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<p align="center"><font size="3" face="Times New Roman">SECURITIES
AND EXCHANGE COMMISSION</font></p>
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<td colspan="4" valign="top">
<p><font size="3" face=
"Times New Roman">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</font></p>
</td>
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<td colspan="4" valign="top">
<p align="center"><font size="3" face="Times New Roman">Washington,
D.C.&nbsp; 20549</font></p>
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<p><font size="3" face=
"Times New Roman">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</font></p>
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<td colspan="4" valign="top">
<p><font size="3" face=
"Times New Roman">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</font></p>
</td>
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<p align="center"><font size="3" face="Times New Roman">FORM
8-K</font></p>
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<p><font size="3" face=
"Times New Roman">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</font></p>
</td>
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<td colspan="4" valign="top">
<p align="center"><font size="3" face="Times New Roman">CURRENT
REPORT</font></p>
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<p><font size="3" face=
"Times New Roman">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</font></p>
</td>
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<p align="center"><font size="3" face="Times New Roman">Pursuant to
Section 13 or 15(d) of the Securities Exchange Act of
1934</font></p>
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<p><font size="3" face=
"Times New Roman">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</font></p>
</td>
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<p align="center"><font size="3" face="Times New Roman">Date of
Report: June 19, 2003</font></p>
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<p><font size="3" face=
"Times New Roman">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</font></p>
</td>
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<td colspan="4" valign="top">
<p><font size="3" face=
"Times New Roman">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</font></p>
</td>
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<p align="center"><font size="3" face="Times New Roman"><br />
 Commission<br />
 File<br />
 Number</font></p>
</td>
<td valign="top">
<p align="center"><font size="3" face="Times New Roman">Exact Name
of<br />
 Registrant<br />
 as specified in<br />
 its charter</font></p>
</td>
<td valign="top">
<p align="center"><font size="3" face="Times New Roman"><br />
 State or other<br />
 Jurisdiction of<br />
 Incorporation</font></p>
</td>
<td valign="top">
<p align="center"><font size="3" face="Times New Roman"><br />
 IRS Employer<br />
 &nbsp; Identification<br />
 Number</font></p>
</td>
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<td valign="top">
<p align="center"><font size="3" face=
"Times New Roman">_____________</font></p>
</td>
<td valign="top">
<p align="center"><font size="3" face=
"Times New Roman">_____________</font></p>
</td>
<td valign="top">
<p align="center"><font size="3" face=
"Times New Roman">_____________</font></p>
</td>
<td valign="top">
<p align="center"><font size="3" face=
"Times New Roman">_____________</font></p>
</td>
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<p align="center"><font size="3" face=
"Times New Roman">1-12609</font></p>

<p align="center"><font size="3" face=
"Times New Roman">1-2348</font></p>
</td>
<td valign="top">
<p align="center"><font size="3" face="Times New Roman">PG&amp;E
Corporation</font></p>

<p align="center"><font size="3" face="Times New Roman">Pacific Gas
and<br />
 Electric Company</font></p>
</td>
<td valign="top">
<p align="center"><font size="3" face=
"Times New Roman">California</font></p>

<p align="center"><font size="3" face=
"Times New Roman">California</font></p>
</td>
<td valign="top">
<p align="center"><font size="3" face=
"Times New Roman">94-3234914</font></p>

<p align="center"><font size="3" face=
"Times New Roman">94-0742640</font></p>
</td>
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<td valign="top">
<p><font size="3" face=
"Times New Roman">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</font></p>
</td>
<td valign="top"></td>
<td valign="top"></td>
<td valign="top"></td>
</tr>

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<td colspan="2" valign="top">
<p align="center"><font size="3" face="Times New Roman">Pacific Gas
and Electric Company<br />
 77 Beale Street, P. O. Box 770000<br />
 San Francisco, California&nbsp;&nbsp;94177</font></p>
</td>
<td colspan="2" valign="top">
<p align="center"><font size="3" face="Times New Roman">PG&amp;E
Corporation<br />
 One Market, Spear Tower, Suite 2400<br />
 San Francisco, California&nbsp;&nbsp;94105</font></p>
</td>
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<td colspan="4" valign="top">
<p><font size="3" face=
"Times New Roman">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</font></p>
</td>
</tr>

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<td colspan="4" valign="top">
<p align="center"><font size="3" face="Times New Roman">(Address of
principal executive offices) (Zip Code)</font></p>
</td>
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<td valign="top"></td>
<td valign="top"></td>
<td valign="top"></td>
<td valign="top"></td>
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<td colspan="2" valign="top">
<p align="center"><font size="3" face="Times New Roman">Pacific Gas
and Electric Company<br />
 (415) 973-7000</font></p>
</td>
<td colspan="2" valign="top">
<p align="center"><font size="3" face="Times New Roman">PG&amp;E
Corporation<br />
 (415) 267-7000</font></p>
</td>
</tr>

<tr>
<td colspan="4" valign="top">
<p><font size="3" face=
"Times New Roman">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</font></p>
</td>
</tr>

<tr>
<td colspan="4" valign="top">
<p align="center"><font size="3" face=
"Times New Roman">(Registrant's telephone number, including area
code)</font></p>
</td>
</tr>

<tr>
<td valign="top">
<p><font size="3" face=
"Times New Roman">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</font></p>
</td>
<td valign="top"></td>
<td valign="top"></td>
<td valign="top"></td>
</tr>
</table>

<div align="center"><font size="3" face="Times New Roman"></font>
<hr size="2" width="100%" align="center" />
</div>

