1. 1 PG&E PY2006 LIEE Budget Augmentation Application LIOB Meeting May 2, 2006 Fresno, CA

2. 2 PG&E LIEE Budget Augmentation Filed April 14, 2006, in compliance with D.05-12-026, O.P. 3 and 12 D.05-12-026 approved PG&E’s PY2006 LIEE Budget  $56.530 Million Annual Authorized  $12.231 Million Unspent Carryover from previous years  $68.761 Million Total PY2006 LIEE Budget Augmentation Request  $21.334 Million Total PY2006 LIEE Projected Budget  $90.094 Million

3. 3 Why PG&E Needs Additional Funding The Commission adopted new LIEE measures for PY2006 in D.05-12-026. The Commission ordered various emergency LIEE Program measures as part of the “Winter Initiative” in response to expected high natural gas prices during the winter of 2005-2006. The Commission ordered that in 2006 the Utilities treat 5-10% more homes than projected in their June 1, 2005 LI Program and Budget Applications. New Title 24 Duct Testing requirements and a proposed Tankless Water Heater Pilot program also add costs to PG&E’s 2006 LIEE Program.

4. 4 PG&E LIEE Budget Augmentation New LIEE measures for PY2006  Standardization Team measure recommendations were not completed and filed in time for the utilities to include them in their PY2006-2007 Program Applications.  For PG&E, these new measures are: High efficiency central air conditioners Duct testing and sealing

5. 5 PG&E LIEE Budget Augmentation Winter Initiative Program  Revise LIEE income eligibility to 200% of federal poverty guidelines for all customers. (Prior income eligibility for LIEE was 200% for elderly and disabled customers only, and 175% for other customers);  Replace central gas forced air furnaces to renters and home- owners as part of whole-house effort where existing furnace has an AFUE of 65 or lower;  Perform necessary duct work when installing a new furnace;  Replace leaky water heaters;  Increase new refrigerator replacements through “go-backs” and other initiatives; and  Hold harmless from repayment customers receiving LIEE benefits during the winter period who are later determined to be ineligible for the LIEE benefits.

6. 6 PG&E LIEE Budget Augmentation Increase homes treated through the LIEE Program by 5-10%  D.05-10-044 increased LIEE income eligibility to 200% of federal poverty guidelines for all customers. (Prior income eligibility for LIEE was 200% for elderly and disabled customers only, and 175% for all other customers). The number of PG&E customers estimated to be eligible for LIEE increased from 1.6 million to 1.8 million.  PG&E proposes treating 11% more homes in 2006. Increase from over 56,000 homes treated in 2005 to 62,500 homes in 2006.

7. 7 PG&E LIEE Budget Augmentation New Title 24 Duct Testing Requirements  Costs were not included in the PY2006-2007 Applications.  New requirements went into effect in October, 2005. Tankless Water Heater Pilot Program  Recent joint proposal for pilot with California State Department of Community Services and Development (CSD) and the Community Action Agency of San Mateo County, Inc. (CAASMC) was filed March 6, 2006.

8. 8 PG&E LIEE Budget Augmentation: 2006 Shortfall

9. 9 PG&E LIEE Budget Augmentation: Measure Installations