<html>
<head>
<title>Implementation of Chapter 11 Settlement Rate
Reduction</title>
</head>
<body link="blue" vlink="purple">
<div>
<div align="center">
  <center>
<table border="0" cellspacing="0" cellpadding="0">
<tr>
<td colspan="4" valign="top">
<p>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</p>
</td>
</tr>

<tr>
<td colspan="4" valign="top">
<p align="center">FORM 8-K</p>
</td>
</tr>

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

<tr>
<td colspan="4" valign="top">
<p align="center">CURRENT REPORT</p>
</td>
</tr>

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

<tr>
<td colspan="4" valign="top">
<p align="center">Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934</p>
</td>
</tr>

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

<tr>
<td colspan="4" valign="top">
<p align="center">Date of Report: February 2, 2004</p>
</td>
</tr>

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

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

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

<tr>
<td valign="top">
<p align="center">_____________</p>
</td>
<td valign="top">
<p align="center">_____________</p>
</td>
<td valign="top">
<p align="center">_____________</p>
</td>
<td valign="top">
<p align="center">_____________</p>
</td>
</tr>

<tr>
<td valign="top">
<p align="center">1-12609</p>

<p align="center">1-2348</p>
</td>
<td valign="top">
<p align="center">PG&amp;E Corporation</p>

<p align="center">Pacific Gas and<br />
 Electric Company</p>
</td>
<td valign="top">
<p align="center">California</p>

<p align="center">California</p>
</td>
<td valign="top">
<p align="center">94-3234914</p>

<p align="center">94-0742640</p>
</td>
</tr>

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

<tr>
<td colspan="2" valign="top">
<p align="center">Pacific Gas and Electric Company<br />
 77 Beale Street, P. O. Box 770000<br />
 San Francisco, California&nbsp;&nbsp;94177</p>
</td>
<td colspan="2" valign="top">
<p align="center">PG&amp;E Corporation<br />
 One Market, Spear Tower, Suite 2400<br />
 San Francisco, California&nbsp;&nbsp;94105</p>
</td>
</tr>

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

<tr>
<td colspan="4" valign="top">
<p align="center">(Address of principal executive offices) (Zip
Code)</p>
</td>
</tr>

<tr>
<td valign="top">
<p align="center">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</p>
</td>
<td valign="top"></td>
<td valign="top"></td>
<td valign="top"></td>
</tr>

<tr>
<td colspan="2" valign="top">
<p align="center">Pacific Gas and Electric Company<br />
 (415) 973-7000</p>
</td>
<td colspan="2" valign="top">
<p align="center">PG&amp;E Corporation<br />
 (415) 267-7000</p>
</td>
</tr>

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

<tr>
<td colspan="4" valign="top">
<p align="center">(Registrant's telephone number, including area
code)</p>
</td>
</tr>

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

  </center>
</div>

<p align="center">Inapplicable</p>

<p align="center">(Former Name or Former Address, if Changed Since
Last Report)</p>

<p><br />
</p>

<div align="center">
<hr size="2" width="100%" align="center" />
</div>

<p>
Item 5. Other Events</p>

<p>Implementation of Chapter 11 Settlement Rate Reduction</p>

<p>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;On
January 15, 2004, Pacific Gas and Electric Company (Utility)
entered into a settlement agreement (Rate Design Settlement) that
addresses revenue allocation and rate design issues associated with
the decrease in the Utility&rsquo;s revenue requirement resulting
from the settlement agreement in the Utility&rsquo;s Chapter 11
proceeding entered into among the Utility, its parent, PG&amp;E
Corporation, and the California Public Utilities Commission (CPUC)
(the Chapter 11 Settlement Agreement).&nbsp; The Utility entered
into the Rate Design Settlement with a number of consumer groups
and government agencies, including The Utility Reform Network and
the CPUC&rsquo;s Office of Ratepayer Advocates.&nbsp; On January
20, 2004, the Utility filed a motion with the CPUC seeking approval
for the Rate Design Settlement.&nbsp; Consistent with the Rate
Design Settlement and as provided by the Chapter 11 Settlement
Agreement, on January 26, 2004, the Utility filed with the CPUC
revised electric rates based on the Utility&rsquo;s overall
forecast revenue requirements for 2004 that will be allocated in
accordance with the Rate Design Settlement.&nbsp; If approved by
the CPUC, the revised electric rates would allocate approximately
$860 million in overall electric rate reductions in 2004, which is
approximately 8.3 percent less than the Utility&rsquo;s current
revenues.&nbsp; In addition, the revised electric rates mark an end
to frozen rates and electric surcharges.&nbsp; The CPUC is expected
to consider the Rate Design Settlement at its meeting on February
26, 2004.&nbsp; If approved, the new rates will be effective March
1, 2004, and the revenue reduction will be retroactive to January
1, 2004, as provided by the Chapter 11 Settlement Agreement.</p>

