<html>
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<title>Form 8-K 11/22/04</title>
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<p align="center"><b>`UNITED STATES</b></p>
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<p align="center"><b>SECURITIES AND EXCHANGE COMMISSION</b></p>
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<p align="center"><b>Washington, D.C.&nbsp; 20549</b></p>
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<p><b>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</b></p>
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<p align="center"><b>FORM 8-K</b></p>
</td>
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<p align="center"><b>CURRENT REPORT</b></p>
</td>
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<p align="center"><b>Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934</b></p>
</td>
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<p><b>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</b></p>
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<p align="center"><b>Date of Report: November 22, 2004</b></p>

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

<tr>
<td colspan="5" valign="top">
<p align="center"><b>PG&amp;E CORPORATION</b></p>
</td>
</tr>

<tr>
<td colspan="5" valign="top">
<p align="center"><b>(Exact Name of Registrant as specified in
Charter)</b></p>
</td>
</tr>

<tr>
<td valign="top">
<p align="center"><b><u>California</u></b></p>
</td>
<td colspan="2" valign="top">
<p align="center"><b><u>1-2609</u></b></p>
</td>
<td colspan="2" valign="top">
<p align="center"><b><u>94-323914</u></b></p>
</td>
</tr>

<tr>
<td valign="top">
<p align="center">(State or other jurisdiction of
incorporation)</p>
</td>
<td colspan="2" valign="top">
<p align="center"><br />
 (Commission File Number)</p>
</td>
<td colspan="2" valign="top">
<p align="center">(IRS Employer<br />
 Identification No.)</p>
</td>
</tr>

<tr>
<td colspan="2" valign="top">
<p align="center"><b><u>One Market, Spear Tower, Suite 2400, San
Francisco, CA</u></b></p>
</td>
<td colspan="3" valign="top">
<p align="center"><b><u>94105</u></b></p>
</td>
</tr>

<tr>
<td colspan="2" valign="top">
<p align="center">(Address of principal executive offices)</p>
</td>
<td colspan="3" valign="top">
<p align="center">(Zip code)</p>
</td>
</tr>

<tr>
<td colspan="5" valign="top">
<p align="center"><b><u>415-267-7000</u></b></p>
</td>
</tr>

<tr>
<td colspan="5" valign="top">
<p align="center"><b>(Registrant&rsquo;s Telephone Number,
Including Area Code)</b></p>
</td>
</tr>

<tr>
<td colspan="5" valign="top">
<p align="center"><b><u>N/A</u></b></p>
</td>
</tr>

<tr>
<td colspan="5" valign="top">
<p align="center"><b>(Former Name or Former Address, if Changed
Since Last Report)</b></p>
</td>
</tr>

<tr>
<td colspan="5" valign="top">
<p align="center"><b>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</b></p>
</td>
</tr>

<tr>
<td colspan="5" valign="top">
<p align="center"><b>PACIFIC GAS AND ELECTRIC COMPANY</b></p>
</td>
</tr>

<tr>
<td colspan="5" valign="top">
<p align="center"><b>(Exact Name of Registrant as specified in
Charter)</b></p>
</td>
</tr>

<tr>
<td valign="top">
<p align="center"><b><u>California</u></b></p>
</td>
<td colspan="2" valign="top">
<p align="center"><b><u>1-2348</u></b></p>
</td>
<td colspan="2" valign="top">
<p align="center"><b><u>94-0742640</u></b></p>
</td>
</tr>

<tr>
<td valign="top">
<p align="center">(State or other jurisdiction of
incorporation)</p>
</td>
<td colspan="2" valign="top">
<p align="center"><br />
 (Commission File Number)</p>
</td>
<td colspan="2" valign="top">
<p align="center">(IRS Employer<br />
 Identification No.)</p>
</td>
</tr>

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

<tr>
<td colspan="4" valign="top">
<p align="center"><b><u>77 Beale Street, P. O. Box 770000, San
Francisco, California</u></b></p>
</td>
<td valign="top">
<p align="center"><b><u>94177</u></b></p>
</td>
</tr>

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

<tr>
<td colspan="5" valign="top">
<p align="center"><b><u>(415) 973-7000</u></b></p>
</td>
</tr>

<tr>
<td colspan="5" valign="top">
<p align="center"><b>(Registrant&rsquo;s Telephone Number,
Including Area Code)</b></p>
</td>
</tr>

<tr>
<td colspan="5" valign="top">
<p align="center"><b><u>N/A</u></b></p>
</td>
</tr>

<tr>
<td colspan="5" valign="top">
<p align="center"><b>(Former Name or Former Address, if Changed
Since Last Report)</b></p>
</td>
</tr>

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

<tr>
<td colspan="5" valign="top">
<p><br />
 &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Check
the appropriate box below if the Form 8-K filing is intended to
simultaneously satisfy the filing obligation of the registrant
under any of the following provisions (see General Instruction A.2.
below):</p>
</td>
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<p>[&nbsp;]</p>
</td>
<td valign="top">
<p>&nbsp;&nbsp;&nbsp;</p>
</td>
<td valign="top">
<p>Written communications pursuant to Rule 425 under the Securities
Act (17 CFR 230.425)</p>
</td>
</tr>

<tr>
<td valign="top">
<p>[&nbsp;]</p>
</td>
<td valign="top"></td>
<td valign="top">
<p>Soliciting Material pursuant to Rule 14a-12 under the Exchange
Act (17 CFR 240.14a-12)</p>
</td>
</tr>

<tr>
<td valign="top">
<p>[&nbsp;]</p>
</td>
<td valign="top"></td>
<td valign="top">
<p>Pre-commencement communications pursuant to Rule 14d-2(b) under
the Exchange Act<br />
 (17 CFR 240.14d-2(b)</p>
</td>
</tr>

<tr>
<td valign="top">
<p>[&nbsp;]</p>
</td>
<td valign="top"></td>
<td valign="top">
<p>Pre-commencement communications pursuant to Rule 13e-4(c) under
the Exchange Act<br />
 (17 CFR 240.13e-4(c))</p>
</td>
</tr>
</table>

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

<p>Item 8.01 Other Events</p>

<p>A.&nbsp;&nbsp;Proposed Decisions in Pacific Gas and Electric
Company&rsquo;s (Utility) Cost of Capital Proceeding</p>

