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SAN FRANCISCO — Pacific Gas and Electric Corp. continued negotiating with lenders Monday, hoping to extend the deadline on a $431 million loan to its unregulated energy trading arm that it says it can’t afford to pay. 

Monday’s deadline marked the end of an earlier extension granted Aug. 21 to PG&E’s National Energy Group, and is the latest obstacle the struggling affiliate must overcome. 

Rating agency Moody’s Investors Service downgraded National Energy Group’s credit rating further into junk status Friday, the latest in a series of downgrades. Brian Hertzog, corporate spokesman for San Francisco-based PG&E, said Friday it would not affect the company substantially. 

But in a recent 8K filing with the Securities and Exchange Commission, PG&E said the $431 million revolving credit agreement due Monday could force the affiliate into insolvency if it’s unable to win yet another extension from lenders. 

Under such a scenario, National Energy Group would become the second PG&E affiliate in bankruptcy court. California’s largest utility filed for federal Chapter 11 protection in April 2001. 

Hertzog said Monday that PG&E has talked with the group of about 16 lenders about an extension since August, but would not elaborate on the length of the requested extension or when PG&E might settle the debt. 

Plummeting electricity prices and close scrutiny of trading practices following the collapse of energy giant Enron Corp. have caused power traders to flounder in recent months. National Energy Group reported a $21 million loss in the third quarter because of slumping energy sales. 

Based in Bethesda, Md., the subsidiary owns USGen New England power system and sells and trades electricity with other utilities. It also builds power plants and has facilities under construction in Arizona, Michigan and New York. 

PG&E Corp. has said it expects new loan agreements will provide the corporation with enough liquidity to fund operations through at least 2006, despite the woes of its affiliates. 

Shares of PG&E climbed 90 cents to close at $10.40 in trading Monday on the New York Stock Exchange.