<p><font size="3" face="Times New Roman">Item 5. Other
Events</font></p>

<p><font size="3" face=
"Times New Roman">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;On June 19, 2003,
PG&amp;E Corporation and its subsidiary, Pacific Gas and Electric
Company (Utility) and the staff of the California Public Utilities
Commission (CPUC) announced a proposed settlement agreement
regarding the competing plans of reorganization submitted in the
Utility&rsquo;s proceeding under Chapter 11 of the U.S. Bankruptcy
Code pending in the U.S. Bankruptcy Court for the Northern District
of California (Bankruptcy Court).&nbsp; The proposed settlement
agreement, which the CPUC staff will recommend to the CPUC and to
the Bankruptcy Court, follows judicially supervised settlement
discussions before Judge Randall Newsome.&nbsp; Under the proposed
settlement agreement, the parties would agree to jointly support a
proposed plan of reorganization (Settlement Plan) that embodies the
terms and conditions contained in the settlement agreement.&nbsp;
PG&amp;E Corporation and the Utility would agree that they would no
longer propose to disaggregate the historic businesses of the
Utility as provided for in PG&amp;E Corporation&rsquo;s and the
Utility&rsquo;s proposed plan of reorganization (PG&amp;E
Plan).&nbsp; Instead the Utility would remain a vertically
integrated utility subject to the CPUC&rsquo;s jurisdiction.&nbsp;
In the proposed settlement agreement, the CPUC would acknowledge
that it is fair and in the public interest to allow the Utility to
recover, over a reasonable time, prior uncollected costs and to
provide the opportunity for the Utility&rsquo;s shareholders to
earn a reasonable rate of return on the Utility&rsquo;s
business.&nbsp;</font></p>

<p><font size="3" face=
"Times New Roman">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The settlement
agreement is subject to the approval of the Boards of Directors of
PG&amp;E Corporation and the Utility, and the CPUC and execution of
the settlement agreement on or before December 31, 2003.&nbsp; The
CPUC will conduct a public hearing process before deciding whether
or not to approve the settlement agreement.&nbsp; A copy of the
proposed settlement agreement is filed with this report as an
exhibit.</font></p>

<p><font size="3" face=
"Times New Roman">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The settlement
agreement is expressly conditioned on the preparation and approval
by the Bankruptcy Court of the Settlement Plan, the disclosure
statement for the Settlement Plan, and the Bankruptcy Court&rsquo;s
order confirming the Settlement Plan, each in form and substance
reasonably satisfactory to each party.&nbsp; The proposed
settlement agreement provides, among other conditions, that the
Settlement Plan would not become effective (Effective Date) until
(1) Standard &amp; Poor&rsquo;s (S&amp;P) and Moody&rsquo;s
Investors Service (Moody&rsquo;s) have issued credit ratings for
the Utility of not less than BBB- and Baa3, respectively, and (2)
the CPUC has given final, nonappealable approval for all rates,
tariffs, and agreements necessary to implement the Settlement Plan,
although PG&amp;E Corporation and the Utility would have the right
to waive the finality provision.&nbsp;</font></p>

<p><b><font size="3" face=
"Times New Roman">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</font></b> Among
other terms, the settlement agreement provides that:</p>

<p><font size="3" face="Times New Roman">&nbsp;<u>Regulatory
Asset</u></font></p>

<p><font size="3" face="Times New Roman">The CPUC would establish
an after-tax regulatory asset of $2.21 billion (Regulatory Asset)
as a new, separate and additional part of the Utility&rsquo;s rate
base. The Regulatory Asset would be amortized on a mortgage-style
basis over nine years beginning January 1, 2004.&nbsp; The details
and mechanics of the amortization are set forth on Appendix A to
the settlement agreement.</font></p>

<p><font size="3" face="Times New Roman">The net after-tax amount
of any refunds, claim offsets or other credits from generators or
other energy suppliers relating to the Utility&rsquo;s power
procurement costs that the Utility actually realizes in cash or by
offset of creditor claims in its bankruptcy case would be applied
to reduce the outstanding balance and the remaining amortization of
the Regulatory Asset.&nbsp; Amounts received in cash by the Utility
from the master settlement agreement resolving an&nbsp; El Paso
Natural Gas Company matter pending before the Federal Energy
Regulatory Commission (FERC) and related civil litigation may also
effect such a reduction, if consistent with CPUC rules or
orders.&nbsp;</font></p>

<p><font size="3" face="Times New Roman">The Regulatory Asset would
earn a return on equity (ROE) of at least 11.22 percent for the
life of the Regulatory Asset and after the equity component of the
Utility&rsquo;s capital structure reaches 52 percent, the
authorized equity component of the Regulatory Asset would be no
less than 52 percent for the life of the Regulatory
Asset.&nbsp;</font></p>

<p><font size="3" face="Times New Roman">Balances in the
Utility&rsquo;s Transition Cost Balancing Account (which tracks the
amount of the Utility&rsquo;s undercollected transition and
electricity procurement costs) as of the Effective Date would have
no further impact on the Utility&rsquo;s retail electric rates and
would not be subject to further CPUC review except for verification
of recorded balances.</font></p>

<p><font size="3" face="Times New Roman">The Utility&rsquo;s rate
base for its retained generation (URG) already established by the
CPUC would be deemed just and reasonable and would not be subject
to modification, adjustment or reduction, except as necessary to
reflect capital expenditures and any change in authorized
depreciation; provided that the CPUC would not be precluded from
determining the reasonableness of any capital expenditures made on
URG after the Effective Date.&nbsp; The CPUC would commit that it
would not reduce or impair the value of the Regulatory Asset or the
URG rate base by taking the Regulatory Asset or the URG rate base,
their amortization or earnings into account when setting other
Utility revenue requirements and resulting rates.&nbsp; The CPUC
would not take the settlement agreement or the Regulatory Asset
into account in establishing the Utility&rsquo;s authorized ROE or
capital structure.&nbsp;</font></p>