<p>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;On
November 16, 2004, a proposed decision was issued by an
administrative law judge overseeing the California investor-owned
electric utilities' (IOUs) cost of capital proceedings at the
California Public Utilities Commission (CPUC).&nbsp; The CPUC
Commissioner assigned to the proceedings also issued an alternate
proposed decision (Alternate PD).&nbsp; Both the proposed decision
and the Alternate PD would approve the Utility&rsquo;s request to
recover (1) its actual cost of long-term debt and preferred stock
from January 1, 2004 through April 11, 2004, and (2) its new cost
of long-term debt and preferred stock resulting from its Chapter 11
exit financing that became effective on April 12, 2004, including
hedging costs.&nbsp; Both the proposed decision and the Alternate
PD also would approve a return on common equity (ROE) for 2004 and
2005 of 11.22%,&nbsp; which is consistent with the December 19, 2003
settlement agreement entered into between the CPUC, the Utility and
PG&amp;E Corporation to resolve the Utility&rsquo;s Chapter 11
proceeding (Settlement Agreement).&nbsp; The Settlement Agreement
provides that, from January 1, 2004 until certain credit ratings
are achieved, the Utility&rsquo;s authorized ROE will be no less
than 11.22% per year.&nbsp; The Utility had requested a ROE of
11.60% for 2005.</p>

<p>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
proposed decision and the Alternate PD would authorize the
following cost of capital for 2004 and 2005:</p>

<div align="center">
<table border="0" cellspacing="0" cellpadding="0" width="636">
<tr>
<td valign="top"></td>
<td colspan="3" valign="top">
<p align="center">
<u><b>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2004&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</b></u></p>
</td>
<td valign="top"></td>
<td colspan="3" valign="top">
<p align="center">
<u><b>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2005&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</b></u></p>
</td>
</tr>

<tr>
<td valign="top"></td>
<td valign="top"></td>
<td valign="top">
<p align="center"><b>Capital</b></p>
</td>
<td valign="top">
<p align="center"><b>Weighted</b></p>
</td>
<td valign="top"></td>
<td valign="top"></td>
<td valign="top">
<p align="center"><b>Capital</b></p>
</td>
<td valign="top">
<p align="center"><b>Weighted</b></p>
</td>
</tr>

<tr>
<td valign="top"></td>
<td valign="top">
<p align="center"><b><u>Cost</u></b></p>
</td>
<td valign="top">
<p align="center"><b><u>Structure</u></b></p>
</td>
<td valign="top">
<p align="center"><b><u>Cost</u></b></p>
</td>
<td valign="top"></td>
<td valign="top">
<p align="center"><b><u>Cost</u></b></p>
</td>
<td valign="top">
<p align="center"><b><u>Structure</u></b></p>
</td>
<td valign="top">
<p align="center"><b><u>Cost</u></b></p>
</td>
</tr>

<tr>
<td valign="top">
<p>Long-term debt</p>
</td>
<td valign="top">
<p align="center">5.90%</p>
</td>
<td valign="top">
<p align="center">48.2%</p>
</td>
<td valign="top">
<p align="center">&nbsp;2.84%</p>
</td>
<td valign="top"></td>
<td valign="top">
<p align="center">6.10%</p>
</td>
<td valign="top">
<p align="center">45.5%</p>
</td>
<td valign="top">
<p align="center">2.78%</p>
</td>
</tr>

<tr>
<td valign="top">
<p>Preferred Stock</p>
</td>
<td valign="top">
<p align="center">6.76%</p>
</td>
<td valign="top">
<p align="center">&nbsp;2.8%</p>
</td>
<td valign="top">
<p align="center">0.19%</p>
</td>
<td valign="top"></td>
<td valign="top">
<p align="center">6.42%</p>
</td>
<td valign="top">
<p align="center">&nbsp;2.5%</p>
</td>
<td valign="top">
<p align="center">0.16%</p>
</td>
</tr>

<tr>
<td valign="top">
<p>Common equity</p>
</td>
<td valign="top">
<p align="center">11.22%&nbsp;&nbsp;</p>
</td>
<td valign="top">
<p align="center">49.0%</p>
</td>
<td valign="top">
<p align="center">5.50%</p>
</td>
<td valign="top"></td>
<td valign="top">
<p align="center">11.22%&nbsp;</p>
</td>
<td valign="top">
<p align="center">52.0%</p>
</td>
<td valign="top">
<p align="center">5.83%</p>
</td>
</tr>

<tr>
<td valign="top">
<p>Return on rate base</p>
</td>
<td valign="top"></td>
<td valign="top"></td>
<td valign="top">
<p align="center">8.53%</p>
</td>
<td valign="top"></td>
<td valign="top"></td>
<td valign="top"></td>
<td valign="top">
<p align="center">8.77%</p>
</td>
</tr>
</table>
</div>

<p></p>

<p>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;If
the proposed decision or the Alternate PD were adopted, the
Utility&rsquo;s annual revenue requirement for 2004 would decrease
by approximately $109 million compared to the currently authorized
revenue requirement, as a result of interest savings associated
with the Utility&rsquo;s Chapter 11 exit financing.&nbsp; The
Utility has previously recorded a reserve against operating
revenues for the difference between its currently authorized rate
of return on rate base of 9.24% and the lower rate of return on
rate base of 8.53% (resulting from its lower interest costs)
requested in its cost of capital application.</p>

<p></p>

<p>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
Utility has proposed to include any electric revenue requirement
change authorized in this proceeding in rates effective January 1,
2005.&nbsp; The proposed decision and the Alternate PD would adopt
the Utility&rsquo;s proposal to include any gas revenue requirement
changes authorized in this proceeding in the next gas
transportation rate change, annual true-up or the biennial cost
allocation proceeding.</p>

