1. Community Choice Aggregation Demonstration Project Marin County Base Case Feasibility Analyses Overview April 5, 2005

2. 2 Community Choice Aggregation  AB 117 authorizes cities and counties to aggregate electric loads of customers for purposes of procuring electrical services.  PG&E delivers the power and provides all metering, billing, collections and other customer service functions on terms and conditions regulated by the CPUC much like today.  Implementation of CCA gives local governments the power to choose what resources serve their loads, which they do not possess today.  All customers are in the program unless they exercise their rights to opt-out and remain with PG&E  The law directs the distribution utilities to cooperate fully with any community choice aggregator in its efforts to develop their aggregation program

3. 3 CCA Benefits  Marin CCA entity would be a community based nonprofit public agency (JPA) with an eye toward the public good  Local Control = Local Benefits  Affordable renewable resources  Consumer savings and/or general fund revenues  Stable and reliable power supply  Increased public benefit funding  Nonprofit status  Tax-exempt bond financing  New power facilities  Rate design (low income, economic development, conservation)

4. 4 What Are Primary The Risks Involved?  Commodity price volatility  CCA entity would contract with program operator/suppliers to bear this risk  Regulatory  Cost responsibility surcharges (“exit fees”) are included as a program cost in the financial analysis  Customer attrition  CCA entity can impose its own exit fees, if necessary to avoid stranded investments made on their behalf

5. 5 Marin’s CCA Status  Navigant Consulting, Inc. has completed a CCA Feasibility Study The feasibility study only answers the question of whether or not CCA is an economically viable choice The next phase will provide a more detailed implementation plan  Marin County, Cities, Resident and Businesses involvement Provide and exchange relevant information Discuss regional and local energy solutions Provide a setting for public input and involvement about CCA

6. 6 Marin County Load Forecast Bases

7. 7 County of Marin Community Energy Usage

8. Study Results

9. 9  The detailed analysis performed for Marin suggests that by forming a CCA program, backed by investments in generation resources concludes that Marin could:  Implement a CCA program as early as 2006.  More than double the renewable content of the energy mix at no increased cost relative to rates charged by PG&E.  Achieve cost savings averaging $6.8 million per year, equivalent to 3% of total electricity bills  Obtain control over electricity rates to enhance rate stability.

10. 10 Study Results [Cont.]  Marin should expect modest savings in the near-term due to Imposition of cost responsibility surcharges (exit fees) Savings opportunities improve with time as the exit fees expire  Increasing the renewable energy percentage from 20% to 51% would not significantly increase the CCA program’s rates;  The capacity for local governments to utilize low cost financing would support significant investments in both conventional and renewable energy resources  Long-term power purchase agreements by Community Choice Aggregators will offer Rate stability for consumers Financial security to support expanded private sector generation development

11. 11 CCA Enables Expanded Renewable Energy Development 51% Renewable Energy By 2017

12. 12 Cost Savings Could Provide Customer Rate Reductions ($ Millions) * Consider startup financing or program phase-in to reduce initial costs

13. 13 CCA Rates Would Be More Stable Than Those Charged By PG&E

14. 14 Program Rates Can Match Those Of PG&E And Generate Significant Cash Flow

15. 15 Sensitivity Analysis Shows Benefits Under Reasonable Range of Scenarios ScenarioNominal Savings ($ M) Average Savings (%) Average Annual Savings ($ M) Base Case128.93%6.8 Lower Natural Gas Prices 114.23%6.0 Higher Natural Gas Prices 59.91%3.2 Lower CRS184.94%9.7 Higher CRS84.12%4.4 Lower PG&E Rates32.31%1.7 Higher PG&E Rates677.714%35.7 New PG&E Rate Designs 129.13%6.8

16. 16 Base Case Feasibility Negative Outcome Terminate Project Positive Outcome Continue Project CPUC Implementation Plan Filing Negative Outcome Terminate Project Positive Outcome Continue Project Proceed to Track-2 Work Elements Next Phase Of Project Would Be To Develop A Detailed Implementation Plan