CPN Calpine Corp.

THE MERGER (PROPOSAL 1)

The rights and obligations of the parties to the merger agreement are governed by the specific terms and conditions of the merger agreement and not by any summary or other information in this proxy statement. Therefore, the information in this proxy statement regarding the merger agreement and the merger is qualified in its entirety by reference to the merger agreement, a copy of which is attached as Annex A to this proxy statement and incorporated herein by reference. We encourage you to read the merger agreement carefully and in its entirety because it is the principal document that governs the merger.

Structure of the Merger

If the merger is consummated, then at the effective time, Merger Sub will merge with and into Calpine, the separate corporate existence of Merger Sub will cease and Calpine will continue as the surviving corporation and as a subsidiary of Parent. As a result of the merger, Calpine will cease to be a publicly traded company, and you will not own any shares of capital stock of the surviving corporation.

Merger Consideration

At the effective time, each outstanding share of Calpine common stock (other than certain excluded shares), will be automatically converted into the right to receive $15.25 in cash, without interest and less any applicable withholding taxes.

Background of the Merger

As part of its ongoing strategic planning process, the Calpine Board, together with Calpine’s senior management, regularly reviews and evaluates Calpine’s businesses, operations, financial performance, competitive position and strategic initiatives with a goal of maximizing stockholder value, including evaluation of the strategic environment in the power industry and consideration of potential value-maximizing transactions, such as portfolio diversification, securities repurchases, dividends, alternative financings, project developments, acquisitions, divestitures of assets or certain business segments or portions thereof and a sale of Calpine or other business combinations. On several occasions during the past two years, the Calpine Board met, together with Calpine’s senior management and outside advisors, to discuss and receive updates regarding potential strategic alternatives in the context of the equity market and the power sector environment and Calpine’s capital structure profile, including a sale of Calpine, and to evaluate potential business combinations with independent power producers and competitive power affiliates of utilities. Such evaluations did not result in any transactable opportunities. Also during such two-year period, representatives of Calpine and Energy Capital Partners discussed on occasion the energy industry in general and potential strategic opportunities involving third parties or certain of Calpine’s assets, including a potential long-term arrangement involving an affiliate of Energy Capital Partners and one of Calpine’s Texas plants.

On February 14, 2017, the Calpine Board convened a regularly-scheduled meeting in person to, among other things, further evaluate potential strategic alternatives that could be available to Calpine as discussed at prior Calpine Board meetings in connection with the Calpine Board’s ongoing strategic planning process. Members of Calpine’s senior management and a representative of White & Case LLP, outside legal counsel to Calpine, which we refer to as “White & Case” in this proxy statement, also attended this meeting. At this meeting, John B. (Thad) Hill, Chief Executive Officer and a director of Calpine, updated the Calpine Board on the status of Calpine’s evaluation of potential strategic alternatives to enhance value for Calpine’s stockholders that had been discussed at prior Calpine Board meetings, including a potential sale of Calpine, which evaluation was being conducted at the direction of the Calpine Board and with oversight from Frank Cassidy, Chairman of the Calpine Board. Also at this meeting, a representative of White & Case provided an overview to the Calpine Board of its fiduciary duties in the context of a potential sale transaction and noted the importance of independent director oversight in transactions in which members of management may be employed by an acquiror. After such

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update, Mr. Hill and Zamir Rauf, Executive Vice President and Chief Financial Officer of Calpine, reviewed with the Calpine Board illustrative structuring and financial matters regarding a potential transaction involving financial sponsors. Mr. Hill also discussed with the Calpine Board business combinations with certain potential strategic counterparties and contacts with those entities in the recent past, noting that perspectives regarding the viability of a business combination with such counterparties would be discussed at the Calpine Board meeting scheduled for the next day. The Calpine Board, together with members of Calpine’s senior management, then discussed potential strategic alternatives, including a potential sale of Calpine.

On February 15, 2017, the Calpine Board continued its regularly-scheduled meeting in person to, among other things, further evaluate potential strategic alternatives that could be available to Calpine. Members of Calpine’s senior management also attended this meeting. At this meeting, Mr. Hill discussed in greater detail with the Calpine Board Calpine senior management’s recent interactions with, and assessments of, other independent power producers and competitive power affiliates of utilities, noting that, among other things, (a) such interactions and assessments did not lead to any near-term opportunities, (b) seeking an opportunity with certain potential strategic counterparties would not advance Calpine’s strategic objectives or likely would not be value accretive for Calpine’s stockholders or such counterparty and (c) an acquisition of Calpine by an integrated utility group was unlikely given that, among other factors, Calpine’s current debt profile could adversely impact such group’s credit ratings. The Calpine Board, together with members of Calpine’s senior management, then discussed the current public market for shares of Calpine common stock, including that uncertainty about regulatory and energy market dynamics affecting the independent power producer industry had caused traditional investors in the sector to lose confidence in the potential for growth, which resulted in lower valuation multiples for independent power producers, including Calpine, and that the limited number of publicly traded companies in the industry and the decline in the total investible market capitalization of companies in the sector were impediments to traditional long-term investors continuing to invest in the industry, all of which negatively affected the price of shares of Calpine common stock, as did energy market prices generally. After further discussion, the consensus of the Calpine Board was that (a) Calpine should continue considering potential strategic alternatives, including remaining as a standalone company and continuing its publicly announced delevering plan, (b) a financial advisor should be engaged to recommend an approach to assessing the potential interest of a limited number of potential financial sponsors, given the likely absence of a transactable opportunity involving a strategic counterparty and concerns with maintaining confidentiality, that were known to invest in the industries in which Calpine operates and could consummate a transaction requiring a substantial equity commitment and (c) Mr. Hill should continue to contact certain potential strategic counterparties to gauge their interest in a potential transaction involving Calpine. The Calpine Board emphasized that any process involving a potential sale of Calpine should be undertaken solely at the direction, and under the supervision, of the Calpine Board, and the Calpine Board determined that Mr. Cassidy should participate when possible in any substantive meetings and discussions with advisors and potential counterparties, with the entire Calpine Board being updated regularly. Throughout the strategic alternatives review process, including the evaluation and negotiation of a transaction with Energy Capital Partners, Mr. Cassidy was involved in substantive meetings and discussions with advisors and potential counterparties, including Energy Capital Partners or, when unavailable, promptly received updates from Calpine’s senior management and outside advisors.

Consistent with the Calpine Board’s directives, members of Calpine’s senior management, under the supervision of Mr. Cassidy, subsequently contacted and considered several potential financial advisors and, after consulting with Mr. Cassidy and involving Mr. Cassidy in preliminary discussions with Lazard, commenced working with Lazard on a preliminary basis to evaluate potential strategic alternatives. Lazard was subsequently engaged by Calpine, with the approval of the Calpine Board, to assist the Calpine Board in its consideration of potential strategic alternatives, including a potential sale of Calpine. Lazard was selected by the Calpine Board after considering information regarding Lazard and other potential financial advisors provided by such potential financial advisors and based on Lazard’s qualifications, expertise and reputation in investment banking and mergers and acquisitions generally and in the independent power producer industry specifically, as well as its familiarity with the business of Calpine.

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On March 24, 2017, the Calpine Board convened a special meeting telephonically to, among other things, further evaluate potential strategic alternatives that could be available to Calpine. Members of Calpine’s senior management and representatives of White & Case and Lazard also attended this meeting. At this meeting, Lazard discussed with the Calpine Board, among other things, preliminary financial matters regarding Calpine, including in the context of a potential transaction, and potential strategic alternatives for Calpine, including continuing to operate as a standalone public company, a potential sale of Calpine to a strategic acquiror or financial sponsor and a range of financing and other opportunities with respect to Calpine’s geothermal power plant assets located in Sonoma County and Lake County, California, which we refer to as the “geysers assets.” During this discussion, representatives of Lazard also provided the Calpine Board with an overview of 25 potential financial sponsors and four potential strategic counterparties that might be contacted to gauge their respective interest in acquiring Calpine or exploring a range of financing and other opportunities with respect to the geysers assets, in addition to two additional parties that could be interested in serving as potential sources of equity financing, and a potential prioritization of outreach to such parties. Representatives of Lazard noted that such parties were identified based on certain criteria, including the applicable party’s ability to fund the requisite equity commitment, equity syndication capabilities, industry knowledge and experience, merchant generation appetite, limited market power issues, potential geothermal generation interest, ability to achieve an appropriate level of returns, ability to analyze an acquisition of Calpine independently and expeditiously, and reputational, behavioral and other considerations. Also at this meeting, a representative of White & Case again provided an overview to the Calpine Board of its fiduciary duties in the context of a potential sale transaction, including the duties relevant in the context of a potential sale transaction, and reiterated the importance of independent director oversight in transactions in which members of management may be employed by an acquirer, and Mr. Rauf reviewed with the Calpine Board certain updated financial information regarding Calpine. Following further discussion of potential strategic alternatives, including a potential sale transaction, the consensus of the Calpine Board was that, given concerns with maintaining confidentiality, Calpine’s senior management should work with Lazard to contact a limited number of financial sponsors that were known to invest in the industries in which Calpine operates and could consummate a transaction requiring a substantial equity commitment consistent with the outreach prioritization reviewed by Lazard, to gauge their respective interests in acquiring Calpine and obtain preliminary indications of interest. The Calpine Board also continued discussing Calpine senior management’s recent interactions with, and assessments of, other independent power producers and competitive power affiliates of utilities as discussed at the February 15, 2017 meeting of the Calpine Board, including that (a) such interactions and assessments did not lead to any near-term opportunities, (b) seeking an opportunity with certain potential strategic counterparties would not advance Calpine’s strategic objectives or likely would not be value accretive for Calpine’s stockholders or such counterparty and (c) an acquisition of Calpine by an integrated utility group was unlikely given that, among other factors, Calpine’s current debt profile could adversely impact such group’s credit ratings. Notwithstanding such recent interactions and assessments, the Calpine Board directed Mr. Hill to continue contacting certain potential strategic counterparties to gauge their interest in a potential transaction involving Calpine.