<p>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Both
the proposed decision and the Alternate PD recognize the importance
of assessing and mitigating the debt equivalence impacts on the
IOUs&rsquo; credit ratings associated with the long-term financial
obligations under power purchase agreements (PPAs) that the IOUs will be
required to enter into to meet electricity resource adequacy
requirements.&nbsp;&nbsp; Although both proposed decisions decline
to adopt a formal debt equivalence policy, they recommend that the
IOUs submit detailed information in their future cost of capital
applications so that the CPUC can assess the debt equivalence
impacts.&nbsp; Additionally, the Alternate PD states that it would
endorse a goal of "maintaining the major utilities' debt to
capital, interest coverage, and cash flow to debt credit ratios to
be no lower than the top third of S&amp;P's BBB benchmarks for
those credit ratios." &nbsp; If the Alternate PD is adopted, it is
possible that this ordering paragraph could be interpreted as a
commitment by the CPUC to provide rate relief to enable the IOUs to
maintain these credit ratios.&nbsp; The ordering paragraph also may
be interpreted to require the IOUs to maintain these credit ratios
without regard to the level of rates approved by the CPUC.&nbsp;
The Utility will file comments on the Alternate PD seeking
clarification of this issue.</p>

<p></p>

<p>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Comments to the proposed decisions are due on December 6, 2004 and
reply comments are due on December 13, 2004.&nbsp; It is expected
that the CPUC will issue a final decision by the end of the
year.</p>

<p></p>

<p>B.&nbsp;&nbsp;Proposed Decision on Long-Term Electricity
Resource Plans</p>

<p>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;On November 16, 2004, a proposed decision also was issued on the
long-term electricity resource plans submitted to the CPUC by the
IOUs to meet electricity resource adequacy requirements over the
10-year period 2004-2014.&nbsp; In general, the proposed decision
would adopt, with modifications, the IOUs&rsquo; long-term
electricity resource plans (LTPs), would find that the LTPs are
reasonable for planning purposes, and that the medium, preferred
case scenarios in the LTPs should be followed for making planning
and procurement decisions.&nbsp; The proposed decision includes the
following key points:</p>

<ul type="square">
<li>The proposed decision would find that the Utility&rsquo;s
strategy of adding 1,200 megawatts (MW) of reserve capacity and new
peaking generation in 2008 and an additional 1,000 MW of new
peaking and dispatchable generation in 2010 through requests for
offers (RFOs) is reasonable and compatible with the Utility&rsquo;s resource
  needs under its medium preferred case scenario, does not crowd out policy-preferred
resources, and is a reasonable level of commitment given load
uncertainty.&nbsp; However, the proposed decision notes that the
Utility&rsquo;s commitments may need to be increased or expedited
for the Utility to meet its 2006 resource adequacy obligations. <a
name="_Toc88371728"></a><a name="_Toc88375747"></a><a name=
"_Toc88381443"></a></li>
</ul>

<p></p>

<ul type="square">
<li>Rather than permit the Utility to have a pre-defined
procurement target of 50% utility-owned generation resources and
50% contracted-for generation resources, as proposed by the
Utility, the proposed decision would require that all the IOUs
conduct a transparent and competitive solicitation through an RFO
process from all potential sources of generation (e.g.
conventional/renewable &ndash; turnkey power plants, buyouts, and
PPAs) to meet their resource requirements. &nbsp; In evaluating
bids, the IOUs would be required to:</li>
</ul>

<p></p>

<div type="square">
<blockquote>
<ul type="circle">
<li>procure the maximum amount of renewable generation resources,
and be prepared to defend any selection of fossil-fuel generation
resources over renewable resources,</li>

<li>employ the Least-Cost Best-Fit methodology when evaluating bids
for PPAs and utility-owned generation resources, taking into
account the qualitative and quantitative attributes (such as
performance risk, credit risk, price diversity, term, and
operational flexibility) associated with each bid, and</li>

<li>employ a &ldquo;carbon adder&rdquo; to evaluate fossil-fuel
generation bids as a method to recognize the cost of greenhouse gas
emissions to develop a more accurate price comparison between
fossil-fuel, renewable and demand-side bids (the carbon adder would
be used for analytical purposes only and would not be paid to a
generator).&nbsp;</li>
</ul>
</blockquote>
</div>

<p>When evaluating PPA bids, the IOU would be required to employ
Standard &amp; Poor&rsquo;s (S&amp;P&rsquo;s) method of assessing
the debt equivalence impacts on the IOU&rsquo;s credit ratings, but
instead of using 30% of the present value of the fixed capacity
payments due under a PPA as the debt equivalent as S&amp;P&rsquo;s
method does, the proposed decision would reduce the factor to 10%
in recognition of the improving California regulatory climate and
the desire not to disadvantage PPAs unduly over utility-owned
generation, particularly with respect to renewable generation.
&nbsp;&nbsp; As described above in the description of the proposed
decisions in the cost of capital proceedings, the CPUC would
consider the debt equivalence impact of PPAs on the IOUs' credit
ratings, and therefore their costs of borrowing, in their future
cost of capital proceedings.</p>

<p></p>

<ul type="square">
<li>The proposed decision would prohibit IOUs from recovering costs
in excess of their final bid price for utility-owned generation
resources, stating that cost overruns should be borne by
shareholders to level the playing field for IOU-owned generation
projects and PPAs, with respect to risk allocation.</li>
</ul>

<p></p>

<ul type="square">
<li>The proposed decision would permit affiliates of the IOUs to
participate in the bidding process for long-term PPAs, subject to
certain guidelines and safeguards, including a requirement that the
IOUs use an independent third party evaluator in resource
solicitations where there are affiliates, IOU-built, or IOU-turnkey
power plant bidders.&nbsp;</li>
</ul>

<p></p>

<ul type="square">
<li>The proposed decision would permit the IOUs to recover their
net stranded costs of all new fossil-fuel and renewable resources
from all customers for a period of 10 years, including through the
use of an exit fee, recognizing that the implementation of
community choice aggregation, departing municipal load, and the
potential for allowing new direct access all create a great degree
of uncertainty as to the amount of load the existing IOUs will be
responsible for serving in the future.&nbsp; The proposed decision
states that the IOUs would be required to take appropriate steps to
minimize potential stranded costs by selling excess energy and
capacity needs into the marketplace and crediting the revenues from
these sales against the IOUs&rsquo; costs.</li>
</ul>

