An assembly for pumping well fluid from a well includes a production conduit string having a polished bore receptacle. A coiled tubing segment with a power cable is suspended within the production conduit string. A motor, which is secured to the coiled tubing segment and electrically connected with the power cable, drives a pump. The pump discharge opens into a coiled tubing annulus between the coiled tubing segment and production conduit string. A gas separator has a heavier fluid outlet leading into the pump intake and a lighter fluid outlet leading into the production conduit string below the polished bore receptacle. A seal member extends between the gas separator and the pump in sealing engagement with the polished bore receptacle above the lighter fluid outlet and below the pump discharge.