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SCHEDULE 14A INFORMATION

PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE
SECURITIES EXCHANGE ACT OF 1934

(AMENDMENT NO.___)

Filed by the Registrant [ü]

Filed by a Party other than the Registrant [   ]

Check the appropriate box:

[   ]		Preliminary Proxy Statement
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[   ]		Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2))
[   ]		Definitive Additional Materials
[   ]		Soliciting Material Pursuant to sec. 240.14a-11(c) or sec. 240.14a-12

 

PG&E Corporation

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		PG&E Corporation and Pacific Gas and Electric Company   Joint Notice of 2005 Annual Meetings • Joint Proxy Statement

	March 15, 2005
	To the Shareholders of PG&E Corporation and Pacific Gas and Electric Company:
	You are cordially invited to attend the 9th annual meeting of PG&E Corporation and the 99th annual meeting of Pacific Gas and Electric Company. The meetings will be held concurrently on Wednesday, April 20, 2005, at 10:00 a.m., at the San Ramon Valley Conference Center, 3301 Crow Canyon Road, San Ramon, California.
	The accompanying Joint Proxy Statement contains information about matters to be considered at both the PG&E Corporation and Pacific Gas and Electric Company annual meetings. At the annual meetings, PG&E Corporation and Pacific Gas and Electric Company shareholders will be asked to vote on the election of directors and ratification of the appointment of independent public accountants for 2005 for each company. The Boards of Directors and management of PG&E Corporation and Pacific Gas and Electric Company recommend that you vote “FOR” the nominees for directors and the ratification of the appointment of Deloitte & Touche LLP as the independent public accountants for 2005, as set forth in the Joint Proxy Statement.
	In addition to the matters described above, PG&E Corporation shareholders will be asked to vote on a management proposal to adopt a new Long-Term Incentive Plan for non-employee directors, officers, key management employees, and other eligible participants. For the reasons stated in the Joint Proxy Statement, the PG&E Corporation Board of Directors and management recommend that PG&E Corporation shareholders vote “FOR” this proposal.
	PG&E Corporation shareholders also will be asked to vote on the proposals submitted by individual PG&E Corporation shareholders described in the Joint Proxy Statement, if such proposals are properly presented at the annual meeting. For the reasons stated in the Joint Proxy Statement, the PG&E Corporation Board of Directors and management recommend that PG&E Corporation shareholders vote “AGAINST” these proposals.
	Your vote on the business at the annual meetings is important. For your convenience, we offer you the option of submitting your proxy and voting instructions over the Internet, by telephone, or by mail. Whether or not you plan to attend, please vote as soon as possible so that your shares can be represented at the annual meetings.
	Sincerely,

Robert D. Glynn, Jr.		Peter A. Darbee
Chairman of the Board of		President and Chief Executive Officer
PG&E Corporation and		PG&E Corporation
Pacific Gas and Electric Company

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Joint Notice of Annual Meetings of Shareholders
Joint Proxy Statement				1
	Questions and Answers			1
	Corporate Governance Guidelines			7
	Item No. 1:       Election of Directors			14
	Information Regarding the Boards of Directors of PG&E Corporation and Pacific Gas and Electric Company			17
	Item No. 2:       Ratification of Appointment of Independent Public Accountants			27
	Information Regarding the Independent Public Accountants of PG&E Corporation and Pacific Gas and Electric Company			28
	Item No. 3:       Management Proposal Regarding a Long-Term Incentive Plan (To Be Voted on by PG&E Corporation Shareholders Only)			30
	Item Nos. 4-8: PG&E Corporation Shareholder Proposals (To Be Voted on by PG&E Corporation Shareholders Only)			38
	Executive Compensation			43
	Report of the Audit Committees			54
	Other Information			55

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1.	For PG&E Corporation and Pacific Gas and Electric Company shareholders, to elect the following 9 and 10 directors, respectively, to each Board for the ensuing year:

David R. Andrews		Peter A. Darbee		Barbara L. Rambo
Leslie S. Biller		Robert D. Glynn, Jr.		Gordon R. Smith*
David A. Coulter		Mary S. Metz		Barry Lawson Williams
C. Lee Cox
* Gordon R. Smith is a nominee for director of Pacific Gas and Electric Company only.

2.	For PG&E Corporation and Pacific Gas and Electric Company shareholders, to ratify each Audit Committee’s appointment of Deloitte & Touche LLP as independent public accountants for 2005 for PG&E Corporation and Pacific Gas and Electric Company,
3.	For PG&E Corporation shareholders only, to act upon a management proposal to adopt a new Long-Term Incentive Plan, as described on pages 30 through 37 of the Joint Proxy Statement,
4.	For PG&E Corporation shareholders only, to act upon proposals submitted by PG&E Corporation shareholders and described on pages 38 through 42 of the Joint Proxy Statement, if such proposals are properly presented at the meeting, and
5.	For PG&E Corporation and Pacific Gas and Electric Company shareholders, to transact any other business that may properly come before the meetings and any adjournments or postponements of the meetings.

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1.	Over the Internet at http://www.proxyvoting.com/pcg,
2.	By telephone by calling toll-free 1-866-540-5760, and
3.	By completing your proxy card and mailing it in the enclosed postage-paid envelope.

Item						Board’s Voting
No.				Description		Recommendation
	1			Election of Directors		For all nominees
	2			Ratification of Appointment of Independent Public Accountants		For this proposal
	3			Management Proposal		For this proposal
	4-8			Shareholder Proposals		Against these proposals

Item						Board’s Voting
No.				Description		Recommendation
	1			Election of Directors		For all nominees
	2			Ratification of Appointment of Independent Public Accountants		For this proposal

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1.	A brief description of the candidate,
2.	The candidate’s name, age, business address, and residence address,
3.	The candidate’s principal occupation and the class and number of shares of the company’s stock owned by the candidate, and
4.	Any other information that would be required under the rules of the Securities and Exchange Commission in a proxy statement listing the candidate as a nominee for director.

1.	A brief description of your nomination,
2.	Your name and address, as they appear in the company’s records,
3.	The class and number of shares of the company’s stock that you own,

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4.	Any material interest you may have in the nomination,
5.	The nominee’s name, age, business address, and residence address,
6.	The nominee’s principal occupation and the class and number of shares of the company’s stock owned by the nominee, and
7.	Any other information that would be required under the rules of the Securities and Exchange Commission in a proxy statement listing the nominee as a candidate for director.

•	PG&E Corporation’s and Pacific Gas and Electric Company’s codes of conduct and ethics that apply to each company’s directors and employees, including executive officers,
•	PG&E Corporation’s and Pacific Gas and Electric Company’s Corporate Governance Guidelines, and
•	Charters of key Board committees including charters for the companies’ Audit Committees and the PG&E Corporation Nominating, Compensation, and Governance Committee.

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1.	Election of Directors

	All members of the Board of Directors of PG&E Corporation (the “Corporation”) are elected each year and serve one-year terms. Directors are not elected for multiple-year, staggered terms.

2.	Composition of the Board

The Board’s membership is composed of qualified, dedicated, ethical, and highly regarded individuals who have experience relevant to the Corporation’s operations and understand the complexities of the Corporation’s business environment. The Board seeks to include a diversity of backgrounds, perspectives, and skills among its members. No member of the Board of Directors may be an employee of the American Stock Exchange or a floor member of that exchange.

3.	Independence of Directors

	All members of the Board have a fiduciary responsibility to represent the best interests of the Corporation and all of its shareholders.
	At least 75 percent of the Board is composed of independent directors, defined as directors who (1) are neither current nor former officers or employees of nor consultants to the Corporation or its subsidiaries, (2) are neither current nor former officers or employees of any other corporation on whose board of directors any officer of the Corporation serves as a member, and (3) otherwise meet the applicable definition of “independence” set forth in the New York Stock Exchange, American Stock Exchange, and Pacific Exchange rules. The Board must affirmatively determine whether a director is independent, and may develop categorical standards to assist the Board in determining whether a director has a material relationship with the Corporation, and thus is not independent. Such standards are set forth in Exhibit A to these Corporate Governance Guidelines. As provided in Article III, Section 1 of the Corporation’s Bylaws, the Chairman of the Board and the President are members of the Board.

4.	Selection of Directors

The Board nominates directors for election at the annual meeting of shareholders and selects directors to fill vacancies which occur between annual meetings. The Nominating, Compensation, and Governance Committee, in consultation with the Chairman of the Board and the Chief Executive Officer (CEO) (if the Chairman is not the CEO), reviews the qualifications of the Board candidates and presents recommendations to the full Board for action.

