June 22, 2006 Development of the Marin County Community Choice Aggregation Project Agenda Background Project Overview Schedule

1 Navigant Consulting, Inc. Overview Core revenues, $575 million Professionals ,500+ Geographic presence.... offices in 42 cities Publicly traded NYSE: NCI Navigant Consulting is a specialized management consulting firm. We focus on large industry sectors that are typically highly regulated and are undergoing significant change. Our Energy Practice is one of the largest in North America. Our clients include the 50 largest electric power companies, 20 largest gas distribution companies, various branches of the U. S. government, various state governments, and many new market entrants to the converging energy and electric power industries.

2 Background The Community Choice Aggregation law, AB 117 enacted in 2002, provides cities and counties the authority to aggregate electric loads of customers within their boundaries for purposes of procuring wholesale electricity. The law was passed in the wake of the energy crisis which had revealed serious flaws in the way that utilities obtained electricity for their customers: –Reliance on volatile, short-term markets –Inadequate electricity supplies and blackouts –Increasing dependence on natural gas fueled generation –Limited options for small customers Aggregation is voluntary and gives customers a means to control their energy costs through their participation in the program.

3 Origins of Marin CCA Program The County began its investigation of CCA in 2004 as part of a pilot project sponsored by the California Energy Commission and the US Department of Energy. Project funding ($968,000) is administered by the Local Government Commission, and NCI is the project’s technical consultant. Project objectives are to: –Develop a template of analytical and cost models for communities to implement CCA with the goal of exceeding the state renewable portfolio standard of 20% by 2017 (goal - 40%) –Document processes and impact of costs, credits, rules and protocols developed in CPUC CCA proceedings –Assist communities in developing detailed plans for implementation that demonstrate use of the template –Develop a guidebook, fact sheet, and workshops for local government elected leaders and staff to share lessons learned by the pilot communities

4 Communities Conduct Feasibility Analysis Positive Outcome Continue Project Develop and Analyze an Implementation Plan Simplified Steps taken to Develop the Current Marin Community Choice Aggregation Program CCA authorized by AB 117 Communities Elect to Further Explore Forming a CCA CPUC establishes Rulemaking Proceeding Demonstration Projects Funded by available grants California Communities begin investigating CCA Various Communities Elect not to Continue Positive Outcome Establish CCA and Deliver Energy Negative Outcome Terminate Project CCA Guidebook to be produced by the California Energy Commission Phase 1 Phase 2 Phase 3

5 Northern California City of Berkeley City of Emeryville City of Oakland County of Marin City of Vallejo City of Pleasanton City of Richmond Southern California City of Beverly Hills City of West Hollywood County of Los Angeles San Diego Area County of San Diego City of San Marcos Demonstration Project Participants and Supporting Organizations Supporters California Energy Commission U.S. Department of Energy Local Government Commission League of California Cities California State Association of Counties Marin Municipal Water District North Marin Water District East Bay Municipal Utilities District

6 Community Feasibility Analysis – Phase 1 Study  Community electric load studies oAnnual energy usage patterns oLong term load forecast  Cost of Service Analyses oEnergy supply costs oRenewables oEnergy planning, operations and maintenance oNon-bypassable historic IOU charges  Analysis of CPUC Rulemaking impacts  Report of CPUC Final Decision on Costs, Credits Rules & Protocol  Evaluation & Report (Completed in March 2005) To determine cost and benefit opportunities Navigant Consulting conducted technical analyses that involved detailed energy load data and characteristics unique to each city, including:

7 Phase 1 Study Findings There would be minimal rate impact from transitioning to a renewable based resource mix for Marin (+/- 5% depending on assumptions). Marin could reduce CO2 emissions by 300,000 to 400,000 tons per year by CCA rates would be more stable than those charged by PG&E: –Reduced exposure to volatile electricity and natural gas markets –Ability to manage supply costs in accordance with the parameters established by CCA There may be cost savings in the longer term (5 + years) due to capital structure advantages enjoyed by publicly owned utilities, but savings are not guaranteed, particularly in the near term. CCA Demonstration Project – Phase 1 Study Findings

8 Phase 1 Study Findings Organization and governance Ratemaking decisions and process Start-up and program roll-out plan Financing of startup costs and potentially future generation projects Screening of qualified energy suppliers and other energy service providers Impact of evolving regulatory rules Competitive threats from PG&E or Energy Service Providers Hedging and risk mitigation strategies Energy efficiency programs Resource availability Issues For Consideration in Phase 2

9 Phase 2 Preliminary Project Schedule

10 Appendix

11 Potential Customer Base of East Bay CCA Potential Customer Base of Marin CCA

12 Potential Customer Base of East Bay CCA Projected CCA Resource Mix - Initially matches PG&E renewable content and achieves 51% by Long term contracts and assets minimize exposure to spot market prices. Spot Market Long Term Contracts Nat. Gas Generation Renewable Generation Renewable Market Purchases System Sales

13 Base Case Rate Projections Vs. PG&E - Very close to breakeven during initial period, stable over forecast period. - Cost-based generation in 2012 reduces rates below PG&E.