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.

CHAPTER 11 UPDATE: PG&E ISSUES STATEMENT FOLLOWING INTEREST RATE AGREEMENTS WITH CALPINE AND GWF POWER SYSTEMS

SAN FRANCISCO - Pacific Gas and Electric Company today announced it has reached an agreement with Calpine Corporation and GWF Power Systems to set a five percent interest rate for their pre-petition debt.

In July, the utility assumed more than 130 of its Qualifying Facility (QF) contracts and agreed to negotiate an appropriate interest rate with the QFs.

The settlement with Calpine and GWF Power Systems allows Pacific Gas and Electric Company to make monthly principal and interest payments beginning on December 31, 2001, for the next 12 months.

Pacific Gas and Electric Company said "it believes today's agreement with Calpine and GWF can serve as a framework for discussions with other QFs. This ensures our customers will continue to have a reliable source of power at competitive prices."

The utility has 13 Calpine QF contracts that provide a total of 450 megawatts of delivered power. The pre-petition amount owed to Calpine was approximately $265 million.

GWF Power Systems delivers about 125 megawatts through its 7 contracts with the company, and was owed $61.7 million.

These agreements are subject to Bankruptcy Court approval. Pacific Gas and Electric Company has about 300 QF contracts, which provide about 2,400 megawatts on an annual basis. When it filed for Chapter 11 on April 6, the utility owed approximately $1 billion to its QFs.