5.	Characteristics of Directors

The Nominating, Compensation, and Governance Committee annually reviews with the Board, and submits for Board approval, the appropriate skills and characteristics required of Board members in the context of the current composition of the Board. In conducting this assessment, the Committee considers diversity, age, skills, and such other factors as it deems appropriate given the current needs of the Board and the Corporation.

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6.	Selection of the Chairman of the Board and the Chief Executive Officer

	The Chairman of the Board and the Chief Executive Officer are elected by the Board.
	Based on the circumstances existing at a time that there is a vacancy in the office of either the Chairman of the Board or the Chief Executive Officer, the Board will consider whether the role of Chief Executive Officer should be separate from that of Chairman of the Board, and, if the roles are separate, whether the Chairman should be selected from the independent directors or should be an employee of the Corporation.

7.	Assessing the Board’s and Committees’ Performance

The Nominating, Compensation, and Governance Committee oversees the process for evaluating and assessing the performance of the Board, including Board committees. The Board conducts a self-evaluation at least annually to determine whether it and its committees are functioning effectively. The Board evaluation includes an assessment of the Board’s contribution as a whole and specific areas in which the Board and/or management believes a better contribution could be made. The purpose of the review is to increase the effectiveness of the Board as a whole, not to discuss the performance of individual directors. The Audit Committee and the Nominating, Compensation, and Governance Committee conduct annual self-evaluations, and any other permanent Board committee that meets on a regular basis conducts periodic self-evaluations. The Board committees provide the results of any self-evaluation to the Nominating, Compensation, and Governance Committee, which will review those results and provide them to the Board for consideration in the Board’s self-evaluation.

8.	Size of the Board

	As provided in paragraph I of Article Third of the Corporation’s Articles of Incorporation, the Board is composed of no less than 7 and no more than 13 members. The exact number of directors is determined by the Board based on its current composition and requirements, and is specified in Article II, Section 1 of the Corporation’s Bylaws.

9.	Advisory Directors

The Board may designate future directors as advisory directors in advance of their formal election to the Board. Advisory directors attend Board and committee meetings, and receive the same compensation as regular directors. They do not, however, vote on matters before the Board. In this manner, they become familiar with the Corporation’s business before assuming the responsibility of serving as a regular director.

10.	Directors Who Change Responsibilities

	Directors shall offer their resignations when they change employment or the major responsibilities they held when they joined the Board. This does not mean that such directors should leave the Board. However, the Board, via the Nominating, Compensation, and Governance Committee, should have the opportunity to review the appropriateness of such directors’ nomination for re-election to the Board under these circumstances.
	Directors who are officers of the Corporation also shall offer their resignations upon retirement or other termination of active PG&E Corporation employment.

11.	Retirement Age

	The Board may not designate any person as a candidate for election or re-election as a director after such person has reached the age of 70.

12.	Compensation of Directors

	The Board sets the level of compensation for directors, based on the recommendation of the Nominating, Compensation, and Governance Committee, and taking into account the impact of compensation on director independence. Directors who are also current employees of the Corporation receive no additional compensation for service as directors.
	The Nominating, Compensation, and Governance Committee reviews periodically the amount and form of compensation paid to directors, taking into account the compensation paid to directors of other comparable U.S. companies. The Committee conducts its review with the assistance of outside experts in the field of executive compensation.

13.	Meetings of the Board

	As provided in Article II, Section 4 of the Corporation’s Bylaws, the Board meets regularly on previously determined dates. Board meetings shall be held at least quarterly. As provided in Article II, Section 5 of the Bylaws, the Chairman of the Board, the President, the Chair of the Executive Committee, or any five directors may call a special meeting of the Board at any time.

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Each Board member is expected to regularly attend Board meetings and meetings of the committees on which the director serves (either in person or by telephone or other similar communication equipment), and to attend annual meetings of the Corporation’s shareholders. Pursuant to proxy disclosure rules, the Corporation’s proxy statement identifies each director who during the last fiscal year attended fewer than 75 percent of the aggregate of the total number of meetings of the Board and each Board committee on which the director served.

14.	Lead Director

The Chair of the Nominating, Compensation, and Governance Committee shall be the lead director, and shall be selected by the independent directors. The lead director shall act as a liaison between the Chairman of the Board and the independent directors, and shall preside at all meetings at which the Chairman is not present. The lead director approves the agendas and schedules for meetings of the Board, and approves information sent to the members of the Board. The lead director has authority to call special meetings of the independent directors.

15.	Meetings of Independent Directors

	The independent directors meet at each regularly scheduled Board meeting in executive session. These executive session meetings are chaired by the lead director. Each such meeting includes a subsequent discussion with the Chairman of the Board (if the Chairman is not an independent director) and the Chief Executive Officer (if the Chairman is not the CEO).
	The Chair of the Nominating, Compensation, and Governance Committee, as lead director, establishes the agenda for each executive session meeting of independent directors, and also determines which, if any, other individuals, including members of management and independent advisors, should attend each such meeting.

16.	Board Agenda Items

	The Chairman of the Board, in consultation with the Chief Executive Officer (if the Chairman is not the CEO), establishes the agenda for each meeting.
	Board members are encouraged to suggest the inclusion of items on the agenda.

17.	Board Materials and Presentations

The agenda for each meeting is provided in advance of the meeting, together with written materials on matters to be presented for consideration, for the directors’ review prior to the meeting. As a general rule, written materials are provided in advance on all matters requiring Board action. Written materials are concise summaries of the relevant information, designed to provide a foundation for the Board’s discussion of key issues and make the most efficient use of the Board’s meeting time. Directors may request from the Chairman of the Board and the Chief Executive Officer (if the Chairman is not the CEO) any additional information they believe to be necessary to perform their duties.

18.	Regular Attendance of Non-Directors at Board Meetings

	Members of management, as designated by the Chairman of the Board and the Chief Executive Officer (if the Chairman is not the CEO), attend each meeting of the Board.

19.	Board Committees

	The Board establishes committees to assist the Board in overseeing the affairs of the Corporation.
	Currently, there are five committees. The Executive Committee exercises all powers of the Board (subject to the provisions of law and limits imposed by the Board) and meets only at such times as it is infeasible to convene a meeting of the full Board. The Audit Committee, the Finance Committee, the Nominating, Compensation, and Governance Committee, and the Public Policy Committee are each responsible for defined areas delegated by the Board.

20.	Membership of Board Committees

	All permanent Board committees, other than the Executive Committee, are chaired by independent directors. Each independent committee chair shall act as a liaison between the Chairman of the Board and the respective committee, and shall preside at all meetings of that committee. Each independent committee chair approves the agendas and schedules for meetings of the respective committee, and approves information sent to the committee members. Each independent committee chair has authority to call special meetings of the respective committee.
	The Audit Committee, the Finance Committee, the Nominating, Compensation, and Governance Committee, and the Public Policy Committee are

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	composed entirely of independent directors, as defined in Section 3 of these guidelines.
	Members of the Audit Committee also must satisfy the audit committee independence and qualification requirements established by the Securities and Exchange Commission, the New York Stock Exchange, the American Stock Exchange, the Pacific Exchange, and any other stock exchange on which securities of the Corporation or Pacific Gas and Electric Company are listed. If an Audit Committee member simultaneously serves on the audit committees of three or more public companies other than the Corporation and its subsidiaries, that Committee member must inform the Corporation’s Board of Directors and, in order for that member to continue serving on the Corporation’s Audit Committee, the Board of Directors must affirmatively determine that such simultaneous service does not impair the ability of that member to serve effectively on the Corporation’s Audit Committee.

21.	Appointment of Committee Members

	The composition of each committee is determined by the Board of Directors.
	The Nominating, Compensation, and Governance Committee, after consultation with the Chairman of the Board and the Chief Executive Officer (if the Chairman is not the CEO) and with consideration of the wishes of the individual directors, recommends to the full Board the chairmanship and membership of each committee.

22.	Committee Agenda Items

	The chair of each committee, in consultation with the appropriate members of management, establishes the agenda for each meeting.
	At the beginning of the year, each committee issues a work plan of subjects to be discussed during the year, to the extent such subjects can be foreseen. Copies of these annual work plans are provided to all directors.

23.	Committee Materials and Presentations

	The agenda for each committee meeting is provided in advance of the meeting, together with written materials on matters to be presented for consideration, for the committee members’ review prior to the meeting. As a general rule, written materials are provided in advance on all matters to be presented for committee action.

