Calpine

(CPN)

signed two long-term power contracts with the

California Department of Water Resources

worth up to $8.3 billion, increasing its power supply to the electricity-starved state.

The San Jose, Calif., energy company said the latest agreement allows it to supply up to 1,500 additional megawatts of electricity to the state. The new pact includes a $5.2 billion, 10-year fixed-price contract to sell up to 1,000 megawatts of power. Initial deliveries will begin July 1.

In a separate 20-year contract, worth up to $3.1 billion, Calpine will supply up to 495 megawatts, beginning as early as August. Calpine also plans to build natural gas-fueled peaking generators to help ensure the reliability of California's power grid during high power demand periods.

Earlier this month, Calpine signed a

$4.6 billion contract to provide a 10-year supply of electricity to the state. Calpine agreed to sell up to 1,000 megawatts of electricity, starting Oct. 1. With these contracts in place, Calpine will provide up to 2,500 megawatts of electricity to California, whose problems started with its failed deregulation experiment.

Shares of Calpine recently sagged by $2.20, or 4.7%, to $44.58 in afternoon activity on the

New York Stock Exchange

.