Pacific Gas and Electric Company ("PG&E") and Microgy, Inc. ("Microgy") today announced an agreement that allows Microgy to utilize PG&E's extensive natural gas transmission network to distribute renewable natural gas to markets in California and the West.

Microgy, a subsidiary of Environmental Power Corporation, plans to generate renewable natural gas from dairy and other wastes using its proprietary biogas production technology. Under the terms of the agreement, PG&E will work with Microgy to interconnect these facilities with PG&E's extensive network of natural gas pipelines.

As these state-of-the-art, gas-generating facilities are constructed at farms in the central valley, California will enjoy a reliable supply of renewable, environmentally friendly gas at market-competitive prices.

"California is the largest dairy producer and the largest energy consumer in the United States. This interconnection agreement will provide California with access to a new gas supply from our projects, said Kam Tejwani, CEO, Environmental Power Corporation. Our projects will also provide additional economic benefits to the dairies that host these projects," Tejwani added. "The opportunity for the central valley dairy community to participate in Microgy's project development efforts represents a great opportunity to help California meet the state's growing energy demand in an environmentally effective manner."

"California potentially stands to gain a significant new supply for its natural gas customers," said Bob Howard, PG&E's vice president, gas transmission and distribution. "This agreement ensures the necessary infrastructure is in place to deliver this renewable natural gas to the California marketplace, benefiting customers."

About Environmental Power

Environmental Power Corporation (Amex: EPG) is a developer, owner, and operator of renewable energy production facilities. Its principal operating subsidiary, Microgy, holds an exclusive license in North America for the development and deployment of a proprietary biogas production technology. Its facilities transform manure and food industry waste into methane-rich biogas that can be used to generate electricity or thermal energy, or refined to pipeline-grade methane for sale as a commodity.

About Pacific Gas and Electric Company

PG&E is one of the largest utilities in the United States, with 5 million electric customers and 4.1 million natural gas customers. The company, a subsidiary of PG&E Corporation, serves approximately 15 million people throughout a 70,000 square mile service area in northern and central California. PG&E operates 123,054 circuit miles of electric distribution lines; 18,610 circuit miles of interconnected transmission lines; 40,123 miles of natural gas distribution pipelines; and, 6,136 miles of transportation pipelines.

For more information about Pacific Gas and Electric Company, please visit http://www.pge.com For more information about Environmental Power Corporation, please visit http://www.environmentalpower.com CAUTIONARY STATEMENT BY ENVIRONMENTAL POWER

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 projects or projects under development, 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.

CONTACT: Environmental Power Corporation Public Relations (212) 679-3300

PG&E News Department (415) 973-5930

SOURCE Microgy

Environmental Power Corporation Public Relations, +1-212-679- 3300; or PG&E News Department, +1-415-973-5930 http://www.prnewswire.com