SAN JOSE, Calif. - Calpine Corp. today said its retail energy service provider subsidiary, Calpine PowerAmerica here, has entered into a three-year power sales agreement with Safeway, Inc. to provide approximately 110 megawatts to Safeway facilities throughout California.

The contract marks the single largest California retail transaction Calpine has entered into to date. Power deliveries are scheduled to begin June 1.

"Calpine has created a large system of new, highly efficient power plants in California, allowing the company to deliver reliable power to customers throughout the state. As a result Calpine is uniquely positioned to provide cost-effective energy solutions for a company as large and diversified as Safeway," said Curt Hildebrand, Calpine's v.p. of marketing and sales. "Calpine views retail contracts such as this as an essential cornerstone of California's energy market. By allowing direct-access power procurement from generators, California's employers can better manage their energy expenses and remain at the forefront of the global economy."

said Joe Pettus, Safeway's v.p. of fuel and energy operations,"Calpine's commitment to California, coupled with Safeway's continued ability to participate in direct access, means that we can keep our costs low, which ultimately translates into lower prices for our customers."

Calpine operates 39 highly efficient, natural gas-fired and geothermal power plants in California, capable of generating nearly 3,900 megawatts, with three more under construction. The contract with Safeway marks the first time Calpine has entered into a power sales agreement that calls for energy deliveries throughout the entire state, as opposed to a single location. The high reliability and flexibility of Calpine's fleet of power plants enable the company to deliver a system-based energy product at an attractive retail price and on superior commercial terms.