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Pacific Gas and Electric Company and Environmental Power Corporation Sign Agreement for Renewable Natural Gas

Posted on: Thursday, 12 October 2006, 06:00 CDT

SAN FRANCISCO, Oct. 12 /PRNewswire-FirstCall/ -- Cow power is the newest and most innovative way PG&E is realizing its renewable energy goals with the signing of an agreement with Microgy, Inc. ("Microgy"), a subsidiary of Environmental Power Corporation , to deliver renewable natural gas. The agreement involves the purchase of up to 8,000 million cubic feet of pipeline quality renewable natural gas daily. The gas will be generated by Microgy facilities in California.

"It is PG&E's priority to develop new sources of renewable energy," said Fong Wan, vice president of energy procurement, "Delivering clean, climate-friendly energy is important to our customers and the environment, this most recent project is yet another example of our company's commitment to combat climate change."

"The state of California is both the largest dairy producer and the largest energy consumer in the United States," said Rich Kessel, President and Chief Executive Officer of Environmental Power. "This agreement is an important step towards developing an important renewable energy source from California's vital agricultural sector." Jeff Dasovich, Microgy's senior vice president and regional manager based in California added; "from the beginning of our relationship, PG&E's management team has exhibited vision and leadership, and we are excited about enhancing our partnership to bring the benefits of our renewable energy technology directly to California's consumers."

The agreement will allow PG&E to purchase from Microgy 8,000 mcf of renewable natural gas. Microgy plans to construct four production facilities on the site of large dairy farms in California and interconnect those systems to PG&E's extensive gas pipeline network. In addition to producing renewable energy, each of these facilities can produce significant greenhouse gas benefits.

"Biomethane takes the problem of air pollution and greenhouse gas emissions and turns it into a key part of the solution to California's reliance on fossil fuels," said Allen Dusault, Biofuels Project Director for Sustainable Conservation, an environmental nonprofit organization. "The state has no shortage of dairy manure, and it can now be cost-effectively converted into 'cow power.' That makes good environmental and economic sense."

As Microgy constructs state-of-the-art gas-generating facilities on farms across the central valley, California consumers will benefit from a new source of renewable, environmentally friendly energy.

"We're excited about the opportunity this presents to make these renewable energy projects work economically for both dairies and utilities," said Michael Marsh, CEO of Western United Dairymen. "This is a market-based solution, which we prefer over mandates."

PG&E will continue to advance its procurement efforts to deliver reliable renewable clean energy to its customers. PG&E is also exploring other projects that will demonstrate the viability of converting biomethane to pipeline quality gas for use in power plants.

PG&E is committed to reducing carbon emissions in California, evidenced by its support of AB32. Currently, over 50% of its electricity delivered is carbon free.

PROGRESSIVE SOLUTIONS. Because the future is smart energy. For more information on PG&E's environmental leadership, please visit http://www.pge.com/environment For more information about Environmental Power Corporation, please visit http://www.environmentalpower.com/

ABOUT ENVIRONMENTAL POWER CORPORATION: Environmental Power Corporation is a developer, owner and operator of renewable energy production facilities. Its principal operating subsidiary, Microgy, Inc., holds an exclusive license in North America for the development and deployment of a proprietary anaerobic digestion technology. Microgy is a developer of renewable energy facilities for the production and commercial application of methane-rich biogas and its associated environmental attributes from agricultural and food industry wastes. The biogas can be used to produce pipeline-grade methane or marketable biogas, liquefied natural gas (LNG), renewable electrical energy or thermal energy, as well as other useful by-products. Environmental Power's other principal subsidiary, Buzzard Power Corporation, holds a 22-year leasehold interest in the waste-coal fired Scrubgrass facility. Scrubgrass generates 83 MW of electricity by burning more than 600,000 tons of waste coal annually from active and abandoned area mine waste dumps.

ENVIRONMENTAL POWER CORPORATION CAUTIONARY STATEMENT: The Private Securities Litigation Reform Act of 1995, referred to as the PSLRA, provides a "safe harbor" for forward-looking statements. Certain statements contained in this press release, such as statements concerning planned manure-to-energy systems, our sales pipeline, our backlog, our projected sales and financial performance, statements containing the words "may,""assumes,""forecasts,""positions,""predicts,""strategy,""will,""expects,""estimates,""anticipates,""believes,""projects,""intends,""plans,""budgets,""potential,""continue,""targets,""proposed," and variations thereof, and other statements contained in this press release regarding matters that are not historical facts are forward-looking statements as such term is defined in the PSLRA. Because such statements involve risks and uncertainties, actual results may differ materially from those expressed or implied by such forward- looking statements. Factors that could cause actual results to differ materially include, but are not limited to: uncertainties involving development-stage companies; uncertainties regarding project financing, the lack of binding commitments and/or the need to negotiate and execute definitive agreements for the construction and financing of projects, the sale of project output, the supply of substrate and other requirements and for other matters; financing and cash flow requirements and uncertainties; inexperience with the development of multi-digester projects; risks relating to fluctuations in the price of commodity fuels like natural gas, and our inexperience with managing such risks; difficulties involved in developing and executing a business plan; difficulties and uncertainties regarding acquisitions; technological uncertainties; including those relating to competing products and technologies; risks relating to managing and integrating acquired businesses; unpredictable developments; including plant outages and repair requirements; the difficulty of estimating construction, development, repair and maintenance costs and timeframes; the uncertainties involved in estimating insurance and implied warranty recoveries, if any; the inability to predict the course or outcome of any negotiations with parties involved with our projects; uncertainties relating to general economic and industry conditions, and the amount and rate of growth in expenses; uncertainties relating to government and regulatory policies and the legal environment; uncertainties relating to the availability of tax credits, deductions, rebates and similar incentives; intellectual property issues; the competitive environment in which Environmental Power Corporation and its subsidiaries operate and other factors, including those described in our most recent Annual Report on Form 10-K or Quarterly Report on Form 10-Q, well as in other filings we make with the Securities and Exchange Commission. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date that they are made. We undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

Pacific Gas and Electric Company

CONTACT: PG&E News Department, +1-415-973-5930; or Rich Kessel,President & CEO, +1-603-431-1780, ext. 22, or Jeff Dasovich, Senior VicePresident, +1-415-385-5755, both of Environmental Power Corporation/Microgy

Web site: http://www.environmentalpower.com/

Web site: http://www.pge.com/

Source: PRNewswire-FirstCall

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