California Public Utilities Commission President Michael Peevey is
uncertain whether Western states will develop a regional cap-and-trade program
for greenhouse gas emissions, he said late Wednesday.

Six Western states, including California, and two Canadian provinces have
pledged to cut GHG emissions from all sectors of the economy to 15% below 2005
levels by 2020. As part of the Western Climate Initiative, the states and
provinces said in August that they will unveil within a year a market-based
system to achieve emission cuts.

California's separate climate law commits the state to cut GHG emissions
to 1990 levels by 2020. "California is so clean that to truly have a
cap-and-trade program" you need to involve a portion of the West, Peevey said
during an interview at the Business Council for Sustainable Energy's 2007
conference in San Francisco.

Those involved in the Western Climate Initiative are Arizona, California,
New Mexico, Oregon, Utah and Washington, along with British Columbia and
Manitoba.

While Western states are so far cooperating on climate issues, when it
gets down to the nuts-and-bolts details of developing a regional cap-and-trade
approach, Peevey said he questions whether the cooperation will continue.
Peevey added that he "certainly hopes" that the states will continue to work
cooperatively.

Peevey said the PUC should know within a few weeks what approach to
capping GHG emissions regulators will recommend to the California Air
Resources Board, the lead agency for the state's climate law. Under a "first
seller" approach, entities that fist sell electricity in the state would be
responsible for compliance. A "load based" approach would assign each retail
electricity provider with responsibility for the GHG emissions associated with
electricity generated to serve its load.

Peevey's chief of staff, Nancy Ryan, said recently that regulators may
decide not to recommend that the state adopt a cap-and-trade program for now
because of the difficulties in capping GHG emissions from electricity imported
into the state.