PG&E Corporation - Press Release

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.

PG&E NATIONAL ENERGY GROUP RESPONDS TO FERC INQUIRY ON ENERGY TRADING TRANSACTIONS

(Bethesda, MD) - PG&E Corporation's (NYSE: PCG) PG&E National Energy Group told federal regulators Friday that of its more than 25,000 electricity trading transactions over two years in the western United States, it identified 12 "sell-buyback" trades. These instances had no material effect on the company's reported financial results.

These instances represent less than one-tenth of 1 percent of the company's trading transactions and less than one-fifth of 1 percent of the company's revenue.

PG&E National Energy Group reviewed its power trading transactions during 2000 and 2001 in response to an inquiry from the Federal Energy Regulatory Commission, which issued a request to more than 100 companies for information on energy trading practices.

The FERC defines these "sell-buyback" trades as involving "the sale of an electricity product to another company together with a simultaneous purchase of the same product at the same price." Some firms have acknowledged using sell-buybacks, also called "wash trades" or "round-trip" trades, to artificially inflate trading volumes.

Lyn Maddox, president of the company's trading operations, has previously stated that "it is not our policy to engage in any trading practices designed simply to build our trading volumes."

"Our review of trading practices during this period, including interviews with our traders, confirms that none of the transactions we identified were designed to inflate our volumes or revenues." Maddox said. "We believe engaging in trades for the primary purpose of building our volume would only serve to drive up settlement costs and possibly increase credit risk. Such transactions do nothing to enhance earnings or shareholder value."

PG&E National Energy Group, based in Bethesda, Md., develops, builds, owns and operates power production and national gas transmission facilities and provides a broad range of energy trading, marketing and risk management services in North America.