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<title>SECURITIES AND EXCHANGE COMMISSION</title>
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<p align="center"><font size="3" face="Times New Roman">SECURITIES
AND EXCHANGE COMMISSION</font></p>
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<p align="center"><font size="3" face=
"Times New Roman">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</font></p>
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<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;</font></p>
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<p align="center"><font size="3" face="Times New Roman">FORM
8-K</font></p>
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<p align="center"><font size="3" face=
"Times New Roman">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</font></p>
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<p align="center"><font size="3" face="Times New Roman">CURRENT
REPORT</font></p>
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<p align="center"><font size="3" face=
"Times New Roman">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</font></p>
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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 align="center"><font size="3" face=
"Times New Roman">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</font></p>
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<td colspan="4" valign="top">
<p align="center"><font size="3" face="Times New Roman">Date of
Report: December 16, 2003</font></p>
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<p align="center"><font size="3" face=
"Times New Roman">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</font></p>
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<p><font size="3" face=
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<p align="center"><font size="3" face="Times New Roman"><br />
 Commission<br />
 File<br />
 Number</font></p>
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<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>
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<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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<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">_____________</font></p>
</td>
<td valign="top">
<p align="center"><font size="3" face=
"Times New Roman">_____________</font></p>
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<p align="center"><font size="3" face=
"Times New Roman">_____________</font></p>
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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;</font></p>
</td>
<td valign="top">
<p><font size="3" face=
"Times New Roman">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</font></p>
</td>
<td valign="top">
<p><font size="3" face=
"Times New Roman">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</font></p>
</td>
<td valign="top">
<p><font size="3" face=
"Times New Roman">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</font></p>
</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 />
 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;</font></p>
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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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<tr>
<td valign="top">
<p align="center"><font size="3" face=
"Times New Roman">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</font></p>
</td>
<td valign="top"></td>
<td valign="top"></td>
<td valign="top"></td>
</tr>

<tr>
<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>
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<tr>
<td colspan="4" valign="top">
<p><font size="3" face=
"Times New Roman">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</font></p>
</td>
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<tr height="28">
<td colspan="4" height="28" valign="top">
<p align="center"><font size="3" face=
"Times New Roman">(Registrant's telephone number, including area
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="4" valign="top">
<p align="center"><font size="3" face=
"Times New Roman">Inapplicable</font></p>
</td>
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<td colspan="4" valign="top"></td>
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<td colspan="4" valign="top">
<p align="center"><font size="3" face="Times New Roman">(Former
Name or Former Address, if Changed Since Last Report)</font></p>
</td>
</tr>

<tr>
<td colspan="4" valign="top"></td>
</tr>
</table>

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

<table border="0" cellspacing="0" cellpadding="0">
<tr>
<td valign="top">
<p><font size="3" face="Times New Roman">Item
5.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Other Events</font></p>
</td>
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<td valign="top"></td>
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<td valign="top">
<p><font size="3" face=
"Times New Roman">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;On December 16,
2003, Pacific Gas and Electric Company (Utility) and The Utility
Reform Network (TURN) filed joint reply comments with the
California Public Utilities Commission (CPUC) in the proceeding to
consider the proposed settlement agreement (Settlement Agreement)
announced in June 2003 by PG&amp;E Corporation, the Utility and the
staff of the CPUC to jointly support a new plan of reorganization
of the Utility (Settlement Plan).&nbsp;</font></p>
</td>
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<td valign="top"></td>
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<td valign="top">
<p><b><font size="3" face=
"Times New Roman">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</font></b> The
Utility and TURN recommended that Commissioner Peevey&rsquo;s
proposed decision, previously identified as Peevey Alternate 2, be
modified to include a proposal, similar to a proposal in
Commissioner Brown&rsquo;s proposed decision, to allow use of a
securitized financing backed by a dedicated rate component (DRC) to
refinance the regulatory asset to be established by the Settlement
Agreement (Regulatory Asset).&nbsp; As a condition precedent to the
CPUC executing the Settlement Agreement, the Utility would agree
that after the Settlement Plan is implemented and the Utility exits
from Chapter 11, the Utility would seek as expeditiously as
practicable to refinance the Regulatory Asset and associated
federal and State income taxes and franchise taxes using a
securitized financing supported by a DRC, provided the following
conditions are met:</p>
</td>
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<td valign="top"></td>
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<td valign="top">
<p><font size="3" color="black" face=
"Times New Roman">&bull;&nbsp;&nbsp;&nbsp;&nbsp;</font> Authorizing
California legislation satisfactory to the CPUC, TURN and the
Utility is passed and signed into law allowing securitization of
the Regulatory Asset and associated federal and state income taxes
and franchise taxes and providing for the collection in the
Utility&rsquo;s rates of any portion of the associated tax gross-up
not securitized.&nbsp; (Proposed legislation based on the
legislation authorizing the issuance of rate reduction bonds and
acceptable to the Utility and TURN was attached as an appendix to
the joint reply comments.)</p>
</td>
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<td valign="top"></td>
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<td valign="top">
<p><font size="3" color="black" face=
"Times New Roman">&bull;&nbsp;&nbsp;&nbsp;&nbsp;</font> The CPUC
determines that, on a net present value basis, the refinancing
would save ratepayers money compared to the Regulatory Asset over
the term of the securitized debt.</p>
</td>
</tr>

