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.
ENERGY GROUP RESPONDS TO FERC INQUIRY ON ENERGY TRADING TRANSACTIONS
(Bethesda, MD) - PG&E Corporation's
(NYSE: PCG) PG&E National Energy Group told federal regulators Friday
that of its more than 25,000 electricity trading transactions over
two years in the western United States, it identified 12 "sell-buyback"
trades. These instances had no material effect on the company's
reported financial results.
These instances represent
less than one-tenth of 1 percent of the company's trading transactions
and less than one-fifth of 1 percent of the company's revenue.
PG&E National Energy Group
reviewed its power trading transactions during 2000 and 2001 in
response to an inquiry from the Federal Energy Regulatory Commission,
which issued a request to more than 100 companies for information
on energy trading practices.
The FERC defines these "sell-buyback"
trades as involving "the sale of an electricity product to another
company together with a simultaneous purchase of the same product
at the same price." Some firms have acknowledged using sell-buybacks,
also called "wash trades" or "round-trip" trades, to artificially
inflate trading volumes.
Lyn Maddox, president of
the company's trading operations, has previously stated that "it
is not our policy to engage in any trading practices designed simply
to build our trading volumes."
"Our review of trading practices
during this period, including interviews with our traders, confirms
that none of the transactions we identified were designed to inflate
our volumes or revenues." Maddox said. "We believe engaging in trades
for the primary purpose of building our volume would only serve
to drive up settlement costs and possibly increase credit risk.
Such transactions do nothing to enhance earnings or shareholder
PG&E National Energy Group,
based in Bethesda, Md., develops, builds, owns and operates power
production and national gas transmission facilities and provides
a broad range of energy trading, marketing and risk management services
in North America.