Submission Complies with Public Utility Holding Company Act of 1935

SAN FRANCISCO - As promised in its Bankruptcy Court filings, PG&E Corporation (NYSE: PCG), and Pacific Gas and Electric Company today jointly submitted an application to the Securities and Exchange Commission (SEC) seeking approval of elements of the utility's proposed Plan of Reorganization (POR) pursuant to the federal Public Utility Holding Company Act of 1935 (PUHCA).

The POR and accompanying disclosure statement identify several important regulatory approvals that must be obtained in order for the Plan to be implemented and the utility to emerge from bankruptcy no later than December 31, 2002. PG&E has already filed applications with the Nuclear Regulatory Commission (NRC) and the Federal Energy Regulatory Commission (FERC) seeking necessary regulatory approvals. Among other conditions, the POR must be confirmed by the U.S. Bankruptcy Court.

The PUHCA filing made today is necessary because, under the POR, the electric transmission (ETrans), electric generation (Gen), and gas transmission (GTrans) assets would be transferred to subsidiaries of PG&E Corporation, where they would issue debt in order to provide funds to pay off PG&E's creditors, without asking the Bankruptcy Court for a rate increase or state bailout. The ETrans and Gen subsidiaries would be "public utilities" as defined in PUHCA. Under PUHCA, a company must obtain SEC approval for a transaction that results in that company owning more than one PUHCA-defined public utility.

For purposes of the SEC review of the application, the filing presents values for the assets of the four companies that Pacific Gas and Electric Company will be divided into under its bankruptcy Plan of Reorganization: Pacific Gas and Electric Company - $9.5 billion, ETrans - $1.6 billion, GTrans - $1.4 billion, and Gen - $5.3 billion. Under the plan, ETrans, GTrans and Gen will assume significant amounts of Pacific Gas and Electric Company's debt: ETrans - $1.1 billion, GTrans - $900 million, and Gen - $2.4 billion. The value for Gen represents PG&E's estimate of the value of Gen's nuclear and hydroelectric assets and power contracts if the company's POR is approved as proposed. Under California law, PG&E's ratepayers were entitled to receive the market value of non-nuclear generation assets owned by PG&E as a credit against their obligation to pay certain of PG&E's investment costs. The application and actual amount of any credit for California ratemaking purposes will depend upon the way the California Public Utilities Commission or the courts implement applicable law.

The filing seeks the expeditious approval by the SEC of the proposed transaction, emphasizing that it meets the applicable standards of PUHCA:

• The POR would have no anti-competitive effect, representing as it does only a regrouping of assets and businesses under existing ownership;

• Fees and commissions would be within accepted ranges;

• The resulting entities would be creditworthy, reflecting capital structures supportive of investment grade credit ratings;

• The businesses and assets allocated to discrete entities would be interconnected utility assets in a single region capable of effective management and in each case subject to effective regulation;

• The POR would benefit the utility and its investors, ratepayers and creditors by permitting its emergence from bankruptcy with payment of all valid claims; implementation of the POR does not require a retail rate increase.

Pacific Gas and Electric Company has requested an expedited review and approval process of this application. While not required to act on an application within any set period of time, the SEC generally issues its approval some time after all other regulatory approvals have been obtained. It is anticipated that approval will be obtained in time to allow the plan of reorganization to be implemented by December 31, 2002.