Company Comments on Moody's Investor Services Downgrade of PG&E National Energy Group Credit Ratings

(SAN FRANCISCO, CA) PG&E Corporation today issued the following statement following Moody's Investors Service credit rating downgrade for the Corporation's PG&E National Energy Group (PG&E NEG) and the PG&E NEG's primary operating subsidiaries:

"The lenders in the Corporation's credit agreement with General Electric Capital Corporation, Lehman Commercial Paper Inc, and certain other lenders have provided a waiver through August 16, 2002, of the requirement that the PG&E National Energy Group maintain an investment grade credit rating by either Standard & Poor's or Moody's Investor Services.

"We are now working with these lenders to discuss long-term modifications to this lending agreement, as our team has done successfully in the past. We look forward to reaching an agreement soon.

"Although the action by Moody's is a disappointment, we continue to believe the fundamentals in our national energy business and its operating units are solid. As emphasized in the Corporation's conference call last week with the financial community, the PG&E NEG is continuing to implement aggressive measures aimed at reducing expenses and financing needs going forward.

"The action by Moody's does not result in substantial incremental impacts at the PG&E NEG beyond those associated with last week's credit action by Standard and Poor's.

"The PG&E NEG has reviewed its estimated sources and uses of cash over the next 12 months, and we believe that the company's liquidity is sufficient to meet the anticipated cash requirements, including those associated with the rating agencies' actions, including Moody's action today. The PG&E NEG's liquidity analysis appears in its 10Q filed Friday with the U.S. Securities and Exchange Commission."