BEYOND COMPLIANCE

A wide array of environmental programs that move the company beyond basic compliance continue to be in place at PG&E Corporation to address issues ranging from pollution prevention to energy efficiency, waste reduction, global climate change and the promotion of clean-air transportation alternatives, among others.

Voluntary Program Participation and Partnerships

Substantial achievements – including performance improvements, new policies and improved stewardship – can be achieved through programs that encourage or support voluntary efforts by companies. These programs improve environmental and safety performance among participating companies, challenge other companies to raise their own performance standards, and encourage companies to explore new strategies and technologies that may be subsequently adopted by others. As a result, these voluntary programs often have the potential to be catalysts for improving performance across the industry.

Examples of voluntary programs and partnerships in which PG&E Corporation’s businesses are active include the following:

• Sulfur Hexafluoride (SF6) Emissions Reduction Partnership. This voluntary program sponsored by the U.S. EPA seeks ways to cut emissions of SF6, a compound that is widely used in the power generation industry within enclosed electrical equipment. SF6 is the most potent greenhouse gas – approximately 24,000 times as potent as carbon dioxide. During 2002, PG&E Corporation met voluntary emission reduction targets set in 1998, by achieving more than a 50 percent reduction in emissions as compared to our 1998 baseline.
• California Climate Action Registry. PG&E Corporation is a Charter Member of the California Climate Action Registry and sits on the Technical Advisory Committee. The Corporation made a commitment to report greenhouse gas emissions associated with generation, transmission and distribution of gas and electricity in the state of California.
• U.S. EPA Natural Gas Star Program. Pacific Gas and Electric Company became a charter member of the U.S. EPA’s Natural Gas Star Partnership in 1994, and NEG’s Gas Transmission Northwest joined the program in 2000. Through the systematic replacement of equipment and older pipelines, methane leakage from operations is down significantly.
• U.S. EPA’s National Environmental Performance Track Program. NEG’s New England hydroelectric system and Indiantown power plant in Florida joined this program as charter members in 2000. In 2002, NEG’s Carneys Point and Logan Generating plants were also accepted. The National Environmental Performance Track is designed to motivate and reward top environmental performance through a systematic approach to managing environmental responsibilities, taking extra steps to reduce and prevent pollution, and being good corporate neighbors. NEG owns and operates four of the nine energy facilities that participate in the program.
• New Jersey Silver Track Program for Environmental Performance. NEG’s Logan and Carneys Point power plants continue to participate in this program, for which they qualified in 2000 based on their track record of demonstrable and measurable environmental achievements. The program is run by the New Jersey Department of Environmental Protection.
• U.S. Department of Energy’s Mercury Pilot Testing Program. NEG’s Salem Harbor and Brayton Point facilities participated in a testing program to help DOE better understand mercury emissions control technologies and to identify innovative measures to reduce emissions.

PG&E Corporation Pollution Prevention and Other Programs

In addition to our participation in a variety of voluntary programs and partnerships, our businesses also manage various challenges through their own initiatives and programs that go beyond compliance. Many of these programs and their results are discussed in this report, primarily in the “2002 Performance” section.

One example is the Pollution Prevention – P2 – Program at NEG. P2 was established as part of the NEG’s environmental management system. It encourages each of NEG’s facilities to identify and evaluate opportunities to reduce the environmental footprint at our sites. The program provides facilities with the framework and tools to analyze material use, energy use, water use, and waste recycling and reuse. We have also created an interactive web-based program to gather performance data monthly from each operating facility, in order to enable us to better track our P2 successes and footprint reduction efforts over time.

An example of a P2 success in 2002 is the use of waste from a paper recycling facility as a supplemental fuel at NEG’s Cedar Bay Generating Facility in Florida. This effort is eliminating 30 tons of waste per day that otherwise would be sent to landfills.

Finally, both Pacific Gas and Electric Company and NEG, as part of the Spare the Air (California) and Ozone Action Days (Baltimore/Washington Metropolitan Area) campaigns, have established an employee awareness program to alert employees to upcoming “bad air” days and provide suggestions for alternative means of commuting and steps that each employee can take to reduce their overall impact on air quality.

Both companies also promote the use of public transportation through the “Commuter Checks” program. Under this program, employees are provided with a tax-free voucher that can be used to take public transportation to work.

Employee Awards Programs

PG&E Corporation’s programs also include annual awards designed to recognize and encourage environmental excellence among our employees. For example, Pacific Gas and Electric Company created the Richard A. Clarke Environmental Leadership Award, which honors an individual or team whose efforts demonstrate environmental excellence in a way that benefits their co-workers, the company and all Californians. The company makes a $5,000 donation to an environmental or environmental justice group of the winner’s choosing. In 2002, the Bay Area Chapter of the American Lung Association received the donation for its work on behalf of clean air in the San Francisco Bay Area.

The National Energy Group gives three annual awards:

• The Joseph P. Kearney Environmental Stewardship Award is presented to an individual or employee team to recognize contributions toward environmental improvement, innovation, environmental awareness and community outreach.
• The Platinum Environmental Excellence Award recognizes a facility for the integration of environmental excellence and continuous improvement into facility culture and into its business goals.
• The Environmental Leadership Award, newly created in 2002, recognizes the accomplishments and leadership of an individual employee.

Winners receive a monetary award, and the company makes a cash donation to a local environmental organization of the winners’ choosing. Since these programs began, NEG has contributed funds to the Treasure Coast Wildlife Hospital; the Allegheny River Association, a river otter reintroduction program; the Logan Township Environmental Commission; New Hampshire Project Learning Tree; the Vermont Wilderness School; Partnership for the Delaware Estuary, Inc; and Sealab, a hands on educational lab for Marine Sciences in Massachusetts.