<p></p>

<ul type="square">
<li>The proposed decision would accept the Utility&rsquo;s request
to extend the mandatory rate adjustment mechanism under California
Assembly Bill 57 (AB 57), which requires the CPUC to review the
revenues and costs associated with an IOU&rsquo;s electricity
procurement plan at least semi-annually and adjust retail
electricity rates or order refunds, as appropriate, when the
forecast aggregate over-collections or under-collections exceed 5%
of the IOU&rsquo;s prior year electricity procurement revenues,
excluding amounts collected for the California Department of Water
Resources (DWR).&nbsp; Although AB 57 provides that these mandatory
adjustments will cease on January 1, 2006, the Utility had
requested that the CPUC extend the mandatory rate adjustment
mechanism through at least the 10-year period covered by the
Utility&rsquo;s LTP.&nbsp; The proposed decision would extend the
time period during which the mandatory rate adjustment mechanism
would be made to the length of a resource commitment or 10 years,
whichever is longer.</li>
</ul>

<p></p>

<ul type="square">
<li>The proposed decision would deny the Utility&rsquo;s request to
clarify that the maximum annual procurement disallowance
established by the CPUC for the Utility&rsquo;s administration of
the DWR allocated contracts and least-cost dispatch of its
electricity resources of two times the Utility&rsquo;s
administration costs of managing procurement activities, be
extended to the Utility&rsquo;s administration of all utility
dispatch, including allocated DWR contracts and administrative and
dispatch costs related to utility-owned generation and other
PPAs.</li>
</ul>

<p></p>

<ul type="square">
<li>With respect to the IOUs&rsquo; contracting authority, the
proposed decision would permit the IOUs to enter into short-term,
mid-term and long-term contracts with starting delivery dates
through 2014, provided the IOUs submit necessary compliance filings
and provided that contracts with terms three years or longer are
submitted to the CPUC for pre-approval.&nbsp; The proposed decision
would adopt a rolling 10-year procurement period, noting that the
LTPs cover a 10-year period and will be updated and reviewed every
2 years.&nbsp; The proposed decision notes that ultimately the CPUC
will eliminate short-term procurement plans and the IOUs will act
in accordance with a single CPUC-approved plan; but until then, the
IOUs&rsquo; existing short-term plans remain in effect and any
updates or modifications should be filed with an advice
letter.</li>
</ul>

<p></p>

<ul type="square">
<li>The proposed decision would direct the IOUs to meet CPUC-mandated energy efficiency goals over the 10-year planning period,
but would not authorize the $245 million incremental revenue
requirement requested by the Utility to fund energy efficiency
programs for 2006 through 2008.&nbsp; The proposed decision would
defer this issue for consideration in the CPUC&rsquo;s energy
efficiency rulemaking proceeding.</li>
</ul>

<p></p>

<p>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Comments are due on December 6, 2004 and reply comments are due on
December 13, 2004.&nbsp; It is expected that the CPUC will issue a
final decision by the end of the year.</p>

<p></p>

<p>C.&nbsp;&nbsp;Proposed Decision in the Utility&rsquo;s Gas
Accord III</p>

<p>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Also,
on November 16, 2004, a proposed decision was issued recommending
approval of the Gas Accord III Settlement Agreement.&nbsp; If
approved by the CPUC, the final decision will:</p>

<ul type="disc">
<li>resolve all issues in this proceeding;</li>
</ul>

<p></p>

<ul type="disc">
<li>set the Utility&rsquo;s gas transmission and storage rates and
market structure for a three-year term, commencing January 1, 2005;
and</li>
</ul>

<p></p>

<ul type="disc">
<li>provide a gas transmission and storage revenue requirement of
$428.5 million for 2005 (as compared to an authorized revenue
requirement of $ 427.8 million for 2004), $436.6 million for 2006,
and $444.9 million for 2007.</li>
</ul>

<p>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Assuming
the CPUC issues a final decision by the end of the year, new rates
would be effective on January 1, 2005.</p>

<p>D.&nbsp;&nbsp;Redemption of Senior Notes</p>

<p></p>

<p>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;On
November 15, 2004, PG&amp;E Corporation&rsquo;s 6&#8542;% Senior
Secured Notes due July 15, 2008 (Senior Secured Notes) were
redeemed and the security interest in approximately 94% of the
outstanding common stock of the Utility that is owned by PG&amp;E
Corporation that secured the Senior Secured Notes was
released.&nbsp; PG&amp;E Corporation paid approximately $664.5
million, which included a redemption premium of approximately $50.7
million and $13.8 million of interest that has accrued since the
last interest payment date, to redeem the Senior Secured
Notes.&nbsp; As a result of the Senior Secured Note redemption,
PG&amp;E Corporation will write off $14.3 million of unamortized
loan fees.</p>

<p></p>

<p>E.&nbsp;&nbsp;Credit Ratings</p>

<p>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;On
November 16, 2004, Fitch Ratings raised the Utility&rsquo;s senior
secured rating to BBB+ (from BBB) and initiated a rating of BBB+ on
the Utility&rsquo;s $850 million secured credit facility, raised
the Utility&rsquo;s indicative senior unsecured rating to BBB+
(from BBB-), and changed the outlook to stable (from positive) as a
result of the upgrades.&nbsp; Fitch Ratings stated that its ratings
and stable outlook reflect what it considers to be the
Utility&rsquo;s manageable post-bankruptcy restructuring debt load
and relatively stable cash flow outlook as well as the recent $600
million debt reduction at PG&amp;E Corporation.</p>

<p></p>

<p>F.&nbsp;&nbsp;Draft Resolution Regarding Billing Issues</p>

<p></p>

<p>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;On
November 16, 2004, a draft resolution was released for comment by
the Energy Division of the CPUC.&nbsp; The Energy Division&rsquo;s
draft resolution proposes to clarify the conditions under which the
Utility can back-bill a residential customer for periods longer
than three months.&nbsp; The draft resolution was issued in
response to the Utility&rsquo;s advice letter filed with the CPUC
on October 15, 2004 to implement a request from the Executive
Director of the CPUC to discontinue collection of overdue amounts
from residential customers that relate to charges for usage in
excess of three months.&nbsp; The draft resolution would accept the
Utility&rsquo;s proposal to change the applicable tariff language
to provide that the failure to issue an actual or estimated bill is
a &ldquo;billing error.&rdquo;&nbsp; In the case of a
&ldquo;billing error,&rdquo; a residential customer&rsquo;s
exposure is limited to three months for undercharges.&nbsp; The
Utility&rsquo;s letter stated that the tariff changes it proposed
would not affect customers&rsquo; billing obligations for bills
issued before the proposed October 13, 2004 effective
date.&nbsp;</p>