Beginning on April 2, 2017, Lazard, consistent with the Calpine Board’s directives and after consultation with Calpine’s senior management, contacted seven financial sponsors, including Energy Capital Partners, to gauge their respective interests in a potential transaction involving Calpine. Of such financial sponsors, Energy Capital Partners and three other financial sponsors executed confidentiality agreements with Calpine, which we refer to as “Party A,” “Party B” and “Party C,” respectively, with the three remaining financial sponsors declining to continue evaluating a potential transaction involving Calpine prior to negotiation of the terms of a confidentiality agreement. One of the three remaining financial sponsors that declined to continue evaluating a potential transaction involving Calpine, later indicated that it may be interested in serving as a potential source of equity financing. Each of the executed confidentiality agreements contains, in addition to customary limitations regarding the use and disclosure of Calpine’s confidential information, standstill provisions that prohibit the counterparty and certain of their respective representatives from taking certain actions during the 12-month period after the date of signing of the applicable confidentiality agreement, including prohibitions on acquiring, agreeing to acquire or proposing to acquire securities of Calpine, rights to acquire securities of Calpine, or any right to vote or direct the voting of securities of Calpine or any assets of Calpine. Although the executed

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confidentiality agreement with Party B provides that such standstill obligations would terminate upon, among other things, public announcement of the merger, none of the executed confidentiality agreements contains a “don’t ask, don’t waive” restriction and each of Party A, Party B and Party C were in fact contacted during the go-shop period.

During the period from April 17, 2017 through April 19, 2017, following the execution of confidentiality agreements, consistent with the Calpine Board’s directives and after consultation with Calpine’s senior management, representatives of Lazard distributed to each of Energy Capital Partners, Party A, Party B and Party C a process letter, which requested submission of preliminary, non-binding indications of interest no later than May 5, 2017 and included an evaluation package containing financial information regarding Calpine’s business. Representatives of Calpine, including Mr. Cassidy and members of Calpine’s senior management, held management presentations with such parties to discuss Calpine’s business, management and prospects. Calpine also granted such parties access to a virtual data room that contained preliminary, non-public legal, financial and operations-related due diligence materials of Calpine and that was updated from time to time during the strategic alternatives review process. In addition, representatives of Calpine’s management, together with representatives of Lazard, continued to engage in discussions with representatives of such parties regarding the strategic alternatives review process and such parties’ continuing interest in acquiring Calpine.

On April 24, 2017, Lazard provided an update to Calpine’s senior management regarding the status of the strategic alternatives review process, including discussions and other communications with Energy Capital Partners, Party A, Party B and Party C. During this update, Lazard discussed with Calpine’s senior management certain perspectives regarding, among other things, the possibility of introducing financial sponsors to certain potential sources of equity financing to facilitate such financial sponsors’ efforts to raise capital in connection with a potential transaction involving Calpine. In that regard, representatives of Lazard provided an overview of a potential source of equity financing, which we refer to as “Potential Equity Financing Party,” and which was previously discussed with the Calpine Board. Lazard then discussed whether it would be beneficial at this time to contact other potential sources of equity financing. After such discussion, it was determined that, subject to consulting with Mr. Cassidy, Lazard should contact Potential Equity Financing Party to gauge its interest in acquiring Calpine or providing equity financing to a financial sponsor in connection with a potential transaction involving Calpine.

On April 24, 2017 and April 25, 2017, consistent with the discussions that occurred earlier on April 24, 2017 and after consulting with Mr. Cassidy, representatives of Lazard contacted Potential Equity Financing Party. Potential Equity Financing Party indicated that it would not be interested in acquiring Calpine but would be interested in providing equity financing to a financial sponsor in connection with a potential transaction involving Calpine. Potential Equity Financing Party did not enter into a confidentiality agreement with Calpine at this time.

On May 4, 2017, Party C informed Lazard that it did not intend to submit an indicative proposal to acquire Calpine.

On May 5, 2017, Energy Capital Partners and Party A submitted preliminary, non-binding indications of interest to acquire 100% of Calpine. The prices per share of Calpine common stock at which Energy Capital Partners and Party A indicated that they would be interested in engaging in such a transaction were $14.80 and $13.50 per share of Calpine common stock in cash, respectively. Each of the indications of interest included, among other things, a description of such financial sponsors’ respective preliminary financing plans, and Energy Capital Partners’ indication of interest requested that Calpine grant Energy Capital Partners an exclusivity period of six to eight weeks to arrange its sources of equity financing. On that same date, Party B informed Lazard that it did not intend to submit an indicative proposal to acquire Calpine.

During the period commencing on May 6, 2017 through May 9, 2017, at the direction of Calpine’s senior management, representatives of Lazard contacted each of Energy Capital Partners and Party A requesting that

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both financial sponsors increase the proposed per share purchase price as reflected in their respective indications of interests in advance of the Calpine Board’s meeting on May 9, 2017.

On May 8, 2017, Energy Capital Partners and Party A submitted revised indicative prices of $15.05 and $14.25 per share of Calpine common stock, respectively.

On May 9, 2017, the Calpine Board convened a special meeting in person to receive an update on the strategic alternatives review process. Members of Calpine’s senior management and representatives of White & Case and Lazard also attended this meeting. At this meeting, a representative of White & Case again provided an overview to the Calpine Board of its fiduciary duties, including the duties relevant in the context of a potential sale transaction, and reiterated the importance of independent director oversight in transactions in which members of management may be employed by an acquiror. Representatives of Lazard then provided an update regarding the strategic alternatives review process, including, among other things, a summary of the indications of interest received from Energy Capital Partners and Party A and such financial sponsors’ respective preliminary financing plans. Representatives of Lazard also noted that other potential counterparties that were contacted in connection with the strategic alternatives review process had not submitted indicative proposals, though certain of such parties expressed an interest in potentially acquiring certain of Calpine’s assets or participating in a transaction as a potential source of financing. Lazard then discussed with the Calpine Board updated preliminary financial matters regarding Calpine and preliminary financial aspects of the indications of interest received from Energy Capital Partners and Party A. The Calpine Board, together with members of Calpine’s senior management and representatives of Lazard, discussed Calpine senior management’s updated views regarding the future financial performance of Calpine and the potential impact of a credit ratings downgrade on the ability of financial sponsors to arrange financing in connection with a transaction involving Calpine. Lazard also discussed with the Calpine Board certain other potential strategic alternatives involving Calpine, including continuing to operate Calpine on a standalone basis, monetizing the geysers assets and effecting a Reverse Morris Trust transaction or a business combination with certain of the potential strategic counterparties discussed at the Calpine Board’s February 15, 2017 meeting. Mr. Hill also updated the Calpine Board on recent discussions with certain potential strategic counterparties. The Calpine Board, together with members of Calpine’s senior management and representatives of Lazard, again discussed the current public market for shares of Calpine common stock, including that uncertainty about regulatory and energy market dynamics affecting the independent power producer industry had caused traditional investors in the sector to lose confidence in the potential for growth, which resulted in lower valuation multiples for independent power producers, including Calpine, and that the limited number of publicly traded companies in the industry and the decline in the total investible market capitalization of companies in the sector were impediments to traditional long-term investors continuing to invest in the industry, all of which negatively affected the price of shares of Calpine common stock, as did energy market prices generally. At the conclusion of the meeting, the Calpine Board held an executive session with only members of the Calpine Board, W. Thaddeus Miller, Executive Vice President, Chief Legal Officer and Secretary, and representatives of White & Case present, during which the attendees discussed potential next steps, including whether the Calpine Board should grant an exclusivity period to Energy Capital Partners as requested by Energy Capital Partners. The consensus of the Calpine Board was to continue exploring a potential transaction with Energy Capital Partners and Party A, but require that Energy Capital Partners further develop its financing plan, that Party A submit an improved proposal on price after it had the opportunity to conduct additional due diligence, and that each of Energy Capital Partners and Party A provide their respective strategies for approaching the credit rating agencies regarding a potential transaction involving Calpine.

Following the Calpine Board meeting, on May 9, 2017, Lazard, consistent with the Calpine Board’s directives, contacted Energy Capital Partners and Party A to outline next steps and, on May 10, 2017, provided to each of Energy Capital Partners and Party A a process letter requesting revised indications of interest and further details of each party’s planned equity syndication, debt financing and rating agency strategies by no later than May 22, 2017. Following the distribution of such process letters, Energy Capital Partners and Party A were

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provided additional access to Calpine’s management for diligence calls and access to additional non-public legal, financial and operations-related due diligence materials of Calpine in the virtual data room.

