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<title>PG&amp;E National Energy Group 8-K</title>
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<table border="0" cellspacing="0" cellpadding="0" width="644">
<tr>
<td colspan="5" valign="top">
<p align="center"><font size="3" face="Times New Roman">SECURITIES
AND EXCHANGE COMMISSION</font></p>
</td>
</tr>

<tr>
<td colspan="5" valign="top">
<p align="center"><font size="3" face="Times New Roman"><br />
 </font></p>
</td>
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<tr>
<td colspan="5" valign="top">
<p align="center"><font size="3" face="Times New Roman">Washington,
D.C.&nbsp; 20549</font></p>
</td>
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<p align="center"><font size="3" face="Times New Roman"><br />
<br />
 </font></p>
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<tr>
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<p align="center"><font size="3" face="Times New Roman">FORM
8-K</font></p>
</td>
</tr>

<tr>
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<p align="center"><font size="3" face="Times New Roman"><br />
 </font></p>
</td>
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<tr>
<td colspan="5" valign="top">
<p align="center"><font size="3" face="Times New Roman">CURRENT
REPORT</font></p>
</td>
</tr>

<tr>
<td colspan="5" valign="top">
<p align="center"><font size="3" face="Times New Roman"><br />
 </font></p>
</td>
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<tr>
<td colspan="5" valign="top">
<p align="center"><font size="3" face="Times New Roman">Pursuant to
Section 13 or 15(d) of the Securities Exchange Act of
1934</font></p>
</td>
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<td colspan="5" valign="top">
<p align="center"><font size="3" face="Times New Roman"><br />
 </font></p>
</td>
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<tr>
<td colspan="5" valign="top">
<p align="center"><font size="3" face="Times New Roman">Date of
Report: March 21, 2003</font></p>
</td>
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<tr>
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<p align="center"><font size="3" face="Times New Roman"><br />
 </font></p>
</td>
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<td colspan="5" valign="top"></td>
</tr>

<tr>
<td valign="top">
<p align="center"><font size="3" face="Times New Roman"><br />
 Commission<br />
 File<br />
 Number</font></p>
</td>
<td valign="top">
<p align="center"><font size="3" face="Times New Roman">Exact Name
of<br />
 Registrant<br />
 as specified in<br />
 its charter</font></p>
</td>
<td valign="top">
<p align="center"><font size="3" face="Times New Roman"><br />
 State or other<br />
 Jurisdiction of<br />
 Incorporation</font></p>
</td>
<td colspan="2" valign="top">
<p align="center"><font size="3" face="Times New Roman"><br />
 IRS Employer<br />
 &nbsp; Identification<br />
 Number</font></p>
</td>
</tr>

<tr>
<td valign="top">
<p align="center"><font size="3" face=
"Times New Roman">_____________</font></p>
</td>
<td valign="top">
<p align="center"><font size="3" face=
"Times New Roman">_____________</font></p>
</td>
<td valign="top">
<p align="center"><font size="3" face=
"Times New Roman">_____________</font></p>
</td>
<td colspan="2" valign="top">
<p align="center"><font size="3" face=
"Times New Roman">_____________</font></p>
</td>
</tr>

<tr>
<td valign="top">
<p align="center"><font size="3" face=
"Times New Roman">333-66032</font></p>
</td>
<td valign="top">
<p align="center"><font size="3" face="Times New Roman">PG&amp;E
National Energy Group, Inc.</font></p>
</td>
<td valign="top">
<p align="center"><font size="3" face=
"Times New Roman">Delaware</font></p>
</td>
<td colspan="2" valign="top">
<p align="center"><font size="3" face=
"Times New Roman">94-3316236</font></p>
</td>
</tr>

<tr>
<td colspan="4" valign="top"></td>
<td>
<p>&nbsp;</p>
</td>
</tr>

<tr>
<td colspan="4" valign="top">
<p align="center"><font size="3" face="Times New Roman">PG&amp;E
National Energy Group, Inc.<br />
 7600 Wisconsin Avenue<br />
 Bethesda, Maryland</font></p>
</td>
<td>
<p>&nbsp;</p>
</td>
</tr>

<tr>
<td colspan="5" valign="top"></td>
</tr>

<tr>
<td colspan="5" valign="top">
<p align="center"><font size="3" face="Times New Roman">(Address of
principal executive offices) (Zip Code)</font></p>
</td>
</tr>

<tr>
<td valign="top">
<p align="center"><font size="3" face="Times New Roman"><br />
 </font></p>
</td>
<td valign="top"></td>
<td valign="top"></td>
<td colspan="2" valign="top"></td>
</tr>

<tr>
<td colspan="5" valign="top">
<p align="center"><font size="3" face="Times New Roman"><br />
 (301) 280-6800</font></p>
</td>
</tr>

