SAN FRANCISCO – Pacific Gas and Electric Company today announced it has taken historic strides to ensure years of clean, reliable future electricity supplies for the more than 15 million northern and central Californians the utility serves. PG&E reached a key milestone by executing agreements to purchase 1,780 megawatts of new, highly efficient electric power generation for operation in 2009 and 2010.

“PG&E has taken a momentous step to secure new, clean and reliable electricity supplies to power California’s growing economy and replace an aging fleet of power plants,” said Tom King, President and CEO of PG&E. “The agreements we are announcing today are part of PG&E’s vision of a cleaner future for California and represent the most attractive resources that utilize the latest in fuel-efficient technological advancements in power plant design.”

PG&E has designed a broad energy strategy to meet its customers’ future power needs in as environmentally responsible a manner as possible. The strategy relies first on an aggressive expansion of customer energy efficiency and demand side management programs, then looks to secure additional renewable power resources, and seeks to fill the remainder of customers’ energy needs through traditional, but ever more efficient generation sources, such as those announced today.

Over the next three years, PG&E expects to provide more than $1 billion of funding for various energy efficiency programs and customer demand reduction programs that will eliminate the need for construction of more than 1,000 megawatts of new generation facilities. Also, the company continues to increase electricity purchased from renewable energy sources – such as wind, solar and small hydroelectric – at an expected rate of more than 300 megawatts each year to achieve its goal of providing 20 percent of customers’ power from state-eligible renewable sources by 2010. The company will also continue to rely on its extensive network of hydroelectric facilities to supply an additional 18 percent of customer electricity needs.

Components of PG&E's comprehensive energy strategy *

PG&E has entered into four contracts that are expected to generate hundreds of new high paying construction jobs and result in more than $1.5 billion of California infrastructure investment. Together the four newly constructed power plants will generate 1,780 megawatts of electricity. Each of the new power plants will utilize the latest technologies to maximize efficiency and minimize environmental impacts.

These new long-term contracts, which are expected to begin delivering power to the grid in spring of 2009, include three long-term power purchase agreements that represent over 1,100 megawatts. Under the power purchase agreements, PG&E would provide the fuel, and in return receive the capacity, energy, and all products generated by the new facilities. PG&E has entered into a fourth agreement to purchase a newly constructed 660-megawatt power plant that would be owned and operated by PG&E.

The contracts are subject to approval by the California Public Utilities Commission (CPUC). PG&E plans to file an application for approval of the new contracts in mid-April and anticipates that the CPUC would issue its decision by the end of the year. Assuming the CPUC approves the contracts and that permitting and construction schedules are met, the new generation facilities are anticipated to begin delivering power to the grid in the spring of 2009.

Description of Generating Projects

These agreements are consistent with PG&E’s CPUC-approved long-term resource plan to add new generation within its service area between 2008 and 2010 to meet the long-term energy needs of its customers. PG&E also ex pects to execute additional agreements in the coming weeks to meet its long-term resource needs.

In addition, PG&E expects to finalize the transfer of permits for a new power plant in Contra Costa County (Contra Costa Unit 8) and, assuming CPUC approval, to complete construction of the new state-of-the-art 530-megawatt generation facility with output available to serve customers in 2008. With the approval of these contracts and the expansion of various energy efficiency programs, PG&E will secure the long-term energy needs of its customers.

Background

On July 9, 2004, PG&E submitted its long-term resource plan with the CPUC and outlined steps to meet the long-term electricity needs of its customers, including this Request for Offers (RFO).

Through the RFO, the company sought to add approximately 2,200 megawatts of generation facilities within its service area between 2008 and 2010. The submission deadline for initial bids was April 27, 2005. PG&E then established a short list of qualified projects and began discussions with various bidders to select the best-fit technology and least-cost energy alternative. Contracts were executed over the last week. This RFO was one of several PG&E has recently embarked upon, and additional RFOs for renewable and all-source resources are either underway or in development.

For more information about Pacific Gas and Electric Company, please visit the company’s web site at www.pge.com