On May 10, 2017, The Wall Street Journal published an article speculating that Calpine was exploring a sale transaction and was working with Lazard in seeking potential acquirors. Following publication of The Wall Street Journal article and other similar news articles, 14 additional parties, including private equity and infrastructure funds, closely held private companies and strategic parties, contacted Calpine or Lazard to express potential interest in acquiring all or a portion of Calpine. The Calpine Board authorized Calpine’s senior management and Lazard to respond to those expressions of interest. Subsequently, six of those parties, including Access, requested a confidentiality agreement, of which one potential counterparty, which we refer to as “Party D,” and Access executed confidentiality agreements and subsequently received an evaluation package, an in-person management presentation and access to the virtual data room. Such executed confidentiality agreements are consistent with the confidentiality agreements described above. On May 24, 2017, Party D informed Lazard that it did not intend to submit an indicative proposal to acquire Calpine, and, on May 26, 2017, Access informed Lazard that it did not intend to submit an indicative proposal to acquire Calpine. Each of Party D and Access indicated that it may be interested in participating in a transaction involving Calpine as a potential source of equity financing.

Between May 22, 2017 and May 30, 2017, after ongoing discussions among representatives of Lazard and each of Energy Capital Partners and Party A regarding, among other things, Energy Capital Partners’ and Party A’s respective indicative proposals, financing plans, credit rating agency strategies and ongoing due diligence reviews, and after Calpine provided Energy Capital Partners and Party A with updated financial information regarding Calpine, Energy Capital Partners and Party A again submitted indicative proposals, together with an overview of their respective equity syndication and credit rating agency strategies. Energy Capital Partners increased its all-cash indicative price from $15.05 to $15.25 per share of Calpine common stock contingent upon Calpine granting Energy Capital Partners an exclusivity period of eight weeks. Party A reaffirmed its previous all-cash indicative price of $14.25 per share of Calpine common stock.

On May 31, 2017, the Calpine Board convened a special meeting telephonically to receive an update on the strategic alternatives review process. Members of Calpine’s senior management and representatives of White & Case and Lazard also attended this meeting. At this meeting, a representative of White & Case again provided an overview to the Calpine Board of its fiduciary duties, including the duties relevant in the context of a potential sale transaction, and reiterated the importance of independent director oversight in transactions in which members of management may be employed by the potential acquiror. Mr. Miller and representatives of White & Case then discussed with the Calpine Board certain existing and prior relationships of employees of Calpine and White & Case with Party A, Energy Capital Partners and Potential Equity Financing Party, which was in discussions with Energy Capital Partners regarding potential equity financing, as previously raised and discussed from time to time with Mr. Cassidy and members of Calpine’s senior management. Representatives of Lazard then provided an update regarding the strategic alternatives review process, including, among other things, a summary of Energy Capital Partners’ and Party A’s revised indicative proposals, preliminary financing plans and credit rating agency strategies, and noted that no other potential counterparties that contacted Calpine or Lazard following market rumors had submitted indicative proposals. Representatives of Lazard also noted for the Calpine Board that Energy Capital Partners’ revised indicative proposal was contingent upon Calpine granting Energy Capital Partners an exclusivity period of eight weeks. Lazard then discussed with the Calpine Board updated preliminary financial matters regarding Calpine and updated preliminary financial aspects of the revised indications of interest received from Energy Capital Partners and Party A. The Calpine Board, together with members of Calpine’s senior management and representatives of Lazard, then discussed various considerations relating to Energy Capital Partners’ request for an exclusivity period, including, among other things, Energy Capital Partners’ indicative proposal relative to Party A’s indicative proposal and Energy Capital Partners’ preliminary financing plan and credit rating strategy, the lack of any additional indicative proposals as a result of the market rumors (whether from strategic acquirors or financial sponsors), the challenges of two potential parties approaching the credit rating agencies regarding a potential transaction involving Calpine, the challenges

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of two parties simultaneously assembling a co-investor group given the likely overlap in potential sources of equity financing and other market, business and strategic factors. At the conclusion of this meeting, the Calpine Board held an executive session with only members of the Calpine Board, Mr. Miller and representatives of White & Case present, during which the attendees discussed potential next steps, including the viability of other potential strategic alternatives and whether the Calpine Board should grant an exclusivity period to Energy Capital Partners in light of various factors discussed during the meeting. The Calpine Board then held an executive session with only the independent members of the Calpine Board and representatives of White & Case present. During such executive session, a representative of White & Case discussed with the independent members of the Calpine Board the importance of agreeing on a price for shares of Calpine common stock in any sale transaction before permitting Calpine’s management to engage in any discussion with Energy Capital Partners regarding compensation arrangements. No such compensation discussions occurred prior to announcement of the merger. The consensus of the Calpine Board was to continue exploring a potential transaction with Energy Capital Partners and, in furtherance thereof, to grant exclusivity to Energy Capital Partners on terms that would not preclude the consideration by the Calpine Board of unsolicited offers.

Following the May 31, 2017 meeting of the Calpine Board, representatives of Lazard communicated to Energy Capital Partners that the Calpine Board had determined to negotiate a potential transaction with Energy Capital Partners on an exclusive basis for a 45-day period. On behalf of Calpine, White & Case thereafter sent an initial draft of an exclusivity agreement to Latham & Watkins LLP, outside legal counsel to Energy Capital Partners, which we refer to as “Latham & Watkins.” The parties subsequently negotiated the terms of an exclusivity agreement and executed an exclusivity agreement, dated June 2, 2017, which did not preclude the consideration by the Calpine Board of unsolicited offers. The exclusivity agreement was approved unanimously by the Calpine Board. From the date of execution of the exclusivity agreement (including subsequent extensions of the exclusivity period) through August 17, 2017, representatives of Calpine, Energy Capital Partners and their respective advisors held numerous discussions regarding the terms of a potential transaction involving Calpine and Energy Capital Partners and Energy Capital Partners’ progress on its equity syndication efforts, the status of its confirmatory due diligence and the status of its credit rating agency strategy and outreach, in addition to the contacts described below.

On June 1, 2017, Mr. Hill and Tyler Reeder, a partner of Energy Capital Partners, informally met at an industry conference, during which meeting Messrs. Hill and Reeder discussed potential next steps, including Energy Capital Partners’ outreach to potential co-investors.

On June 5, 2017, representatives of Calpine, Energy Capital Partners and their respective advisors met in New York City to discuss Energy Capital Partners’ equity syndication, confirmatory due diligence and credit rating agency advisory processes. Following the June 5, 2017 meeting, Energy Capital Partners was provided additional access to Calpine’s management and a second virtual data room in response to Energy Capital Partners’ additional due diligence requests.

On June 9, 2017, Bloomberg reported that Calpine had received bids from certain financial sponsors, which did not include Energy Capital Partners.

On June 20, 2017, SparkSpread, a publication that covers U.S. and European energy markets, reported that Energy Capital Partners had built a position in, and was bidding to acquire, Calpine.

On June 29, 2017, the Calpine Board convened a special meeting telephonically to receive an update on the evaluation of a potential transaction involving Energy Capital Partners. Members of Calpine’s senior management and representatives of White & Case and Lazard also attended this meeting. At this meeting, a representative of White & Case again provided an overview to the Calpine Board of its fiduciary duties, including the duties relevant in the context of a potential sale transaction, and reiterated the importance of independent director oversight in transactions in which members of management may be employed by the potential acquiror. Representatives of Lazard then updated the Calpine Board on, among other things, Energy

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Capital Partners’ progress on its equity syndication efforts and the status of discussions with credit rating agencies. Representatives of White & Case also reviewed with the Calpine Board the exclusivity agreement that had been entered into with Energy Capital Partners and certain provisions of a draft merger agreement proposed to be sent to Energy Capital Partners relating to, among other things, the parameters of the go-shop and non-solicitation covenants, obligations and risk allocation with respect to regulatory approvals and credit ratings, the circumstances under which termination fees would be payable by Calpine or Parent, and the amounts of such termination fees.

On July 5, 2017, on behalf of Calpine, representatives of White & Case sent to representatives of Latham & Watkins an initial draft of the merger agreement.

On July 7, 2017, on behalf of Calpine, representatives of White & Case sent to representatives of Latham & Watkins an initial draft of Calpine’s confidential disclosure letter.