24.	Attendance at Committee Meetings

	The chair of each committee, after consultation with the Chairman of the Board and the Chief Executive Officer (if the Chairman is not the CEO), determines the appropriate members of management to attend each meeting of the Committee.
	Any director or advisory director may attend any meeting of any committee with the concurrence of the committee chair.

25.	Formal Evaluation of the Chief Executive Officer

	The independent directors annually review and evaluate the performance of the Chief Executive Officer. The review is based upon objective criteria, including the performance of the business and accomplishment of objectives previously established in consultation with the Chief Executive Officer.
	The results of the review and evaluation are communicated to the Chief Executive Officer by the Chair of the Nominating, Compensation, and Governance Committee, and are used by that Committee and the Board when considering the compensation of the CEO.

26.	Management Development and Succession Planning

	The Chief Executive Officer reports annually to the Board on management development and succession planning. This report includes the CEO’s recommendation for a successor should the CEO become unexpectedly disabled.

27.	Communications with External Entities

	The Chief Executive Officer is responsible for all communications with the media, the financial community, or other external entities pertaining to the affairs of the Corporation. Directors refer any inquiries from such entities to the CEO for handling.

28.	Access to Independent Advisors

	The Board of Directors and its committees have the right to retain independent outside financial, legal, or other advisors, as necessary and appropriate. The Corporation shall bear the costs of retaining such advisors.

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29.	Director Orientation and Continuing Education

	The Corporation provides information to new directors on subjects that would assist them in discharging their duties, and periodically provides briefing sessions or materials for all directors on such subjects.

30.	Communications with Shareholders

The Chair of the Nominating, Compensation, and Governance Committee shall be designated as the director who receives written communications from the Corporation’s shareholders, in care of the Corporate Secretary. The Corporate Secretary shall forward to the Chair of the Nominating, Compensation, and Governance Committee any shareholder communications addressed to the Board of Directors as a body or to all the directors in their entirety, and such other communications as the Corporate Secretary, in his or her discretion, determines is appropriate.

31.	Legal Compliance and Business Ethics

The Board of Directors is responsible for exercising reasonable oversight with respect to the implementation and effectiveness of the Corporation’s legal compliance and ethics program. In that role, the Board of Directors shall be knowledgeable about the content and operation of the Corporation’s compliance and ethics program, but may delegate more detailed oversight to a committee of the Board of Directors.

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•	If a director is a current or former employee of the Corporation.
•	If a member of the director’s immediate family is or was employed as a Section 16 Officer of the Corporation, unless such employment ended more than three years ago.

•	If a director is a consultant to the Corporation.
•	If a director or his or her immediate family member receives, or during the past three years received, more that $100,000 per year or rolling 12-month period in direct compensation from the Corporation. “Direct compensation” does not include director and committee fees and pension or other forms of deferred compensation for prior service (provided such compensation is not contingent in any way on continued service) or compensation received by a director’s immediate family member for service as an employee (unless the immediate family member received compensation for services as a Section 16 Officer, in which case the director has a material relationship with the Corporation).

•	If a director or his or her immediate family member is, or during the past three years was, affiliated with, or employed by, a firm that serves or served during the past three years as the Corporation’s internal or external auditor.

•	If a director is a current or former officer or employee of any other company on whose board of directors any officer of the Corporation serves as a member.
•	If a director’s immediate family member is, or during the past three years was, employed by another company where any of the Corporation’s present Section 16 Officers concurrently serves on that company’s compensation committee.

•

If a director is a current Section 16 Officer or employee, or his or her immediate family member is a current Section 16 Officer, of a company (which does not include charitable, non-profit, or tax-exempt entities) that makes payments to, or receives payments from, the Corporation for property or services in an amount which, in any single fiscal year, exceeds the greater of $1 million or 2 percent of such other company’s consolidated gross revenues, during any of the past three years. The director is not “independent” until three years after falling below such threshold. (Both the payments and the consolidated gross revenues to be measured shall be those reported in the last completed fiscal year. The look-back provision for this test applies solely to the financial relationship between the Corporation and the director or immediate family member’s current employer; the Corporation need not consider former employment of the director or immediate family member.)

•	If the director (or a relative) is a trustee, director, or employee of a charitable or non-profit organization that receives grants or endowments from the Corporation or its affiliates exceeding the greater of $200,000 or 2 percent of the recipient’s

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	gross revenues during the Corporation’s or the recipient’s most recent completed fiscal year.

•	During the first year after adoption of these standards, only a one-year look-back applies. The three-year look-back will apply thereafter.
•	“Immediate family member” includes a person’s spouse, parents, children, siblings, mothers- and fathers-in-law, sons- and daughters-in-law, brothers- and sisters-in-law, and anyone (other than domestic employees) who shares such person’s home, or is financially dependent on such person.
•	“Corporation” includes any consolidated subsidiaries or parent companies.
•	“Section 16 Officer” means “officer” as defined in Rule 16a-1(f) under the Securities Exchange Act of 1934, and includes the president, the principal financial officer, the principal accounting officer, any vice president in charge of a principal business unit, division, or function (such as sales, administration, or finance), any other officer who performs a policymaking function, or any other person who performs similar policymaking functions for that company.

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		David R. Andrews Mr. Andrews is retired Senior Vice President Government Affairs, General Counsel, and Secretary of PepsiCo, Inc. (food and beverage businesses). He held that position from February 2002 to November 2004. Prior to joining PepsiCo, Inc., Mr. Andrews was a partner in the law firm of McCutchen, Doyle, Brown & Enersen, LLP from May 2000 to January 2002 and from 1981 to July 1997. From August 1997 to April 2000, he served as the legal advisor to the U.S. Department of State. Mr. Andrews, 63, has been a director of PG&E Corporation and Pacific Gas and Electric Company since 2000. He also is a director of UnionBanCal Corporation.
		Leslie S. Biller Mr. Biller is retired Vice Chairman and Chief Operating Officer of Wells Fargo & Company (financial services and retail banking). He held that position from November 1998 until his retirement in October 2002. Mr. Biller, 57, was an advisory director of PG&E Corporation and Pacific Gas and Electric Company from January 2003 to February 2004, and has been a director of PG&E Corporation and Pacific Gas and Electric Company since February 2004. He also is a director of Ecolab Inc.
		David A. Coulter Mr. Coulter is Vice Chairman of JPMorgan Chase & Co. (financial services and retail banking), and has held that position since January 2001. Prior to the merger with J.P. Morgan & Co. Incorporated, he was Vice Chairman of The Chase Manhattan Corporation (bank holding company) from August 2000 to December 2000. He was a partner in the Beacon Group, L.P. (investment banking firm) from January 2000 to July 2000. Mr. Coulter, 57, has been a director of PG&E Corporation and Pacific Gas and Electric Company since 1996. He also is a director of Strayer Education, Inc.
		C. Lee Cox Mr. Cox is retired Vice Chairman of AirTouch Communications, Inc. and retired President and Chief Executive Officer of AirTouch Cellular (cellular telephone and paging services). He was an executive officer of AirTouch Communications, Inc. and its predecessor, PacTel Corporation, from 1987 until his retirement in April 1997. Mr. Cox, 63, has been a director of PG&E Corporation and Pacific Gas and Electric Company since 1996.
		Peter A. Darbee Mr. Darbee is President and Chief Executive Officer of PG&E Corporation and has held that position since January 2005. He was Senior Vice President and Chief Financial Officer of PG&E Corporation from September 1999 to December 2004. Mr. Darbee, 52, has been a director of PG&E Corporation and Pacific Gas and Electric Company since January 2005.

