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.

PACIFIC GAS AND ELECTRIC COMPANY RESPONDS TO FERC: IT DID NOT ENGAGE IN WASH TRADING STRATEGIES

SAN FRANCISCO - Pacific Gas and Electric Company today informed the Federal Energy Regulatory Commission (FERC) that it did not engage in wash, roundtrip or sell/buyback electric trades in the Western United States markets.

The filing was in response to the Commission's request for information about trading activities from more than 100 companies who sold power in the Western U.S. markets in 2000 and 2001.

In its response, Pacific Gas and Electric Company told FERC that as part of the state's retail electric industry restructuring, the utility was required by the California Public Utilities Commission (CPUC) to bid all of its generation into the California Power Exchange (PX) and California Independent System Operator (CAISO) and to purchase through the PX and CAISO all of the electric energy required to serve its retail customers (the so-called buy/sell requirement). In August 2000, the CPUC modified the "buy" requirement to permit PG&E to make some energy purchases through bilateral markets. All power purchased by Pacific Gas and Electric Company under the resulting bilateral contracts was used to meet retail load and was not resold in the markets.

On December 15, 2000, FERC ordered the elimination of the "sell" requirement, allowing the utility to use its own resources to serve directly its own load, rather than having to sell those resources to the CAISO and PX. After this order, Pacific Gas and Electric Company exclusively used its generation resources for service to its own retail loads or to provide necessary ancillary services to the CAISO.

At no time during this two-year period did Pacific Gas and Electric Company use its generation resources to engage in "wash," "round trip" or "sell/buyback" trading.

Pacific Gas and Electric Company's response to FERC is available at www.pge.com.