• PG&E Corporation announced 2001 earnings from operations of $3.02 per share, a 19 percent increase over results for the year 2000.

• Pacific Gas and Electric Company grew its earnings from operations by 19 percent to $2.51 per share, or $914 million, over year 2000 results.

• PG&E National Energy Group grew its contribution to earnings from operations by 27 percent to $0.57 per share, or $209 million, compared with results in 2000.

(San Francisco) -- PG&E Corporation (NYSE: PCG) today announced earnings from operations of $1.1 billion, or $3.02 per share, for the full year 2001. The Corporation's results reflected a 19 percent increase over earnings from operations in 2000 of $925 million, or $2.54 per share. Total reported net income for the year was also $1.1 billion, or $3.02 per share. "The Corporation's financial results for the full year 2001 show that the company's fundamental operations performed solidly last year," said PG&E Corporation Chairman, CEO and President Robert D. Glynn, Jr.

Earnings from operations at Pacific Gas and Electric Company, the Corporation's utility business, were $914 million, or $2.51 per share, compared with $769 million, or $2.11 per share, last year. The results included earnings from operations in the fourth quarter of 2001 of $0.94 per share, compared with $0.31 for the year-ago quarter. The fourth quarter 2001 results included the full year of revenues, totaling $151 million, or $0.24 per share, from the retroactive attrition rate adjustment recently authorized by the California Public Utilities Commission (CPUC).

At the PG&E National Energy Group (PG&E NEG), income from operations grew to $209 million, or $0.57 per share, for 2001, compared with $168 million, or $0.45 per share, in the year 2000. The 2001 results included $0.37 per share from the PG&E NEG's Integrated Energy and Marketing segment, compared with $0.32 per share in 2000, and $0.21 per share from its Interstate Pipeline Operations, compared with $0.16 per share in 2000. PG&E NEG results in 2001 also included $0.01 per share in eliminations, compared with $0.03 per share in eliminations in 2000.

The PG&E NEG's fourth quarter 2001 earnings from operations were $0.02 per share in the fourth quarter compared with $0.08 in the fourth quarter 2000, a decrease driven primarily by reduced power prices and lower volumes due to mild winter weather in the regions in which the PG&E NEG operates, offset somewhat by increased trading profits.

2001 Total Net Income

PG&E Corporation reported total net income of $1.1 billion, or $3.02 per share, for 2001. For 2000, the Corporation reported a total net loss of $3.36 billion, or $9.29 per share, after accounting rules required the company to record a more than $4.1 billion charge for wholesale power costs and transition costs that it could no longer consider "probable" of recovery in light of multiple adverse regulatory decisions by the CPUC.

Prior to the energy crisis, and in accordance with CPUC requirements, any generation-related revenues in excess of Pacific Gas and Electric's generation and wholesale power costs were used to amortize generation-related transition costs associated with energy industry restructuring. However, throughout much of 2000 and part of 2001, extreme wholesale power costs prevented any such revenues from being available for transition cost recovery. Ultimately, in the fourth quarter of 2000, the company was forced to write off the balance of these unrecovered transition costs. Beginning in the second quarter of 2001, reductions in the utility's costs and increases in its retail rates resulted in some revenues once again being available to recover the costs. This recovery totaled $1.26 per share for the full year and is included in the company's total net income, offsetting costs previously written off.

Total net income for 2001 also includes several other items impacting comparability. These include an interest expense charge of $0.72 per share, associated with increased amount of and cost of debt resulting from the energy crisis; a charge of $0.21 per share for bankruptcy-related costs; a charge of $0.10 per share to account for the PG&E NEG's exposure to Enron Corp.; a charge of $0.18 per share for losses at Pacific Gas and Electric Company stemming from counterparties' decisions to terminate gas transportation hedges following the decline in the utility's credit quality; a gain of $0.02 per share from the cumulative effect of a change in accounting principle; and a charge of $0.07 per share associated with the California Public Utilities Commission's rehearing of the utility's 1999 General Rate Case.

Accomplishments at Pacific Gas and Electric Company in 2001

Pacific Gas and Electric Company's operational successes in 2001 included critical financial and operational accomplishments to maintain and increase gas and electric supplies for customers, highly successful customer energy efficiency programs to reduce demand, and the filing of a comprehensive plan to resolve the Chapter 11 process the company initiated in April. "Pacific Gas and Electric Company surmounted a number of financial and operational challenges associated with the state's energy crisis in 2001," said Glynn. "In addition to meeting this challenge and filing the Plan of Reorganization, our team delivered on its commitment to provide safe, reliable, and responsive gas and electric service to its customers."

Among the utility's accomplishments for the year were the following:

• Negotiating financial arrangements with power and natural gas suppliers to ensure they would be able to continue providing gas and electricity for our customers.

• Receiving the Institute for Nuclear Power Operations' top rating for safety and operational performance at Diablo Canyon.

• Facilitating the connection of 14 new power plants to the transmission grid, totaling 1,200 megawatts (MW).

• Completing 30 critical transmission capacity projects in order to move more power to the regions and communities where demand was highest.