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		Robert D. Glynn, Jr. Mr. Glynn is Chairman of the Board of PG&E Corporation and Pacific Gas and Electric Company. He has been an officer of PG&E Corporation since December 1996 and an officer of Pacific Gas and Electric Company since January 1988. Mr. Glynn, 62, has been a director of Pacific Gas and Electric Company since 1995 and a director of PG&E Corporation since 1996.
		Mary S. Metz Dr. Metz is retired President of S. H. Cowell Foundation, and held that position from January 1999 to March 2005. She is Dean Emerita of University Extension of the University of California, Berkeley, and President Emerita of Mills College. Dr. Metz, 67, has been a director of Pacific Gas and Electric Company since 1986 and a director of PG&E Corporation since 1996. She also is a director of Longs Drug Stores Corporation, SBC Communications Inc., and UnionBanCal Corporation.
		Barbara L. Rambo Ms. Rambo is Chief Executive Officer of Nietech Corporation (payments technology company), and has held that position since November 2002. Prior to joining Nietech, Ms. Rambo was a director of OpenClose Technologies (financial services company) from January 2000 through March 2002. She served as Chairman of the Board of OpenClose Technologies from July 2001 to December 2001 and as President and Chief Executive Officer of that company from January 2000 to June 2001. Previously, Ms. Rambo held various executive positions at Bank of America, most recently serving as Group Executive Vice President and Head of National Commercial Banking. Ms. Rambo, 52, has been a director of PG&E Corporation and Pacific Gas and Electric Company since January 2005. She also is a director of The Gymboree Corporation.
		Gordon R. Smith* Mr. Smith is President and Chief Executive Officer of Pacific Gas and Electric Company. He has been an officer of Pacific Gas and Electric Company since 1980. Mr. Smith, 57, has been a director of Pacific Gas and Electric Company since 1997.
		Barry Lawson Williams Mr. Williams is President of Williams Pacific Ventures, Inc. (business investment and consulting), and has held that position since 1987. He also served as interim President and Chief Executive Officer of the American Management Association (management development organization) from November 2000 to June 2001. Mr. Williams, 60, has been a director of Pacific Gas and Electric Company since 1990 and a director of PG&E Corporation since 1996. He also is a director of CH2M Hill Companies, Ltd., The Northwestern Mutual Life Insurance Company, R.H. Donnelley Corporation, The Simpson Manufacturing Company Inc., and SLM Corporation.

	*	Gordon R. Smith is a nominee for director of Pacific Gas and Electric Company only.

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•	Do not have any material relationship with either PG&E Corporation or Pacific Gas and Electric Company that would interfere with the exercise of independent judgment,
•	Are “independent” as defined by applicable New York Stock Exchange, American Stock Exchange, and Pacific Exchange rules, and
•	Satisfy each of the categorical standards adopted by the Boards for determining whether a specific relationship is “material” and a director is independent. Those categorical standards are set forth on pages 12 and 13 of this Joint Proxy Statement.

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Nominating,

Compensation,

Public

Executive

Audit

Finance

and Governance

Policy

Committees

Committees

Committee

Committee

Committee

Non-Employee Directors:

D. R. Andrews

X

X

L. S. Biller

X

X

D. A. Coulter

X

X

*

X

C. L. Cox

X

X

X

*(1)

D. M. Lawrence, MD (through April 20, 2005)

X

X

M. S. Metz

X

X

X

*

B. L. Rambo (beginning January 1, 2005)

X

X

B. L. Williams

X

X

*(2)

X

X

Employee Directors:

P. A. Darbee

X

R. D. Glynn, Jr.

X

*

G. R. Smith

X

(3)

Number of Meetings in 2004 (PG&E Corporation/ Pacific Gas and Electric Company where applicable)

0/0

5/5

6

7

4

*	Committee Chair

(1)	Lead director
(2)	Audit Committee financial expert as defined by the Securities and Exchange Commission
(3)	Member of the Pacific Gas and Electric Company Executive Committee only

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•	Are responsible for the selection, appointment, compensation, and oversight of the work of the independent public accountants that PG&E Corporation and Pacific Gas and Electric Company, as applicable, employ to prepare or issue audit reports or perform related work,
•	Satisfy themselves as to the independence and competence of the appropriate company’s independent public accountants,
•	Pre-approve all auditing and non-auditing services that the independent public accountants provide to PG&E Corporation and Pacific Gas and Electric Company, as applicable,
•	Review and discuss with the independent public accountants, and with the appropriate company’s officers and internal auditors, the scope and results of the independent public accountants’ audit work, consolidated quarterly and annual financial statements, the quality and effectiveness of internal controls, and compliance with laws, regulations, policies, and programs, and
•	Make further inquiries as they deem necessary or desirable to inform themselves of the affairs of the companies and their subsidiaries.

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•	Long-term financial and investment plans and strategies,
•	Annual financial plans,
•	Dividend policy,
•	Short-term and long-term financing plans,
•	Proposed capital expenditures,
•	Proposed divestitures,
•	Major commercial banking, investment banking, financial consulting, and other financial relations of PG&E Corporation or its subsidiaries, and
•	Risk management activities.

•	The selection and compensation of directors,
•	Employment, compensation, and benefits policies and practices,
•	The development, selection, and compensation of policy-making officers, and
•	Corporate governance matters, including the performance and effectiveness of the Boards and the companies’ governance principles and practices.

•	Reviews and acts upon the compensation of officers of PG&E Corporation and its subsidiaries, although the Committee has delegated to the PG&E Corporation Chief Executive Officer the authority to approve compensation for certain officers,
•	Recommends to the independent members of the appropriate Board of Directors the compensation of the Chief Executive Officers of PG&E Corporation and Pacific Gas and Electric Company,
•	Reviews long-range planning for executive development and succession,
•	Reviews the composition and performance of the Boards of PG&E Corporation and Pacific Gas and Electric Company, and
•	Reviews the Corporate Governance Guidelines of PG&E Corporation and Pacific Gas and Electric Company.

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•	Protection and improvement of the quality of the environment,
•	Charitable and community service organizations and activities,
•	Equal opportunity in hiring and promoting employees, and
•	Development of minority-owned and women-owned businesses as suppliers to PG&E Corporation, Pacific Gas and Electric Company, and their subsidiaries.

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•	Restricted shares of PG&E Corporation common stock valued at $30,000 (based on the closing price of PG&E Corporation common stock on the first business day of the year), and
•	A combination, as elected by the director, of non-qualified stock options and common stock equivalents with a total value of $30,000, based on increments valued at $5,000.

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•	Robert D. Glynn, Jr.’s son, Robert D. Glynn III, is Program Manager in Information Technology User Support Services, for Pacific Gas and Electric Company. During 2004, Mr. Glynn III earned $157,164 in annual salary and annual short-term incentive awards.
•	Gregory M. Rueger’s brother-in-law, Roy M. Kuga, is Vice President – Gas and Electric Supply, for Pacific Gas and Electric Company. During 2004, Mr. Kuga earned $289,431 in annual salary and annual short-term incentive awards.

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		Beneficial Stock				Percent of				Common Stock
Name		Ownership(1)(2)(3)				Class(4)				Equivalents(5)				Total
David R. Andrews(6)			8,050				*				0				8,050
Leslie S. Biller(6)			3,428				*				5,799				9,227
David A. Coulter(6)			6,589				*				26,324				32,913
C. Lee Cox(6)			54,368				*				4,518				58,886
Peter A. Darbee(7)			317,011				*				10,450				327,461
Robert D. Glynn, Jr. (7)			1,219,610				*				99,181				1,318,791
David M. Lawrence, MD (6)			50,270				*				3,216				53,486
Mary S. Metz(6)			26,123				*				5,274				31,397
Barbara L. Rambo(6)			908				*				0				908
Gordon R. Smith(8)			417,495				*				20,059				437,554
Barry Lawson Williams (6)			26,464				*				5,689				32,153
Thomas B. King(9)			387,646				*				49,880				437,526
Bruce R. Worthington(9)			382,141				*				7,917				390,058
All PG&E Corporation directors, and executive officers as a group (17 persons)			3,375,680				0.9				259,826				3,635,506
All Pacific Gas and Electric Company directors, and executive officers as a group (20 persons)			3,898,164				1.0				264,904				4,163,068

*	Less than 1 percent

(1)

This column includes any shares held in the name of the spouse, minor children, or other relatives sharing the home of the director, nominee for director, or executive officer and, in the case of executive officers, includes shares of PG&E Corporation common stock held in the defined contribution retirement plan maintained by PG&E Corporation. Except as otherwise indicated below, the directors, nominees for director, and executive officers have sole voting and investment power over the shares shown in this column. Voting power includes the power to direct the voting of the shares held, and investment power includes the power to direct the disposition of the shares held.

This column also includes the following shares of PG&E Corporation common stock in which the directors, nominees for director, and executive officers share voting and investment power: Mr. Andrews 2,984 shares, Mr. Biller 1,959 shares, Mr. Coulter 6,589 shares, Mr. Cox 28,657 shares, Mr. Darbee 33,472 shares, Mr. Glynn 113,261 shares, Dr. Lawrence 15,676 shares, Dr. Metz 8,898 shares, Mr. Smith 52,888 shares, Mr. Worthington 5,366 shares, all PG&E Corporation directors and executive officers as a group 269,450 shares, and all Pacific Gas and Electric Company directors and executive officers as a group 282,366 shares.

