New Program to Promote Carbon Neutrality

(May 3, 2007)

PG&E Announces ClimateSmart External Advisory Group

Independent Team to Help Guide PG&E's Carbon Neutralization Program

SAN FRANCISCO, May 3-- Pacific Gas and Electric Company today announced the formation of the External Advisory Group (EAG) for ClimateSmart, PG&E's new voluntary climate protection program which allows customers to reduce greenhouse gas emissions associated with their energy use by investing in projects that eliminate or capture carbon dioxide (CO2) emissions. The EAG, which is comprised of representatives from a wide range of interests, including community and environmental groups, businesses and state and local government agencies, will collaborate with PG&E to provide input on carbon reduction project proposals.
"We're honored to have the guidance of the External Advisory Group's distinguished members as we launch the ClimateSmart program," said Wendy Pulling, Director of Environmental Policy for PG&E. "The independent feedback provided by this group will help ClimateSmart set the standard in voluntary carbon neutralization programs."

As part of PG&E's ClimateSmart proposal to the California Public Utilities Commission (CPUC), which was approved in December 2006, PG&E recommended the development of an EAG to provide independent counsel for the program. Eleven EAG members were selected based on their recognized leadership in their respective fields and include:

-- Jared Blumenfeld, director, Department of the Environment, City and
County of San Francisco
-- Linda Carlson, Residential Customer
-- Jamie Fordyce, Division of Strategic Planning, California Public
Utilities Commission

-- Dan Geis, assistant executive director, Agricultural Energy Consumers
-- Ann Hancock, executive director, Climate Protection Campaign
-- Ortensia Lopez, executive director, Low Income Oversight Board
-- Peter Miller, consultant, Natural Resources Defense Council
-- Elena Powers, senior manager, energy program management, Genentech

-- Honorable Art Rosenfeld, commissioner, California Energy Commission
-- Hank Ryan, executive director, Small Business California
-- Nina Suetake, staff attorney, The Utility Reform Network

"We hope that together with energy efficiency and renewable energy, ClimateSmart will play an important role in helping the San Francisco residents and businesses meet our city's ambitious greenhouse gas emissions reduction goal," said Jared Blumenfeld, director, department of the environment, City and County of San Francisco

ClimateSmart, conceived and developed by PG&E, allows residential and business customers to sign up voluntarily and pay a small amount on their monthly utility bill based on energy usage, which will fund environmental projects aimed at removing CO2 from the atmosphere. The amount removed from the atmosphere will equal the amount of greenhouse gases associated with the customer's energy use, thus making them "climate neutral." PG&E created the program as a part of its overall climate protection and environmental leadership strategies, including the support of federal and state regulation of greenhouse gases such as AB 32.

"I am pleased to be part of the External Advisory Group for ClimateSmart," said Peter Miller, a consultant to the Natural Resources Defense Council. "PG&E has been enabling customers to reduce their global warming emissions through energy efficiency and renewable energy for many years. The ClimateSmart program offers customers one more tool to take action on climate change by creating an accountable framework with measurable results."

Scheduled to launch in summer 2007, ClimateSmart's projects will all be located in California and selected through competitive bidding under stringent criteria and protocols developed by an independent non-profit organization, the California Climate Action Registry. PG&E will focus its first investments in California forest conservation and preservation projects -- which meet these strict standards. Greenhouse gas reduction projects under PG&E's program will be independently certified per the Registry's protocols. The program will be reviewed by independent auditors and PG&E will regularly report program results to the CPUC, as well as to the EAG and all participating customers.

PG&E will enroll as the first participant in the program by committing more than $1 million of shareholder funding over the next three years to make the energy use in the company's offices, service centers, maintenance facilities, and other company buildings completely climate neutral.

Pacific Gas and Electric Company already delivers some of the cleanest energy of any large utility in the nation in part because of its mix of energy efficiency and renewable energy resources. ClimateSmart is designed to supplement, not substitute for, PG&E's existing efforts -- both voluntary and mandatory -- to address climate change, including increasing its renewable energy sources and expanding energy efficiency programs for its customers.