SPENCER STATION GENERATING TO SHUT DOWN

BETHESDA, Md. – PG&E National Energy Group, Inc. today announced that it plans to shut down its Spencer Station Generating facility in Denton, northwest of Dallas. The decision was made due to the increased cost of doing business across the entire wholesale power sector and a slowdown in the growth of demand for electric power because of current economic conditions. PG&E National Energy Group, Inc. is a wholly owned subsidiary of PG&E Corporation (NYSE: PCG).

Electricity deregulation in Texas has resulted in the construction of several new generating stations that use highly efficient state-of-the-art technology. The addition of these plants to the electric supply mix has significantly impacted the economies of operating older plants, such as Spencer Station.

PG&E National Energy Group acquired the 176-megawatt natural gas-fired plant in June 2001. Under a five-year contract, the company, through its power-trading unit provides wholesale power purchased from the Texas wholesale power markets to the city of Denton. Despite the shut down, PG&E National Energy Group will continue to provide power to meet the city’s electricity needs.

The plant, which entered commercial service in 1954, is now owned by Spencer Station Generating Company, L.P., an affiliate of PG&E National Energy Group, which administers the generating units on behalf of Spencer Station.

Completion of the shut down process is expected by Dec. 31, 2002. The plant’s 27 employees will be offered severance and other benefits.

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.

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