(2)

This column includes the following shares of PG&E Corporation common stock which the directors, nominees for director, and executive officers have the right to acquire within 60 days of January 31, 2005, through the exercise of vested stock options granted under the PG&E Corporation Long-Term Incentive Program, as follows: Mr. Andrews 5,066 shares, Mr. Biller 1,469 shares, Mr. Cox 25,711 shares, Mr. Darbee 222,758 shares, Mr. Glynn 1,080,507 shares, Dr. Lawrence 27,180 shares, Dr. Metz 14,998 shares, Mr. Smith 321,346 shares, Mr. Williams 19,701 shares, Mr. King 338,716 shares, Mr. Worthington 340,184 shares, all PG&E Corporation directors and executive officers as a group 2,798,666 shares, and all Pacific Gas and Electric Company directors and executive officers as a group 3,198,807 shares. The directors, nominees for director, and executive officers have neither voting power nor investment power with respect to these shares unless and until they are

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	purchased through the exercise of the options, under the terms of the PG&E Corporation Long-Term Incentive Program.
(3)	This column includes restricted shares of PG&E Corporation common stock awarded under the PG&E Corporation Long-Term Incentive Program. As of January 31, 2005, directors, nominees for director, and executive officers of PG&E Corporation and Pacific Gas and Electric Company held the following numbers of restricted shares that may not be sold or otherwise transferred until certain vesting conditions are satisfied: Mr. Andrews 2,984 shares, Mr. Biller 1,959 shares, Mr. Coulter 4,611 shares, Mr. Cox 4,611 shares, Mr. Darbee 58,532 shares, Mr. Glynn 113,261 shares, Dr. Lawrence 4,964 shares, Dr. Metz 4,964 shares, Ms. Rambo 908 shares, Mr. Smith 64,734 shares, Mr. Williams 4,964 shares, Mr. King 38,299 shares, Mr. Worthington 36,414 shares, all PG&E Corporation directors and executive officers as a group 401,639 shares, and all Pacific Gas and Electric Company directors and executive officers as a group 454,947 shares.
(4)	The percent of class calculation is based on the number of shares of PG&E Corporation common stock outstanding as of January 31, 2005, excluding shares held by a subsidiary.
(5)	This column reflects the number of stock units that were purchased by directors, nominees for director, and executive officers through salary and other compensation deferrals or that were awarded under equity compensation plans. The value of each stock unit is equal to the value of a share of PG&E Corporation common stock and fluctuates daily based on the market price of PG&E Corporation common stock. The directors, nominees for director, and officers who own these stock units share the same market risk as PG&E Corporation shareholders, although they do not have voting rights with respect to these stock units.
(6)	Mr. Andrews, Mr. Biller, Mr. Coulter, Mr. Cox, Dr. Lawrence, Dr. Metz, Ms. Rambo, and Mr. Williams are directors of both PG&E Corporation and Pacific Gas and Electric Company.
(7)	Mr. Glynn and Mr. Darbee are directors and executive officers of both PG&E Corporation and Pacific Gas and Electric Company. They are named in the Summary Compensation Table on pages 47 and 48.
(8)	Mr. Smith is a director and an executive officer of Pacific Gas and Electric Company, and also is an executive officer of PG&E Corporation. He is named in the Summary Compensation Table on pages 47 and 48.
(9)	Mr. Worthington and Mr. King are executive officers of both PG&E Corporation and Pacific Gas and Electric Company and are named in the Summary Compensation Table on pages 47 and 48.

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		2004				2003
Audit Fees		$	4.6 million			$	6.5 million
Audit-Related Fees		$	0.6 million			$	0.7 million
Tax Fees		$	0.3 million			$	1.1 million
All Other Fees		$	0			$	0

		2004				2003
Audit Fees		$	3.6 million			$	2.8 million
Audit-Related Fees		$	0.2 million			$	0.4 million
Tax Fees		$	0			$	0
All Other Fees		$	0			$	0

•	Audit services,
•	Audit-related services, and
•	Tax services that Deloitte & Touche LLP and its affiliates are allowed to provide to Deloitte & Touche LLP’s audit clients under the Sarbanes-Oxley Act.

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(1)	“Audit services” generally include audit and review of annual and quarterly financial statements and services that only the external auditors reasonably can provide (e.g., comfort letters, statutory audits, attest services, consents, and assistance with and review of documents filed with the Securities and Exchange Commission).
(2)	“Audit-related services” generally include assurance and related services that traditionally are performed by the independent public accountants (e.g., employee benefit plan audits, due diligence related to mergers and acquisitions, accounting consultations and audits in connection with acquisitions, internal control reviews, and attest services that are not required by statute or regulation).
(3)	“Tax services” generally include compliance, tax strategy, tax appeals, and specialized tax issues, all of which also must be permitted under the Sarbanes-Oxley Act.

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•	Determine the eligible participants who will be granted incentive awards,

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•	Determine the amount and type of award,
•	Determine the applicable fair market value of PG&E Corporation common stock,
•	Determine the terms and conditions of awards,
•	Construe and interpret the LTIP, and
•	Make all other determinations relating to the LTIP, to the extent permitted by applicable law and subject to certain restrictions specified in the LTIP.

•	Stock options and freestanding (non-tandem) SARs representing a total of no more than 400,000 shares reserved for use under the LTIP,
•	Restricted stock awards and restricted stock units subject to vesting based on the achievement of performance goals (see “Performance Awards” below) representing a total of no more than 400,000 shares reserved for use under the LTIP,
•	Performance shares that could result in the employee receiving no more than 400,000 shares reserved for use under the LTIP for each full fiscal year contained in the performance period for the award, and
•	Performance units that could result in the employee receiving no more than $2 million for each full fiscal year contained in the performance period for the award.

•	Cash or certain cash equivalents,
•	Shares of PG&E Corporation common stock owned by the participant, with a fair market value equal to or greater than the option exercise price,
•	A “cashless exercise” procedure (whereby a broker sells the shares or holds them as collateral for a margin loan, and delivers the net stock option sale or loan proceeds to the participant), subject to limitations set forth by the Committee,

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•	A “net exercise” procedure (whereby the participant receives the number of shares with a value equivalent to the net proceeds from the participant’s exercised options), or
•	Any combination of the foregoing or any other method of payment which the Committee may allow.

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•	Compensation that otherwise would be payable in cash,
•	Shares of PG&E Corporation common stock otherwise issuable to the participant upon the exercise of a stock option,
•	Cash or shares of PG&E Corporation common stock otherwise issuable to the participant upon the exercise of an SAR, and
•	Cash or shares of PG&E Corporation common stock otherwise issuable to the participant upon the settlement of a performance award.

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•	All outstanding stock options and SARs vest immediately and become exercisable in full, and
•	With respect to restricted stock and other awards, all outstanding vesting conditions, restriction periods or performance goals applicable to the

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shares subject to a restricted stock award or other award are accelerated and/or waived, and the award becomes payable to the extent provided in the award agreement.

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	“4 – Expense Stock Options
	Resolved: Shareholders request that our Board of Directors establish a policy of expensing in our Company’s annual income statement the costs of all future stock options issued by our directors.
	53% Shareholder Support
	The 33 shareholder proposals voted on this topic in 2004 achieved an impressive 53% average supporting vote.
	Stock options are an important part of our Company’s executive pay. Options have replaced salary and bonuses as the most significant element of executive pay at numerous companies. The lack of option expensing can promote excessive use of options in a company’s pay plans, obscure and understate the cost of executive pay and promote the pursuit of strategies designed to promote short-term stock price rather than long-term shareholder value.
	Expensing stock options can more accurately reflect the costs of such options to our company. Options are a form of compensation with value to our managers and a cost to our company. In the words of Warren Buffett: “If stock options aren’t a form of compensation what are they? If compensation isn’t an expense, what is it? And, if expenses shouldn’t go into the calculation of earnings, where in the world do they go?”
	The failure to expense stock options can distort our earnings. According to the June 27, 2002 issue of the Analyst’s Accounting Observer, the lack of expense recognition for options resulted in a 31% overstatement of the 2001 earnings of S&P 500 companies. Standard & Poor’s now calculates “core earnings” in which the cost of options is treated as an expense.
	Expensing stock options can send a signal to the market that a company is committed to transparency and corporate governance best practices. Recognizing this, 386 companies announced their intention to expense stock options as of October 2003. Voluntary action by companies is even more critical to investors since the Financial Accounting Standards Board delayed a decision on requiring expensing under GAAP.
	Not expensing stock options may lead to overuse by companies that see options as “free money.” As Standard & Poor’s has stated, “when something is significantly underpriced, it is often also substantially overconsumed.”
	Many companies have responded positively to investors’ concerns about expensing stock options. Let us resolve that our company do so also.
	Expense Stock Options

