U.S. Generating Company (USGen) and any other company referenced herein that uses the PG&E name or logo are not the same company as Pacific Gas and Electric Company, the California utility. Neither USGen nor these other referenced companies are regulated by the California Public Utilities Commission. California customers do not have to buy products from these companies in order to continue to receive quality regulated services from Pacific Gas and Electric Company. Facilitating a Green Market – Unleashing the Power of Consumer Choice through Appropriate Rules Fourth Annual Green Power Marketing Conference May 10, 1999

2 PG&E Corp.’s non-utility generating business -- a $6 billion -- 7,700 MW plant portfolio Develops, manages, and operates highly efficient, low-cost generation Natural gas, coal, waste coal and hydro Developing more than 8,500 MW of new “merchant” generating capacity Actively participating in green market proceedings at federal/state levels U.S. Generating Company

3 A vibrant green power market can improve environmental quality Consumers are educated and informed Information is accurate Appropriate guidelines and rules are in place

4 Market participants have huge stake in protecting consumers from deceptive advertising Self-regulation through deceptive advertising guidelines –Start simple, add guidelines as experience grows –Rely on principles and provide guidance Encourage uniform rules/definitions/programs from state to state –Promulgate substantiation standards equivalent to those in other industries –Allow marketers to complement state consumer education programs

5 Regulatory programs should backstop market Disclosure - retail suppliers provide information on environmental, other attributes of energy sold to customers, via printed label RPS - retail suppliers provide minimum levels of power from renewable sources in their portfolios GPS - retail suppliers meet minimum environmental performance standards for specific pollutants, on a portfolio basis, in a specified state or region

6 Programs require verification of accuracy of reported environmental information Verification system should: –produce accurate information –be flexible and cost-efficient –be uniform throughout markets

7 System design must accommodate commodity energy markets Separate environmental attributes from energy Provide ability to trade attributes as a separate commodity “Tradable environmental certificates”

8 Consumer credibility issues must be addressed through system design and education Electron trail Geographic limits Double-selling Deceptive advertising

9 Demonstration programs are underway Conversion Transactions –New York’s Environmental Disclosure Order 12/98 –New Jersey’s Disclosure Order – Phase II (likely) USGen’s label verification pilot in Massachusetts

10 Give markets a chance… Build on verification programs underway Expand in scope and area as experience is gained Support self-regulation efforts