June 16, 2000


Sempra Energy International, PG&E Corporation and Próxima Gas, S.A. de C.V., to Develop Mexico Natural Gas Pipeline

San Diego — Sempra Energy International, a subsidiary of Sempra Energy, PG&E Corporation and Mexico's Próxima Gas, S.A. de C.V. announced that they will join forces to build the proposed North Baja Pipeline, a $230 million, 212-mile natural gas transportation pipeline to serve growing energy demand in Baja California, Mexico.

The three companies have signed an interim agreement to jointly develop, design, construct and operate the proposed pipeline. The project will begin at an interconnection with El Paso Natural Gas Co. near Ehrenberg, Ariz., traverse southeastern California and northern Baja California, Mexico, and terminate at an interconnection with the Rosarito Pipeline south of Tijuana. The PG&E National Energy Group will direct development of the 77-mile U.S. leg of the pipeline, while Sempra Energy International will direct development of the 135-mile Mexican leg.

"We and Próxima Gas believe this is a critical project integrating the energy markets of California and Northern Mexico," said Donald E. Felsinger, group president of Sempra Energy and also chairman of the subsidiary, Sempra Energy International. "By developing this new pipeline with PG&E Corporation —our third project in Baja California— we will link our existing natural gas assets in Rosarito and Mexicali and expand our capacity to deliver a clean, reliable source of energy that will spur economic development and improve air quality in the border region."

"This pipeline will deliver much-needed natural gas supplies to Northern Mexico, where demand is growing rapidly, providing a new link between Southwest U.S. natural gas supplies and the Mexico market," said Thomas B. King, president, West Region, for the PG&E National Energy Group. "For PG&E Corporation's National Energy Group, the project will broaden our presence as a natural gas transportation provider in western North American markets."

If approved, the proposed pipeline could be in service as early as January 2003, with a gas transportation capacity of approximately 400 million cubic feet per day at rates competitive with existing alternatives. The initial design calls for a 30-inch pipeline and one compressor station in Arizona.

The U.S. segment of the pipeline will be regulated by the U.S. Federal Energy Regulatory Commission and the Mexican segment by the Mexican Energy Regulatory Commission (CRE). Sempra Energy International filed for a natural gas transportation permit with the CRE in March of this year.

The primary target markets for the pipeline are power plants and energy-intensive industries in Baja California. Currently, the Mexican Federal Electricity Commission (CFE) has plans to convert the existing President Juárez Power Plant in Rosarito, Baja California, to natural gas from oil. In addition, the CFE has solicited offers from independent developers to build 500 megawatts of new natural gas-fired electric generation in Baja California.

Increased use of clean-burning natural gas at power plants and industries in the region will improve air quality by reducing emissions in the San Diego/Tijuana border area. Currently, manufacturing plants and residents in Baja California rely primarily on propane and fuel oil for industrial boilers and cooking.

Sempra Energy International and Próxima Gas have been pioneers in Mexico's energy market. The companies currently own and operate four energy businesses in Mexico, including natural gas distribution systems in Mexicali, Baja California, Chihuahua and the states of Coahuila and Durango, as well as the pipeline from San Diego to the Rosarito Power Plant in Baja California.

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