PG&E                                                    7500 Old Georgetown Road
U.S. Generating Company                                 13th Floor
                                                        Bethesda, MD  20814-6161

                                                        301.718.6800
                                                        Fax:  301.913.5854


FOR IMMEDIATE RELEASE                                   Contact:  Lisa Donnellan
                                                             Investor  Relations
                                                                  (301) 280-6979



                SELKIRK COGEN PARTNERS CLOSE AMENDED AND RESTATED
                  POWER PURCHASE AGREEMENT WITH NIAGARA MOHAWK


(BETHESDA,  MD, AUGUST 31, 1998) - Selkirk Cogen Partners, L.P., today announced
that it has  satisfied  the necessary  conditions  under its Trust  Indenture to
consummate the transactions  contemplated by the Master Restructuring Agreement,
dated as of July 9, 1997, as amended,  between Niagara Mohawk Power  Corporation
and certain  independent  power producers,  including Selkirk Cogen. The Amended
and Restated Power Purchase Agreement,  dated as of July 1, 1998 between Selkirk
Cogen and Niagara Mohawk,  became effective with the closing of this transaction
on August 31, 1998.

Selkirk Cogen Partners,  L.P., is a Delaware limited  partnership whose partners
include affiliates of U.S.  Generating Company (USGen).  USGen is a wholly owned
indirect  subsidiary of San Francisco-based  PG&E Corporation,  which provides a
full range of energy services  throughout  North America through its unregulated
affiliates.


                                    --USGen--

U.S. GENERATING COMPANY IS NOT THE SAME AS PACIFIC GAS AND ELECTRIC COMPANY, THE
REGULATED  CALIFORNIA  UTILITY.  U.S. GENERATING COMPANY IS NOT REGULATED BY THE
CALIFORNIA PUBLIC UTILITIES COMMISSION (CPUC).  CALIFORNIA CUSTOMERS DO NOT HAVE
TO BUY  PRODUCTS  OF U.S.  GENERATING  COMPANY TO  CONTINUE  TO RECEIVE  QUALITY
REGULATED SERVICES FROM THE CALIFORNIA UTILITY.


EDITORS:  PLEASE  NOTE THAT PG&E  CORPORATION  IS THE PROPER NAME FOR THE ENERGY
SERVICES  HOLDING COMPANY TRADING ON THE NYSE UNDER THE STOCK SYMBOL PCG. PLEASE
DO NOT USE PACIFIC GAS AND ELECTRIC OR PACIFIC GAS AND ELECTRIC CORPORATION WHEN
REFERRING TO PG&E  CORPORATION.  EFFECTIVE  JANUARY 1, 1997, THE PACIFIC GAS AND
ELECTRIC COMPANY, A REGULATED  CALIFORNIA  UTILITY,  BECAME ONE OF FIVE LINES OF
BUSINESS MANAGED BY PG&E CORPORATION.  THE FOUR OTHER NON-REGULATED SUBSIDIARIES
ARE U.S. GENERATING, PG&E GAS TRANSMISSION,  PG&E ENERGY TRADING AND PG&E ENERGY
SERVICES.