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<td valign="top"></td>
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<td valign="top">
<p><font size="3" color="black" face=
"Times New Roman">&bull;&nbsp;&nbsp;&nbsp;&nbsp;</font> The
refinancing will not adversely affect the Utility&rsquo;s company
and debt credit ratings.&nbsp;</p>
</td>
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<td valign="top"></td>
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<td valign="top">
<p><font size="3" color="black" face=
"Times New Roman">&bull;&nbsp;&nbsp;&nbsp;&nbsp;</font> The Utility
obtains, or decides it does not need, a private letter ruling from
the Internal Revenue Service that neither the refinancing nor the
issuance of the securitized debt is a presently taxable event.</p>
</td>
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<td valign="top"></td>
</tr>

<tr>
<td valign="top">
<p><b><font size="3" face=
"Times New Roman">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</font></b> The
Utility would be permitted to effectuate the refinancing in up to
two tranches up to one year apart, and would issue sufficient
callable or short-term debt as part of its plan of reorganization
to accommodate the refinancing supported by a DRC.&nbsp; The cost
of the callable or short-term debt would be recovered in rates in
accordance with the Settlement Agreement.&nbsp; The Utility would
be required to proceed with the first tranche as expeditiously as
practicable and in good faith after the passage of authorizing
legislation.&nbsp; The Utility would be permitted to issue the
second tranche for the remaining associated federal and State
income taxes and franchise taxes; provided that, if sufficient
generator and energy supplier refunds have not yet been received,
the Utility would not be required to securitize more than a total
of $3 billion in both tranches.&nbsp; The Utility would use the
securitization proceeds to rebalance its capital structure in order
to maintain the capital structure provided for under the Settlement
Agreement.</p>
</td>
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<td valign="top"></td>
</tr>

<tr>
<td valign="top">
<p><b><font size="3" face=
"Times New Roman">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</font></b> The
Utility and TURN estimate that, based on current interest rates,
refinancing using the DRC could reduce ratepayer costs by about $1
billion (nominal) over the term of the debt securitized by the DRC
compared to the estimated costs of the Regulatory Asset, while
still allowing the immediate rate reduction provided for under the
Settlement Agreement.&nbsp;</p>
</td>
</tr>

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

<tr>
<td valign="top">
<p><font size="3" face=
"Times New Roman">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;As a further
condition for the CPUC to execute the modified Settlement
Agreement, PG&amp;E Corporation would agree that it will not seek
reimbursement from the Utility for any of its professional fees and
expenses incurred in connection with the Utility&rsquo;s Chapter 11
proceeding.&nbsp; Cash which the Utility would have used to
reimburse PG&amp;E Corporation for its bankruptcy costs will
instead be used to pay creditors, thereby lowering the amount
required to be financed.&nbsp; As of September 30, 2003, PG&amp;E
Corporation had incurred expenses of approximately $128 million
related to the Utility's Chapter 11 proceeding.</font></p>
</td>
</tr>

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

<tr>
<td valign="top">
<p><font size="3" face=
"Times New Roman">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;TURN would agree
not to oppose the Peevey Alternate 2, as proposed to be
modified.&nbsp; The Utility believes that the CPUC should adopt
Peevey Alternate 2, modified as recommended.<b>&nbsp;</b> To become
effective, among other conditions, the Settlement Agreement must be
entered into by the CPUC by December 31, 2003.&nbsp; As previously
disclosed, the CPUC is scheduled to consider six proposed decisions
regarding the Settlement Agreement at its regular meeting to be
held on December 18, 2003.&nbsp; The CPUC may accept, reject, or
modify any proposed decision. &nbsp;</font></p>
</td>
</tr>