<p>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
Utility Reform Network (TURN) filed a protest to the
Utility&rsquo;s advice letter.&nbsp; TURN stated that the CPUC
should reject the advice letter and instead review the
Utility&rsquo;s billing practices comprehensively in a new
proceeding.&nbsp; On November 9, 2004, TURN filed a motion
requesting the CPUC to open an investigation into the
Utility&rsquo;s billing practices.&nbsp; The Utility&rsquo;s
response to TURN&rsquo;s motion is due on December 3, 2004.&nbsp;
The Energy Division&rsquo;s draft resolution would deny
TURN&rsquo;s request to reject the advice letter outright, but
would accept TURN&rsquo;s request to reject the Utility&rsquo;s
suggestion to exempt from the definition of &ldquo;billing
error&rdquo; circumstances where the failure to issue a bill was
due to causes beyond the Utility&rsquo;s reasonable control.&nbsp;
Instead, the Energy Division&rsquo;s draft resolution would treat
the failure to deliver a timely bill as a &ldquo;billing
error&rdquo; except in situations where a customer had failed to
establish service with the Utility.&nbsp; The draft resolution
would also treat the issuance of estimated bills as &ldquo;billing
error&rdquo; and subject to the three month retroactive adjustment
limitation except where the estimated bills result from the
Utility&rsquo;s inability to access the meter or other causes
within the control of the customer.&nbsp; In addition, the draft
resolution would prevent the Utility from recovering charges for
unauthorized use from the person who caused the unauthorized
use.&nbsp; Finally, the Energy Division&rsquo;s draft resolution
declares that the changes stated are &ldquo;declarative of existing
CPUC tariffs and requirements&rdquo; and therefore would be
retroactive to bills issued before October 13, 2004, as well as to
bills issued prospectively.&nbsp;&nbsp;</p>

<p>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
PG&amp;E Corporation and the Utility believe that the draft
resolution, if adopted as an order by the CPUC, would be unlawful
to the extent it is applied retroactively to bills issued before
October 13, 2004 and to the extent it would require the Utility to
make tariff modifications beyond those it requested.&nbsp;&nbsp;
The issues addressed in the Energy Division&rsquo;s draft
resolution exceed the changes proposed by the Utility in its advice
letter and have not been the subject of any hearing or other CPUC
rulemaking process.</p>

<p>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
In releasing the draft resolution, the Energy Division indicated
that the CPUC may vote on whether to adopt the draft resolution as
early as its meeting to be held on December 16, 2004.&nbsp;
Comments on the draft resolution are due December 3, 2004 with
reply comments due December 8, 2004.&nbsp; Neither PG&amp;E
Corporation nor the Utility can predict the outcome of this
matter.&nbsp; It is possible that the outcome would have a material
adverse effect on PG&amp;E Corporation&rsquo;s or the
Utility&rsquo;s results of operations or financial condition.</p>

<p>G. Approval of Energy Recovery Bond Application</p>

<p>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;On
November 19, 2004, the CPUC voted to approve the Utility's
application for a wholly owned subsidiary to issue energy recovery
bonds (ERBs) to refinance the remaining unamortized balance of the
regulatory asset authorized under the Settlement Agreement
(Settlement Regulatory Asset) and related federal income and state
franchise taxes, in an aggregate principal amount of up to $3.0
billion in two separate tranches up to one year apart, to be
secured by a dedicated rate component. (The dedicated rate
component was authorized in June 2004 when California Senate Bill
772 became law.)&nbsp; The decision authorizes the issuance of ERBs
subject to the Utility&rsquo;s consent to the terms and conditions
of the CPUC&rsquo;s financing order and approval of transaction
terms by a financing team comprised of CPUC staff and their outside
advisors.&nbsp;</p>

<p>The remaining conditions to be met before ERBs can be issued
are:</p>

<ul type="square">
<li>The rating agencies determine that the issuance of ERBs will
not adversely affect the Utility&rsquo;s issuer or debt credit
ratings, and</li>
</ul>

<p></p>

<ul type="square">
<li>The Utility obtains, or decides it does not need, a private
letter ruling from the Internal Revenue Service (IRS)
confirming that neither the refinancing of the Settlement
Regulatory Asset nor the issuance of the ERBs is a presently
taxable event.&nbsp; On June 8, 2004, the Utility filed a request
for a private letter ruling with the IRS.&nbsp;</li>
</ul>

<p></p>

<p>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Assuming the timely satisfaction of these remaining conditions, the
issuance of the first series of ERBs, in the amount of the
after-tax balance of the Settlement Regulatory Asset (estimated to
be approximately $1.8 billion), is targeted to occur in January
2005.</p>

<br clear="all" />


<div align="center">
<hr size="2" width="624" align="center" />
</div>

<table border="0" cellspacing="0" cellpadding="0" width="624">
<tr>
<td valign="top">
<p align="center">&nbsp; SIGNATURE</p>
</td>
</tr>

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

<tr>
<td valign="top">
<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>

<p>&nbsp;</p>
</td>
</tr>
</table>

<p></p>

<table border="0" cellspacing="0" cellpadding="0">
<tr>
<td valign="top">
<p>&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;&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;&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">
<div>
<p><u>LINDA Y.H. CHENG&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</u></p>
</div>
</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;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</p>
</td>
<td valign="top"></td>
<td valign="top">
<p>Linda Y.H. Cheng<br />
 Corporate Secretary</p>

<p><br />
 </p>
</td>
</tr>

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

<tr>
<td valign="top">
<p>&nbsp;</p>
</td>
<td valign="top"></td>
<td valign="top">
<p>&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;&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">
<div>
<p><u>LINDA Y.H. CHENG&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</u></p>
</div>
</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;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</p>
</td>
<td valign="top"></td>
<td valign="top">
<p>Linda Y.H. Cheng<br />
 Corporate Secretary<br />
 </p>
</td>
</tr>
</table>