<tr>
<td colspan="5" valign="top"></td>
</tr>

<tr>
<td colspan="5" valign="top">
<p align="center"><font size="3" face=
"Times New Roman">(Registrant's telephone number, including area
code)</font></p>
</td>
</tr>

<tr>
<td valign="top"></td>
<td valign="top"></td>
<td valign="top"></td>
<td colspan="2" valign="top"></td>
</tr>
</table>

<p><font size="3" face="Times New Roman"><br />
</font></p>

<div align="center"><font size="3" face="Times New Roman"></font>
<hr size="2" width="100%" align="center" />
</div>

<font size="3" face="Times New Roman"><br clear="all" />
</font>

<p><b><font size="3" face="Times New Roman">Item 5. Other
Events</font></b></p>

<p><font size="3" face="Times New Roman"></font></p>

<p><b><i><font size="3" face="Times New Roman">Shaw
Litigation</font></i></b></p>

<p><font size="3" face="Times New Roman"></font></p>

<p><font size="3" face=
"Times New Roman">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
On March 16, 2003, The Shaw Group Inc. (Shaw) provided a notice of
termination of each of the engineering, procurement and
construction contracts for PG&amp;E National Energy Group, Inc.'s
(PG&amp;E NEG) Covert and Harquahala generating projects. Covert,
owned by Covert Generating Company, LLC (Covert), is a
1,170-megawatt plant in Covert, Michigan, with about 84 percent of
construction complete. Harquahala, owned by Harquahala Generating
Company, LLC (Harquahala) is a 1,092-megawatt plant in Tonopah,
Arizona, with about 88 percent of the construction complete.&nbsp;
The equity in Covert and Harquahala is owned by GenHoldings I, LLC
(GenHoldings), a subsidiary of PG&amp;E NEG.&nbsp; GenHoldings
entered into a credit agreement to fund construction and operation
of the Covert and Harquahala projects as well as other projects.
GenHoldings' loans are secured by these projects.&nbsp; PG&amp;E
NEG has previously issued a guarantee to Shaw for NEG Construction
Finance Company, LLC's (CFC) cost sharing arrangements with Shaw
related to the Covert and Harquahala project cost overruns of up to
$50 million per project.&nbsp; In addition, PG&amp;E NEG has issued
guarantees in favor of the GenHoldings lenders up to $555 million
that guarantee the completion dates and certain payment obligations
regarding the Covert and Harquahala projects.</font></p>

<p><font size="3" face="Times New Roman"></font></p>

<p><font size="3" face=
"Times New Roman">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
As previously disclosed, in October 2002, GenHoldings defaulted
under the credit facility by failing to make required equity
contributions.&nbsp; Although PG&amp;E NEG has guaranteed
GenHoldings' obligation to contribute equity of up to $355 million,
PG&amp;E NEG notified the lenders that it would not pay such
amounts.&nbsp; PG&amp;E NEG's guarantee of GenHoldings' equity
commitment remains outstanding. By letter dated October 16, 2002,
Shaw alleged that in light of this default, it was entitled to
adequate assurance of payment under its contracts.&nbsp;</font></p>

<p><font size="3" face="Times New Roman"></font></p>

<p><font size="3" face=
"Times New Roman">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
On December 13, 2002, Shaw filed complaints in the United States
District Court for the District of Delaware against PG&amp;E NEG,
CFC, Covert and Harquahala, alleging that the claimed failure to
provide Shaw adequate assurance of payment constituted a default
under the contracts. PG&amp;E NEG believes that Shaw is not
entitled to adequate assurances as a matter of law and that, in any
case, the credit arrangements which became effective on December
23, 2002, by which GenHoldings' lenders waived the default and
agreed to provide funds to complete construction, are sufficient to
provide Shaw adequate assurances.&nbsp;&nbsp; On March 13, 2003,
Shaw dismissed the litigation without prejudice, thus reserving its
right to assert the same claims in the same or another court.&nbsp;
On March 18, 2003, PG&amp;E NEG, CFC, Covert, Harquahala, and
Societe Generale, the administrative agent of the GenHoldings'
lenders' group, petitioned the Court to vacate Shaw's
dismissal.&nbsp;</font></p>

<p><font size="3" face="Times New Roman"></font></p>

<p><font size="3" face=
"Times New Roman">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
On March 18, 2003, Covert and Harquahala notified Shaw that its
notice of termination was wrongful and constituted a material
breach of, and an event of abandonment under, the construction
contracts.&nbsp; Later that same day, Societe Generale filed a
complaint for damages against Shaw for its wrongful notice of
termination in the United States District Court for the District of
Delaware.</font></p>

<p><font size="3" face="Times New Roman"></font></p>

<p><font size="3" face=
"Times New Roman">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
PG&amp;E NEG and the lenders are in discussions with Shaw
concerning these matters.</font></p>