<p>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The revised rates and forecast revenue requirements are based on,
and ultimately will be trued up to reflect, various CPUC decisions
including the Utility&rsquo;s 2003 General Rate Case (GRC).&nbsp;
Currently, the forecast revenue requirements for 2004 assume that
the CPUC will approve the 2003 GRC settlement agreement reached by
the Utility and other parties in September 2003.&nbsp; As
previously disclosed, under the 2003 GRC settlement agreement,
among other terms, the Utility would receive a $236 million
increase in its electric distribution revenue requirement and a $38
million increase in its electric generation revenue
requirement.&nbsp; The 2003 GRC settlement agreement also would
provide for a 2004 attrition adjustment (an increase of $109
million in electric distribution and generation revenue
requirements). The 2004 forecast revenue requirement is further
adjusted to include, among other items, the pension contribution
proposed by the Utility (an increase of $54 million in electric
distribution and generation revenue requirements).</p>

<p>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
In addition, the revised rates and forecast revenue requirements
are based on, and ultimately will be trued up to reflect, the
allocation of the California Department of Water Resources (DWR)
2004 revenue requirements. &nbsp; In January 2004, the CPUC issued
a decision allocating the DWR&rsquo;s 2004 power charge-related
revenue requirement on an interim basis among the California
investor-owned utilities based on the methodology adopted for
2003.&nbsp; The interim allocation of the 2004 DWR revenue
requirement allocates 40.5 percent of the approximately $4.65
billion 2004 DWR revenue requirement, or approximately $1.87
billion, to Utility customers.&nbsp; In addition, the CPUC found
that the Utility had over-remitted approximately $101 million in
power charges to the DWR related to the DWR's 2001-2002 revenue
requirement and ordered that the Utility's allocation of the DWR's
2004 revenue requirement be reduced by this amount.&nbsp; The power
charge revenue requirement of approximately $1.69 billion included
in the Utility&rsquo;s January 26, 2004, filing with the CPUC
reflects the 2001-2002 true-up adjustment and the DWR&rsquo;s share
of the El Paso settlement referred to below.&nbsp; The final
allocation methodology for the 2004 DWR revenue requirement will be
litigated in a second phase of this proceeding, and, once
determined, will be retroactive to January 1, 2004.&nbsp; Hearings
in the second phase began on January 20, 2004.</p>

<p>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
forecast revenue requirements on which the electric rate reduction
is based assume that the outstanding balance of the regulatory
asset called for under the Chapter 11 Settlement Agreement
(Regulatory Asset) will be reduced, dollar for dollar, by the net
after-tax amount of any refunds, claim offsets, or other credits
from generators or other energy suppliers relating to the Utility's
Power Exchange, Independent System Operator, qualifying facility,
or energy service provider costs during the California energy
crisis that the Utility realizes in cash or by offset of creditor
claims in its Chapter 11 case.</p>