<p><font size="3" face="Times New Roman">The CPUC would timely act
upon the Utility&rsquo;s applications to collect in rates prudently
incurred costs (including return of and return on) of any new,
reasonable investment in utility plant and assets. The CPUC would
promptly adjust the Utility&rsquo;s rates consistent with Assembly
Bill 57 and Senate Bill 1976 and the CPUC-California Department of
Water Resources (DWR) Rate Agreement to ensure that the Utility
collection of the following is not impaired:&nbsp; (1) Fixed
Transition Amounts to service existing Rate Reduction Bonds; (2)
Regulatory Asset amortization and return; and (3) base revenue
requirements (<i>e.g.,</i> electric and gas distribution, URG, gas
commodity procurement, existing QF contract costs and associated
return).&nbsp; The CPUC would not discriminate against the Utility
by reason of the Utility&rsquo;s bankruptcy, the Utility&rsquo;s
pending federal lawsuit against the CPUC Commissioners to recover
its previously incurred costs of providing electric service from
ratepayers under the federal filed rate doctrine (the &ldquo;Filed
Rate Case&rdquo;), the settlement agreement, the Regulatory Asset,
or any other matters addressed or resolved by the proposed
settlement agreement.</font></p>

<p><u><font size="3" face="Times New Roman">Ratemaking
Matters</font></u></p>

<p><font size="3" face="Times New Roman">The CPUC would maintain
the Utility&rsquo;s retail electric rates at current levels through
December 31, 2003.&nbsp; As of January 1, 2004, the CPUC may adjust
the Utility&rsquo;s retail electric rates prospectively consistent
with the settlement agreement, Settlement Plan, the confirmation
order and California law.&nbsp; The proposed settlement agreement
contemplates that retail electric rates will be reduced in January
2004, with future reductions thereafter.&nbsp;</font></p>

<p><font size="3" face="Times New Roman">The CPUC would set the
Utility&rsquo;s capital structure and authorized ROE in the
Utility&rsquo;s annual cost of capital proceedings in its usual
manner; provided that, from January 1, 2004 until either S&amp;P
confers on the Utility a company credit rating of at least
&ldquo;A-&rdquo; or Moody&rsquo;s confers on the Utility a company
credit rating of at least &ldquo;A3,&rdquo; the authorized ROE
would be no less than 11.22 percent per year and the authorized
equity ratio for ratemaking purposes would be no less than 52
percent, except that for 2004 and 2005, the authorized equity ratio
would equal the greater of the forecast average equity ratio in the
cost of capital proceeding and 48.6 percent.&nbsp;</font></p>

<p><u><font size="3" face="Times New Roman">Implementation of
Ratemaking.</font></u>&nbsp;&nbsp; As soon as practicable after the
CPUC decision approving the settlement agreement, the Utility would
be required to file an advice letter to implement all the rate and
tariff changes necessary to implement the Settlement Plan. The CPUC
would act promptly on the advice filing and revised rates and
tariffs and to review and issue a decision promptly on the merits
of any application for rehearing of the approval of the advice
filing.&nbsp; The CPUC also would act promptly on certain of the
Utility&rsquo;s pending ratemaking proceedings, including the
Utility&rsquo;s pending 2003 General Rate Case.</p>

<p><u><font size="3" face="Times New Roman">Dividend Payments and
Stock Repurchases.</font></u>&nbsp;&nbsp; There would be no
restrictions on the ability of the Boards of Directors of the
Utility or PG&amp;E Corporation to declare and pay dividends or
repurchase common stock, other than the capital structure and
stand-alone dividend conditions contained in prior CPUC decisions
authorizing the formation of the holding company.&nbsp; Further,
the Utility would agree that it would not pay any dividend on its
common stock before July 1, 2004.</p>

<p><u><font size="3" face="Times New Roman">DWR
Contracts.</font></u>&nbsp; The CPUC could require the Utility to
accept assignment of or assume legal and financial responsibility
for the DWR contracts only if the following conditions were
met:&nbsp; (1) the company credit rating for the Utility following
such assumption&nbsp; would be no less than &ldquo;A&rdquo; from
S&amp;P and &ldquo;A2&rdquo; from Moody&rsquo;s, (2) the CPUC first
made a finding that the contracts are just and reasonable, and (3)
the CPUC had acted to ensure full and timely recovery in retail
electric rates of all contract costs without further review.&nbsp;
The CPUC would retain the right to review administration and
dispatch of the DWR contracts consistent with applicable law.</p>

<p><u><font size="3" face="Times New Roman">Headroom
Revenues.</font></u>&nbsp;&nbsp; The CPUC would agree that the
&ldquo;headroom&rdquo;, surcharge and base revenues accrued or
collected by the Utility through and including December 31, 2003
are property of the Utility&rsquo;s Chapter 11 estate, have been or
will be used for utility purposes, including to pay claims in the
Chapter 11 case, have been included in the Utility&rsquo;s retail
electric rates consistent with state and federal law, and are not
subject to refund. For this purpose, &ldquo;headroom&rdquo; means
the Utility&rsquo;s total net after-tax income reported under GAAP,
less earnings from operations, plus after-tax amounts accrued for
bankruptcy-related administration and bankruptcy-related interest
costs, all multiplied by 1.67, provided that the calculation will
reflect the outcome of the Utility&rsquo;s 2003 General Rate
Case.&nbsp; The settlement agreement provides that if
&ldquo;headroom&rdquo; revenues accrued by the Utility during 2003
are greater than $875 million, the Utility will refund the excess
to ratepayers and if &ldquo;headroom&rdquo; revenues are less than
$775 million, the CPUC would allow the Utility to collect the
shortfall.</p>