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	“RADIOACTIVE WASTES: RISK

	Proponent believes PG&E’s production and storage of high level radioactive wastes at Diablo Canyon nuclear plant involves potentially catastrophic risks to the public, to the environment, and to our company which must be mitigated.
	Diablo Canyon operations are continually creating and accumulating substantial quantities of high level radioactive wastes in spent-fuel pools 21/2 miles from a major active California coast earthquake fault, on a bluff overlooking the Pacific. Potential magnitude of a possible spent-fuel accident increases as quantities of radioactive wastes increase. Every day of unrestricted operation each Diablo Canyon reactor produces radioactive wastes equivalent to those of an Hiroshima bomb. Hundreds of tons are now stored on-site within a corrugated steel structure. These wastes -including Cesium 137, Strontium 90 and Plutonium 239- are so hazardous that Department Of Energy requires isolation for 10,000 years. No safe off-site storage place exists or will be available -if ever- for over a decade. Even if storage outside California becomes feasible, shipment to a distant storage site on barges, trains and trucks would entail significantly increased risks of accidents or terrorism.
	Since 9/11/01 we have realized our vulnerability to terrorism and urgent need for increased vigilance. Diagrams of U.S. nuclear power plants were found in AlQueda enclaves in Afghanistan. Nuclear Regulatory Commission anti-terrorist exercises to determine potential vulnerability of nuclear plants did not consider all weapons or methods attributed to AlQueda terrorists or direct hit by large aircraft. After 9/11 the NRC revealed that “nuclear power plants were not designed to withstand such crashes”, and that consequences of a spent-fuel accident “could be comparable to those for a severe reactor accident.” Moreover, stored radioactive wastes are more vulnerable than nuclear reactors. A recent Princeton University study suggests that a terrorist attack on high-level radioactive wastes stored at nuclear plants could cause contamination problems “significantly worse than those from Chernobyl”. California Senator Feinstein and Attorney General Lockyer have questioned expanding Diablo Canyon’s nuclear waste storage without public hearings addressing existing significant risks.
	Dividends have been suspended, and thousands of shareholders have been hurt. Proponent believes PG&E’s financial prospects are already threatened by bankruptcy of its largest subsidiary and a $4 billion unfair practices suit by the California Attorney General, and that any loss from a catastrophic nuclear accident could jeopardize corporate viability and remaining shareholder equity.
	No corporate profit goal can justify disregard of serious hazards to public and environmental health and safety. So, fiscally and morally, PG&E has a compelling duty to mitigate risks arising from production and storage of high level radioactive wastes at Diablo Canyon Nuclear Plant.
	RESOLUTION:
	THEREFORE, Shareholders recommend that Board of Directors adopt and implement a new policy and plan to reduce PG&E vulnerability to a catastrophic nuclear accident or terrorist attack at Diablo Canyon; and that pursuant to such plan, production of high level radioactive wastes shall not exceed the current capacity of existing spent-fuel pools, thereby averting untenable risks of possible off-site shipments or excessive on-site storage.”

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	RESOLVED: Shareholders request that our Board adopt a policy that any future poison pill be redeemed or put to a shareholder vote within 4-months after it is adopted by our Board. And formalize this policy as corporate governance policy or bylaw.
	I believe that there is a material difference between a shareholder vote within 4-months in contrast to our current 12-month lag in a vote. A 12-month delay could guarantee that a poison pill stays effective through an entire proxy contest. This could result in us as shareholders losing a profitable offer for our stock – or an exchange for shares in a more valuable company. I believe that even if a special election would be needed the cost would be relatively trivial in comparison to the potential loss of a valuable offer.
	Pills Entrench Current Management
	“They [poison pills] entrench the current management, even when it’s doing a poor job. They [poison pills] water down shareholders’ votes and deprive them of a meaningful voice in corporate affairs.”
	“Take on the Street” by Arthur Levitt, SEC Chairman, 1993-2001
	Like a Dictator
	“[Poison pill] That’s akin to the argument of a benevolent dictator, who says, “Give up more of your freedom and I’ll take care of you. ”
	T.J. Dermot Dunphy, CEO of Sealed Air (NYSE) for 25 years
	Poison Pill Negative
	“That’s the key negative of poison pills – instead of protecting investors, they can also preserve the interests of management deadwood as well.”
	Morningstar.com, Aug. 15, 2003

		The Potential of a Tender Offer Can Motivate Our Directors

	Hectoring directors to act more independently is a poor substitute for the bracing possibility that shareholders could sell the company out from under its present management.
	Wall Street Journal, Feb. 24, 2003
	Stock Value
	I believe that if a poison pill makes our company difficult to sell – or to exchange for shares in a more valuable company – that the value of our stock suffers.
	Redeem or Vote Poison Pill

	“Performance-Based Options Proposal
	Resolved: That the shareholders of PG&E (the “Company”) request that the Compensation

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	Committee of the Board of Directors adopt a policy that a significant portion of future stock option grants to senior executives shall be performance-based. Performance-based options are defined as follows: (1) indexed options, in which the exercise price is linked to an industry or well-defined peer group index; (2) premium-priced stock options, in which the exercise price is set above the market price on the grant date; or (3) performance-vesting options, which vest when a performance target is met.
	Supporting Statement: As long-term shareholders of the Company, we support executive compensation policies and practices that provide challenging performance objectives and serve to motivate executives to enhance long-term corporate value. We believe that standard fixed-price stock option grants can and often do provide levels of compensation well beyond those merited, by reflecting stock market value increases, not performance superior to the company’s peer group.
	Our shareholder proposal advocates performance-based stock options in the form of indexed, premium-priced or performance-vesting stock options. With indexed options, the option exercise price moves with an appropriate peer group index so as to provide compensation value only to the extent that the company’s stock price performance is superior to the companies in the peer group utilized. Premium-priced options entail the setting of an option exercise price above the exercise price used for standard fixed-priced options so as to provide value for stock price performance that exceeds the premium option price. Performance-vesting options encourage strong corporate performance by conditioning the vesting of granted options on the achievement of demanding stock and/or operational performance measures.
	Our shareholder proposal requests that the Company’s Compensation Committee utilize one or more varieties of performance-based stock options in constructing the long-term equity portion of the senior executives’ compensation plan. The use of performance-based options, to the extent they represent a significant portion of the total options granted to senior executives, will help place a strong emphasis on rewarding superior corporate performance and the achievement of demanding performance goals.
	Leading investors and market observers, such as Warren Buffett and Alan Greenspan, have criticized the use of fixed-price options on the grounds that they all to often reward mediocre or poor performance. The Conference Board’s Commission on Public Trust and Private Enterprise in 2002 looked at the issue of executive compensation and endorsed the use of performance-based options to help restore public confidence in the markets and U.S. corporations.
	At present, the Company does not employ performance-based stock options as defined in this proposal, so shareholders cannot be assured that only superior performance is being rewarded. Performance-based options can be an important component of a compensation plan designed to focus senior management on accomplishing long-term corporate strategic goals and superior long-term corporate performance. We urge your support for this important executive compensation reform.”

	“8 – Allow a Vote regarding Future Golden Parachutes
	RESOLVED: Allow a Vote regarding Future Golden Parachutes. Shareholders request that our Board seek shareholder approval for future golden parachutes for senior executives. This applies to benefits exceeding 299% of the sum of

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	the executive’s base salary plus bonus. Future golden parachutes include agreements renewing, modifying or extending existing severance agreements or employment agreements with golden parachute or severance provisions.
	This includes that golden parachutes are not given for a change in control or merger which is approved but is not completed. Or for executives who transfer to a successor company. This proposal would include to the fullest extent each golden parachute that our Board has or will have the power to grant or modify.
	Our company would have the flexibility under this proposal of seeking approval after the material terms of a golden parachute were agreed upon.
	51% Yes-Vote
	The 26 shareholder proposals voted on this topic achieved an impressive 51% average yes-vote in 2004.

	Shareholders to Lose $1.7 billion in Dividends

	PG&E Shareholders are expected to lose $1.7 billion in dividends due our company’s bankruptcy.
	Yet $19 Million for our Chairman
	Our Chairman’s 2003 pay was reported as $19 million including stock option grants. Plus he has $18-million in unexercised stock options from previous years.