<p>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
In its January 26, 2004, filing with the CPUC, the Utility has
reduced the revenue requirement for its Regulatory Asset to reflect
the after-tax amount of such refunds, offsets, and credits received
in 2003 or expected to be received in 2004, including an estimate
of the Utility&rsquo;s portion of the settlement with El Paso
Natural Gas Company approved by the CPUC in October 2003, which
portion is pending release from escrow pursuant to the terms of
that settlement, and an after-tax credit of approximately $90
million that the Utility expects to receive as a result of a
settlement with five subsidiaries of Enron Corporation.&nbsp; In
December 2003, the Utility entered into a settlement agreement with
certain subsidiaries of Enron Corporation (collectively, Enron),
settling certain claims between the Utility and Enron (Enron
Settlement).&nbsp; In order for the Enron Settlement to become
effective, the bankruptcy courts overseeing both the
Utility&rsquo;s and Enron&rsquo;s respective Chapter 11 proceedings
must approve the Enron Settlement.&nbsp; The hearing on
Enron&rsquo;s motion seeking approval of the Enron Settlement in
Enron&rsquo;s Chapter 11 proceeding is scheduled for February 5,
2004, and the Utility&rsquo;s motion is scheduled for hearing in
its Chapter 11 proceeding on February 9, 2004.&nbsp;</p>

<p>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Finally, the revised rates and 2004 forecast revenue requirements
are based on, and ultimately will be trued up to reflect, the
calculation of any under-collection or over-collection of the
Utility&rsquo;s 2003 headroom amount as defined for regulatory
purposes in the Chapter 11 Settlement Agreement.&nbsp; In
accordance with the Chapter 11 Settlement Agreement, if headroom
accrued by the Utility during 2003 is greater than $875 million,
pre-tax, the Utility will refund the excess to ratepayers.&nbsp; In
its January 26, 2004, filing with the CPUC, the Utility&rsquo;s
proposed rates reflect the Utility&rsquo;s preliminary estimate of
$95 million in excess headroom, which would be returned to
customers through the rates proposed in the Utility&rsquo;s
filing.&nbsp; Any subsequent adjustments to the preliminary
headroom estimate will be amortized in customers&rsquo; future
rates.</p>

&nbsp;


<div align="center">
  <center>


<table border="0" cellspacing="0" cellpadding="0">
<tr>
<td valign="top">
<p>SIGNATURE</p>
</td>
</tr>
</table>

  </center>
</div>

<p>Pursuant to the requirements of the Securities Exchange Act of
1934, the registrants have duly caused this report to be signed on
their behalf by the undersigned thereunto duly authorized.</p>

<table border="0" cellspacing="0" cellpadding="0" width="656">
<tr>
<td valign="top">
<p>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</p>
</td>
<td colspan="2" valign="top">
<p>PG&amp;E CORPORATION</p>
</td>
</tr>

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

<tr>
<td valign="top">
<p>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</p>
</td>
<td valign="top">
<p>By:&nbsp;&nbsp;</p>
</td>
<td valign="top">
<p>/s/ CHRISTOPHER P. JOHNS<br />
 ________________________________________</p>
</td>
</tr>

<tr>
<td valign="top">
<p>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</p>
</td>
<td valign="top">
<p>&nbsp;&nbsp;</p>
</td>
<td valign="top">
<p>CHRISTOPHER P. JOHNS<br />
 Senior Vice President and Controller</p>
</td>
</tr>

<tr>
<td valign="top"></td>
<td colspan="2" valign="top">
<p>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</p>
</td>
</tr>

<tr>
<td valign="top">
<p>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</p>
</td>
<td colspan="2" valign="top">
<p>PACIFIC GAS AND ELECTRIC COMPANY
 </p>
</td>
</tr>

<tr>
<td valign="top">
</td>
<td colspan="2" valign="top">
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
</td>
</tr>

<tr>
<td valign="top">
<p>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</p>
</td>
<td valign="top">
<p>By:&nbsp;&nbsp;</p>
</td>
<td valign="top">
<p>/s/ DINYAR B. MISTRY<br />
 ________________________________________</p>
</td>
</tr>

<tr>
<td valign="top">
<p>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</p>
</td>
<td valign="top">
<p>&nbsp;&nbsp;</p>
</td>
<td valign="top">
<p>DINYAR B. MISTRY<br />
 Vice President and Controller</p>
</td>
</tr>
</table>

<p>&nbsp;</p>

<table border="0" cellspacing="0" cellpadding="0" width="661">
<tr>
<td valign="top" width="118">
<p>Dated:&nbsp;&nbsp;</p>
</td>
<td valign="top" width="539">
<p>&nbsp;&nbsp;&nbsp;February 2, 2004</p>
</td>
</tr>