<p><font size="3" face="Times New Roman">&nbsp;<u>Dismissal of
Filed Rate Case, Other Litigation and
Proceedings</u>.&nbsp;&nbsp;</font></p>

<p><font size="3" face="Times New Roman">On or as soon as
practicable after the later of the Effective Date or the date the
CPUC decision approving the settlement agreement is final and
nonappealable, the Utility would dismiss with prejudice the Filed
Rate Case and withdraw the PG&amp;E Plan.&nbsp; In exchange, on or
before January 1, 2004, the CPUC would establish and authorize the
collection of the Regulatory Asset and the URG rate base, and, as
soon as practicable after the Effective Date, resolve the pending
Annual Transition Cost Proceeding in which the CPUC is reviewing
the reasonableness of the Utility&rsquo;s procurement costs
incurred during the energy crisis with no adverse impact on the
Utility&rsquo;s cost recovery as filed.&nbsp;&nbsp;</font></p>

<p><font size="3" face="Times New Roman">On or as soon as
practicable after the later of the Effective Date or the date the
CPUC decision approving the settlement agreement is final and
nonappealable, the Utility, PG&amp;E Corporation, on the one hand,
and the CPUC, on the other, will execute full mutual releases and
dismissals with prejudice of certain claims, actions or regulatory
proceedings, as specified in the settlement agreement, arising out
of or related in any way to the energy crisis or the implementation
of AB 1890, including the CPUC&rsquo;s investigation into past
holding company actions during the energy crisis (but only as to
past actions, not prospective matters).</font></p>

<p><u><font size="3" face="Times New Roman">Withdrawal of
Applications in Connection with PG&amp;E
Plan.</font></u>&nbsp;&nbsp; The Utility and PG&amp;E Corporation
would agree that upon execution of the settlement agreement, they
will request a stay of all proceedings before the FERC, the Nuclear
Regulatory Commission (NRC), the Securities and Exchange Commission
(SEC), and other regulatory agencies relating to approvals sought
to implement the PG&amp;E Plan.&nbsp; On the Effective Date or as
soon thereafter as practicable, the Utility and PG&amp;E
Corporation would withdraw or abandon all applications for such
regulatory approvals.</p>

<p><u><font size="3" face="Times New Roman">Treatment of
Creditors.</font></u>&nbsp; The treatment of creditors under the
proposed Settlement Plan would be consistent with that provided in
the PG&amp;E Plan, except that those creditors that were to receive
long-term notes to be issued by the limited liability companies
contemplated under the PG&amp;E Plan or a combination of cash and
such long-term notes would be paid entirely in cash.&nbsp; It is
anticipated that all of the Utility&rsquo;s existing trade and
financial debt, except for certain pollution control bond-related
obligations, would be paid in cash under the Settlement Plan.&nbsp;
It is further anticipated that these certain obligations and the
Utility&rsquo;s preferred stock would be reinstated under the
Settlement Plan. The Settlement Plan would provide for necessary
financing including interest rate hedging and would specify
creditor treatment. It is anticipated that the Utility would issue
approximately $8 billion in debt securities under the Settlement
Plan.</p>

<p><u><font size="3" face="Times New Roman">Environmental
Measures</font></u>.&nbsp;&nbsp; The Utility would implement three
environmental enhancement measures:&nbsp;</p>

<p><font size="3" face="Times New Roman">the Utility would encumber
with conservation easements or donate approximately 140,000 acres
of land to public agencies or non-profit conservation
organizations,</font></p>

<p><font size="3" face="Times New Roman">environmental enhancements
associated with these lands funded over 10 years with $70 million
of ratepayer funding,</font></p>

<p><font size="3" face="Times New Roman">the creation of a
non-profit corporation funded by shareholders with $15 million over
five years dedicated to support research and investment in clean
energy technology, primarily in the Utility&rsquo;s service
territory.</font></p>

<p><font size="3" face="Times New Roman"><br />
<u>Waiver of Sovereign Immunity.</u>&nbsp; In connection with any
action or proceeding concerning the enforcement of the settlement
agreement, the Settlement Plan or the confirmation order or other
determination of the parties&rsquo; rights under the settlement
agreement, the Settlement Plan or the confirmation order, the CPUC
would agree to waive all existing and future rights of sovereign
immunity, and all other similar immunities, as a defense. The CPUC
would agree to consent to the jurisdiction of any court or other
tribunal or forum for such actions or proceedings including, but
not limited to, the Bankruptcy Court.</font></p>

<p><u><font size="3" face="Times New Roman">Term and
Enforceability.</font></u> The settlement agreement would generally
terminate nine years after the Effective Date. The parties would
agree that the Bankruptcy Court will have jurisdiction over the
parties for all purposes relating to enforcement of the settlement
agreement, the Settlement Plan, and the confirmation order.&nbsp;
The parties also would agree that the settlement agreement, the
Settlement Plan or any order entered by the Bankruptcy Court
contemplated or required to implement the settlement agreement or
the Settlement Plan would be enforceable under federal law,
notwithstanding any contrary state law or future decisions or
orders of the CPUC.</p>