• Helping customers save, through our energy efficiency programs, enough power to serve 90,000 homes for one year, and enough natural gas to serve 19,000 homes for a year.

• Assisting a record-breaking 18.8 million callers to our call centers, nearly a 30 percent increase over the numbers for the previous year, and another 530,000 callers to our Smarter Energy Line.

The combined contributions of these efforts significantly helped California optimize supply and reduce energy usage during the summer of 2001, ultimately avoiding rotating outages. They also helped enable the utility to earn a customer-satisfaction rating of good, very good, or excellent from nearly nine out of 10 customers surveyed.

Accomplishments at PG&E National Energy Group in 2001

The PG&E NEG maintained solid operational performance in both its Integrated Energy and Marketing segment and its Interstate Pipeline operations in 2001. The PG&E NEG worked successfully throughout the year to manage the indirect impacts of the utility's Chapter 11 filing and to shape its strategy in light of the economic downturn and increasingly challenging market conditions.

"Our team at the PG&E NEG continued to deliver strong growth in earnings from operations in 2001," said Glynn. Accomplishments at the PG&E NEG in 2001 included the following:

• Securing independent investment-grade credit ratings for the PG&E NEG and its energy trading business.

• Completing several substantial financings providing capital to invest in generating and pipeline assets and liquidity to support its energy trading activities.

• Starting commercial operations in June at the 526-MW Attala power plant in Mississippi, and in Gallion, Ohio, beginning operations at the final unit of the 144-MW multi-unit, multi-site peaker project.

• Launching construction on the 1,092-MW Harquahala plant in Arizona, the 1,080-MW Athens plant in New York, the 111-MW Plains End facility in Colorado, and the 1,170-MW Covert generating project in southwest Michigan.

• Taking ownership of the 66-MW Mountain View wind-generating facility in Southern California, which sells its power to the California Department of Water Resources under a 10-year contract.

• Beginning operation of 21 miles of new natural gas pipeline in the fall as part of its 2002 mainline expansion project, which will increase capacity on the system by about 10 percent.

At year's end, the PG&E NEG's portfolio of controlled megawatts totaled 7,100 megawatts in operation and 7,740 megawatts in construction. Looking to 2002 and 2003, the PG&E NEG will continue to move forward with all of the projects currently under construction or with which it has tolling agreements.

Accounting for PG&E NEG Synthetic Leases

The Corporation announced on Feb. 21 that was initiating a thorough review of the accounting treatment for several synthetic leases used to finance power plant development at the PG&E NEG. The review confirmed that payments to the independent equity owners during construction reduced the investors' equity below the 3 percent minimum requirement to maintain these leases off balance sheet. As a result, the Corporation's financial statements now include these financings on balance sheet. The change in accounting treatment results in no restatement of prior year earnings, a less than $1 million impact on earnings for the fourth quarter 2001, and an increase in total assets and liabilities of $118 million in 1999, $861 million in 2000, and $1.058 billion in 2001.

2002 Guidance and Conclusion

The Corporation estimates 2002 earnings from operations including headroom-the difference between generation-related revenues collected from customers at CPUC-authorized rates and our generation related costs-to be in the range of $3.00 per share. (On a regulatory accounting basis, headroom recovers previously uncollected generation related costs that were written off at December 31, 2000.) The guidance is based on the belief that results at the PG&E NEG in 2002 will be down somewhat from 2001, and that it is not prudent to assume the utility's extraordinary 2001 performance in areas such as Diablo Canyon and California Gas Transmission will necessarily recur in 2002.

On a quarterly basis, the amount of headroom in the utility's results is expected to fluctuate materially due to many factors, including the outcome of regulatory proceedings and other regulatory actions, changes in estimates of previously incurred energy procurement costs, sales volatility, and the impact of the end of the rate freeze period. Other factors that could affect actual 2002 earnings are listed at the end of this news release.

"As we enter a major transition year for our company, we will continue our focus on maintaining the strong operational and financial fundamentals that enabled us to deliver solid results for 2001," said Glynn. "We will also continue to move forward with our plan of reorganization, which is the foundation for enabling Pacific Gas and Electric Company to emerge from bankruptcy and reaffirming our company's financial health."

A conference call with the financial community will be held today at 10:30 AM Pacific time to discuss the company's results for the year. The call will be open to the public on a listen-only basis via webcast. Please visit our website www.pgecorp.com for more information and instructions for accessing the webcast. A replay of the conference call will be available toll-free by calling 877-690-2090, and also will be available on our website. International callers will be able to access the replay by dialing 402-220-0699.

* Terms Used in This Release

Attrition Rate Adjustment - An adjustment to the utility's base revenue requirement to cover changes in operating and maintenance expenses, income taxes, depreciation, and rate base that occur in the years between General Rate Case proceedings.

Tolling Agreement - Contracts that provide PG&E Corporation with the rights to sell electricity generated by facilities owned and operated by another party. Under such arrangements, PG&E Corporation supplies the fuel to the power plant, and then sells the plant's output in the competitive market.