	Source: Executive PayWatch Database, http://www.aflcio.org/corporateamerica/ paywatch/ceou/database.cfm
	And Millions in 2004 Bonuses for our PG&E management

	Our PG&E management was reported to collect the following bonuses in 2004:

Robert Glynn, Chairman		$17 million
Gordon Smith, CEO		$10 million
Tom King, senior VP		$4.8 million
Gregory Rueger, chief nuclear officer		$2.6 million
Dan Richard, senior VP		$3.5 million
Roger Peters, chief counsel		$2.6 million
Kent Harvey, CFO		$2.6 million

	A change in control can be more likely if our executives do not maximize shareholder value. Golden parachutes can allow our executives to walk away with millions even if our shareholder value languishes during their tenure.
	The potential magnitude of golden parachutes for executives was highlighted in the failed merger of Sprint (FON) with MCI WorldCom. Investor and media attention focused on the potential $400 million payout to Sprint Chairman William Esrey. Almost $400 million would have come from the exercise of stock options that would vest when the deal was approved by Sprint’s shareholders.
	Another example of questionable golden parachutes was the $150 million in parachutes for Northrup Grumman executives after a merger attempt with Lockheed Martin fell apart.

		Independent Support for Shareholder Vote on Golden Parachutes

	Institutional investors recommend companies seek shareholder approval for golden parachutes. For instance the California Public Employees Retirement System (CalPERS) said, “shareholder proposals requesting submission of golden parachutes to shareholder vote will always be supported.” Also, the Council of Institutional Investors www.cii.org supports shareholder approval of golden parachutes.

		Allow a Vote regarding Future Golden Parachutes

	Yes on 8”

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•	To emphasize long-term incentives to further align shareholders’ and officers’ interests, and focus employees on enhancing total return for shareholders.
•	To attract, retain, and motivate employees with the necessary mix of skills and experience for the development and successful operation of PG&E Corporation’s businesses.
•	To minimize short-term and long-term costs and reduce corporate exposure to longer-term financial risk.

•	A significant component of every officer’s compensation should be tied directly to PG&E Corporation’s performance for shareholders.
•	Target cash compensation (base salary and target short-term incentive) should be equal to the average target cash compensation for comparable officers in the comparator group.
•	Consistent with the Corporation’s performance aspiration of being a top quartile performer, it is the Committee’s objective to set long-term incentive targets for officers at this performance level that are equal to the 75th percentile target compensation for comparable officers in the comparator group.

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		Annual Compensation																Long-Term Compensation
																										Payouts
														Other				Awards
														Annual				Restricted				Securities								All Other
														Compen-				Stock				Underlying				LTIP				Compen-
Name and						Salary				Bonus				sation				Award(s)				Options/SARs				Payouts				sation
Principal Position		Year				($)				($)(1)				($)(2)				($)(3)				(# of Shares)				($)(4)				($)(5)
Robert D. Glynn, Jr.*			2004			$	1,090,000			$	1,871,530			$	103,123			$	1,415,960				255,000			$	639,790			$	62,225
Chairman of the Board, Chief			2003				1,050,000				1,734,600				3,154,268				2,169,950				486,000				9,879,911				666,050
Executive Officer, and			2002				1,050,000				787,500				4,833,389				0				150,000				632,461				79,777
President of PG&E Corporation; Chairman of the Board of Pacific Gas and Electric Company
Peter A. Darbee*			2004			$	525,000			$	585,926			$	2,339			$	372,506				67,200			$	366,928			$	25,851
Senior Vice President and			2003				490,000				526,162				2,368				678,269				101,300				4,023,098				329,140
Chief Financial Officer of			2002				490,000				220,500				4,862				0				0				115,244				62,355
PG&E Corporation
Bruce R. Worthington			2004			$	455,000			$	429,679			$	2,339			$	335,201				60,500			$	324,126			$	34,746
Senior Vice President and			2003				425,000				386,155				836,295				530,708				79,300				2,310,713				306,575
General Counsel of PG&E			2002				425,000				175,313				1,220,913				0				0				205,801				43,893
Corporation
Gordon R. Smith			2004			$	780,000			$	1,075,230			$	951			$	596,065				107,550			$	469,974			$	37,652
Senior Vice President of			2003				735,000				906,255				2,402,048				943,441				140,900				5,842,500				453,723
PG&E Corporation; President			2002				735,000				519,278				4,310,520				0				0				182,009				37,173
and Chief Executive Officer of Pacific Gas and Electric Company
Thomas B. King			2004			$	520,000			$	621,244			$	0			$	368,713				65,150			$	513,304			$	68,714
Senior Vice President and Chief			2003				500,000				519,350				23,780				530,708				79,300				2,938,351				659,488
of Utility Operations of Pacific			2002				450,000				93,163				0				0				0				94,863				89,263
Gas and Electric Company

*	Mr. Glynn served as President and Chief Executive Officer of PG&E Corporation through December 31, 2004; he continues to serve as Chairman of the Board of PG&E Corporation. Effective January 1, 2005, Peter A. Darbee was elected President and Chief Executive Officer of PG&E Corporation.

(1)	Represents payments received or deferred in 2005, 2004, and 2003 for achievement of corporate and organizational objectives in 2004, 2003, and 2002, respectively, under the Short-Term Incentive Plan.
(2)	Amounts reported consist of (i) reportable officer benefits, including perquisite allowances (Mr. Glynn $35,000 in each of 2004, 2003, and 2002) and amounts for non-business related travel (Mr. Glynn $60,221 in 2004, $62,998 in 2003, and $69,849 in 2002), (ii) payments of related taxes, and (iii) for 2003 and 2002, the cost of annuities and associated tax restoration payments to replace existing retirement benefits. The annuities will not change the amount and timing of after-tax benefits that would have been provided upon retirement under existing arrangements.
(3)	As of the end of the year, the aggregate number of shares or units of restricted stock held by each named executive officer, and the value using the year-end closing price of a share of PG&E Corporation common stock, were: Mr. Glynn 163,393 (with a value of $5,437,719), Mr. Darbee 48,498 (with a value of $1,614,013), Mr. Worthington 39,553 (with a value of $1,316,324), Mr. Smith 70,321 (with a value of $2,340,283), and Mr. King 40,733 (with a value of $1,355,594). The restrictions lapse in annual increments of up to 25 percent on the first business day of each of the 4 years following the grant, subject to the recipient’s continued employment. For the grant made in 2003, 20 percent of each year’s increment is subject to forfeiture if PG&E Corporation fails to be in the top quartile of the comparator group as measured by relative annual total shareholder return at the end of the prior year. With respect to the 2003 grant to Mr. Glynn, 25 percent of each year’s increment is subject to forfeiture if PG&E Corporation fails to be in the top quartile of the comparator group as measured by total shareholder return at the end of the prior year, and an additional

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	25 percent is subject to forfeiture if PG&E Corporation fails to be in the top half of the comparator group. PG&E Corporation’s 2004 performance was not in the top half of its comparator group. Therefore, the shares subject to the performance requirement were cancelled in 2005. The shares of restricted stock have the same dividend rights as unrestricted shares of PG&E Corporation common stock.
(4)	Represents (i) payments received or deferred for achievement of corporate performance objectives over 3-year rolling periods under the Performance Unit Plan and (ii) vested common stock equivalents called Special Incentive Stock Ownership Premiums (SISOPs) earned by executive officers under the Executive Stock Ownership Program and additional common stock equivalents reflecting dividends accrued on those SISOPs.
(5)	Amounts reported for 2004 consist of: (i) contributions to defined contribution retirement plans (Mr. Glynn $9,225, Mr. Darbee $5,906, Mr. Worthington $3,413, Mr. Smith $9,000, and Mr. King $8,900), (ii) contributions received or deferred under excess benefit arrangements associated with defined contribution retirement plans (Mr. Glynn $39,825, Mr. Darbee $17,719, Mr. Worthington $17,062, Mr. Smith $26,100, and Mr. King $14,500), (iii) above-market interest on deferred compensation (Mr. Glynn $11,106, Mr. Darbee $2,226, Mr. Worthington $271, Mr. Smith $483, and Mr. King $764), (iv) relocation allowances and other one-time awards (Mr. Glynn $2,069, Mr. Smith $2,069, and Mr. King $44,550), and (v) sale of vacation (Mr. Worthington $14,000).