<p>Dated:&nbsp; November 22, 2004</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": "041162122"}, "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"}}
Form 8-K 11/22/04
`UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C.  20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report: November 22, 2004
PG&E CORPORATION
(Exact Name of Registrant as specified in
Charter)
California
1-2609
94-323914
(State or other jurisdiction of
incorporation)
(Commission File Number)
(IRS Employer
Identification No.)
One Market, Spear Tower, Suite 2400, San
Francisco, CA
94105
(Address of principal executive offices)
(Zip code)
415-267-7000
(Registrant's Telephone Number,
Including Area Code)
N/A
(Former Name or Former Address, if Changed
Since Last Report)
PACIFIC GAS AND ELECTRIC COMPANY
(Exact Name of Registrant as specified in
Charter)
California
1-2348
94-0742640
(State or other jurisdiction of
incorporation)
(Commission File Number)
(IRS Employer
Identification No.)
77 Beale Street, P. O. Box 770000, San
Francisco, California
94177
(Address of principal executive offices)
(Zip code)
(415) 973-7000
(Registrant's Telephone Number,
Including Area Code)
N/A
(Former Name or Former Address, if Changed
Since Last Report)
Check
the appropriate box below if the Form 8-K filing is intended to
simultaneously satisfy the filing obligation of the registrant
under any of the following provisions (see General Instruction A.2.
below):
[ ]
Written communications pursuant to Rule 425 under the Securities
Act (17 CFR 230.425)
[ ]
Soliciting Material pursuant to Rule 14a-12 under the Exchange
Act (17 CFR 240.14a-12)
[ ]
Pre-commencement communications pursuant to Rule 14d-2(b) under
the Exchange Act
(17 CFR 240.14d-2(b)
[ ]
Pre-commencement communications pursuant to Rule 13e-4(c) under
the Exchange Act
(17 CFR 240.13e-4(c))
Item 8.01 Other Events
A.  Proposed Decisions in Pacific Gas and Electric
Company's (Utility) Cost of Capital Proceeding
On
November 16, 2004, a proposed decision was issued by an
administrative law judge overseeing the California investor-owned
electric utilities' (IOUs) cost of capital proceedings at the
California Public Utilities Commission (CPUC).  The CPUC
Commissioner assigned to the proceedings also issued an alternate
proposed decision (Alternate PD).  Both the proposed decision
and the Alternate PD would approve the Utility's request to
recover (1) its actual cost of long-term debt and preferred stock
from January 1, 2004 through April 11, 2004, and (2) its new cost
of long-term debt and preferred stock resulting from its Chapter 11
exit financing that became effective on April 12, 2004, including
hedging costs.  Both the proposed decision and the Alternate
PD also would approve a return on common equity (ROE) for 2004 and
2005 of 11.22%,  which is consistent with the December 19, 2003
settlement agreement entered into between the CPUC, the Utility and
PG&E Corporation to resolve the Utility's Chapter 11
proceeding (Settlement Agreement).  The Settlement Agreement
provides that, from January 1, 2004 until certain credit ratings
are achieved, the Utility's authorized ROE will be no less
than 11.22% per year.  The Utility had requested a ROE of
11.60% for 2005.
The
proposed decision and the Alternate PD would authorize the
following cost of capital for 2004 and 2005:
2004
2005
Capital
Weighted
Capital
Weighted
Cost
Structure
Cost
Cost
Structure
Cost
Long-term debt
5.90%
48.2%
2.84%
6.10%
45.5%
2.78%
Preferred Stock
6.76%
2.8%
0.19%
6.42%
2.5%
0.16%
Common equity
11.22%
49.0%
5.50%
11.22%
52.0%
5.83%
Return on rate base
8.53%
8.77%
If
the proposed decision or the Alternate PD were adopted, the
Utility's annual revenue requirement for 2004 would decrease
by approximately $109 million compared to the currently authorized
revenue requirement, as a result of interest savings associated
with the Utility's Chapter 11 exit financing.  The
Utility has previously recorded a reserve against operating
revenues for the difference between its currently authorized rate
of return on rate base of 9.24% and the lower rate of return on
rate base of 8.53% (resulting from its lower interest costs)
requested in its cost of capital application.
The
Utility has proposed to include any electric revenue requirement
change authorized in this proceeding in rates effective January 1,
2005.  The proposed decision and the Alternate PD would adopt
the Utility's proposal to include any gas revenue requirement
changes authorized in this proceeding in the next gas
transportation rate change, annual true-up or the biennial cost
allocation proceeding.
Both
the proposed decision and the Alternate PD recognize the importance
of assessing and mitigating the debt equivalence impacts on the
IOUs' credit ratings associated with the long-term financial
obligations under power purchase agreements (PPAs) that the IOUs will be
required to enter into to meet electricity resource adequacy
requirements.   Although both proposed decisions decline
to adopt a formal debt equivalence policy, they recommend that the
IOUs submit detailed information in their future cost of capital
applications so that the CPUC can assess the debt equivalence
impacts.  Additionally, the Alternate PD states that it would
endorse a goal of "maintaining the major utilities' debt to
capital, interest coverage, and cash flow to debt credit ratios to
be no lower than the top third of S&P's BBB benchmarks for
those credit ratios."   If the Alternate PD is adopted, it is
possible that this ordering paragraph could be interpreted as a
commitment by the CPUC to provide rate relief to enable the IOUs to
maintain these credit ratios.  The ordering paragraph also may
be interpreted to require the IOUs to maintain these credit ratios
without regard to the level of rates approved by the CPUC. 
The Utility will file comments on the Alternate PD seeking
clarification of this issue.
Comments to the proposed decisions are due on December 6, 2004 and
reply comments are due on December 13, 2004.  It is expected
that the CPUC will issue a final decision by the end of the
year.
B.  Proposed Decision on Long-Term Electricity
Resource Plans
On November 16, 2004, a proposed decision also was issued on the
long-term electricity resource plans submitted to the CPUC by the
IOUs to meet electricity resource adequacy requirements over the
10-year period 2004-2014.  In general, the proposed decision
would adopt, with modifications, the IOUs' long-term
electricity resource plans (LTPs), would find that the LTPs are
reasonable for planning purposes, and that the medium, preferred
case scenarios in the LTPs should be followed for making planning
and procurement decisions.  The proposed decision includes the
following key points:
The proposed decision would find that the Utility's
strategy of adding 1,200 megawatts (MW) of reserve capacity and new
peaking generation in 2008 and an additional 1,000 MW of new
peaking and dispatchable generation in 2010 through requests for
offers (RFOs) is reasonable and compatible with the Utility's resource
  needs under its medium preferred case scenario, does not crowd out policy-preferred
resources, and is a reasonable level of commitment given load