On July 10, 2017, the Calpine Board convened a special meeting telephonically to receive an update on the evaluation of a potential transaction involving Energy Capital Partners. Members of Calpine’s senior management and representatives of White & Case and Lazard also attended this meeting. At this meeting, representatives of White & Case again provided an overview to the Calpine Board of its fiduciary duties, including the duties relevant in the context of a potential sale transaction, and reiterated the importance of independent director oversight in transactions in which members of management may be employed by the potential acquiror. Representatives of Lazard provided an update regarding, among other things, Energy Capital Partners’ progress on its equity syndication efforts and the status of discussions with credit rating agencies. Lazard then discussed with the Calpine Board updated preliminary financial matters regarding Calpine and updated preliminary financial aspects of Energy Capital Partners’ indicative proposal. The Calpine Board, together with members of Calpine’s senior management and representatives of Lazard and White & Case, then discussed the possibility that Energy Capital Partners would request an extension of the exclusivity period, which was set to expire on July 17, 2017, in order to continue arranging its equity financing. The Calpine Board also discussed the advisability of establishing a “Transaction Committee” to aid the Calpine Board in overseeing the conduct of the strategic alternatives review process and make decisions in connection with the conduct of such process between meetings of the Calpine Board. The Calpine Board then resolved to establish a Transaction Committee consisting of Mr. Cassidy, W. Benjamin Moreland and Denise M. O’Leary, each of whom is an independent member of the Calpine Board. Throughout the Calpine Board’s evaluation of a potential transaction involving Energy Capital Partners, the Transaction Committee was regularly consulted and updated on any material matters relating to such evaluation, and the Transaction Committee provided direction to Calpine’s senior management and outside advisors prior to any decisions that were made that did not require approval of the full Calpine Board.

On July 11, 2017, representatives of Latham & Watkins provided to representatives of White & Case a revised draft of the draft merger agreement that was initially provided by White & Case on July 5, 2017. During the period from July 11, 2017 through August 17, 2017, representatives of Calpine and Energy Capital Partners, including members of the Transaction Committee, Messrs. Hill, Miller, Reeder and Andrew Singer, a partner and general counsel of Energy Capital Partners, together with representatives of Calpine’s and Energy Capital Partners’ respective legal and financial advisors, held numerous discussions regarding the merger agreement, disclosure schedules and financing documents and representatives of White & Case and Latham & Watkins exchanged drafts of the merger agreement and confidential disclosure letter.

On July 13, 2017, SparkSpread reported that Calpine had narrowed the field of bidders to two parties, one of which was Energy Capital Partners.

On July 15, 2017, the Transaction Committee convened a status update meeting telephonically. Members of Calpine’s senior management and representatives of White & Case and Lazard also attended this meeting. At this meeting, representatives of Lazard updated the Transaction Committee on the status of Energy Capital Partners’

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equity syndication efforts. Representatives of White & Case then reviewed with the Transaction Committee certain open business points in the draft merger agreement being negotiated with Energy Capital Partners relating to, among other things, the parameters of the go-shop and non-solicitation covenants, obligations and risk allocation with respect to regulatory approvals and credit ratings, the circumstances under which termination fees would be payable by Calpine or Parent, and the amounts of such termination fees. The Transaction Committee, together with members of Calpine’s senior management and representatives of Lazard and White & Case, then discussed various open business points and Energy Capital Partners’ recent request for a three-week extension of the exclusivity period granted by Calpine to Energy Capital Partners in order to continue arranging its equity financing. The Transaction Committee then approved an extension of the exclusivity period to July 31, 2017.

On July 17, 2017, Calpine and Energy Capital Partners agreed to extend the exclusivity period to July 31, 2017.

On July 22, 2017, the Transaction Committee convened a status update meeting telephonically. Members of Calpine’s senior management and representatives of White & Case and Lazard also attended this meeting. At this meeting, Messrs. Hill and Miller provided an update regarding the status of the potential transaction, including Energy Capital Partners’ equity syndication efforts and certain open business points in the draft merger agreement being negotiated with Energy Capital Partners. The Transaction Committee, together with members of Calpine’s senior management and representatives of Lazard and White & Case, then discussed various open business points.

Also on July 22, 2017, representatives of Latham & Watkins provided to representatives of White & Case an initial draft of the engagement letter with Barclays in connection with the amendment to the existing revolving credit agreement, which we refer to as the “Barclays engagement letter.” During the period from July 22, 2017 through August 17, 2017, representatives of Calpine and Energy Capital Partners, including members of the Transaction Committee, Messrs. Hill, Miller, Reeder and Singer, together with representatives of Calpine’s and Energy Capital Partners’ respective legal and financial advisors, held discussions regarding, and representatives of White & Case and Latham & Watkins exchanged drafts of, the Barclays engagement letter.

On July 26, 2017, Bloomberg reported a potential announcement of an Energy Capital Partners acquisition of Calpine to occur as soon as the first week of August.

On July 28, 2017, Calpine issued a press release and held its second quarter earnings call regarding its second quarter financial results, in which Mr. Hill, at the direction of the Calpine Board, disclosed that it was exploring strategic alternatives. Although Calpine received additional in-bound inquiries, as a result of the recent market rumors and Calpine’s disclosure of the strategic alternative review process, no additional indications of interest were received.

Later on July 28, 2017, the Calpine Board convened a special meeting telephonically to receive an update on the evaluation of a potential transaction involving Energy Capital Partners. Members of Calpine’s senior management and representatives of White & Case and Lazard also attended this meeting. At this meeting, representatives of Lazard provided an update regarding Energy Capital Partners’ equity syndication efforts and members of Calpine’s senior management provided an update regarding the status of discussions with credit rating agencies. Representatives of White & Case then reviewed with the Calpine Board certain open business points in the draft merger agreement being negotiated with Energy Capital Partners relating to, among other things, the parameters of the go-shop and non-solicitation covenants, obligations and risk allocation with respect to regulatory approvals and credit ratings, the circumstances under which termination fees would be payable by Calpine or Parent, and the amounts of such termination fees. The Calpine Board, together with members of Calpine’s senior management and representatives of Lazard and White & Case, then discussed various open business points and Energy Capital Partners’ recent request for an extension of the exclusivity period granted by Calpine to Energy Capital Partners in order to continue arranging its equity financing to the week of August 14, 2017. The consensus of the Calpine Board was to permit Calpine’s management to extend the exclusivity period by one to two weeks.

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Also on July 28, 2017, representatives of Latham & Watkins provided to representatives of White & Case initial drafts of the limited guarantee and equity commitment letter. During the period from July 28, 2017 through August 17, 2017, representatives of Calpine and Energy Capital Partners, including members of the Transaction Committee, Messrs. Hill, Miller, Reeder and Singer, together with representatives of Calpine’s and Energy Capital Partners’ respective legal and financial advisors, held discussions regarding, and representatives of White & Case and Latham & Watkins exchanged drafts of, the limited guarantee and equity commitment letter.

On July 31, 2017, Calpine and Energy Capital Partners agreed to extend the exclusivity period to August 16, 2017.

On August 1, 2017, representatives of Latham & Watkins provided initial drafts of the Parent amended and restated limited partnership agreement, which we refer to as the “Parent LPA,” form subscription agreement and bridge commitment letter to White & Case. During the period from August 1, 2017 through August 17, 2017, representatives of Calpine and Energy Capital Partners, including members of the Transaction Committee, Messrs. Hill, Miller, Reeder and Singer, together with representatives of Calpine’s and Energy Capital Partners’ respective legal and financial advisors, held discussions regarding, and representatives of White & Case and Latham & Watkins exchanged drafts of, the Parent LPA, subscription agreements and bridge commitment letter.

On August 7, 2017, the Transaction Committee convened a status update meeting telephonically. Members of Calpine’s senior management and representatives of White & Case and Lazard also attended this meeting. At this meeting, representatives of Lazard updated the Transaction Committee on the status of Energy Capital Partners’ equity syndication efforts and Mr. Hill and representatives of Lazard updated the Transaction Committee on the status of ongoing discussions with principals of Energy Capital Partners, including recent discussions among Messrs. Hill, Miller, Cassidy, Reeder, Singer and other representatives of Calpine and Energy Capital Partners regarding open business points. Mr. Hill and Lazard also discussed with the Transaction Committee potentially exploring whether Energy Capital Partners could offer any additional value to Calpine’s stockholders relative to its indicative proposal of $15.25 per share of Calpine common stock. Representatives of White & Case then reviewed with the Transaction Committee certain open business points in the draft merger agreement being negotiated with Energy Capital Partners relating to, among other things, the parameters of the go-shop and non-solicitation covenants, obligations and risk allocation with respect to regulatory approvals and credit ratings, the circumstances under which termination fees would be payable by Calpine or Parent, and the amounts of such termination fees. The Transaction Committee, together with members of Calpine’s senior management and representatives of Lazard and White & Case, then discussed various open business points and determined to explore whether Energy Capital Partners could offer any additional value to Calpine’s stockholders.

