All of the plants have multi-year contracts that will providemore consistent earnings and help convince the company's lenders torenegotiate debt, company officials say. Calpine earlier this yearwon a contract to sell power to utility owner Xcel Energy Inc. fromthe plant it is now building. The plant is expected to be ready in2006. Calpine submitted the lowest bid to Xcel and agreed to aclause that allows Xcel to step in and complete the plant ifCalpine defaults.

"Calpine's proposed plant is a good fit with other projects inthe generation portfolio that resulted from Xcel Energy'ssolicitation of proposals to meet the growing energy needs of our1.5 million electricity customers in Minnesota and neighboringstates," says David Eves, Xcel Energy's vice president for resourceplanning and acquisition. The Minnesota contract includes arequirement for 280 megawatts of intermediate power plus anadditional 85 megawatts of peaking capability, for servicebeginning in 2006.

New construction such as the Mankato plant is funded withproject financing, meaning lenders don't have a claim on Calpine'sother assets in a bankruptcy. The company expects to raise about$1.225 billion in such financing through 2007.