diff --git a/.gitignore b/.gitignore
index 21d7495..eaf7061 100644
--- a/.gitignore
+++ b/.gitignore
@@ -1,3 +1,4 @@
+.env
 *.egg
 *.egg-info/
 *.pyc
diff --git a/postdoc.py b/postdoc.py
index d4ac9b4..11a2947 100755
--- a/postdoc.py
+++ b/postdoc.py
@@ -56,9 +56,6 @@ def connect_bits(meta):
 def pg_command(command, meta):
     """Construct the command."""
     bits = []
-    # password as environment varariable
-    if meta.password:
-        bits.append('PGPASSWORD=%s' % meta.password)
     # command to run
     bits.append(command)
     # connection params
@@ -72,22 +69,24 @@ def pg_command(command, meta):
 def main():
     if len(sys.argv) < 2:
         exit('Usage: phd COMMAND [additional-options]\n\n'
-            '  ERROR: Must give a COMMAND like psql, createdb, dropdb'
-        )
+            '  ERROR: Must give a COMMAND like psql, createdb, dropdb')
     if sys.argv[1] not in VALID_COMMANDS:
         exit('Usage: phd COMMAND [additional-options]\n\n'
-            '  ERROR: "%s" is not a known postgres command' % sys.argv[1]
-        )
+            '  ERROR: "%s" is not a known postgres command' % sys.argv[1])
 
     try:
-        tokens = pg_command(sys.argv[1], get_uri())
+        meta = get_uri()
+        tokens = pg_command(sys.argv[1], meta)
     except AttributeError:
         exit('Usage: phd COMMAND [additional-options]\n\n'
-            '  ERROR: DATABASE_URL is not set'
-        )
+            '  ERROR: DATABASE_URL is not set')
+    env = os.environ.copy()
+    # password as environment varariable
+    if meta.password:
+        env['PGPASSWORD'] = meta.password
     # pass any other flags the user set along
     tokens.extend(sys.argv[2:])
-    subprocess.call(tokens)
+    subprocess.call(tokens, env=env)  # TODO test that PGPASS is in env
 
 
 if __name__ == '__main__':
diff --git a/setup.py b/setup.py
index d89c116..b3cd69d 100644
--- a/setup.py
+++ b/setup.py
@@ -3,7 +3,7 @@
 
 setup(
     name='postdoc',
-    version='0.1.2',
+    version='0.1.3',
     description='A helper for Postgres + Docker that works for free',
     long_description=open('README.rst').read(),
     author='Chris Chang',
@@ -16,7 +16,7 @@
         ],
     },
     license='Apache',
-    tests_require = [
+    tests_require=[
         'mock==1.0.1',
     ],
     test_suite='test_postdoc',
diff --git a/test_postdoc.py b/test_postdoc.py
index 9eb7868..9ecbe61 100644
--- a/test_postdoc.py
+++ b/test_postdoc.py
@@ -1,5 +1,6 @@
 # -*- coding: utf-8 -*-
 
+import os
 try:
     # for python 2.6 compatibility
     import unittest2 as unittest
@@ -42,14 +43,14 @@ def test_pg_command_assembles_bits_in_right_order(self):
             self.assertEqual(postdoc.pg_command('foo', meta),
                     ['foo', 'lol', 'database'])
 
-    def test_pg_command_prepends_password(self):
+    def test_pg_command_ignores_password(self):
         meta = type('mock', (object, ),
                 {'username': '', 'hostname': '', 'port': '', 'password': 'oops',
                 'path': '/database'})
         with mock.patch('postdoc.connect_bits') as mock_bits:
             mock_bits.return_value = ['rofl']
             self.assertEqual(postdoc.pg_command('bar', meta),
-                    ['PGPASSWORD=oops', 'bar', 'rofl', 'database'])
+                    ['bar', 'rofl', 'database'])
 
     def test_main_exits_with_no_command(self):
         with mock.patch('postdoc.sys') as mock_sys:
@@ -69,7 +70,8 @@ def test_main_exits_with_missing_env(self):
         mock_sys = mock.MagicMock()
         mock_sys.argv = ['argv1', 'psql', 'argv3', 'argv4']
 
-        with mock.patch.multiple(postdoc,
+        with mock.patch.multiple(
+            postdoc,
             subprocess=mock_subprocess,
             pg_command=mock_pg_command,
             sys=mock_sys,
@@ -77,22 +79,51 @@ def test_main_exits_with_missing_env(self):
             with self.assertRaises(SystemExit):
                 postdoc.main()
 
+    def test_main_passes_password_in_env(self):
+        my_password = 'oops'
+        meta = type('mock', (object, ),
+                {'password': my_password})
+        self.assertNotIn('DATABASE_URL', os.environ,
+            msg="Re-run tests in an environment without DATABASE_URL")
+        mock_subprocess = mock.MagicMock()
+        mock_pg_command = mock.MagicMock(return_value=['pg_command'])
+        mock_get_uri = mock.MagicMock(return_value=meta)
+        mock_sys = mock.MagicMock()
+        mock_sys.argv = ['foo', 'psql']
+
+        with mock.patch.multiple(
+            postdoc,
+            subprocess=mock_subprocess,
+            pg_command=mock_pg_command,
+            get_uri=mock_get_uri,
+            sys=mock_sys,
+        ):
+            postdoc.main()
+        self.assertEqual(
+            mock_subprocess.call.call_args[1]['env']['PGPASSWORD'],
+            my_password)
+
     def test_main_appends_additional_flags(self):
+        self.assertNotIn('DATABASE_URL', os.environ,
+            msg="Re-run tests in an environment without DATABASE_URL")
         mock_subprocess = mock.MagicMock()
         mock_pg_command = mock.MagicMock(return_value=['pg_command'])
+        mock_get_uri = mock.MagicMock()
         mock_sys = mock.MagicMock()
         mock_sys.argv = ['argv1', 'psql', 'argv3', 'argv4']
-        mock_get_uri = mock.MagicMock()
 
-        with mock.patch.multiple(postdoc,
+        with mock.patch.multiple(
+            postdoc,
             subprocess=mock_subprocess,
             pg_command=mock_pg_command,
             get_uri=mock_get_uri,
             sys=mock_sys,
         ):
             postdoc.main()
-            mock_subprocess.call.assert_called_once_with(
-                    ['pg_command', 'argv3', 'argv4'])
+            self.assertEqual(
+                mock_subprocess.call.call_args[0][0],
+                ['pg_command', 'argv3', 'argv4']
+            )
 
 
 if __name__ == '__main__':