Power Efficiency Corporation Files Provisional Patent on New Digital Technology

New Patent Filing Establishes Intellectual Property Rights on Key Energy Efficiency Technology

June 12, 2006

LAS VEGAS--(BUSINESS WIRE)---Power Efficiency Corporation (OTCBB: PEFF), a developer and manufacturer of advanced energy savings technologies for electric motors, today announced it has filed a provisional patent on its new digital technology for reducing energy consumption by electric motors operating at constant speed.

The provisional patent covers key software and algorithms developed by the Company through intensive research and development activities undertaken over the previous 12 months. This technology forms the foundation for the Company's future products it will sell under its own brand, the Power GeniusT. It also enables the Company to pursue licensing agreements in which its critical energy savings technology is incorporated into soft starts, appliances, and motor-related equipment made by other manufacturers.

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"This is an important milestone in the Company's development and growth into a highly valuable energy technology Company," said Steven Strasser, the Company's Chairman and CEO. "With this provisional patent, we are beginning to lay the groundwork to control key intellectual property for the efficiency of electric motors operating at constant speed. We expect to be filing additional provisional patents in coming months."

According to the Department of Energy, electric motors consume 23% of all electricity produced in the U.S., and almost 65% of electricity used in manufacturing. Electric motors operating at low loads can waste over 50% of the energy they consume. Ther e are numerous technologies for saving electricity by changing the speed of an electric motor. However, these technologies are very expensive, and many motors must operate at constant speed.

Strasser Continued: "Our technology attacks the energy wasted by electric motors in a way the industry has ignored - by controlling the current and voltage provided to the motor when it is operating at low loads and operating very inefficiently. This provisional patent and the associated technology are the foundation for the Company's future products, which will cost less to manufacture and will incorporate additional features. These features may include the ability to quantify the energy savings of each product, predictive maintenance for motor-related problems, and equipment usage information over time. These features should give our product not only additional revenue, but a competitive advantage over existing motor-control related technology.

"Even more important, these developments will allow us to actively pursue licensing the technology to original equipment manufacturers. Manufacturers of motor soft starts, as well as appliances and shop tools, can incorporate this technology into their equipment. This technology will improve the efficiency of electric motors running in all kinds of equipment in commercial buildings, industrial facilities and appliances throughout the world. The Company's long run objective is to control and leverage the intellectual property around this critical energy saving technology. We can then manufacture private label products for other companies, as we are doing now for KONE and Otis, and/or license the technology to manufacturers in these multibillion dollar industries."

About Power Efficiency Corporation

Power Efficiency Corporation designs and manufactures the Power GeniusT(a product that reduces the amount of energy used by electric motors in many constant speed/variable load applications. These motors are found in escalators, elevators, grinders, granulators, mixers, saw mills and many other applications. The Power GeniusT allocates power in direct proportion to the motor's required workload, eliminating wasted electricity. The company's core technology is based on patented improvements to NASA technology. Energy savings from these controllers are typically 20-40%, but can be as high as 45%. The controllers also reduce the operating heat of the motor, enabling significant motor life extension and downtime reduction benefits. PEC products are UL compliant and CE and CSA certified. The Company also has a prototype unit applicable to single-phase electric motors that are found in applications such as clothes dryers, refrigerators, vending machines, mixers and coffee grinders. For more information visit www.powerefficiencycorp.com.

As a cautionary note to investors, certain matters discussed in this press release may be forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Such matters involve risks and uncertainties that may cause actual results to differ materially, including the following: changes in economic conditions; general competitive factors; acceptance of the Company's product in the market; the Company's success in technology and product development; the Company's ability to execute its business model and strategic plans; and all the risks and related information described from time to time in the Company's SEC filings, including the financial statements and related information contained in the Company's 2005 Annual Report. Power Efficiency assumes no obligation to update the information in this release.

Contact:
Power Efficiency Corporation
B.J. Lackland, 702-697-0377
Chief Financial Officer
blackland@powerefficiencycorp.com

Mike Varney, 702-697-0377
Vice President - Sales and Marketing
mvarney@powerefficiencycorp.com

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