On August 9, 2017, the Calpine Board convened a special meeting telephonically to receive an update on the evaluation of a potential transaction involving Energy Capital Partners. Members of Calpine’s senior management and representatives of White & Case and Lazard also attended this meeting. Representatives of Lazard updated the Calpine Board on the status of Energy Capital Partners’ equity syndication efforts and Messrs. Hill and Miller and representatives of Lazard updated the Calpine Board on the status of ongoing discussions with principals of Energy Capital Partners, including recent discussions among Messrs. Cassidy, Hill, Miller and other representatives of Calpine’s senior management and Messrs. Reeder, Singer and other representatives of Energy Capital Partners regarding open business points, and Calpine’s exploration as to whether Energy Capital Partners could offer any additional value to Calpine’s stockholders. Representatives of White & Case then reviewed with the Calpine Board certain open business points in the draft merger agreement being negotiated with Energy Capital Partners relating to, among other things, the parameters of the go-shop and non-solicitation covenants, obligations and risk allocation with respect to regulatory approvals and credit ratings, the circumstances under which termination fees would be payable by Calpine or Parent, and the amounts of such termination fees. The Calpine Board, together with members of Calpine’s senior management and representatives of Lazard and White & Case, then discussed various open business points and Calpine’s exploration as to whether Energy Capital Partners could offer any additional value to Calpine’s stockholders, including the initial

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view expressed by Energy Capital Partners that seeking approval for an increase in Energy Capital Partners’ indicative proposal from potential co-investors could destabilize Energy Capital Partners’ equity syndication efforts and that, notwithstanding recent market rumors, Calpine had not received any recent communications from Calpine’s stockholders regarding potential price per share in a transaction involving Calpine. The consensus of the Calpine Board was to continue exploring a potential transaction with Energy Capital Partners on the basis of Energy Capital Partners’ indicative proposal of $15.25 per share of Calpine common stock but that the Transaction Committee, together with Calpine’s senior management and Lazard, should continue to evaluate whether to continue exploring Energy Capital Partners’ ability to offer any additional value to Calpine’s stockholders and the effect that would have on a potential transaction with Energy Capital Partners.

Following the August 9, 2017 Calpine Board meeting, the Transaction Committee convened a status update meeting telephonically. Members of Calpine’s senior management and representatives of White & Case and Lazard also attended this meeting. Members of Calpine’s senior management updated the Transaction Committee on a discussion held after the Calpine Board’s meeting earlier that day among Messrs. Hill, Miller and other members of Calpine’s senior management and Messrs. Reeder, Singer and other representatives of Energy Capital Partners, which discussion included Energy Capital Partners’ perspectives regarding open business points, which included a willingness generally to accept risk with respect to regulatory approvals and credit ratings, and Calpine’s exploration as to whether Energy Capital Partners could offer any additional value to Calpine’s stockholders. Members of Calpine’s senior management and representatives of Lazard noted Energy Capital Partners’ indication that it could consult with potential co-investors regarding an increase in Energy Capital Partners’ indicative proposal but that doing so would delay and might destabilize Energy Capital Partners’ equity syndication efforts. Representatives of Lazard discussed with the Transaction Committee the potential destabilization in Energy Capital Partners’ equity syndication efforts. After further discussion, the consensus of the Transaction Committee was to continue exploring a potential transaction with Energy Capital Partners on the basis of Energy Capital Partners’ indicative proposal of $15.25 per share of Calpine common stock but seeking terms that would be more beneficial to Calpine, including the circumstances under which such termination fees would be payable by Calpine or Parent and the amounts of such termination fees.

Also on August 9, 2017, MergerMarket reported that Calpine and Energy Capital Partners were working to finalize the capital structure of a potential buyout. Prior to announcement of the merger on August 18, 2017, various news articles were published regarding a potential transaction involving Calpine and Energy Capital Partners. Although Calpine received in-bound inquiries as a result of the recent market rumors and Calpine’s disclosure of the strategic alternative review process, no additional indications of interest were received.

On August 16, 2017, the Calpine Board convened a regularly scheduled meeting in person during which the Calpine Board evaluated the proposed merger. Members of Calpine’s senior management and representatives of White & Case and Lazard also attended a portion of this meeting. During this meeting, representatives of White & Case again provided an overview to the Calpine Board of the Calpine Board’s fiduciary duties to Calpine’s stockholders, including the Calpine Board’s duties in connection with a potential sale of Calpine. Representatives of Lazard reviewed with the Calpine Board the terms of the Barclays engagement letter and representatives of White & Case reviewed with the Calpine Board, among other things, the proposed terms and conditions of the merger agreement in detail. Also at this meeting, Lazard reviewed with the Calpine Board updated preliminary financial aspects of the merger consideration. The Calpine Board, together with members of Calpine’s senior management and representatives of Lazard and White & Case, then discussed the proposed terms and conditions of the merger agreement and financial aspects of the merger consideration, noting that open business points in the merger agreement relating to, among other things, risk allocation with respect to regulatory approvals and credit ratings, the circumstances under which termination fees would be payable by Calpine or Parent and the amounts of such termination fees, were resolved in a manner that, in the aggregate, would be favorable to Calpine. Also at this meeting, the Calpine Board discussed certain relationships with Lazard and various participants in the strategic alternatives review process of which the Calpine Board was previously made aware prior to this meeting and the May 9, 2017 meeting of the Calpine Board and determined that such relationships were not material to the Calpine Board’s evaluation of strategic alternatives.

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On August 17, 2017, the Calpine Board convened the second day of its regularly scheduled meeting in person during which the Calpine Board further evaluated the proposed merger. During this meeting, representatives of White & Case again provided an overview to the Calpine Board of the Calpine Board’s fiduciary duties to Calpine’s stockholders, including the Calpine Board’s duties in connection with a potential sale of Calpine. Also at this meeting, Lazard reviewed with the Calpine Board its financial analysis of the merger consideration and rendered an oral opinion, confirmed by delivery of a written opinion dated August 17, 2017, to the Calpine Board to the effect that, as of that date and based upon and subject to the assumptions made, procedures followed, matters considered and qualifications and limitations on the scope of review undertaken by Lazard as set forth in its written opinion, the merger consideration to be paid to holders of shares of Calpine common stock (other than holders of certain excluded shares) in the merger was fair, from a financial point of view, to holders of shares of Calpine common stock (other than holders of certain excluded shares). In addition, the Calpine Board carefully considered the proposed merger consideration, any risks related to the terms and conditions of the merger agreement, the prospects of continuing to operate Calpine as a stand-alone publicly-held entity, and the views expressed by members of the Calpine Board during the meeting, in addition to the other reasons to approve the merger agreement and countervailing factors described in the section entitled “— Recommendation of the Calpine Board; Reasons for the Merger ” beginning on page [ ● ] of this proxy statement.

After further discussions with Calpine’s senior management and legal and financial advisors, and in light of the reasons considered, the Calpine Board unanimously (a) determined that the terms of the merger agreement and the transactions contemplated thereby, including the merger, are advisable and fair to, and in the best interests of, Calpine and its stockholders, (b) approved and declared advisable the form and terms of the merger agreement and the transactions contemplated thereby, including the merger, (c) resolved that the merger agreement be submitted to the stockholders of Calpine for adoption and (d) resolved to recommend to such stockholders that they vote in favor of adoption of the merger agreement and the transactions contemplated thereby, including the merger.

During the evening of August 17, 2017, representatives of Calpine, White & Case, Energy Capital Partners and Latham & Watkins finalized the merger agreement and each of Calpine, Parent and Merger Sub executed and delivered the merger agreement, effective as of August 17, 2017.

On August 18, 2017, Calpine and Energy Capital Partners issued a joint press release announcing the execution of the merger agreement. Also on August 18, 2017, Moody’s and S&P affirmed Calpine’s ratings. Moody’s revised its rating outlook for Calpine from stable to negative.

The merger agreement permits Calpine and its advisors to actively solicit and negotiate alternative transaction proposals from third parties during the go-shop period (see the section entitled “ The Merger Agreement—Terms of the Merger Agreement—Go-Shop Period; Solicitation of Alternative Transaction Proposals ” beginning on page [ ● ] of this proxy statement). During the go-shop period, Lazard, under the direction of the Calpine Board, undertook a broad solicitation effort by contacting 65 potential counterparties comprised of 25 strategic parties, six pension funds and sovereign wealth funds, 30 infrastructure firms and financial sponsors and four family offices and insurance companies, which outreach included potential counterparties previously contacted or identified by Lazard. As a result of this solicitation effort, only one financial sponsor, which we refer to as “Party E,” entered into a confidentiality agreement with Calpine. Party E subsequently received a bid process letter and an evaluation package but on September 25, 2017, informed representatives of Lazard that Party E would not pursue a transaction involving Calpine.

Recommendation of the Calpine Board; Reasons for the Merger

In evaluating the merger agreement, the merger and the other transactions contemplated by the merger agreement, the Calpine Board consulted with Calpine’s senior management and Calpine’s outside legal advisor and financial advisor. In determining that the terms of the merger agreement and the transactions contemplated

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by the merger agreement, including the merger, are advisable and fair to, and in the best interests of, Calpine and its stockholders and in recommending to such stockholders that they vote in favor of adoption of the merger agreement and the transactions contemplated thereby, including the merger, the Calpine Board considered a number of factors, including the following, which are not intended to be exhaustive and are not presented in any relative order of importance:

Financial Terms; Certainty of Value

Prospects of Calpine

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Strategic Alternatives

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Opinion of Calpine’s Financial Advisor

Merger Agreement Terms

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Likelihood of Consummation

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The Calpine Board believed that, overall, the potential benefits of the merger to Calpine’s stockholders outweighed the risks and uncertainties of the merger.

The foregoing discussion of information and factors considered by the Calpine Board is not intended to be exhaustive. In light of the variety of factors considered in connection with its evaluation of the merger, the Calpine Board did not find it practicable to, and did not, quantify or otherwise assign relative weights to the specific factors considered in reaching their determinations and recommendations. Moreover, each member of the Calpine Board applied his or her own personal business judgment to the process and may have given different weight to different factors.

