PG&E Corp., Waste Management, Inc. To Introduce Clean Air Trucks In San Diego; Plan Makes Way For New Power Plant


(San Diego, CA) – PG&E Corporation (NYSE: PCG) and Waste Management, Inc. (NYSE: WMI) announced today that they have joined forces for a program that will use emission reductions in a 120-truck refuse collection fleet to pave the way for construction of a much-needed power plant in San Diego County. This is the first time that emission reductions from mobile sources have been used to offset emissions from a major new stationary source.

The companies plan to replace 120 diesel-fueled refuse collection trucks with new Mack trucks fueled by clean-burning natural gas. As a result, air emissions will be reduced by more than 50 percent. The air emission credits gained through the reductions will be used by the PG&E National Energy Group (PG&E NEG) to offset emissions from the Otay Mesa Generating Project, a proposed 500-megawatt plant to be built outside of San Diego.

Like a number of local governments, San Diego County manages its air quality within a regulatory framework that requires new sources of emissions to be offset by reductions from other sources. In most cases, those offsets have come from emission reductions at stationary sources, such as power plants and manufacturing facilities. This project is the first in the nation to offset emissions from a new power plant by reducing emissions from mobile sources.

"As we have seen this summer, there is a critical need for new power supplies in California, including the San Diego region. New base-load power plants, like Otay Mesa, are the long-term solution to the immediate problem," said Thomas B. King, president and chief operating officer of the PG&E National Energy Group's West Region.

"This project is a ground-breaking, win-win strategy that helps bring the region the new sources of power it needs while improving San Diego's air quality." King added. "We are very grateful to all of the regulatory agencies that worked with us to pioneer this new approach to emission control, including the U.S. Environmental Protection Agency, the California Air Resources Board, the San Diego County Air Pollution Control District and the California Energy Commission."

A. Maurice Myers, chairman and CEO of Waste Management noted: "We are an environmental services company, and we are committed to using new technologies and developing unique partnerships to improve our most precious environmental resource - the air we breathe."

"Waste Management has been experimenting with a variety of clean fuel technologies for nearly a decade," Myers continued. "By partnership with the PG&E National Energy Group, we are able to move from pilot projects to full-scale commercial deployment. In 18 months, Waste Management of San Diego will have the cleanest fleet of heavy-duty trucks in the world."

Construction of the Otay Mesa Generating Project is expected to begin in early 2001, immediately after the project gains final approval from the California Energy Commission. It is scheduled to begin commercial operation in mid-2003.

The first major power plant to be built in San Diego County in about 30 years, the facility will generate enough power for half a million homes. The plant will be equipped with state-of-the-art emission control equipment which, when combined with the precedent-setting mobile offset program, will make it one of the cleanest fossil-fueled generating plants ever built.

"We have a tremendous need for new generation in San Diego County and this project will help meet that need," said Greg Cox, the San Diego County supervisor in whose district the plant will be sited. "Just as importantly, the innovative emissions offset program devised by Waste Management and PG&E National Energy Group demonstrates that high environmental standards can be met at the same time new energy is generated. The result of this effort will be clean energy and cleaner neighborhoods for the residents of San Diego County."

In order to reduce air emissions, Waste Management has agreed to greatly accelerate the replacement of its current fleet of refuse trucks. A total of 120 trucks will be replaced during an 18-month period. PG&E NEG will pay Waste Management the difference in cost between replacing the existing trucks with updated diesel-fueled engines and replacing them with the more expensive liquefied natural gas (LNG) fuel systems. PG&E NEG also will pay for the construction of a new LNG fuel station that will be available for other fleets that convert to LNG.

PG&E NEG and Waste Management together will spend $33 million on the fleet conversion project.

The fleet conversion project will reduce smog-forming emissions of nitrogen oxides (NOx) by more than 35 tons per year. The emissions reductions are the equivalent of removing 9,200 new passenger cars from San Diego County roads.

Felicia Marcus, Regional Administrator of the U.S. EPA's Region IX, said, "The Otay Mesa mobile emission reduction credit program will provide NOx reductions as well as control of diesel particulates and other toxic compounds in the San Diego regions. We're happy to support such an innovative, common sense approach to producing cleaner energy while cleaning our air."

The Waste Management offset program will provide about one-third of the NOx offsets needed for the Otay Mesa Generating Project. Other emission offsets were acquired from San Diego Harbor Excursions, through conversion of two of their vessels to cleaner-burning fuel, and from stationary sources in San Diego County.

PG&E Corporation, with revenues of more that $20 billion and operations in 21 states, markets energy services and products throughout North America. The Corporation owns or controls some 7,000 megawatts across the nation and another 14,000 megawatts under development or construction. Among those projects if the LaPaloma Generating Project, a 1,000-megawatt plant under construction near Bakersfield, CA. PG&E Corporation's businesses also include Pacific Gas and Electric Company, the Northern and Central California utility that delivers natural gas and electricity to one in every twenty Americans.

Waste Management, Inc., is its industry's leading provider of comprehensive waste management services. Based in Houston, the Company serves municipal, commercial, industrial, and residential customers throughout North America.


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