This press release includes forward-looking statements about 2002 earnings that are necessarily subject to various risks and uncertainties. These statements are based on current expectations and assumptions which management believes are reasonable and on information currently available to management. Actual results could differ materially from those contemplated by the forward-looking statements. Although PG&E Corporation and the Utility are not able to predict all the factors that may affect future results, some of the factors that could cause future results to differ materially from those expressed or implied by the forward-looking statements, or from historical results, include:

• The outcome of the Utility's bankruptcy case;
• The effect of the Utility's bankruptcy proceedings on PG&E Corporation and PG&E NEG and in particular, the impact a protracted delay in the Utility's bankruptcy proceedings could have on PG&E Corporation's liquidity and access to capital markets;
• The outcome of the CPUC's pending investigation into whether the California investor-owned utilities, including the Utility, have complied with past CPUC decisions, rules, or orders authorizing their holding company formations, the outcomes of the lawsuits brought by the California Attorney General, the City and County of San Francisco, and People of the State of California, against PG&E Corporation alleging unfair or fraudulent business acts or practices based on alleged violations of conditions established in the CPUC's holding company decisions, and the outcome of the California Attorney General's petition requesting revocation of PG&E Corporation's exemption from the Public Utility Holding Company Act of 1935, and the effect of such outcomes, if any, on PG&E Corporation, the Utility, and PG&E NEG;
• The extent to which the ability of PG&E Corporation to obtain financing or capital on reasonable terms is affected by the interpretation of the CPUC's holding company conditions, conditions in the general economy, the energy markets, or capital markets;
• The outcome of the Utility's various regulatory proceedings pending at the CPUC, including the proceeding to determine future ratemaking for the Utility's retained generation (primarily hydroelectric assets and the Diablo Canyon Nuclear Power Plant), the 2002 attrition rate application, and the 2003 General Rate Case;
• Whether the CPUC's March 27, 2001 accounting decision regarding the Utility's under-collected wholesale power purchase costs is upheld and whether the Utility's lawsuit against the CPUC for recovery of those costs is successful;
• Any changes in the amount of transition costs the Utility is allowed to collect from its customers, and the timing of the completion of the Utility's transition cost recovery;
• The amount and timing of regulatory valuation of the Utility's hydroelectric and other non-nuclear generation assets; § The impact on earnings of the future operating performance at the Utility's Diablo Canyon Nuclear Power Plant (Diablo Canyon);
• Legislative or regulatory changes affecting the electric and natural gas industries in the United States, including the pace and extent of efforts to restructure the electric and natural gas industries;
• The volatility of commodity fuel and electricity prices (which may result from a variety of factors, including weather; the supply and demand for energy commodities; the availability of competitively priced alternative energy sources; the level of production and availability of natural gas, crude oil, and coal; transmission or transportation constraints; federal and state energy and environmental regulation and legislation; the degree of market liquidity; and natural disasters, wars, embargoes, and other catastrophic events); any resulting increases in the cost of producing power and decreases in prices of power sold, and whether the Utility's and PG&E NEG's strategies to manage and respond to such volatility are successful;
• PG&E NEG's ability to obtain financing from third parties or from PG&E Corporation for its planned development projects and related equipment purchases and to refinance PG&E NEG's and its subsidiaries' existing indebtedness as it matures, in each case, on reasonable terms, while preserving PG&E NEG's credit quality; which ability could be negatively affected by conditions in the general economy, the energy markets, or capital markets; and the extent to which the CPUC's holding company conditions may be interpreted to restrict PG&E Corporation's ability to provide financial support to PG&E NEG;
• The extent to which PG&E NEG's current or planned development of generation, pipeline, and storage facilities are completed and the pace and cost of that completion, including the extent to which commercial operations of these development projects are delayed or prevented because of various development and construction risks such as PG&E NEG's failure to obtain necessary permits or equipment, the failure of third-party contractors to perform their contractual obligations, or the failure of necessary equipment to perform as anticipated;
• The extent and timing of generating, pipeline, and storage capacity expansion and retirements by others;
• The performance of PG&E NEG's projects and the success of PG&E NEG's efforts to invest in and develop new opportunities;
• Restrictions imposed upon PG&E Corporation and PG&E NEG under certain term loans of PG&E Corporation including maintenance of minimum segregated cash balances by PG&E Corporation and prohibitions on payment of dividends by both PG&E Corporation and PG&E NEG;
• Future sales levels which, in the case of the Utility, will be affected by when the CPUC ultimately determines that direct access has been suspended and the level of exit fees that may be imposed on direct access customers, and general economic and financial market conditions, and changes in interest rates;
• Volatility resulting from mark-to-market accounting and the extent to which the assumptions underlying PG&E NEG's and the Utility's mark-to market accounting and risk management programs are not realized;
• The effect of compliance with existing and future environmental laws, regulations, and policies, the cost of which could be significant;
• Heightened rating agency criteria and the impact of changes in credit ratings on PG&E NEG's future financial condition, particularly a downgrade below investment grade which would impair PG&E NEG's ability to meet liquidity calls in connection with its trading activities and obtain financing for its planned development projects;
• New accounting pronouncements; and
• The outcome of pending litigation.

Please visit our website: www.pgecorp.com