<p><font size="3" face="Times New Roman">Item 7. Financial
Statements, Pro Forma Financial Information, and
Exhibits</font></p>

<p><font size="3" face="Times New Roman">Exhibit 99 &ndash;
Proposed Settlement Agreement among PG&amp;E Corporation, Pacific
Gas and Electric Company, and the California Public Utilities
Commission</font></p>

<p align="center"><u><font size="3" face=
"Times New Roman">Cautionary Statement</font></u></p>

<p><font size="3" face="Times New Roman">Although PG&amp;E
Corporation and the Utility are unable to predict whether or when
the settlement agreement and Settlement Plan will become effective,
it is anticipated that both the CPUC and the Bankruptcy Court
approvals to implement the settlement could occur by the end of the
year, enabling the financing and repayment of the creditors to
occur in the first quarter of 2004.&nbsp; This statement and other
statements in this report about the anticipated implementation of
the settlement agreement and the Settlement Plan are
forward-looking statements. Actual results may differ materially
from the outcomes contemplated in the forward-looking
statements.&nbsp; Whether or when the settlement agreement and the
Settlement Plan become effective and to what extent PG&amp;E
Corporation and the Utility are able to achieve the anticipated
benefits of the Settlement Plan are subject to many risks and
uncertainties, including:</font></p>

<p><font size="3" face="Times New Roman">The outcome and the timing
of the CPUC&rsquo;s proceeding to approve the settlement agreement
and the resulting retail electric rates,</font></p>

<p><font size="3" face="Times New Roman">The outcome and the timing
of the Bankruptcy Court&rsquo;s proceeding to confirm the
Settlement Plan,</font></p>

<p><font size="3" face="Times New Roman">Whether the required
credit ratings to implement the Settlement Plan are
obtained,</font></p>

<p><font size="3" face="Times New Roman">The outcome of any
litigation that may arise to challenge the settlement agreement or
the Settlement Plan, including the prosecution of any appeals
related to the CPUC order approving the settlement agreement or the
Bankruptcy Court&rsquo;s confirmation order and the affect any
pending appeals may have on the ability of the Utility to complete
the financing contemplated under the Settlement Plan,</font></p>

<p><font size="3" face="Times New Roman">The outcome of the case
pending before the California Supreme Court to consider the
CPUC&rsquo;s authority to enter into a settlement agreement with
Southern California Edison,</font></p>

<p><font size="3" face="Times New Roman">The impact of future
ratemaking actions of the CPUC,</font></p>

<p><font size="3" face="Times New Roman">Changes that may be made
to California's electric industry restructuring legislation and to
other applicable regulations, including for example, legislation
that would repeal major portions of the electric industry
restructuring law or that would extend the CPUC's jurisdiction to
regulate certain activities of the parent companies of the
California investor-owned electric and gas utilities,</font></p>

<p><font size="3" face="Times New Roman">Future equity or debt
market conditions, future interest rates, future credit ratings,
and other factors that may affect the ability to implement the
Settlement Plan or affect the terms, amount, and value of the debt
securities proposed to be issued under the Settlement
Plan.</font></p>

<p><font size="3" face="Times New Roman"><br clear="all" />
</font></p>

<table border="0" cellspacing="0" cellpadding="0">
<tr>
<td valign="top">
<p><font size="3" face=
"Times New Roman">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</font></p>
</td>
<td valign="top">
<p><font size="3" face="Times New Roman">SIGNATURE</font></p>
</td>
</tr>
</table>

<p><font size="3" face="Times New Roman">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.</font></p>

<table border="0" cellspacing="0" cellpadding="0">
<tr>
<td valign="top">
<p><font size="3" face=
"Times New Roman">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</font></p>
</td>
<td valign="top">
<p><font size="3" face="Times New Roman">PG&amp;E
CORPORATION</font></p>
</td>
</tr>

<tr>
<td valign="top">
<p><font size="3" face=
"Times New Roman">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</font></p>
</td>
<td valign="top"></td>
</tr>

<tr>
<td valign="top">
<p><font size="3" face=
"Times New Roman">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</font></p>
</td>
<td valign="top">
<p><font size="3" face="Times New Roman">By:
&nbsp;&nbsp;&nbsp;BRUCE R. WORTHINGTON</font></p>
</td>
</tr>

<tr>
<td valign="top">
<p><font size="3" face=
"Times New Roman">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</font></p>
</td>
<td valign="top">
<p><font size="3" face=
"Times New Roman">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<u>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</u></font></p>
</td>
</tr>

<tr>
<td valign="top">
<p><font size="3" face=
"Times New Roman">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</font></p>
</td>
<td valign="top">
<p><font size="3" face=
"Times New Roman">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;BRUCE
R. WORTHINGTON<br />
 &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Senior Vice
President and General Counsel</font></p>
</td>
</tr>

<tr>
<td valign="top">
<p><font size="3" face=
"Times New Roman">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</font></p>
</td>
<td valign="top"></td>
</tr>

<tr>
<td valign="top">
<p><font size="3" face=
"Times New Roman">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</font></p>
</td>
<td valign="top">
<p><font size="3" face="Times New Roman">PACIFIC GAS AND ELECTRIC
COMPANY</font></p>
</td>
</tr>

<tr>
<td valign="top">
<p><font size="3" face=
"Times New Roman">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</font></p>
</td>
<td valign="top"></td>
</tr>

<tr>
<td valign="top">
<p><font size="3" face=
"Times New Roman">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</font></p>
</td>
<td valign="top">
<p><font size="3" face=
"Times New Roman">By:&nbsp;&nbsp;&nbsp;&nbsp;ROGER J.
PETERS</font></p>
</td>
</tr>