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

<tr>
<td valign="top">
<p><font size="3" face=
"Times New Roman">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;PG&amp;E
Corporation and the Utility are unable to predict the outcome of
this matter.</font></p>
</td>
</tr>

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

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

<table border="0" cellspacing="0" cellpadding="0" width="656">
<tr>
<td valign="top">
<p align="center"><font size="3" face=
"Times New Roman">SIGNATURE</font></p>
</td>
</tr>

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

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

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

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

<table border="0" cellspacing="0" cellpadding="0" width="656">
<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;</font></p>
</td>
<td colspan="2" valign="top">
<p><font size="3" face="Times New Roman">PG&amp;E
CORPORATION</font></p>
</td>
</tr>

<tr>
<td valign="top"></td>
<td valign="top"></td>
<td valign="top">
<p><font size="3" face=
"Times New Roman">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</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;</font></p>
</td>
<td valign="top">
<p><font size="3" face="Times New Roman">By:&nbsp;&nbsp;</font></p>
</td>
<td valign="top">
<p><font size="3" face="Times New Roman"><br />
 CHRISTOPHER P. JOHNS _________________________________</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;</font></p>
</td>
<td valign="top">
<p><font size="3" face="Times New Roman">&nbsp;&nbsp;</font></p>
</td>
<td valign="top">
<p><font size="3" face="Times New Roman">CHRISTOPHER P. JOHNS<br />
 Senior Vice President and Controller</font></p>
</td>
</tr>

<tr>
<td valign="top"></td>
<td colspan="2" valign="top">
<p><font size="3" face=
"Times New Roman">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</font></p>
</td>
</tr>

<tr height="53">
<td height="53" 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;</font></p>
</td>
<td colspan="2" height="53" 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;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&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;</font></p>
</td>
<td valign="top">
<p><font size="3" face="Times New Roman">LINDA Y.H. CHENG<br />
 _________________________________________</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;</font></p>
</td>
<td valign="top">
<p><font size="3" face="Times New Roman">&nbsp;&nbsp;</font></p>
</td>
<td valign="top">
<p><font size="3" face="Times New Roman">LINDA Y.H. CHENG<br />
 Corporate Secretary</font></p>
</td>
</tr>
</table>

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

<table border="0" cellspacing="0" cellpadding="0" width="661">
<tr>
<td valign="top">
<p><font size="3" face=
"Times New Roman">Dated:&nbsp;&nbsp;</font></p>
</td>
<td valign="top">
<p><font size="3" face="Times New Roman">&nbsp;&nbsp;&nbsp;December
16, 2003</font></p>
</td>
</tr>

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

<tr height="29">
<td height="29" valign="top"></td>
<td height="29" valign="top"></td>
</tr>
</table>