<p><font size="3" face="Times New Roman"></font></p>

<p><b><font size="3" face="Times New Roman">Sale of ET
Canada</font></b></p>

<p><font size="3" face="Times New Roman"></font></p>

<p><font size="3" face=
"Times New Roman">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</font>
On March <font color="black">18</font>, 2003, PG&amp;E Energy
Trading-Gas Corporation (ET-Gas), a subsidiary of PG&amp;E NEG,
sold 100% of the stock of PG&amp;E Energy Trading, Canada
Corporation (ET Canada) to Seminole Canada Gas Company, a Nova
Scotia unlimited liability company (Seminole). <font color=
"black">&nbsp;&nbsp; Seminole transferred approximately $86
million</font> at closing&nbsp;to<font color="black">ET-Gas and
several of its affiliates</font>, representing <font color=
"black">the purchase price and the</font> return of collateral
posted by ET-Gas and ET Canada to support ET Canada's energy
trading transactions,<font color="black">&nbsp;plus
interest</font>.&nbsp; Most of the proceeds will be used to repay
principal and interest of an outstanding loan of $76 million to
another affiliate.</p>

<p><font size="3" face="Times New Roman"></font></p>

<p><font size="3" face=
"Times New Roman">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</font>
Seminole has also agreed within 30 days after the closing to
replace certain letters of credit issued to support ET Canada's
energy trading transactions and to obtain the release of ET-Gas and
its affiliates, including PG&amp;E Gas Transmission, Northwest
Corporation and PG&amp;E NEG from obligations under guarantees
issued for the same reasons.&nbsp; Seminole has indemnified ET-Gas
for any liability under the letters of credit or the guarantees. As
previously disclosed, in the fourth quarter of 2002, PG&amp;E NEG
recorded a $25 million pre-tax loss, with no tax benefits
associated with the loss, on the disposition of ET
Canada.&nbsp;</p>

<font size="3" face="Times New Roman"><br clear="all" />
</font>

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<tr>
<td valign="top">
<p><font size="3" face="Times New Roman">SIGNATURE</font></p>
</td>
</tr>
</table>

<p><font size="3" face="Times New Roman"></font></p>

<p><font size="3" face="Times New Roman">Pursuant to the
requirements of the Securities Exchange Act of 1934, the registrant
has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.</font></p>

<p><font size="3" face="Times New Roman"></font></p>

<p><font size="3" face="Times New Roman"></font></p>

<p><font size="3" face="Times New Roman"></font></p>

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<tr>
<td valign="top">
<p><font size="3" face=
"Times New Roman">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</font></p>
</td>
<td valign="top">
<p><font size="3" face="Times New Roman">PG&amp;E NATIONAL ENERGY
GROUP, INC.<br />
 </font></p>
</td>
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<td valign="top"></td>
</tr>

<tr>
<td valign="top">
<p><font size="3" face="Times New Roman">&nbsp;
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</font></p>
</td>
<td valign="top">
<p><font size="3" face="Times New Roman">By:&nbsp; /s/&nbsp; THOMAS
E. LEGRO</font></p>
</td>
</tr>

<tr>
<td valign="top">
<p><font size="3" face=
"Times New Roman">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</font></p>
</td>
<td valign="top">
<p><font size="3" face=
"Times New Roman">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<u>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</u></font></p>
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<p><font size="3" face="Times New Roman">&nbsp;
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</font></p>
</td>
<td valign="top">
<p><font size="3" face=
"Times New Roman">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;THOMAS
E. LEGRO</font></p>

<p><font size="3" face=
"Times New Roman">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</font>
Vice President and</p>

<p><font size="3" face=
"Times New Roman">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Chief
Accounting Officer</font></p>

<p><font size="3" face="Times New Roman"><br />
 </font></p>
</td>
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<tr>
<td valign="top">
<p><font size="3" face="Times New Roman">&nbsp;
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</font></p>
</td>
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</tr>
</table>