<tr>
<td valign="top">
<p><font size="3" face=
"Times New Roman">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</font></p>
</td>
<td valign="top">
<p><font size="3" face=
"Times New Roman">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<u>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</u></font></p>
</td>
</tr>

<tr>
<td valign="top">
<p><font size="3" face=
"Times New Roman">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</font></p>
</td>
<td valign="top">
<p><font size="3" face=
"Times New Roman">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;ROGER
J. PETERS<br />
 &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Senior Vice President
and General Counsel</font></p>
</td>
</tr>
</table>

<p><font size="3" face="Times New Roman">Dated:&nbsp; June 19,
2003</font></p>
</div>
</body>
</html>
[{"type": "8-K", "sequence": "1", "filename": "final061903.htm", "description": "FORM 8-K", "secsgml_size_bytes": 35059}]
{"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": "03750832"}, "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"}}
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: June 19, 2003
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)
Item 5. Other
Events
On June 19, 2003,
PG&E Corporation and its subsidiary, Pacific Gas and Electric
Company (Utility) and the staff of the California Public Utilities
Commission (CPUC) announced a proposed settlement agreement
regarding the competing plans of reorganization submitted in the
Utility's proceeding under Chapter 11 of the U.S. Bankruptcy
Code pending in the U.S. Bankruptcy Court for the Northern District
of California (Bankruptcy Court).  The proposed settlement
agreement, which the CPUC staff will recommend to the CPUC and to
the Bankruptcy Court, follows judicially supervised settlement
discussions before Judge Randall Newsome.  Under the proposed
settlement agreement, the parties would agree to jointly support a
proposed plan of reorganization (Settlement Plan) that embodies the
terms and conditions contained in the settlement agreement. 
PG&E Corporation and the Utility would agree that they would no
longer propose to disaggregate the historic businesses of the
Utility as provided for in PG&E Corporation's and the
Utility's proposed plan of reorganization (PG&E
Plan).  Instead the Utility would remain a vertically
integrated utility subject to the CPUC's jurisdiction. 
In the proposed settlement agreement, the CPUC would acknowledge
that it is fair and in the public interest to allow the Utility to
recover, over a reasonable time, prior uncollected costs and to
provide the opportunity for the Utility's shareholders to
earn a reasonable rate of return on the Utility's
business.
The settlement
agreement is subject to the approval of the Boards of Directors of
PG&E Corporation and the Utility, and the CPUC and execution of
the settlement agreement on or before December 31, 2003.  The
CPUC will conduct a public hearing process before deciding whether
or not to approve the settlement agreement.  A copy of the
proposed settlement agreement is filed with this report as an
exhibit.
The settlement
agreement is expressly conditioned on the preparation and approval
by the Bankruptcy Court of the Settlement Plan, the disclosure
statement for the Settlement Plan, and the Bankruptcy Court's
order confirming the Settlement Plan, each in form and substance
reasonably satisfactory to each party.  The proposed
settlement agreement provides, among other conditions, that the
Settlement Plan would not become effective (Effective Date) until
(1) Standard & Poor's (S&P) and Moody's
Investors Service (Moody's) have issued credit ratings for
the Utility of not less than BBB- and Baa3, respectively, and (2)
the CPUC has given final, nonappealable approval for all rates,
tariffs, and agreements necessary to implement the Settlement Plan,
although PG&E Corporation and the Utility would have the right
to waive the finality provision.
Among
other terms, the settlement agreement provides that:
Regulatory
Asset
The CPUC would establish
an after-tax regulatory asset of $2.21 billion (Regulatory Asset)
as a new, separate and additional part of the Utility's rate
base. The Regulatory Asset would be amortized on a mortgage-style
basis over nine years beginning January 1, 2004.  The details
and mechanics of the amortization are set forth on Appendix A to
the settlement agreement.
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
procurement costs that the Utility actually realizes in cash or by
offset of creditor claims in its bankruptcy case would be applied
to reduce the outstanding balance and the remaining amortization of
the Regulatory Asset.  Amounts received in cash by the Utility
from the master settlement agreement resolving an  El Paso
Natural Gas Company matter pending before the Federal Energy
Regulatory Commission (FERC) and related civil litigation may also
effect such a reduction, if consistent with CPUC rules or
orders.
The Regulatory Asset would
earn a return on equity (ROE) of at least 11.22 percent for the
life of the Regulatory Asset and after the equity component of the
Utility's capital structure reaches 52 percent, the
authorized equity component of the Regulatory Asset would be no
less than 52 percent for the life of the Regulatory
Asset.
Balances in the
Utility's Transition Cost Balancing Account (which tracks the
amount of the Utility's undercollected transition and
electricity procurement costs) as of the Effective Date would have
no further impact on the Utility's retail electric rates and
would not be subject to further CPUC review except for verification
of recorded balances.
The Utility's rate
base for its retained generation (URG) already established by the
CPUC would be deemed just and reasonable and would not be subject
to modification, adjustment or reduction, except as necessary to
reflect capital expenditures and any change in authorized
depreciation; provided that the CPUC would not be precluded from
determining the reasonableness of any capital expenditures made on
URG after the Effective Date.  The CPUC would commit that it
would not reduce or impair the value of the Regulatory Asset or the
URG rate base by taking the Regulatory Asset or the URG rate base,
their amortization or earnings into account when setting other
Utility revenue requirements and resulting rates.  The CPUC
would not take the settlement agreement or the Regulatory Asset
