1. Climate Change Actions taken by the California Public Utilities Commission

2. Commission Action on Climate Change The PUC has been engaged in proactive climate change work since 2004. Commission's Rulemaking on greenhouse gas policies (R. 06-04-009) I) Implementation of a Greenhouse Gas Emissions Performance Standard II) Consideration of a Load-based Greenhouse Gas Emissions Cap PG&E’s ClimateSmart Program

3. Phase I: Greenhouse Gas Emissions Performance Standard Adoption of an interim Greenhouse Gas (GHG) Emissions Performance Standard (EPS) to help mitigate climate change. Facility-based emissions standard requiring all new long-term commitments for baseload generation be with power plants that have emissions no greater than a combined cycle gas turbine plant. That emissions level is established at 1,100 pounds of CO2 per megawatt-hour. "New long-term commitment" refers to new plant investments with a term of five years or more, or major investments by the utility in its existing baseload power plants.

4. Phase II: Load-based Greenhouse Gas Emissions Cap The Commission and the California Energy Commission (CEC) are working together to provide recommendations to the California Air Resources Board as required by AB32, California's landmark climate change legislation from 2006. In June 2007, the Commission and the CEC staff issued a proposal for an electricity retail provider reporting protocol and ruling regarding comments.

5. Recent Commission-Sponsored Climate Change Public Events August 21, 2007: Joint En Banc Hearing of PUC and CEC on Point of Regulation in the Electricity Sector June 22, 2007: PUC/CEC Workshop: 1990 electricity sector baseline, Current entity-specific GHG emissions levels and Policy issues related to allowance allocation April 20, 2007: Symposium on Flexible Compliance Mechanisms in a Market-Based GHG Cap System April 19, 2007: Symposium on Linking Greenhouse Gas Cap Systems

6. GHG Emission Reductions from Energy Efficiency 23%+ of California Climate Action Goals for 2020 State Program Source: Climate Action Team Report to Governor Schwarzenegger and the Legislature, March 2006. GHG Savings (Million Tons CO2) 2010 2020 IOU Energy Efficiency Programs through 201348.8 Additional IOU EE/Demand Response Programs (2014- 2020) NA6.3 Municipal Utility EE Programs15.9 Current Building & Appliance EE Standards47 New Building & Appliance EE StandardsTBD Green Buildings Initiative0.51.8 Combined Heat and Power Initiative1.14.4 Total:10.634.2

7. Electricity Sector Strategies Climate Action Team Report March 2006 GHG Savings (MMT CO 2 ) 2010 2020 Investor Owned Utility (IOU) Energy Efficiency Programs415.1 IOU Renewable Portfolio Standard511 California Solar Initiative0.43 IOU Combined Heat and Power Program1.14.4 IOU Emissions Performance Standard1.62.7 State Appliance Energy Efficiency Standards35 State Building Energy Efficiency Standards12 Green Buildings Initiative0.51.8 Publicly-Owned Utility (POU) Energy Efficiency Programs15.9 POU Renewable Portfolio Standard< 13.2 POU Combined Heat and Power Program0< 1 POU Emissions Performance Standard39 Total Potential Emission Reductions24.663.1

8. PG&E’s ClimateSmart Program A voluntary program - available initially over a three-year period to interested PG&E customers. Participating customers will pay a premium which will be charged volumetrically ($0.00254 per kWh and $0.06528 per therm exclusive of A&M cost). For the typical participating residential customer the increase on their monthly energy bill will be approximately $4.31 a month ($51.72 per year). PG&E will use the funds it collects in CPT premiums to contract for new California-based projects that, over their life, will yield sufficient emissions reductions or sequester enough GHGs to offset participating customers’ gas and electricity footprint. The program will not mitigate GHG emissions associated with other activities in an average customer’s life, such as driving or flying.

9. PG&E’s ClimateSmart Program: Low Income Impact D. 06-12-032 Ordering Paragraph 26 “encourage[s] PG&E to consider creative alternatives to enable their low income customers to participate in reducing GHG emissions… it is appropriate for PG&E to consider outreach to all customers regardless of income level.” Staff has developed some creative solutions: 1) Distribution of brochures 2) Discussion of measures during LIEE audits or installations 3) Provides for a percentage of contract jobs to go to low income 4) Provides funding to current CARE/LIEE CBOs with green projects 5) Provides grants for CBOs building low income green buildings 6) Requires the ClimateSmart program to be tied to LIEE/CARE September 5, 2007 Meeting with PG&E to discuss ideas.