uncertainty.  However, the proposed decision notes that the
Utility's commitments may need to be increased or expedited
for the Utility to meet its 2006 resource adequacy obligations.
Rather than permit the Utility to have a pre-defined
procurement target of 50% utility-owned generation resources and
50% contracted-for generation resources, as proposed by the
Utility, the proposed decision would require that all the IOUs
conduct a transparent and competitive solicitation through an RFO
process from all potential sources of generation (e.g.
conventional/renewable – turnkey power plants, buyouts, and
PPAs) to meet their resource requirements.   In evaluating
bids, the IOUs would be required to:
procure the maximum amount of renewable generation resources,
and be prepared to defend any selection of fossil-fuel generation
resources over renewable resources,
employ the Least-Cost Best-Fit methodology when evaluating bids
for PPAs and utility-owned generation resources, taking into
account the qualitative and quantitative attributes (such as
performance risk, credit risk, price diversity, term, and
operational flexibility) associated with each bid, and
employ a "carbon adder" to evaluate fossil-fuel
generation bids as a method to recognize the cost of greenhouse gas
emissions to develop a more accurate price comparison between
fossil-fuel, renewable and demand-side bids (the carbon adder would
be used for analytical purposes only and would not be paid to a
generator).
When evaluating PPA bids, the IOU would be required to employ
Standard & Poor's (S&P's) method of assessing
the debt equivalence impacts on the IOU's credit ratings, but
instead of using 30% of the present value of the fixed capacity
payments due under a PPA as the debt equivalent as S&P's
method does, the proposed decision would reduce the factor to 10%
in recognition of the improving California regulatory climate and
the desire not to disadvantage PPAs unduly over utility-owned
generation, particularly with respect to renewable generation.
   As described above in the description of the proposed
decisions in the cost of capital proceedings, the CPUC would
consider the debt equivalence impact of PPAs on the IOUs' credit
ratings, and therefore their costs of borrowing, in their future
cost of capital proceedings.
The proposed decision would prohibit IOUs from recovering costs
in excess of their final bid price for utility-owned generation
resources, stating that cost overruns should be borne by
shareholders to level the playing field for IOU-owned generation
projects and PPAs, with respect to risk allocation.
The proposed decision would permit affiliates of the IOUs to
participate in the bidding process for long-term PPAs, subject to
certain guidelines and safeguards, including a requirement that the
IOUs use an independent third party evaluator in resource
solicitations where there are affiliates, IOU-built, or IOU-turnkey
power plant bidders.
The proposed decision would permit the IOUs to recover their
net stranded costs of all new fossil-fuel and renewable resources
from all customers for a period of 10 years, including through the
use of an exit fee, recognizing that the implementation of
community choice aggregation, departing municipal load, and the
potential for allowing new direct access all create a great degree
of uncertainty as to the amount of load the existing IOUs will be
responsible for serving in the future.  The proposed decision
states that the IOUs would be required to take appropriate steps to
minimize potential stranded costs by selling excess energy and
capacity needs into the marketplace and crediting the revenues from
these sales against the IOUs' costs.
The proposed decision would accept the Utility's request
to extend the mandatory rate adjustment mechanism under California
Assembly Bill 57 (AB 57), which requires the CPUC to review the
revenues and costs associated with an IOU's electricity
procurement plan at least semi-annually and adjust retail
electricity rates or order refunds, as appropriate, when the
forecast aggregate over-collections or under-collections exceed 5%
of the IOU's prior year electricity procurement revenues,
excluding amounts collected for the California Department of Water
Resources (DWR).  Although AB 57 provides that these mandatory
adjustments will cease on January 1, 2006, the Utility had
requested that the CPUC extend the mandatory rate adjustment
mechanism through at least the 10-year period covered by the
Utility's LTP.  The proposed decision would extend the
time period during which the mandatory rate adjustment mechanism
would be made to the length of a resource commitment or 10 years,
whichever is longer.
The proposed decision would deny the Utility's request to
clarify that the maximum annual procurement disallowance
established by the CPUC for the Utility's administration of
the DWR allocated contracts and least-cost dispatch of its
electricity resources of two times the Utility's
administration costs of managing procurement activities, be
extended to the Utility's administration of all utility
dispatch, including allocated DWR contracts and administrative and
dispatch costs related to utility-owned generation and other
PPAs.
With respect to the IOUs' contracting authority, the
proposed decision would permit the IOUs to enter into short-term,
mid-term and long-term contracts with starting delivery dates
through 2014, provided the IOUs submit necessary compliance filings
and provided that contracts with terms three years or longer are
submitted to the CPUC for pre-approval.  The proposed decision
would adopt a rolling 10-year procurement period, noting that the
LTPs cover a 10-year period and will be updated and reviewed every
2 years.  The proposed decision notes that ultimately the CPUC
will eliminate short-term procurement plans and the IOUs will act
in accordance with a single CPUC-approved plan; but until then, the
IOUs' existing short-term plans remain in effect and any
updates or modifications should be filed with an advice
letter.
The proposed decision would direct the IOUs to meet CPUC-mandated energy efficiency goals over the 10-year planning period,
but would not authorize the $245 million incremental revenue
requirement requested by the Utility to fund energy efficiency
programs for 2006 through 2008.  The proposed decision would
defer this issue for consideration in the CPUC's energy
efficiency rulemaking proceeding.
Comments are due on December 6, 2004 and reply comments are due on
December 13, 2004.  It is expected that the CPUC will issue a
final decision by the end of the year.
C.  Proposed Decision in the Utility's Gas
Accord III
Also,
on November 16, 2004, a proposed decision was issued recommending
approval of the Gas Accord III Settlement Agreement.  If
approved by the CPUC, the final decision will:
resolve all issues in this proceeding;
set the Utility's gas transmission and storage rates and
market structure for a three-year term, commencing January 1, 2005;
and
provide a gas transmission and storage revenue requirement of
$428.5 million for 2005 (as compared to an authorized revenue
requirement of $ 427.8 million for 2004), $436.6 million for 2006,