into account in establishing the Utility's authorized ROE or
capital structure.
The CPUC would timely act
upon the Utility's applications to collect in rates prudently
incurred costs (including return of and return on) of any new,
reasonable investment in utility plant and assets. The CPUC would
promptly adjust the Utility's rates consistent with Assembly
Bill 57 and Senate Bill 1976 and the CPUC-California Department of
Water Resources (DWR) Rate Agreement to ensure that the Utility
collection of the following is not impaired:  (1) Fixed
Transition Amounts to service existing Rate Reduction Bonds; (2)
Regulatory Asset amortization and return; and (3) base revenue
requirements (
e.g.,
electric and gas distribution, URG, gas
commodity procurement, existing QF contract costs and associated
return).  The CPUC would not discriminate against the Utility
by reason of the Utility's bankruptcy, the Utility's
pending federal lawsuit against the CPUC Commissioners to recover
its previously incurred costs of providing electric service from
ratepayers under the federal filed rate doctrine (the "Filed
Rate Case"), the settlement agreement, the Regulatory Asset,
or any other matters addressed or resolved by the proposed
settlement agreement.
Ratemaking
Matters
The CPUC would maintain
the Utility's retail electric rates at current levels through
December 31, 2003.  As of January 1, 2004, the CPUC may adjust
the Utility's retail electric rates prospectively consistent
with the settlement agreement, Settlement Plan, the confirmation
order and California law.  The proposed settlement agreement
contemplates that retail electric rates will be reduced in January
2004, with future reductions thereafter.
The CPUC would set the
Utility's capital structure and authorized ROE in the
Utility's annual cost of capital proceedings in its usual
manner; provided that, from January 1, 2004 until either S&P
confers on the Utility a company credit rating of at least
"A-" or Moody's confers on the Utility a company
credit rating of at least "A3," the authorized ROE
would be no less than 11.22 percent per year and the authorized
equity ratio for ratemaking purposes would be no less than 52
percent, except that for 2004 and 2005, the authorized equity ratio
would equal the greater of the forecast average equity ratio in the
cost of capital proceeding and 48.6 percent.
Implementation of
Ratemaking.
As soon as practicable after the
CPUC decision approving the settlement agreement, the Utility would
be required to file an advice letter to implement all the rate and
tariff changes necessary to implement the Settlement Plan. The CPUC
would act promptly on the advice filing and revised rates and
tariffs and to review and issue a decision promptly on the merits
of any application for rehearing of the approval of the advice
filing.  The CPUC also would act promptly on certain of the
Utility's pending ratemaking proceedings, including the
Utility's pending 2003 General Rate Case.
Dividend Payments and
Stock Repurchases.
There would be no
restrictions on the ability of the Boards of Directors of the
Utility or PG&E Corporation to declare and pay dividends or
repurchase common stock, other than the capital structure and
stand-alone dividend conditions contained in prior CPUC decisions
authorizing the formation of the holding company.  Further,
the Utility would agree that it would not pay any dividend on its
common stock before July 1, 2004.
DWR
Contracts.
The CPUC could require the Utility to
accept assignment of or assume legal and financial responsibility
for the DWR contracts only if the following conditions were
met:  (1) the company credit rating for the Utility following
such assumption  would be no less than "A" from
S&P and "A2" from Moody's, (2) the CPUC first
made a finding that the contracts are just and reasonable, and (3)
the CPUC had acted to ensure full and timely recovery in retail
electric rates of all contract costs without further review. 
The CPUC would retain the right to review administration and
dispatch of the DWR contracts consistent with applicable law.
Headroom
Revenues.
The CPUC would agree that the
"headroom", surcharge and base revenues accrued or
collected by the Utility through and including December 31, 2003
are property of the Utility's Chapter 11 estate, have been or
will be used for utility purposes, including to pay claims in the
Chapter 11 case, have been included in the Utility's retail
electric rates consistent with state and federal law, and are not
subject to refund. For this purpose, "headroom" means
the Utility's total net after-tax income reported under GAAP,
less earnings from operations, plus after-tax amounts accrued for
bankruptcy-related administration and bankruptcy-related interest
costs, all multiplied by 1.67, provided that the calculation will
reflect the outcome of the Utility's 2003 General Rate
Case.  The settlement agreement provides that if
"headroom" revenues accrued by the Utility during 2003
are greater than $875 million, the Utility will refund the excess
to ratepayers and if "headroom" revenues are less than
$775 million, the CPUC would allow the Utility to collect the
shortfall.
Dismissal of
Filed Rate Case, Other Litigation and
Proceedings
.
On or as soon as
practicable after the later of the Effective Date or the date the
CPUC decision approving the settlement agreement is final and
nonappealable, the Utility would dismiss with prejudice the Filed
Rate Case and withdraw the PG&E Plan.  In exchange, on or
before January 1, 2004, the CPUC would establish and authorize the
collection of the Regulatory Asset and the URG rate base, and, as
soon as practicable after the Effective Date, resolve the pending
Annual Transition Cost Proceeding in which the CPUC is reviewing
the reasonableness of the Utility's procurement costs
incurred during the energy crisis with no adverse impact on the
Utility's cost recovery as filed.
On or as soon as
practicable after the later of the Effective Date or the date the
CPUC decision approving the settlement agreement is final and
nonappealable, the Utility, PG&E Corporation, on the one hand,
and the CPUC, on the other, will execute full mutual releases and
dismissals with prejudice of certain claims, actions or regulatory
proceedings, as specified in the settlement agreement, arising out
of or related in any way to the energy crisis or the implementation
of AB 1890, including the CPUC's investigation into past
