Company Also Files FERC Application for 2003 Expansion Project

PORTLAND, Ore. - PG&E Gas Transmission Northwest (GTN), a unit of PG&E National Energy Group, announced today that service has begun on 21 miles of new pipeline installed this fall as part of GTN's 2002 mainline expansion. The new pipe increases the company's ability to deliver natural gas to western markets by 42,000 decatherms per day (Dth/d) one year early and in time for the 2001 winter heating season.

"We applaud the efforts of the Federal Energy Regulatory Commission to expedite the permitting process so that some of this new capacity could be in service before the winter heating season," said Thomas B. King, president and chief operating officer of PG&E National Energy Group's West Region.

The new 42-inch pipe is in Spokane County, Wash., and Kootenai County, Idaho, and represents the first installation of a third pipe, known as the "C" line, in GTN's mainline right of way. The new pipe became operational late Friday. The pipeline addition is part of GTN's 2002 Expansion Project, which also includes new 19,500-horsepower compressor units at five existing stations on the GTN main line. The 2002 mainline expansion increases capacity on the GTN system by 220,000 Dth/d.

Also on Friday, GTN filed with the Federal Energy Regulatory Commission for a certificate to build a second expansion for service commencing in the fall of 2003. The proposed 2003 expansion project would add another 143,000 Dth/d beginning in the fall of 2003, plus an additional 20,000 Dth/d of winter-only service. The 2003 expansion project calls for an additional 53 miles of new "C" line pipe, plus the installation of one 19,500-horsepower compressor unit on the mainline system.

Combined, the 2002 and 2003 expansion projects would put the total GTN capacity at nearly 3,100,000 Dth/d.

"The 2002 and 2003 expansion projects will provide much-needed natural gas transmission capacity to supply electric generation projects already in construction or advanced development in California and the Pacific Northwest," King said.

GTN also is exploring the possibility of building a pipeline lateral from its mainline system near Spokane, Wash., to the Interstate 5 corridor near Seattle/Tacoma. The company has been in discussions with potential shippers about the Washington lateral project since an open season was completed in June 2001.

"There is clearly market interest in this project," King said. "We have successfully completed much of the initial feasibility studies for the Washington lateral project and are ready to move to development when the market indicates it is ready."

King noted that the commissioning of the new "C" line coincides with the GTN pipeline system's 40th anniversary. The GTN system went into service on Dec. 2, 1961, with initial capacity of 580,000 Dth/d. The original system, inaugurated as Pacific Gas Transmission Company, consisted of one 36-inch pipe, the "A" line. The mainline system grew over the last four decades, first through the addition of a second pipe, the "B" line, measuring 42-inches, and now with the beginning of the "C" line.

The GTN system includes 1,356 miles of pipeline along a 612-mile route which begins at the Idaho/British Columbia border, traversing through northern Idaho, southeastern Washington and central Oregon, and terminates at the Oregon/California border, where it interconnects with the Pacific Gas and Electric Company pipeline system and Tuscarora Gas Transmission.

PG&E National Energy Group, headquartered in Bethesda, Md., develops, builds, owns and operates electric generation and natural gas transmission facilities and provides energy-related trading, marketing and risk-management services. PG&E National Energy Group is a unit of PG&E Corporation (NYSE: PCG).