and $444.9 million for 2007.
Assuming
the CPUC issues a final decision by the end of the year, new rates
would be effective on January 1, 2005.
D.  Redemption of Senior Notes
On
November 15, 2004, PG&E Corporation's 6⅞% Senior
Secured Notes due July 15, 2008 (Senior Secured Notes) were
redeemed and the security interest in approximately 94% of the
outstanding common stock of the Utility that is owned by PG&E
Corporation that secured the Senior Secured Notes was
released.  PG&E Corporation paid approximately $664.5
million, which included a redemption premium of approximately $50.7
million and $13.8 million of interest that has accrued since the
last interest payment date, to redeem the Senior Secured
Notes.  As a result of the Senior Secured Note redemption,
PG&E Corporation will write off $14.3 million of unamortized
loan fees.
E.  Credit Ratings
On
November 16, 2004, Fitch Ratings raised the Utility's senior
secured rating to BBB+ (from BBB) and initiated a rating of BBB+ on
the Utility's $850 million secured credit facility, raised
the Utility's indicative senior unsecured rating to BBB+
(from BBB-), and changed the outlook to stable (from positive) as a
result of the upgrades.  Fitch Ratings stated that its ratings
and stable outlook reflect what it considers to be the
Utility's manageable post-bankruptcy restructuring debt load
and relatively stable cash flow outlook as well as the recent $600
million debt reduction at PG&E Corporation.
F.  Draft Resolution Regarding Billing Issues
On
November 16, 2004, a draft resolution was released for comment by
the Energy Division of the CPUC.  The Energy Division's
draft resolution proposes to clarify the conditions under which the
Utility can back-bill a residential customer for periods longer
than three months.  The draft resolution was issued in
response to the Utility's advice letter filed with the CPUC
on October 15, 2004 to implement a request from the Executive
Director of the CPUC to discontinue collection of overdue amounts
from residential customers that relate to charges for usage in
excess of three months.  The draft resolution would accept the
Utility's proposal to change the applicable tariff language
to provide that the failure to issue an actual or estimated bill is
a "billing error."  In the case of a
"billing error," a residential customer's
exposure is limited to three months for undercharges.  The
Utility's letter stated that the tariff changes it proposed
would not affect customers' billing obligations for bills
issued before the proposed October 13, 2004 effective
date.
The
Utility Reform Network (TURN) filed a protest to the
Utility's advice letter.  TURN stated that the CPUC
should reject the advice letter and instead review the
Utility's billing practices comprehensively in a new
proceeding.  On November 9, 2004, TURN filed a motion
requesting the CPUC to open an investigation into the
Utility's billing practices.  The Utility's
response to TURN's motion is due on December 3, 2004. 
The Energy Division's draft resolution would deny
TURN's request to reject the advice letter outright, but
would accept TURN's request to reject the Utility's
suggestion to exempt from the definition of "billing
error" circumstances where the failure to issue a bill was
due to causes beyond the Utility's reasonable control. 
Instead, the Energy Division's draft resolution would treat
the failure to deliver a timely bill as a "billing
error" except in situations where a customer had failed to
establish service with the Utility.  The draft resolution
would also treat the issuance of estimated bills as "billing
error" and subject to the three month retroactive adjustment
limitation except where the estimated bills result from the
Utility's inability to access the meter or other causes
within the control of the customer.  In addition, the draft
resolution would prevent the Utility from recovering charges for
unauthorized use from the person who caused the unauthorized
use.  Finally, the Energy Division's draft resolution
declares that the changes stated are "declarative of existing
CPUC tariffs and requirements" and therefore would be
retroactive to bills issued before October 13, 2004, as well as to
bills issued prospectively.
PG&E Corporation and the Utility believe that the draft
resolution, if adopted as an order by the CPUC, would be unlawful
to the extent it is applied retroactively to bills issued before
October 13, 2004 and to the extent it would require the Utility to
make tariff modifications beyond those it requested.  
The issues addressed in the Energy Division's draft
resolution exceed the changes proposed by the Utility in its advice
letter and have not been the subject of any hearing or other CPUC
rulemaking process.
In releasing the draft resolution, the Energy Division indicated
that the CPUC may vote on whether to adopt the draft resolution as
early as its meeting to be held on December 16, 2004. 
Comments on the draft resolution are due December 3, 2004 with
reply comments due December 8, 2004.  Neither PG&E
Corporation nor the Utility can predict the outcome of this
matter.  It is possible that the outcome would have a material
adverse effect on PG&E Corporation's or the
Utility's results of operations or financial condition.
G. Approval of Energy Recovery Bond Application
On
November 19, 2004, the CPUC voted to approve the Utility's
application for a wholly owned subsidiary to issue energy recovery
bonds (ERBs) to refinance the remaining unamortized balance of the
regulatory asset authorized under the Settlement Agreement
(Settlement Regulatory Asset) and related federal income and state
franchise taxes, in an aggregate principal amount of up to $3.0
billion in two separate tranches up to one year apart, to be
secured by a dedicated rate component. (The dedicated rate
component was authorized in June 2004 when California Senate Bill
772 became law.)  The decision authorizes the issuance of ERBs
subject to the Utility's consent to the terms and conditions
of the CPUC's financing order and approval of transaction
terms by a financing team comprised of CPUC staff and their outside
advisors.
The remaining conditions to be met before ERBs can be issued
are:
The rating agencies determine that the issuance of ERBs will
not adversely affect the Utility's issuer or debt credit
ratings, and
The Utility obtains, or decides it does not need, a private
letter ruling from the Internal Revenue Service (IRS)
confirming that neither the refinancing of the Settlement
Regulatory Asset nor the issuance of the ERBs is a presently
taxable event.  On June 8, 2004, the Utility filed a request
for a private letter ruling with the IRS.
Assuming the timely satisfaction of these remaining conditions, the
issuance of the first series of ERBs, in the amount of the
after-tax balance of the Settlement Regulatory Asset (estimated to
be approximately $1.8 billion), is targeted to occur in January
2005.
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:
LINDA Y.H. CHENG
Linda Y.H. Cheng
Corporate Secretary
PACIFIC GAS AND ELECTRIC COMPANY
By:
LINDA Y.H. CHENG
Linda Y.H. Cheng
Corporate Secretary
Dated:  November 22, 2004