BETHESDA, Md. – PG&E National Energy Group, Inc. today announced that a syndicate of lenders has again agreed to provide limited funding to the company’s subsidiary, GenHoldings I LLC. This will allow construction to continue at power plants in Arizona, Michigan and New York. PG&E National Energy Group is a wholly owned subsidiary of PG&E Corporation (NYSE: PCG).

PG&E National Energy Group recently did not repay $431 million in principal due under its corporate revolving credit facility, triggering a cross-default under its unsecured senior notes and various guarantees, including a guarantee to fund equity commitment obligations under the GenHoldings credit facility.

Notwithstanding the defaults, PG&E National Energy Group continues to negotiate with key lenders and bondholders to restructure the company’s obligations. Today’s agreement is a transitional step while lenders look at a more permanent resolution as part of the global restructuring effort.

PG&E National Energy Group guarantees the obligation of its subsidiary, GenHoldings I LLC, to make equity contributions under GenHoldings’ credit facility to fund construction of the Harquahala power plant in Tonopah, Ariz., the Covert plant in Covert, Mich., and the Athens Generating plant in Athens, N.Y. This credit facility is secured by these projects in addition to the Millennium power plant in Charlton, Mass.

In August and September 2002, PG&E National Energy Group funded approximately $150 million of GenHoldings’ equity commitment. GenHoldings’ remaining equity commitment is $355 million. In October 2002, PG&E National Energy Group notified the lenders under the GenHoldings I LLC credit facility that it did not intend to make further equity contributions on behalf of GenHoldings. Later in the month, the lending syndicate agreed to fund the October payment, allowing construction to continue.

As of Sept. 30, 2002, construction on Athens was 70 percent complete; Covert, 61 percent complete; and Harquahala, 69 percent complete.

Headquartered in Bethesda, Md., PG&E National Energy Group develops, builds, owns and operates electric generating and natural gas pipeline facilities and provides energy trading, marketing and risk-management services.

This news release discusses certain matters that may be considered “forward-looking” statements within the meaning of Section 27A of the Securities Act of 1933, as amended, including statements regarding the intent, belief or current expectations of PG&E National Energy Group and its management. Actual future results could differ materially from those expressed or implied in any forward-looking statements. PG&E National Energy Group describes in its filings with the U.S. Securities and Exchange Commission some of the key factors that could cause actual results to differ materially.