Under the terms, Calpine will sell the California Department of Water Resources (CDWR) up to a five-year supply of peaking capacity from the company’s Los Esteros critical energy facility (LECEF), a 180MW natural gas-fired energy facility, located in San Jose, California.

The restructured agreement amends Calpine’s previous obligation to deliver 1,000MW of fixed-price energy until 2009, and replaces it with a unit-specific arrangement whereby CDWR has the right to dispatch LECEF until 2009 with an option to extend this agreement for an additional three years.

Robert May, CEO of Calpine, said: We are pleased with the outcome of this truly collaborative effort and commend the CDWR for approaching Calpine with a creative solution that benefits all parties – California energy consumers, the state of California and Calpine.