</table>

<p></p>
</div>
</body>
</html>
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{"company-data": {"conformed-name": "PACIFIC GAS & ELECTRIC CO", "cik": "0000075488", "assigned-sic": "4931", "irs-number": "940742640", "state-of-incorporation": "CA", "fiscal-year-end": "1231"}, "filing-values": {"form-type": "8-K", "act": "34", "file-number": "001-02348", "film-number": "04560456"}, "business-address": {"street1": "77 BEALE ST", "street2": "P O BOX 770000", "city": "SAN FRANCISCO", "state": "CA", "zip": "94177", "phone": "4152677000"}, "mail-address": {"street1": "77 BEALE STREET", "street2": "P O BOX 770000", "city": "SAN FRANCISCO", "state": "CA", "zip": "94177"}}
Implementation of Chapter 11 Settlement Rate
Reduction
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
Date of Report: February 2, 2004
Commission
File
Number
Exact Name of
Registrant
as specified in
its charter
State or other
Jurisdiction of
Incorporation
IRS Employer
Identification
Number
_____________
_____________
_____________
_____________
1-12609
1-2348
PG&E Corporation
Pacific Gas and
Electric Company
California
California
94-3234914
94-0742640
Pacific Gas and Electric Company
77 Beale Street, P. O. Box 770000
San Francisco, California  94177
PG&E Corporation
One Market, Spear Tower, Suite 2400
San Francisco, California  94105
(Address of principal executive offices) (Zip
Code)
Pacific Gas and Electric Company
(415) 973-7000
PG&E Corporation
(415) 267-7000
(Registrant's telephone number, including area
code)
Inapplicable
(Former Name or Former Address, if Changed Since
Last Report)
Item 5. Other Events
Implementation of Chapter 11 Settlement Rate Reduction
On
January 15, 2004, Pacific Gas and Electric Company (Utility)
entered into a settlement agreement (Rate Design Settlement) that
addresses revenue allocation and rate design issues associated with
the decrease in the Utility's revenue requirement resulting
from the settlement agreement in the Utility's Chapter 11
proceeding entered into among the Utility, its parent, PG&E
Corporation, and the California Public Utilities Commission (CPUC)
(the Chapter 11 Settlement Agreement).  The Utility entered
into the Rate Design Settlement with a number of consumer groups
and government agencies, including The Utility Reform Network and
the CPUC's Office of Ratepayer Advocates.  On January
20, 2004, the Utility filed a motion with the CPUC seeking approval
for the Rate Design Settlement.  Consistent with the Rate
Design Settlement and as provided by the Chapter 11 Settlement
Agreement, on January 26, 2004, the Utility filed with the CPUC
revised electric rates based on the Utility's overall
forecast revenue requirements for 2004 that will be allocated in
accordance with the Rate Design Settlement.  If approved by
the CPUC, the revised electric rates would allocate approximately
$860 million in overall electric rate reductions in 2004, which is
approximately 8.3 percent less than the Utility's current
revenues.  In addition, the revised electric rates mark an end
to frozen rates and electric surcharges.  The CPUC is expected
to consider the Rate Design Settlement at its meeting on February
26, 2004.  If approved, the new rates will be effective March
1, 2004, and the revenue reduction will be retroactive to January
1, 2004, as provided by the Chapter 11 Settlement Agreement.
The revised rates and forecast revenue requirements are based on,
and ultimately will be trued up to reflect, various CPUC decisions
including the Utility's 2003 General Rate Case (GRC). 
Currently, the forecast revenue requirements for 2004 assume that
the CPUC will approve the 2003 GRC settlement agreement reached by
the Utility and other parties in September 2003.  As
previously disclosed, under the 2003 GRC settlement agreement,
among other terms, the Utility would receive a $236 million
increase in its electric distribution revenue requirement and a $38
million increase in its electric generation revenue
requirement.  The 2003 GRC settlement agreement also would
provide for a 2004 attrition adjustment (an increase of $109
million in electric distribution and generation revenue
requirements). The 2004 forecast revenue requirement is further
adjusted to include, among other items, the pension contribution
proposed by the Utility (an increase of $54 million in electric
distribution and generation revenue requirements).
In addition, the revised rates and forecast revenue requirements
are based on, and ultimately will be trued up to reflect, the
