“ From Waste to Resource Management: A New Way of Thinking about Waste Services and Contracts” Materials Management Resource Recovery Process (Private Sector Experience) PADEP Waste Reduction and Reuse Video Conference and Web Cast Harrisburg, PA April 10, 2002

Who We Are… Internationally, PSEG ranks as one of the worlds top 10 independent power marketers PSEG Power is one of the largest independent power companies in the United StatesPSEG Power is one of the largest independent power companies in the United States PSE&G is among the largest combined electric and gas transmission and distribution companies in the United StatesPSE&G is among the largest combined electric and gas transmission and distribution companies in the United States PADEP Waste Reduction and Reuse Video Conference and Web Cast Harrisburg, PA April 10, 2002 Background… Background…

The Rules are changing… Competition Independent power producers Open Market for gas and electric commodity Rules and Regulations Environmental Energy Size / Diversification requires substantial materials support Size / Diversification requires substantial materials support Focus on opportunity in materials management Focus on opportunity in materials management PADEP Waste Reduction and Reuse Video Conference and Web Cast Harrisburg, PA April 10, 2002 Company Business Drivers

Increase the Intensity of Material Recovery, Recycling and Re-use Activities - Waste Accounting - Resource versus Waste Mindset Develop Supplier Relations Process – Move Away From Adversarial Relationships – Intelligent Supplier Base Reduction – Open To Long Term Agreements – Resource Management Leverage the Company’s Procurement Power STRATEGIC INITIATIVES STRATEGIC INITIATIVES PADEP Waste Reduction and Reuse Video Conference and Web Cast Harrisburg, PA April 10, 2002

Keys to Success !!! Waste Accounting - Know your material and waste streams - Dumpster Diving - Routinely track and link to contract provisions Resource Management and Supplier Relationships Material Life Cycle and Supply Chain Process Management Approach PADEP Waste Reduction and Reuse Video Conference and Web Cast Harrisburg, PA April 10, 2002

Waste Accounting Data Sheet

Keys to Success !!! Supplier Relationships - Move Away From Adversarial Relationships to Open Communications (two-way) - Intelligent Supplier Base Reduction - Open To Long Term Agreements, Risk Sharing and Pursuit of New Opportunities - Shift From Supplier Price Reductions To Supplier Cost Reductions From To Price = Cost + Profit Profit = Price - Cost PADEP Waste Reduction and Reuse Video Conference and Web Cast Harrisburg, PA April 10, 2002

What is Resource Management (RM)? RM is a strategic alternative to traditional waste contracting and recycling RM contracts emphasis / reward resource efficiency throughout material lifecycle rather than disposal – Prevention, reuse, recycling, composting – RM contractor compensation is tied to quality of service rather than quantity of waste disposal RM Contracts Align Contractor and Customer Incentives PADEP Waste Reduction and Reuse Video Conference and Web Cast Harrisburg, PA April 10, 2002

Resource Recovery Mindset…A Paradigm Shift FROM TO Minimization Prevention Resource Waste Dispose Recover PADEP Waste Reduction and Reuse Video Conference and Web Cast Harrisburg, PA April 10, 2002 Keys to Success !!!

Public Service Enterprise Group Design, Specifications and Standards CUSTOMER “Need” Procurement and Supplier Relations Application CUSTOMER “Satisfied” Material and Inventory Management Resource Recovery Materials Requirements Planning MATERIALS MANAGEMENT PROCESS PADEP Waste Reduction and Reuse Video Conference and Web Cast Harrisburg, PA April 10, 2002

PSEG - Resource Management Case Study Waste Management and Recycling - Over 100 company facilities generated solid waste - Each facility maintained individual contracts with landfills and waste haulers - Over 35 suppliers used (landfills, transporters, transfer stations, brokers) - Solid waste volumes and recycling levels not known Corporate Contract Established - Outsourced Recycling Services to Supplier MRF - Identified Recycling Level Guarantees and Waste Accounting Reports - Educated on PSEG materials management initiatives, i.e. supplier reductions, changing roles and relationships and interest in core business - Commitment to supplier development process PADEP Waste Reduction and Reuse Video Conference and Web Cast Harrisburg, PA April 10, 2002

PSEG - Resource Management Case Study, cont. Contract Value Add - Preferred Pricing and cost savings - Value Added Components: indemnification, training, audits, dedicated equipment - Consultative services on waste reductions, recycling opportunities and business solutions Environmental / Business Results - Reduced supplier base 35:1 and signed 3 year contract. - Established base recycling level of 88%…exceeded 90% in 3 years. - Summary invoices, on-time payment and problem resolution - Savings of $1.75 million dollars for hazardous and non hazardous solid waste management services over 3 year period - Outsourced training needs, audits, on-site management services - Reduced company resources for solid waste and permitted a core business focus PADEP Waste Reduction and Reuse Video Conference and Web Cast Harrisburg, PA April 10, 2002

PSEG Hazardous Waste Trends

PSEG - Resource Management Implementation Resource Management is not for the “weak of heart” - It takes hard work and commitment - Change management issues…you will experience resistance - Not all suppliers able to operate under RM conditions - It is not a single event but a continuous process and journey - View waste as part of a materials management or supply chain process Benefits and Return on Investment - Established base recycling level of 88%…exceeded 90% in 3 years. - Summary invoices, on-time payment, back office efficiency and business solutions - Savings of $1.75 million dollars for hazardous and non hazardous solid waste over 3 year period - Reduced company resources required for waste management and permitted a core business focus - Sharing of best practices across lines of business PADEP Waste Reduction and Reuse Video Conference and Web Cast Harrisburg, PA April 10, 2002

For Additional Information Contact… Waste Wise web site – Community Trends in Waste Prevention and Recycling North Carolina Division of Pollution Prevention and Environment - Sample EPP Contract Language King County, WA Environmental Purchasing Bulletins Tellus Institute -