November 09, 2000
Contact: Steve Roberts, (619) 687 7017
EDITORS: Please do not use "Pacific Gas and Electric" or "PG&E" when referring to PG&E Corporation or its National Energy Group. The PG&E National Energy Group is not the same company as Pacific Gas and Electric Company, the utility, and is not regulated by the California Public Utilities Commission. Customers of Pacific Gas and Electric Company do not have to buy products or services from the National Energy Group in order to continue to receive quality regulated services from Pacific Gas and Electric Company.


Hearings start Monday on the project, which is expected to play a critical role in relieving the power supply crunch facing the San Diego region

SAN DIEGO, Calif. - PG&E Corporation (NYSE: PCG) announced Thursday that the proposed Otay Mesa Generating Project will enter the final stages of the state siting process next week, as the California Energy Commission holds public hearings on the project. The Corporation's National Energy Group, which is developing the project, hopes to have final permits by early 2001.

The Otay Mesa Generating Project will be the first new power plant built in San Diego County in almost three decades.

"Dealing with all of the issues related to the siting of this plant has been a long, complex process," said Sharon Segner, who has managed the development project for the PG&E National Energy Group (NEG). "We feel confident that we are entering these final hearings having resolved the vast majority of the issues to all parties' satisfaction. We expect that the few that are left will be resolved very soon."

One outstanding matter relates to natural gas supply for the plant. "The plant's natural gas supply can come from two potential sources -- the existing San Diego Gas & Electric Company system or the proposed North Baja Pipeline, the project proposed by PG&E National Energy Group and Sempra to bring additional gas supplies to the border region," Segner said.

The California Energy Commission will begin hearings on Nov. 13 in San Diego and resume the following week. Following the hearings, the matter goes to the Commission for a final decision, probably in early 2001.

The goal is to bring the project on line as soon as possible. By doing so, Otay Mesa will help alleviate the energy capacity shortage now facing the San Diego region.

San Diego City Councilman Juan Vargas applauded the effort to develop new generation capacity in the San Diego County.

"As we saw last summer, this region faces serious energy problems. Customer prices have skyrocketed, largely because we do not have enough generating capacity to meet the needs of our region," Vargas said. "I applaud all efforts to meet the increased demand for electricity in our region that will help halt the skyrocketing costs."

The 500-megawatt Otay Mesa Generating Project will be located within a 46-acre property on the remote eastern portion of Otay Mesa, near the base of the San Ysidro Mountains, approximately 1.5 miles from the United States/Mexico border.

The plant will be fueled with natural gas and contain state-of-the-art emission control equipment, making it one of the cleanest plants in the country. In addition, in a first-of-its-kind program, the Otay Mesa Generating Project will utilize mobile emission credits to offset nitrogen oxide emissions from the plant. A large portion of the mobile credits will be created through the conversion of refuse-hauling vehicles in San Diego to natural gas fuel, under a joint program by PG&E National Energy Group and Waste Management Inc.

Greg Cox, the San Diego County supervisor in whose district the plant will be sited, said the proposed power project is an important component in the economic development efforts in the East Otay Mesa area.

"Strengthening the economic base of the East Otay Mesa area is a top priority for San Diego County," Cox said. "Construction of this plant will lay the groundwork for establishment of the infrastructure we need for a successful economic development effort."

PG&E Corporation, with 1999 revenues of nearly $21 billion and operations in 21 states, markets energy services and products throughout North America through its National Energy Group. The Corporation has ownership and management interests in more than 30 power plants and has one of the largest energy trading and risk management programs in North America.

This news release discusses certain matters that may be considered "forward-looking" statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, including statements regarding the intent, belief or current expectations of PG&E Corporation ("the Company") and its management or those of the PG&E National Energy Group and its management. Prospective investors are cautioned that any such forward-looking statements are not guarantees of future performance and involve a number of risks and uncertainties that could materially affect actual results such as, but not limited to, (i) changes in government regulations and anticipated deregulation of the electric energy industry; (ii) commercial operations of new plants that may be delayed or prevented because of various development and construction risks, such as a failure to obtain financing and the necessary permits or equipment to operate or the failure of third-party contractors to perform their contractual obligations, (iii) a competitor's development of a lower-cost generating gas-fired power plant, (iv) fluctuations in natural gas and electricity prices and the ability to successfully manage such price fluctuations or (v) the risks associated with marketing and selling power from power plants in the newly competitive energy market. Prospective investors are also referred to the other risks identified from time to time in the Company's reports and registration statements filed with the Securities and Exchange Commission.