allocation of the California Department of Water Resources (DWR)
2004 revenue requirements.   In January 2004, the CPUC issued
a decision allocating the DWR's 2004 power charge-related
revenue requirement on an interim basis among the California
investor-owned utilities based on the methodology adopted for
2003.  The interim allocation of the 2004 DWR revenue
requirement allocates 40.5 percent of the approximately $4.65
billion 2004 DWR revenue requirement, or approximately $1.87
billion, to Utility customers.  In addition, the CPUC found
that the Utility had over-remitted approximately $101 million in
power charges to the DWR related to the DWR's 2001-2002 revenue
requirement and ordered that the Utility's allocation of the DWR's
2004 revenue requirement be reduced by this amount.  The power
charge revenue requirement of approximately $1.69 billion included
in the Utility's January 26, 2004, filing with the CPUC
reflects the 2001-2002 true-up adjustment and the DWR's share
of the El Paso settlement referred to below.  The final
allocation methodology for the 2004 DWR revenue requirement will be
litigated in a second phase of this proceeding, and, once
determined, will be retroactive to January 1, 2004.  Hearings
in the second phase began on January 20, 2004.
The
forecast revenue requirements on which the electric rate reduction
is based assume that the outstanding balance of the regulatory
asset called for under the Chapter 11 Settlement Agreement
(Regulatory Asset) will be reduced, dollar for dollar, by the net
after-tax amount of any refunds, claim offsets, or other credits
from generators or other energy suppliers relating to the Utility's
Power Exchange, Independent System Operator, qualifying facility,
or energy service provider costs during the California energy
crisis that the Utility realizes in cash or by offset of creditor
claims in its Chapter 11 case.
In its January 26, 2004, filing with the CPUC, the Utility has
reduced the revenue requirement for its Regulatory Asset to reflect
the after-tax amount of such refunds, offsets, and credits received
in 2003 or expected to be received in 2004, including an estimate
of the Utility's portion of the settlement with El Paso
Natural Gas Company approved by the CPUC in October 2003, which
portion is pending release from escrow pursuant to the terms of
that settlement, and an after-tax credit of approximately $90
million that the Utility expects to receive as a result of a
settlement with five subsidiaries of Enron Corporation.  In
December 2003, the Utility entered into a settlement agreement with
certain subsidiaries of Enron Corporation (collectively, Enron),
settling certain claims between the Utility and Enron (Enron
Settlement).  In order for the Enron Settlement to become
effective, the bankruptcy courts overseeing both the
Utility's and Enron's respective Chapter 11 proceedings
must approve the Enron Settlement.  The hearing on
Enron's motion seeking approval of the Enron Settlement in
Enron's Chapter 11 proceeding is scheduled for February 5,
2004, and the Utility's motion is scheduled for hearing in
its Chapter 11 proceeding on February 9, 2004.
Finally, the revised rates and 2004 forecast revenue requirements
are based on, and ultimately will be trued up to reflect, the
calculation of any under-collection or over-collection of the
Utility's 2003 headroom amount as defined for regulatory
purposes in the Chapter 11 Settlement Agreement.  In
accordance with the Chapter 11 Settlement Agreement, if headroom
accrued by the Utility during 2003 is greater than $875 million,
pre-tax, the Utility will refund the excess to ratepayers.  In
its January 26, 2004, filing with the CPUC, the Utility's
proposed rates reflect the Utility's preliminary estimate of
$95 million in excess headroom, which would be returned to
customers through the rates proposed in the Utility's
filing.  Any subsequent adjustments to the preliminary
headroom estimate will be amortized in customers' future
rates.
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of
1934, the registrants have duly caused this report to be signed on
their behalf by the undersigned thereunto duly authorized.
PG&E CORPORATION
By:
/s/ CHRISTOPHER P. JOHNS
________________________________________
CHRISTOPHER P. JOHNS
Senior Vice President and Controller
PACIFIC GAS AND ELECTRIC COMPANY
By:
/s/ DINYAR B. MISTRY
________________________________________
DINYAR B. MISTRY
Vice President and Controller
Dated:
February 2, 2004