holding company actions during the energy crisis (but only as to
past actions, not prospective matters).
Withdrawal of
Applications in Connection with PG&E
Plan.
The Utility and PG&E Corporation
would agree that upon execution of the settlement agreement, they
will request a stay of all proceedings before the FERC, the Nuclear
Regulatory Commission (NRC), the Securities and Exchange Commission
(SEC), and other regulatory agencies relating to approvals sought
to implement the PG&E Plan.  On the Effective Date or as
soon thereafter as practicable, the Utility and PG&E
Corporation would withdraw or abandon all applications for such
regulatory approvals.
Treatment of
Creditors.
The treatment of creditors under the
proposed Settlement Plan would be consistent with that provided in
the PG&E Plan, except that those creditors that were to receive
long-term notes to be issued by the limited liability companies
contemplated under the PG&E Plan or a combination of cash and
such long-term notes would be paid entirely in cash.  It is
anticipated that all of the Utility's existing trade and
financial debt, except for certain pollution control bond-related
obligations, would be paid in cash under the Settlement Plan. 
It is further anticipated that these certain obligations and the
Utility's preferred stock would be reinstated under the
Settlement Plan. The Settlement Plan would provide for necessary
financing including interest rate hedging and would specify
creditor treatment. It is anticipated that the Utility would issue
approximately $8 billion in debt securities under the Settlement
Plan.
Environmental
Measures
.   The Utility would implement three
environmental enhancement measures:
the Utility would encumber
with conservation easements or donate approximately 140,000 acres
of land to public agencies or non-profit conservation
organizations,
environmental enhancements
associated with these lands funded over 10 years with $70 million
of ratepayer funding,
the creation of a
non-profit corporation funded by shareholders with $15 million over
five years dedicated to support research and investment in clean
energy technology, primarily in the Utility's service
territory.
Waiver of Sovereign Immunity.
In connection with any
action or proceeding concerning the enforcement of the settlement
agreement, the Settlement Plan or the confirmation order or other
determination of the parties' rights under the settlement
agreement, the Settlement Plan or the confirmation order, the CPUC
would agree to waive all existing and future rights of sovereign
immunity, and all other similar immunities, as a defense. The CPUC
would agree to consent to the jurisdiction of any court or other
tribunal or forum for such actions or proceedings including, but
not limited to, the Bankruptcy Court.
Term and
Enforceability.
The settlement agreement would generally
terminate nine years after the Effective Date. The parties would
agree that the Bankruptcy Court will have jurisdiction over the
parties for all purposes relating to enforcement of the settlement
agreement, the Settlement Plan, and the confirmation order. 
The parties also would agree that the settlement agreement, the
Settlement Plan or any order entered by the Bankruptcy Court
contemplated or required to implement the settlement agreement or
the Settlement Plan would be enforceable under federal law,
notwithstanding any contrary state law or future decisions or
orders of the CPUC.
Item 7. Financial
Statements, Pro Forma Financial Information, and
Exhibits
Exhibit 99 –
Proposed Settlement Agreement among PG&E Corporation, Pacific
Gas and Electric Company, and the California Public Utilities
Commission
Cautionary Statement
Although PG&E
Corporation and the Utility are unable to predict whether or when
the settlement agreement and Settlement Plan will become effective,
it is anticipated that both the CPUC and the Bankruptcy Court
approvals to implement the settlement could occur by the end of the
year, enabling the financing and repayment of the creditors to
occur in the first quarter of 2004.  This statement and other
statements in this report about the anticipated implementation of
the settlement agreement and the Settlement Plan are
forward-looking statements. Actual results may differ materially
from the outcomes contemplated in the forward-looking
statements.  Whether or when the settlement agreement and the
Settlement Plan become effective and to what extent PG&E
Corporation and the Utility are able to achieve the anticipated
benefits of the Settlement Plan are subject to many risks and
uncertainties, including:
The outcome and the timing
of the CPUC's proceeding to approve the settlement agreement
and the resulting retail electric rates,
The outcome and the timing
of the Bankruptcy Court's proceeding to confirm the
Settlement Plan,
Whether the required
credit ratings to implement the Settlement Plan are
obtained,
The outcome of any
litigation that may arise to challenge the settlement agreement or
the Settlement Plan, including the prosecution of any appeals
related to the CPUC order approving the settlement agreement or the
Bankruptcy Court's confirmation order and the affect any
pending appeals may have on the ability of the Utility to complete
the financing contemplated under the Settlement Plan,
The outcome of the case
pending before the California Supreme Court to consider the
CPUC's authority to enter into a settlement agreement with
Southern California Edison,
The impact of future
ratemaking actions of the CPUC,
Changes that may be made
to California's electric industry restructuring legislation and to
other applicable regulations, including for example, legislation
that would repeal major portions of the electric industry
restructuring law or that would extend the CPUC's jurisdiction to
regulate certain activities of the parent companies of the
California investor-owned electric and gas utilities,
Future equity or debt
market conditions, future interest rates, future credit ratings,
and other factors that may affect the ability to implement the
Settlement Plan or affect the terms, amount, and value of the debt
securities proposed to be issued under the Settlement
Plan.
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:
   BRUCE R. WORTHINGTON
BRUCE
R. WORTHINGTON
Senior Vice
President and General Counsel
PACIFIC GAS AND ELECTRIC
COMPANY
By:    ROGER J.
PETERS
ROGER
J. PETERS
Senior Vice President
and General Counsel
Dated:  June 19,
2003