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																		Grant
Individual Grants																		Date Value
		Number of				% of Total
		Securities				Options/SARs
		Underlying				Granted to				Exercise or								Grant Date
		Options/SARs				Employees in				Base Price				Expiration				Present
Name		Granted(#)(1)(2)				2004(2)				($/Sh)(3)				Date(4)				Value ($)(5)
Robert D. Glynn, Jr.			255,000				10.41	%		$	27.23				01-03-2014			$	1,264,800
Peter A. Darbee			67,200				2.74	%			27.23				01-03-2014				333,312
Bruce R. Worthington			60,500				2.47	%			27.23				01-03-2014				300,080
Gordon R. Smith			107,550				4.39	%			27.23				01-03-2014				533,448
Thomas B. King			60,500				2.47	%			27.23				01-03-2014				300,080
			4,650				.19	%			28.40				08-03-2014				33,387

(1)	All options granted to executive officers in 2004 are exercisable as follows: 25 percent of the options may be exercised on or after the first anniversary of the date of grant, 50 percent on or after the second anniversary, 75 percent on or after the third anniversary, and 100 percent on or after the fourth anniversary, provided that options will vest immediately upon the occurrence of certain events. No options were accompanied by tandem dividend equivalents.
(2)	No stock appreciation rights (SARs) have been granted since 1991.
(3)	The exercise price is equal to the closing price of PG&E Corporation common stock on the date of grant.
(4)	All options granted to executive officers in 2004 expire 10 years and 1 day from the date of grant, subject to earlier expiration in the event of the officer’s termination of employment with PG&E Corporation, Pacific Gas and Electric Company, or one of their subsidiaries.
(5)	Estimated present values are based on the Black-Scholes Model, a mathematical formula used to value options traded on stock exchanges. The Black-Scholes Model considers a number of factors, including the expected volatility and dividend rate of the stock, interest rates, and time of exercise of the option. The following assumptions were used in applying the Black-Scholes Model to the 2004 option grants shown in the table above: (i) volatility of 31.3 percent for the January 2, 2004 grant and 35.4 percent for the August 2, 2004 grant, (ii) risk-free rate of return of 4.29 percent for the January 2, 2004 grant and 4.73 percent for the August 2, 2004 grant, (iii) dividend yield of $1.00, and (iv) an exercise date 10 years after the date of grant. The ultimate value of the options will depend on the future market price of PG&E Corporation common stock, which cannot be forecast with reasonable accuracy. That value will depend on the future success achieved by employees for the benefit of all shareholders. The estimated grant date present value for the options shown in the table was $4.96 per share for the January 2, 2004 grant and $7.18 for the August 2, 2004 grant.

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Value of

Number of Securities

Unexercised

Underlying Unexercised

In-the-Money

Options/SARs at

Options/SARs at

Shares Acquired

End of 2004 (#)

End of 2004 ($)(1)

on Exercise

Value Realized

(Exercisable/

(Exercisable/

Name

(#)

($)

Unexercisable)

Unexercisable)

Robert D. Glynn, Jr.

1,032,501

$

9,732,136

766,791/876,432

$

3,089,300/$12,706,788

Peter A. Darbee

295,059

3,173,037

150,000/204,441

829,500/2,986,770

Bruce R. Worthington

195,625

1,424,346

281,068/168,307

2,444,793/2,392,919

Gordon R. Smith

595,159

5,600,282

213,900/303,891

541,048/4,342,884

Thomas B. King

144,093

1,921,837

272,700/186,757

1,950,712/2,677,293

(1)	Based on the difference between the option exercise price (without reduction for the amount of accrued dividend equivalents, if any) and a fair market value of $33.28, which was the closing price of PG&E Corporation common stock on December 31, 2004.

Estimated Future Payouts Under

Awards

Non-Stock Price-Based Plans

Performance or

Other Period

Number of Shares,

Until Maturation

Threshold

Target

Maximum

Name

Units, or Other Rights(1)

or Payout

($ or #)(2)

($ or #)(2)

($ or #)(2)

Robert D. Glynn, Jr.

52,000

3 years

0 units

52,000 units

104,000 units

Peter A. Darbee

13,680

3 years

0 units

13,680 units

27,360 units

Bruce R. Worthington

12,310

3 years

0 units

12,310 units

24,620 units

Gordon R. Smith

21,890

3 years

0 units

21,890 units

43,780 units

Thomas B. King

13,490

3 years

0 units

13,490 units

26,980 units

(1)	Represents performance shares granted under the Long-Term Incentive Program. The shares vest 3 years after the grant year and are earned based on PG&E Corporation’s 3-year cumulative total shareholder return (dividends plus stock price appreciation) as compared with that achieved by other companies in the comparator group. Each time a cash dividend is paid on PG&E Corporation common stock, an amount equal to the cash dividend per share multiplied by the number of shares held by the recipient will be accrued on behalf of the recipient and, at the end of the vesting period, the amount of accrued dividend equivalents will be increased or decreased by the same percentage used to increase or decrease the number of vested performance shares for the period.
(2)	Payments for performance shares are determined by multiplying the number of shares earned for a given period by the average market price of PG&E Corporation common stock for the 30 calendar day period prior to the end of the period.

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1.	A lump sum payment of one and one-half or two times annual base salary and Short-Term Incentive Plan target (the applicable severance multiple being dependent on an officer’s level),
2.	Continued vesting of equity-based incentives for 18 months or two years after termination (depending on the applicable severance multiple),
3.	Accelerated vesting of up to two-thirds of the common stock equivalents granted under the Executive Stock Ownership Program (depending on an officer’s level), and
4.	Payment of health care insurance premiums for 18 months after termination.

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1.	Unpaid base salary earned through the termination date,
2.	Short-Term Incentive Plan target calculated for the fiscal year in which termination occurs (Target Bonus),
3.	Any accrued but unpaid vacation pay, and
4.	Three times the sum of Target Bonus and the officer’s annual base salary in effect immediately before either the date of termination or the change in control, whichever base salary is greater.

1.	Any time periods relating to the exercise or realization of any stock-based incentive (including performance shares, stock options, performance units, and common stock equivalents granted under the Executive Stock Ownership Program) will be accelerated so that such incentive may be exercised or realized in full immediately upon the change in control,
2.	All shares of restricted stock will immediately cease to be forfeitable, and
3.	All conditions relating to the realization of any stock-based incentive will terminate immediately.

1.	Any “person” (as such term is used in Sections 13(d) and 14(d)(2) of the Securities Exchange Act of 1934, but excluding any benefit plan for employees or any trustee, agent, or other fiduciary for any such plan acting in such person’s capacity as such fiduciary), directly or indirectly, becomes the beneficial owner of securities of PG&E Corporation representing 20 percent or more of the combined voting power of PG&E Corporation’s then outstanding securities,
2.	During any two consecutive years, individuals who at the beginning of that period constitute the Board of Directors cease for any reason to constitute at least a majority of the Board of Directors, unless the election, or the nomination for election by the shareholders of the Corporation, of each new director was approved by a vote of at least two-thirds of the directors then still in office who were directors at the beginning of the period, or
3.	The shareholders of the Corporation shall have approved:

	a.	Any consolidation or merger of the Corporation other than a merger or consolidation that would result in the voting securities of the Corporation outstanding immediately prior thereto continuing to represent (either by remaining outstanding or by being converted into voting securities of the surviving entity or any parent of such surviving entity) at least 70 percent of the combined voting power of the Corporation, such surviving entity, or the parent of such surviving entity outstanding immediately after the merger or consolidation,
	b.	Any sale, lease, exchange, or other transfer (in one transaction or a series of related transactions) of all or substantially all of the assets of the Corporation, or
	c.	Any plan or proposal for the liquidation or dissolution of the Corporation.

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(1)	Assumes $100 invested on December 31, 1999, in PG&E Corporation common stock, the Standard & Poor’s 500 Stock Index, and the Dow Jones Utilities Index, and assumes quarterly reinvestment of dividends. The total shareholder returns shown are not necessarily indicative of future returns.

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		Name and Address of		Amount and Nature of				Percent
Class of Stock		Beneficial Owner		Beneficial Ownership				of Class
Pacific Gas and Electric Company stock (1)		PG&E Corporation(2) One Market, Spear Tower, Suite 2400 San Francisco, CA 94105			321,314,760				95.10%

(1)	Pacific Gas and Electric Company’s common stock and preferred stock vote together as a single class. Each share is entitled to one vote.
(2)	As a result of the formation of the holding company on January 1, 1997, PG&E Corporation became the holder of all issued and outstanding shares of Pacific Gas and Electric Company common stock. As of January 31, 2005, PG&E Corporation and a subsidiary held 100 percent of the issued and outstanding shares of Pacific Gas and Electric Company common stock, and neither PG&E Corporation nor any of its subsidiaries held shares of Pacific Gas and Electric Company preferred stock.

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