BETHESDA, Md.—PG&E Corporation's (NYSE: PCG) National Energy Group today announced it has begun construction of the 1,170-megawatt Covert Generating Plant in southwest Michigan. Projected to begin operating in summer of 2003, Covert Generating will be a combined cycle, gas-fired plant, producing enough electricity to power roughly 1 million homes.

The plant site is located in Covert Township, about 48 miles west of Kalamazoo. As a "merchant" plant, Covert Generating is intended to sell its output primarily in the competitive wholesale markets via the Michigan Electric Transmission Company lines, a subsidiary of Consumers Energy.

"The construction of the Covert Generating Plant is an important step in meeting the growing need for electricity throughout the Midwest," said Chris Iribe, president and chief operating officer of the National Energy Group's East Region. "We look forward to the opportunity to provide efficient power at competitive costs."

The Covert Plant's three generators, fueled by natural gas, will be driven by advanced Mitsubishi 501G turbines in a combined-cycle configuration to optimize efficiency and environmental performance. Covert Generating last spring commenced construction of a water intake and discharge system from Lake Michigan to the plant that will be owned and operated by the nearby City of South Haven and will be available to serve future drinking water needs of the City and several neighboring townships.

The Covert development team selected The Shaw Group Inc. and its subsidiary, Stone & Webster, as the primary contractor for the project. The Covert Generating Plant received its final permits early this year.

"Construction of the Covert Generating Plant comes at the end of a long development effort. We're grateful to the people of Covert Township and neighboring communities for their patience and support during this complicated process," said Iribe.

Covert Generating Company, LLC, is a wholly owned, indirect subsidiary of PG&E National Energy Group. Headquartered in Bethesda, Md., the National Energy Group develops, owns and operates electric generating and natural gas pipeline facilities and provides energy trading, marketing and risk-management services.