<p><font size="3" face="Times New Roman"></font></p>

<p><font size="3" face="Times New Roman">Date: March 21,
2003</font></p>
</div>
</body>
</html>
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PG&E National Energy Group 8-K
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C.  20549
FORM
8-K
CURRENT
REPORT
Pursuant to
Section 13 or 15(d) of the Securities Exchange Act of
1934
Date of
Report: March 21, 2003
Commission
File
Number
Exact Name
of
Registrant
as specified in
its charter
State or other
Jurisdiction of
Incorporation
IRS Employer
Identification
Number
_____________
_____________
_____________
_____________
333-66032
PG&E
National Energy Group, Inc.
Delaware
94-3316236
PG&E
National Energy Group, Inc.
7600 Wisconsin Avenue
Bethesda, Maryland
(Address of
principal executive offices) (Zip Code)
(301) 280-6800
(Registrant's telephone number, including area
code)
Item 5. Other
Events
Shaw
Litigation
On March 16, 2003, The Shaw Group Inc. (Shaw) provided a notice of
termination of each of the engineering, procurement and
construction contracts for PG&E National Energy Group, Inc.'s
(PG&E NEG) Covert and Harquahala generating projects. Covert,
owned by Covert Generating Company, LLC (Covert), is a
1,170-megawatt plant in Covert, Michigan, with about 84 percent of
construction complete. Harquahala, owned by Harquahala Generating
Company, LLC (Harquahala) is a 1,092-megawatt plant in Tonopah,
Arizona, with about 88 percent of the construction complete. 
The equity in Covert and Harquahala is owned by GenHoldings I, LLC
(GenHoldings), a subsidiary of PG&E NEG.  GenHoldings
entered into a credit agreement to fund construction and operation
of the Covert and Harquahala projects as well as other projects.
GenHoldings' loans are secured by these projects.  PG&E
NEG has previously issued a guarantee to Shaw for NEG Construction
Finance Company, LLC's (CFC) cost sharing arrangements with Shaw
related to the Covert and Harquahala project cost overruns of up to
$50 million per project.  In addition, PG&E NEG has issued
guarantees in favor of the GenHoldings lenders up to $555 million
that guarantee the completion dates and certain payment obligations
regarding the Covert and Harquahala projects.
As previously disclosed, in October 2002, GenHoldings defaulted
under the credit facility by failing to make required equity
contributions.  Although PG&E NEG has guaranteed
GenHoldings' obligation to contribute equity of up to $355 million,
PG&E NEG notified the lenders that it would not pay such
amounts.  PG&E NEG's guarantee of GenHoldings' equity
commitment remains outstanding. By letter dated October 16, 2002,
Shaw alleged that in light of this default, it was entitled to
adequate assurance of payment under its contracts.
On December 13, 2002, Shaw filed complaints in the United States
District Court for the District of Delaware against PG&E NEG,
CFC, Covert and Harquahala, alleging that the claimed failure to
provide Shaw adequate assurance of payment constituted a default
under the contracts. PG&E NEG believes that Shaw is not
entitled to adequate assurances as a matter of law and that, in any
case, the credit arrangements which became effective on December
23, 2002, by which GenHoldings' lenders waived the default and
agreed to provide funds to complete construction, are sufficient to
provide Shaw adequate assurances.   On March 13, 2003,
Shaw dismissed the litigation without prejudice, thus reserving its
right to assert the same claims in the same or another court. 
On March 18, 2003, PG&E NEG, CFC, Covert, Harquahala, and
Societe Generale, the administrative agent of the GenHoldings'
lenders' group, petitioned the Court to vacate Shaw's
dismissal.
On March 18, 2003, Covert and Harquahala notified Shaw that its
notice of termination was wrongful and constituted a material
breach of, and an event of abandonment under, the construction
contracts.  Later that same day, Societe Generale filed a
complaint for damages against Shaw for its wrongful notice of
termination in the United States District Court for the District of
Delaware.
PG&E NEG and the lenders are in discussions with Shaw
concerning these matters.
Sale of ET
Canada
On March
18
, 2003, PG&E Energy
Trading-Gas Corporation (ET-Gas), a subsidiary of PG&E NEG,
sold 100% of the stock of PG&E Energy Trading, Canada
Corporation (ET Canada) to Seminole Canada Gas Company, a Nova
Scotia unlimited liability company (Seminole).
Seminole transferred approximately $86
million
at closing to
ET-Gas and
several of its affiliates
, representing
the purchase price and the
return of collateral
posted by ET-Gas and ET Canada to support ET Canada's energy
trading transactions,
plus
interest
.  Most of the proceeds will be used to repay
principal and interest of an outstanding loan of $76 million to
another affiliate.
Seminole has also agreed within 30 days after the closing to
replace certain letters of credit issued to support ET Canada's
energy trading transactions and to obtain the release of ET-Gas and
its affiliates, including PG&E Gas Transmission, Northwest
Corporation and PG&E NEG from obligations under guarantees
issued for the same reasons.  Seminole has indemnified ET-Gas
for any liability under the letters of credit or the guarantees. As
previously disclosed, in the fourth quarter of 2002, PG&E NEG
recorded a $25 million pre-tax loss, with no tax benefits
associated with the loss, on the disposition of ET
Canada.
SIGNATURE
Pursuant to the
requirements of the Securities Exchange Act of 1934, the registrant
has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
PG&E NATIONAL ENERGY
GROUP, INC.
By:  /s/  THOMAS
E. LEGRO
THOMAS
E. LEGRO
Vice President and
Chief
Accounting Officer
Date: March 21,
2003