EDITORS: Please do not use "Pacific Gas and Electric" or "PG&E" when referring to PG&E Corporation or its National Energy Group. The PG&E National Energy Group is not the same company as Pacific Gas and Electric Company, the utility, and is not regulated by the California Public Utilities Commission. Customers of Pacific Gas and Electric Company do not have to buy products or services from the National Energy Group in order to continue to receive quality regulated services from Pacific Gas and Electric Company.

PG&E CORPORATION COMMENTS ON DOWNGRADE OF PG&E NATIONAL ENERGY GROUP CREDIT RATING BY S&P

(San Francisco, CA) - Credit rating agency Standard and Poor's today notified PG&E Corporation and the PG&E National Energy Group that it has placed the PG&E NEG on Credit Watch Negative and downgraded the unit's credit rating from BBB to BB+. Additionally, S&P has informed PG&E Corporation that it has made credit ratings and Credit Watch revisions to the following PG&E NEG operating units. PG&E Energy Trading Holdings LLC has been placed on Credit Watch Negative and its credit rating revised from BBB+ to BB+. USGen New England, Inc. has been placed on Credit Watch Negative and its credit rating has been revised from BBB- to BB+. PG&E Gas Transmission, Northwest Corporation has been placed on Credit Watch Negative and its credit rating has been revised from A- to BBB+.

While disappointing, these revisions to the credit ratings and credit outlook for portions of our business are in keeping with the credit agency's larger overall industry review, PG&E Corporation said. S&P's notice of the downgrades stated they were being made in part as a result of adoption of recently revised "more robust" rating methodologies that are being applied "across the board to this sector" to evaluate credit risk. Since January 1, 2002, S&P has revised downward the credit ratings of 78 energy holding companies and operating subsidiaries principally reflecting current challenging market conditions in the energy sector.

PG&E Corporation said that it will discuss further its plans to address the S&P downgrades during the Corporation's previously scheduled second quarter earnings call which will now take place on Thursday, August 1 at 5:30 a.m. (PDT) 8:30 a.m. (EDT). The call was originally scheduled to take place at 8:00 a.m. (PDT) 11:00 a.m. (EDT). The call will be available via webcast at www.42chongdong.com.