The foregoing discussion of the information and factors considered by the Calpine Board is forward-looking in nature. This information should be read in light of the factors described in the section entitled “ Cautionary Statement Concerning Forward-Looking Information ” beginning on page [ ● ] of this proxy statement.

The Calpine Board unanimously recommends that you vote “FOR” the proposal to adopt the merger agreement, thereby approving the merger.

In considering the recommendation of the Calpine Board with respect to the proposal to adopt the merger agreement, you should be aware that certain of our directors and executive officers may be deemed to have

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interests in the transactions contemplated by the merger agreement that are different from, or in addition to, those of Calpine’s stockholders generally. See the section entitled “ —Interests of Certain Persons in the Merger ” beginning on page [ ● ] of this proxy statement and the section entitled “ Advisory Vote on Golden Parachute Compensation (Proposal 3) ” beginning on page [ ● ] of this proxy statement. The Calpine Board was aware of and considered these interests, among other matters, in evaluating and negotiating the merger agreement and the merger, and in recommending that the merger agreement be adopted by Calpine’s stockholders.

Opinion of Calpine’s Financial Advisor

Calpine retained Lazard to provide it with financial advisory services and a fairness opinion in connection with the merger. On August 17, 2017, Lazard rendered its written opinion, consistent with its oral opinion rendered on the same date, to the Calpine Board that, as of such date, and based upon and subject to the assumptions made, procedures followed, matters considered and qualifications and limitations on the scope of review undertaken by Lazard as set forth therein, the merger consideration to be paid to holders of shares of Calpine common stock (other than holders of excluded shares) in connection with the merger was fair, from a financial point of view, to such holders.

The full text of Lazard’s written opinion to the Calpine Board, dated August 17, 2017, which sets forth the assumptions made, procedures followed, matters considered and qualifications and limitations on the scope of review undertaken by Lazard in connection with its opinion, is attached to this proxy statement as Annex B and is incorporated by reference herein in its entirety. The following summary of Lazard’s opinion is qualified in its entirety by reference to the full text of the opinion. You are encouraged to read Lazard’s opinion and this section carefully and in their entirety.

Lazard’s engagement and its opinion were for the benefit of the Calpine Board (in its capacity as such), and Lazard’s opinion was rendered to the Calpine Board on August 17, 2017 in connection with its evaluation of the merger and addressed only the fairness as of the date of the opinion, from a financial point of view, to holders of shares of Calpine common stock (other than holders of excluded shares) of the consideration to be paid to such holders in the merger. Lazard’s opinion was not intended to, and does not, constitute a recommendation to any stockholder as to how such stockholder should vote or act with respect to the merger or any matter relating thereto. Lazard’s opinion was necessarily based on economic, monetary, market and other conditions as in effect on, and the information made available to Lazard as of, the date of the opinion. Lazard assumed no responsibility for updating or revising its opinion based on circumstances or events occurring after the date of the opinion. Lazard did not express any opinion as to the price at which shares of Calpine common stock may trade at any time subsequent to the announcement of the merger. In addition, Lazard’s opinion did not address the relative merits of the merger as compared to any other transaction or business strategy in which Calpine might engage or the merits of the underlying decision by Calpine to engage in the merger.

In connection with its opinion, Lazard:

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Lazard assumed and relied upon the accuracy and completeness of the foregoing information, without independent verification of such information. Lazard did not conduct any independent valuation or appraisal of any of the assets or liabilities (contingent or otherwise) of Calpine or Parent or concerning the solvency or fair value of Calpine or Parent, and Lazard was not furnished with any such valuation or appraisal. Management of Calpine advised Lazard that the June 2017 Projections (as defined in the section entitled “—Certain Company Projections ” beginning on page [ ● ] of this proxy statement) represented the best then-currently available estimates and judgments as to the future financial performance of Calpine, and, accordingly, for purposes of Lazard’s analyses in connection with its opinion, Calpine directed Lazard to utilize such financial forecasts. With respect to the financial forecasts utilized in Lazard’s analyses, Lazard assumed, with the consent of Calpine, that they were reasonably prepared. Lazard assumed no responsibility for and expressed no view as to any such forecasts or the assumptions on which they were based.

Representatives of Calpine advised Lazard, and Lazard assumed, that the merger agreement, when executed, would conform to the draft reviewed by Lazard in all material respects. In rendering its opinion, Lazard assumed, with the consent of Calpine, that the merger would be consummated on the terms described in the merger agreement, without any waiver or modification of any material terms or conditions. Lazard also assumed, with the consent of Calpine, that obtaining the necessary governmental, regulatory or third-party approvals and consents for the merger would not have an adverse effect on Calpine, Parent or the merger. Lazard did not express any opinion as to any tax or other consequences that might result from the merger, nor did Lazard’s opinion address any legal, tax, regulatory or accounting matters, as to which Lazard understood that Calpine had obtained such advice as it deemed necessary from qualified professionals. Lazard expressed no view or opinion as to any terms or other aspects (other than the merger consideration to the extent expressly specified in the opinion) of the merger. In addition, Lazard expressed no view or opinion as to the fairness of the amount or nature of, or any other aspects relating to, the compensation to any officers, directors or employees of any parties to the merger, or class of such persons, relative to the merger consideration or otherwise.

In connection with rendering its opinion, Lazard performed certain financial analyses and reviews of certain information that Lazard deemed appropriate in connection with rendering its opinion as summarized in the section entitled “— Summary of Lazard Financial Analyses ” beginning on page [ ● ] of this proxy statement. In addition, Lazard also performed certain additional financial analyses and reviews as summarized in the section entitled “— Other Analyses ” beginning on page [ ● ] of this proxy statement. The summary of the analyses and reviews provided in the sections entitled “— Summary of Lazard Financial Analyses ” and “ —Other Analyses ” is not a complete description of the analyses and reviews undertaken by Lazard. The preparation of a fairness opinion is a complex process involving various determinations as to the most appropriate and relevant methods of financial analysis and review and the application of those methods to particular circumstances and, therefore, is not readily susceptible to partial analysis or summary description. Considering selected portions of these analyses and reviews or the summary contained in the sections entitled “— Summary of Lazard Financial Analyses ” and “— Other Analyses ,” without considering the analyses and reviews as a whole, could create an incomplete or misleading view of the analyses and reviews undertaken by Lazard. In arriving at its opinion, Lazard considered the results of all of its analyses and reviews set forth in the section entitled “— Summary of Lazard Financial Analyses ” and did not attribute any particular weight to any particular analysis or review or application thereof considered by it; rather, Lazard made its determination as to fairness on the basis of its experience and professional judgment after considering the results of all of its analyses and reviews.

For purposes of its analyses and reviews, Lazard considered industry performance, general business, economic, market and financial conditions and other matters, many of which are beyond the control of Calpine. No company, business or transaction used in Lazard’s analyses and reviews, as a comparison, is identical to Calpine, its business or the merger, and an evaluation of the results of those analyses and reviews is not entirely

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mathematical. Rather, the analyses and reviews involve complex considerations and judgments concerning financial and operating characteristics and other factors that could affect the acquisition, public trading or other values of the companies, businesses or transactions used in Lazard’s analyses and reviews. The estimates contained in Lazard’s analyses and reviews and the ranges of valuations resulting from any particular analysis or review are not necessarily indicative of actual results or values or predictive of future results or values, which may be significantly more or less favorable than those suggested by Lazard’s analyses and reviews. In addition, analyses and reviews relating to the value of companies, businesses or securities do not purport to be appraisals or to reflect the prices at which companies, businesses or securities actually may be sold. Accordingly, the estimates used in, and the results derived from, Lazard’s analyses and reviews are inherently subject to substantial uncertainty.

Summary of Lazard Financial Analyses

The summary of the analyses and reviews provided below includes information presented in tabular format. In order to fully understand Lazard’s analyses and reviews, the tables must be read together with the full text of each summary. The tables alone do not constitute a complete description of Lazard’s analyses and reviews. Considering the data in the tables below without considering the full description of the analyses and reviews, including the methodologies and assumptions underlying the analyses and reviews, could create a misleading or incomplete view of Lazard’s analyses and reviews.

Except as otherwise noted, the following quantitative information, to the extent that it is based on market data, is based on market data as it existed on or before August 17, 2017, and is not necessarily indicative of current market conditions. For purposes of the financial analyses described below, unless otherwise noted, (a) Lazard assumed, with the consent of Calpine, net debt of $11,495 million and non-controlling interest of $73 million, each as of June 30, 2017, and 362.5 million fully-diluted shares outstanding as provided by Calpine, which includes basic Calpine common stock, company restricted stock units, company restricted shares and outstanding company options (the impact of which is calculated using the Treasury Stock Method), (b) present value date means June 30, 2017 and (c) Lazard utilized the June 2017 Projections as provided by management of Calpine. Implied price per share ranges for shares of Calpine common stock were rounded to the nearest $0.25.

