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Dean OrricoCalpine Power Income FundCF.UN.TOBUYApr 22, 2005

Calpine Corp (CPN-N), a US based entity, announced a possible cash crunch over the next couple of years. Owns 30% of the income fund and is the off-taker of all the power for the Calgary energy facility which is one of the income funds primary assets. However there is subordination of it which cushions other investors. This pull back represents a pretty good entry point.

Dean Orrico

Owned

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$10.14

Stock price when the opinion was issued

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HOLD

Mother company in the US is going through bankrupt proceedings, so there is a lot of speculation regarding their Calgary facility. Just signed a new 20-year contract with Calgary. Expect distribution will be sustainable. Have a lot of cash. Can see some upside.

SELL

Have been through a lot over the last 6/8 months with their parent company seeking bankruptcy protection. There will continue to be a lot of uncertainties. Fairly high risk.

DON'T BUY

A little less optimistic because of the convoluted contractual rate arrangement between this company and the Calpine Corporation which has gone into bankruptcy.

DON'T BUY

Has lightened up his position in this stock over time. The parent company in the US went into Chapter 11. There are various inter company arrangements relating to debt, fees, etc. which caused them some problems.

DON'T BUY

Have used this as a trading stock in the past. There is uncertainty on hydro costs in Alberta. They are very good assets but because of uncertainty, he doesn't own now.

BUY

Very complicated story with a lot of moving parts. Their parent is going through bankruptcy procedures and they still own some of this company. A lot of uncertainty. Good buying opportunity. Over the next couple of months, the story should get a lot cleaner.

DON'T BUY

Parent in the US took creditor protection last year and the price dropped to $7.50 which was a very good price. North of $10, he was selling his units.

BUY

Calpine Corp. in California is going into bankruptcy protection and this trust contracts with them which created a lot of concerns. There is definitely a risk of distribution cut of 25% but the drop in price has fully reflected this and was very pessimistic. Very solidly run business. Below $9 it is a good buy and in the drops below $8 it will be a good take a candidate.

BUY ON WEAKNESS

There is some value in this fund and he would be a buyer around $7.50.

DON'T BUY

The issue on this one is not the underlying assets, but is the contracts between it and its California parent which is in financial difficulty. If the parent company were out of the equation, it would have distributable cash flow of roughly $0.69. Would be a buyer in the mid $7’s.

DON'T BUY

They have a power purchase agreement with Calpine Corp, in the US and Calpine Corp. is very close to bankruptcy. This has been reflected in the price of the trust. Thinks they will be able to change the purchaser to a new body. There will be volatility here.

SELL

In between a supply contract, you have the parent Calpine Corp. (CPN-N) standing in the middle which is somewhat unique. The parent is a bankruptcy case.

DON'T BUY

Operates 3 very fine power generation facilities. The big problem is that the guarantees behind the power contracts are held by Calpine Corp. in the US which is virtually bankrupt. Calpine Trust has very little ability to call on their parent for back up revenues.

TOP PICK

(A Top Pick May 27/05. Up 5%.) Very good value.

TOP PICK

The big issue is their relationship with Calpine Corp (CPN-N) on which there are lots of rumours on bankruptcy. The only real connection is through Calpine Corp.'s Calgary Energy Centre which has long term contracts with them. This is a speculative Top Pick with a little bit more risk.

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Dean OrricoCalpine Power Income FundCF.UN.TOBUYApr 22, 2005

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