<p><font size="3" face="Times New Roman"></font></p>
</div>
</body>
</html>
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{"company-data": {"conformed-name": "PG&E CORP", "cik": "0001004980", "assigned-sic": "4931", "irs-number": "943234914", "state-of-incorporation": "CA", "fiscal-year-end": "1231"}, "filing-values": {"form-type": "8-K", "act": "34", "file-number": "001-12609", "film-number": "031058138"}, "business-address": {"street1": "ONE MARKET SPEAR TOWER", "street2": "SUITE 2400", "city": "SAN FRANCISCO", "state": "CA", "zip": "94105", "phone": "4152677000"}, "mail-address": {"street1": "ONE MARKET SPEAR TOWER", "street2": "SUITE 2400", "city": "SAN FRANCISCO", "state": "CA", "zip": "94105"}, "former-company": {"former-conformed-name": "PG&E PARENT CO INC", "date-changed": "19951214"}}
SECURITIES AND EXCHANGE COMMISSION
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: December 16, 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)
Inapplicable
(Former
Name or Former Address, if Changed Since Last Report)
Item
5.     Other Events
On December 16,
2003, Pacific Gas and Electric Company (Utility) and The Utility
Reform Network (TURN) filed joint reply comments with the
California Public Utilities Commission (CPUC) in the proceeding to
consider the proposed settlement agreement (Settlement Agreement)
announced in June 2003 by PG&E Corporation, the Utility and the
staff of the CPUC to jointly support a new plan of reorganization
of the Utility (Settlement Plan).
The
Utility and TURN recommended that Commissioner Peevey's
proposed decision, previously identified as Peevey Alternate 2, be
modified to include a proposal, similar to a proposal in
Commissioner Brown's proposed decision, to allow use of a
securitized financing backed by a dedicated rate component (DRC) to
refinance the regulatory asset to be established by the Settlement
Agreement (Regulatory Asset).  As a condition precedent to the
CPUC executing the Settlement Agreement, the Utility would agree
that after the Settlement Plan is implemented and the Utility exits
from Chapter 11, the Utility would seek as expeditiously as
practicable to refinance the Regulatory Asset and associated
federal and State income taxes and franchise taxes using a
securitized financing supported by a DRC, provided the following
conditions are met:
•
Authorizing
California legislation satisfactory to the CPUC, TURN and the
Utility is passed and signed into law allowing securitization of
the Regulatory Asset and associated federal and state income taxes
and franchise taxes and providing for the collection in the
Utility's rates of any portion of the associated tax gross-up
not securitized.  (Proposed legislation based on the
legislation authorizing the issuance of rate reduction bonds and
acceptable to the Utility and TURN was attached as an appendix to
the joint reply comments.)
•
The CPUC
determines that, on a net present value basis, the refinancing
would save ratepayers money compared to the Regulatory Asset over
the term of the securitized debt.
•
The
refinancing will not adversely affect the Utility's company
and debt credit ratings.
•
The Utility
obtains, or decides it does not need, a private letter ruling from
the Internal Revenue Service that neither the refinancing nor the
issuance of the securitized debt is a presently taxable event.
The
Utility would be permitted to effectuate the refinancing in up to
two tranches up to one year apart, and would issue sufficient
callable or short-term debt as part of its plan of reorganization
to accommodate the refinancing supported by a DRC.  The cost
of the callable or short-term debt would be recovered in rates in
accordance with the Settlement Agreement.  The Utility would
be required to proceed with the first tranche as expeditiously as
practicable and in good faith after the passage of authorizing
legislation.  The Utility would be permitted to issue the
second tranche for the remaining associated federal and State
income taxes and franchise taxes; provided that, if sufficient
generator and energy supplier refunds have not yet been received,
the Utility would not be required to securitize more than a total
of $3 billion in both tranches.  The Utility would use the
securitization proceeds to rebalance its capital structure in order
to maintain the capital structure provided for under the Settlement
Agreement.
The
Utility and TURN estimate that, based on current interest rates,
refinancing using the DRC could reduce ratepayer costs by about $1
billion (nominal) over the term of the debt securitized by the DRC
compared to the estimated costs of the Regulatory Asset, while
still allowing the immediate rate reduction provided for under the
Settlement Agreement.
As a further
condition for the CPUC to execute the modified Settlement
Agreement, PG&E Corporation would agree that it will not seek
reimbursement from the Utility for any of its professional fees and
expenses incurred in connection with the Utility's Chapter 11
proceeding.  Cash which the Utility would have used to
reimburse PG&E Corporation for its bankruptcy costs will
instead be used to pay creditors, thereby lowering the amount
required to be financed.  As of September 30, 2003, PG&E
Corporation had incurred expenses of approximately $128 million
related to the Utility's Chapter 11 proceeding.
TURN would agree
not to oppose the Peevey Alternate 2, as proposed to be
modified.  The Utility believes that the CPUC should adopt
Peevey Alternate 2, modified as recommended.
To become
effective, among other conditions, the Settlement Agreement must be
entered into by the CPUC by December 31, 2003.  As previously
disclosed, the CPUC is scheduled to consider six proposed decisions
regarding the Settlement Agreement at its regular meeting to be
held on December 18, 2003.  The CPUC may accept, reject, or
modify any proposed decision.
PG&E
Corporation and the Utility are unable to predict the outcome of
this matter.
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:
CHRISTOPHER P. JOHNS _________________________________
CHRISTOPHER P. JOHNS
Senior Vice President and Controller
PACIFIC GAS AND ELECTRIC
COMPANY
By:
LINDA Y.H. CHENG
_________________________________________
LINDA Y.H. CHENG
Corporate Secretary
Dated:
December
16, 2003