Selected Public Company Analysis

For purposes of its analysis, Lazard reviewed and analyzed certain financial information, valuation multiples and market trading data related to Calpine and selected comparable publicly traded companies whose operations Lazard believed, based on its experience with companies in the independent power producer industry and professional judgment, to be generally relevant in analyzing Calpine’s operations. Lazard then compared such information to the corresponding information in the June 2017 Projections.

The selected group of companies used in this analysis, which we refer to as “Calpine comparable companies,” was as follows:

Lazard selected the companies reviewed in this analysis because, among other things, the Calpine comparable companies operate businesses similar to the business of Calpine. However, none of the selected companies is identical to Calpine. Accordingly, Lazard believes that purely quantitative analyses are not, in isolation, determinative in the context of the merger and that qualitative judgments concerning differences between the business, financial and operating characteristics and prospects of Calpine and the Calpine comparable companies that could affect the public trading values of each also are relevant.

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Lazard calculated and compared the ratio of Calpine’s and each company’s NOL-adjusted enterprise value, which Lazard calculated as the market capitalization of each company (based on each company’s fully-diluted share count as of March 31, 2017 and closing share price as of May 9, 2017, which we refer to as the “unaffected date,” and which represented the last “unaffected” trading day for shares of Calpine common stock prior to an article published in The Wall Street Journal on May 10, 2017 speculating that Calpine was exploring a sale transaction), plus balance sheet debt and other non-equity capitalization (if applicable) and less cash, cash equivalents and marketable securities (each, as of March 31, 2017) and less the estimated net present value of each company’s net operating losses (as estimated by Wall Street research, which represents publicly available consensus estimates), which we refer to as “NOL” or “NOLs,” to its calendar year 2017 and 2018 estimated earnings before interest, taxes, depreciation and amortization, commonly referred to as “EBITDA.” The EBITDA estimates for Calpine and each of the Calpine comparable companies used by Lazard in its analysis were based on estimates provided by Wolfe Research. The multiples of Vistra Energy Corp. were excluded from the analysis because Lazard believed, in its professional judgment, that such multiples were impacted by Vistra Energy Corp.’s limited trading history.

The following table summarizes the results of this review:

Based on an analysis of the relevant metrics for Calpine and each of the Calpine comparable companies, as well as its professional judgment and experience, Lazard applied a NOL-adjusted enterprise value to EBITDA multiple range of 7.00x to 8.00x and 6.50x and 7.50x to the calendar years 2017 and 2018 estimated adjusted EBITDA of Calpine as reflected in the June 2017 Projections, respectively, and added the net present value of Calpine’s NOLs based on Calpine’s estimated utilization of federal and state NOLs multiplied by the applicable tax rates and discount rates ranging from 6.00% to 12.25%.

This analysis resulted in an implied price per share range for shares of Calpine common stock, as compared to the merger consideration, as set forth below.

Discounted Cash Flow Analysis

Lazard performed discounted cash flow analyses of Calpine on both a levered and unlevered basis. A discounted cash flow analysis is a valuation methodology used to derive a valuation of a company by calculating the present value of its estimated future cash flows. “Future cash flows” refers to either projected unlevered or levered free cash flows of a company, as applicable. “Present value” refers to the current value of future cash flows or amounts and is obtained by discounting those future cash flows or amounts by an applicable discount rate. Lazard calculated the discounted cash flow value for Calpine as the sum of the net present value as of the present value date of each of:

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The following table sets forth the estimated adjusted EBITDA and levered and unlevered future cash flows, in each case excluding the estimated utilization of Calpine’s NOLs, for each of the second half of calendar year 2017 and the calendar years 2018 through 2021:

For its discounted cash flow calculations, Lazard applied discount rates ranging from 5.75% to 6.25% for unlevered cash flows, 11.75% to 12.75% for levered cash flows and 6.00% to 12.25% for Calpine’s NOL utilization. The discount range for the unlevered cash flows was based on the mid-range of Lazard’s judgment of the weighted average cost of capital for Calpine. The discount range for the levered cash flows was based on the mid-range of Lazard’s judgment of the cost of equity for Calpine utilizing the capital asset pricing model. The discount range for Calpine’s NOL utilization was based on Lazard’s judgment as to the risk profile associated with Calpine’s NOL utilization with reference to the weighted average cost of capital for Calpine and the cost of equity for Calpine.

The terminal value of Calpine was calculated applying terminal year NOL-adjusted enterprise value to EBITDA multiples ranging from 6.75x to 7.75x.

Such multiples were selected by Lazard by reference to NOL-adjusted enterprise value to EBITDA trading multiples calculated for Calpine as well as the corresponding multiples of the Calpine comparable companies (excluding Vistra Energy Corp.). Lazard applied such ranges of multiples to the relevant financial data of Calpine to determine a terminal value for Calpine.

Lazard averaged the price per share ranges implied by these calculations for levered and unlevered cash flows and, based on these analyses, reviewed the implied price per share range for shares of Calpine common stock, as compared to the merger consideration, as set forth below.

Other Analyses

The analyses and data described below were presented to the Calpine Board for informational purposes only and did not provide the basis for, and were not otherwise material to, the rendering of Lazard’s opinion.

52-Week High/Low Trading Prices

Lazard reviewed the range of trading prices of shares of Calpine common stock for the 52 weeks ended on May 9, 2017, the unaffected date. Lazard observed that, during such period, the intraday share price of Calpine common stock ranged from $9.25 to $16.00 per share, as compared to the merger consideration of $15.25 per share.

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Illustrative Discounted Future Stock Price Analysis

Lazard performed an illustrative analysis of the implied present value of a hypothetical future price of shares of Calpine common stock on December 31, 2020, which is designed to provide an indication of the present value of a theoretical future value of a company’s equity based on the company’s estimated adjusted EBITDA and an assumed NOL-adjusted enterprise value to EBITDA multiple plus the estimated net present value of a company’s NOLs based on estimated utilization of federal and state NOLs multiplied by the applicable tax rates, discounted to the present value date at an estimated cost of equity. For purposes of this analysis, Lazard first calculated Calpine’s implied enterprise value for the calendar year ending December 31, 2020 by applying NOL-adjusted enterprise value to EBITDA multiples ranging from 7.25x to 8.25x to estimates of Calpine’s adjusted EBITDA for the calendar year ending December 31, 2021 and adding the net present value of Calpine’s NOLs (as of December 31, 2020) based on Calpine’s estimated utilization of federal and state NOLs multiplied by the applicable tax rates and discount rates ranging from 6.00% to 12.25%. Lazard then subtracted net debt and non-controlling interest as of December 21, 2020. Finally, Lazard calculated the present values, as of the present value date, of the implied per share future stock prices for Calpine common stock in the calendar year ending 2020, using discount rates ranging from 12.00% to 12.50%, based on estimates relating to Calpine’s cost of equity. Based on the foregoing, Lazard calculated an illustrative implied price per share range for shares of Calpine common stock of $10.50 to $14.00 per share, as compared to the merger consideration of $15.25 per share.

Discounted Cash Flow Analysis—Updated February 2017 Marketing Projections

Lazard performed a discounted cash flow analysis of Calpine using the same methodology as set forth in the section entitled “—Summary of Lazard Financial Analyses—Discounted Cash Flow Analysis ” beginning on page  [ ● ] of this proxy statement, except that Lazard, at the direction of management of Calpine, derived estimated future levered and unlevered cash flows utilizing the Updated February 2017 Marketing Projections (as defined in the section entitled “— Certain Company Projections ” beginning on page [ ● ] of this proxy statement) as provided by management of Calpine. The following table sets forth the estimated adjusted EBITDA and levered and unlevered future cash flows, in each case excluding the estimated utilization of Calpine’s NOLs, based on the Updated February 2017 Marketing Projections for each of the second half of calendar year 2017 and the calendar years 2018 through 2021:

Lazard averaged the price per share ranges implied by these calculations for levered and unlevered cash flows and, based on these analyses, reviewed the implied price per share range for shares of Calpine common stock of $14.75 to $20.75 per share, as compared to the merger consideration of $15.25 per share.

Selected Precedent Transactions Multiple Analysis

Lazard reviewed and analyzed selected precedent merger and acquisition transactions involving companies in the independent power producer industry that it viewed, based on its experience and professional judgment, as generally relevant in analyzing Calpine. In performing this analysis, Lazard reviewed certain financial information and transaction multiples relating to the companies involved in such selected transactions and compared such information to the corresponding information for Calpine. Specifically, Lazard reviewed 15

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merger and acquisition transactions announced since February 2007 involving companies in the independent power producer industry for which sufficient public information was available.

The selected group of transactions reviewed in this analysis was as follows:

To the extent publicly available, Lazard reviewed, among other things, the enterprise value to EBITDA multiples of each of the target companies implied by the selected transactions by comparing the enterprise value implied by the acquisition price to the relevant target company’s estimated EBITDA for the fiscal year immediately following the fiscal year in which the relevant transaction was announced. Estimated EBITDA amounts for the target companies were based on publicly available Wall Street consensus estimates or other publicly available financial information and analysts’ research. The following table summarizes the results of this review:

Based on an analysis of the relevant metrics for each of the transactions, as well as its professional judgment and experience, Lazard applied an enterprise value to EBITDA multiple range of 7.00x to 8.00x to the calendar year 2018 estimated adjusted EBITDA of Calpine. This analysis resulted in an implied price per share range for shares of Calpine common stock of $6.75 to $12.25, as compared to the merger consideration of $15.25.

Miscellaneous

In connection with Lazard’s services as financial advisor to Calpine with respect to the merger, Calpine agreed to pay Lazard a fee based on the merger consideration (given a merger consideration of $15.25, such amount was calculated to be approximately $21.625 million), of which a portion became payable upon the

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rendering of Lazard’s opinion and approximately $17.625 million is contingent upon the closing of the merger. Calpine has also agreed to reimburse Lazard for certain expenses incurred in connection with Lazard’s engagement and to indemnify Lazard and certain related persons under certain circumstances against various liabilities that may arise from or be related to Lazard’s engagement, including certain liabilities under United States federal securities laws.

Lazard, as part of its investment banking business, is continually engaged in the valuation of businesses and their securities in connection with mergers and acquisitions, negotiated underwritings, secondary distributions of listed and unlisted securities, private placements, leveraged buyouts, and valuations for estate, corporate and other purposes. In addition, in the ordinary course, Lazard and its respective affiliates and employees may trade securities of Calpine, Energy Capital Partners and the consortium co-investors and certain of their respective affiliates for their own accounts and for the accounts of their customers, may at any time hold a long or short position in such securities, and may also trade and hold securities on behalf of Calpine, Energy Capital Partners and the consortium co-investors and certain of their respective affiliates. The issuance of Lazard’s opinion was approved by the opinion committee of Lazard.

Lazard is an internationally recognized investment banking firm providing a full range of financial advisory and other services. Lazard was selected to act as investment banker to Calpine because of its qualifications, expertise and reputation in investment banking and mergers and acquisitions generally and in the independent power producer industry specifically, as well as its familiarity with the business of Calpine.

Calpine and Energy Capital Partners determined the merger consideration of $15.25 in cash per share of Calpine common stock, to be paid to the holders of shares of Calpine common stock (other than holders of excluded shares) in the merger, through arm’s-length negotiations, and the Calpine Board unanimously approved such merger consideration. Lazard did not recommend any specific consideration to the Calpine Board or any other person or indicate that any given consideration constituted the only appropriate consideration for the merger. Lazard’s opinion was one of many factors considered by the Calpine Board, as further described in the section entitled “The Merger (Proposal 1)—Recommendation of the Calpine Board; Reasons for the Merger” beginning on page [●] of this proxy statement.

Certain Company Projections

Calpine does not as a matter of course make public projections as to future performance, earnings or other results due to the unpredictability of the underlying assumptions and estimates. However, in connection with the Calpine Board’s evaluation of the merger, Calpine’s senior management prepared and provided to the Calpine Board unaudited prospective financial information for fiscal years 2017 through 2021 based on June 2017 market forward prices, which assumed, among other things, prevailing forward market prices at face value and retail business margins consistent with recent performance and consistent with the Calpine Board’s and Calpine’s senior management’s historical views as to the future financial performance of Calpine, which we refer to as the “June 2017 Projections.” The June 2017 Projections also were provided to Lazard for its use and reliance in connection with its financial analyses and opinion, as described in the section entitled “ —Opinion of Calpine’s Financial Advisor ” beginning on page [ ● ] of this proxy statement. In connection with the strategic alternatives review process, at the direction of the Calpine Board, Calpine’s senior management also prepared and provided to the Calpine Board for its review unaudited prospective financial information for fiscal years 2017 through 2021 based on February 2017 market forward prices, which assumed, among other things, that the Texas wholesale power market would improve beginning in fiscal year 2019 relative to prevailing market forward prices and Calpine’s retail growth initiatives would result in expanded retail business margins over time, which we refer to as the “February 2017 Marketing Projections.” The February 2017 Marketing Projections were provided to potential participants in the strategic alternatives review process that executed confidentiality agreements with Calpine (including Energy Capital Partners), in connection with their respective evaluations of a potential transaction beginning in April 2017 and to formulate indicative proposals. In May 2017, at the direction

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of the Calpine Board, Calpine’s senior management further prepared and provided to the Calpine Board for its review and to participants in the strategic alternatives review process updated unaudited prospective financial information to reflect revised capacity prices in the PJM market for the 2020/2021 planning year based on auction results published by the system operator in May 2017, as well as other changes related to plant-specific operational plans, including outage timing, utilizing similar assumptions as described above for the February 2017 Marketing Projections, which we refer to as the “Updated February 2017 Marketing Projections.” The February 2017 Marketing Projections were provided to Lazard in connection with the strategic alternatives review process and the Updated February 2017 Marketing Projections were provided to Lazard for its use and reliance in connection with its financial analyses, as further described in the section entitled “ —Opinion of Calpine’s Financial Advisor ” beginning on page [ ● ] of this proxy statement. The summary of the unaudited prospective financial information is not being included in this proxy statement to influence a stockholder’s decision whether to adopt the merger agreement and thereby approve the merger, but is being included to provide Calpine’s stockholders with certain unaudited prospective financial information that was made available to the Calpine Board, Calpine’s financial advisor and the potential participants in the strategic alternatives review process who executed confidentiality agreements with Calpine (including Energy Capital Partners).

The unaudited prospective financial information was not prepared with a view toward public disclosure and, accordingly, does not necessarily comply with published guidelines of the SEC, the guidelines established by the American Institute of Certified Public Accountants for preparation and presentation of unaudited prospective financial information or U.S. generally accepted accounting principles, which we refer to as “GAAP.” PricewaterhouseCoopers LLP, Calpine’s independent, registered public accounting firm, has not audited, compiled or performed any procedures with respect to the unaudited prospective financial information and does not express an opinion or any form of assurance related thereto.

The unaudited prospective financial information, while presented with numerical specificity, reflects numerous estimates and assumptions that are inherently uncertain and beyond the control of Calpine’s management, including, among other things, Calpine’s future financial results, industry performance and activity, the regulatory environment, commodity prices, demand for energy, competition, general business, economic and financial conditions and matters specific to Calpine’s businesses, which may not be realized. The unaudited prospective financial information also reflects assumptions as to certain business decisions that are subject to change and, in many respects, subjective judgment, and thus is susceptible to multiple interpretations and periodic revisions based on actual experience and business developments. The unaudited prospective financial information should be evaluated, if at all, in light of the assumptions made by Calpine and in conjunction with other information regarding Calpine contained elsewhere in this proxy statement and Calpine’s public filings with the SEC. Calpine’s stockholders are urged to review Calpine’s SEC filings for a description of risk factors with respect to the business of Calpine. See the section entitled “ Cautionary Statement Concerning Forward-Looking Information ” beginning on page [ ● ] of this proxy statement and the section entitled “ Where You Can Find More Information ” beginning on page [ ● ] of this proxy statement. Calpine can give no assurance that the unaudited prospective financial information and the underlying estimates and assumptions will be realized. In addition, since the prospective financial information covers multiple years, such information by its nature, becomes less predictive with each successive year. Actual results may differ materially from those set forth below.

The unaudited prospective financial information also does not take into account any circumstances or events occurring after the date on which they were prepared and do not give effect to the transactions contemplated by the merger agreement, including the merger. Calpine can give no assurance that, had the unaudited prospective financial information been prepared either as of the date of the merger agreement or as of the date of this proxy statement, similar estimates and assumptions would be used. Except to the extent required by applicable law, Calpine does not intend to make publicly available any update or other revisions to the unaudited prospective financial information, even in the event that any or all of the underlying estimates and assumptions are shown to be in error, or to reflect changes in general economic or industry conditions.

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The inclusion of the unaudited prospective financial information in this proxy statement should not be regarded as an indication that Calpine or any of its affiliates, advisors, officers, directors or other representatives or any other recipient of this information considered or now considers the unaudited prospective financial information to be necessarily predictive of actual future events or events which have occurred since the date of such forecasts, and the unaudited prospective financial information should not be relied upon as such. Neither Calpine nor any of its affiliates, advisors, officers, directors or other representatives can give any assurance that actual results will not differ materially from the unaudited prospective financial information. Neither Calpine nor any of its affiliates, advisors, officers, directors or other representatives has made or makes any representation to any stockholder of Calpine regarding the ultimate performance of Calpine compared to the information contained in the unaudited prospective financial information or that the unaudited prospective financial information will be achieved.

In light of the foregoing factors and the uncertainties inherent in the unaudited prospective financial information, and considering that the special meeting will be held several months after the unaudited prospective financial information was prepared, stockholders are cautioned not to place undue, if any, reliance on the unaudited prospective financial information. Since the date the unaudited prospective financial information was prepared, Calpine has made publicly available its actual results of operations for the quarter ended June 30, 2017. You should review Calpine’s Current Report on Form 8-K filed on July 28, 2017 and Quarterly Report on Form 10-Q for the quarter ended June 30, 2017, filed on July 28, 2017, to obtain this information. See the section entitled “ Where You Can Find More Information ” beginning on page [ ● ] of this proxy statement.

June 2017 Projections

The following is a summary of the June 2017 Projections:

The June 2017 Projections are based on various assumptions, including the following:

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The February 2017 Marketing Projections are based on various assumptions, including the following:

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