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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><font size="3" face=
"Times New Roman">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&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;&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><font size="3" face=
"Times New Roman">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&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><font size="3" face=
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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;&nbsp;</font></p>
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<p align="center"><font size="3" face="Times New Roman">Date of
Report: August 25, 2003</font></p>
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<p><font size="3" face=
"Times New Roman">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&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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<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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<p align="center"><font size="3" face="Times New Roman"><br />
 State or other<br />
 Jurisdiction of<br />
 Incorporation</font></p>
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<p align="center"><font size="3" face="Times New Roman"><br />
 IRS Employer<br />
 &nbsp; Identification<br />
 Number</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">_____________</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">_____________</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>
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<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>
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<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>
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<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>
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<p><font size="3" face=
"Times New Roman">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</font></p>
</td>
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<p><font size="3" face=
"Times New Roman">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</font></p>
</td>
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<p><font size="3" face=
"Times New Roman">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</font></p>
</td>
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<p><font size="3" face=
"Times New Roman">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</font></p>
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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>
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<p><font size="3" face=
"Times New Roman">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&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>
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<p><font size="3" face=
"Times New Roman">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</font></p>
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<p><font size="3" face=
"Times New Roman">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</font></p>
</td>
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<p><font size="3" face=
"Times New Roman">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</font></p>
</td>
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<p><font size="3" face=
"Times New Roman">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</font></p>
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<p align="center"><font size="3" face="Times New Roman">Pacific Gas
and Electric Company<br />
 (415) 973-7000</font></p>
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<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>
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<p><font size="3" face=
"Times New Roman">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&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">(Registrant's telephone number, including area
code)</font></p>
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<p><font size="3" face=
"Times New Roman">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</font></p>
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<td valign="top"></td>
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<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;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;California
Supreme Court Decision</font></p>

<p><font size="3" face=
"Times New Roman">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;As
previously disclosed, on June 19, 2003, PG&amp;E Corporation, its
subsidiary, Pacific Gas and Electric Company (Utility), and the
staff of the California Public Utilities Commission (CPUC)
announced a proposed settlement agreement that contemplates a new
plan of reorganization (Settlement Plan) to supersede the competing
plans of reorganization submitted in the Utility&rsquo;s Chapter 11
proceeding.&nbsp; As discussed below, on August 21, 2003, the
California Supreme Court issued a decision concluding that the CPUC
had the authority to enter into the settlement agreement with
another California investor-owned utility, Southern California
Edison (SCE), and that the settlement agreement did not violate
California law.&nbsp;&nbsp; The CPUC and SCE had entered into the
settlement agreement to resolve SCE&rsquo;s lawsuit against the
CPUC Commissioners to recover its costs to procure electricity
during the energy crisis under the federal filed rate doctrine;
i.e., that utilities should be allowed to recover in
state-regulated retail rates the costs of electricity purchases
made under federally approved tariffs.&nbsp; Although the
Utility&rsquo;s proposed settlement agreement remains subject to
the approval of the CPUC, among other conditions, PG&amp;E
Corporation and the Utility believe that the California Supreme
Court&rsquo;s validation of the SCE-CPUC settlement agreement
supports the authority of the CPUC to enter into the proposed
settlement agreement with PG&amp;E Corporation and the
Utility.</font></p>

<p><font size="3" face=
"Times New Roman">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In
the CPUC-SCE settlement agreement, which was reflected in a
stipulated judgment entered by the U.S. District Court for the
Central District of California, the CPUC agreed to permit SCE to
recover its past procurement related costs by maintaining the
existing rates until the end of 2005, if necessary.&nbsp; A
consumer group, The Utility Reform Network (TURN), intervened in
the action and challenged the settlement and the stipulated
judgment as violating the provisions of California Assembly Bill
(AB) 1890 which required the retail rate freeze to end no later
than March 31, 2002 and prohibited the utilities from recovering
their uneconomic generation-related costs after December 31,
2002.&nbsp;</font></p>

<p><font size="3" face=
"Times New Roman">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In
September 2002, the United States Court of Appeals for the Ninth
Circuit affirmed that the federal filed rate doctrine was
applicable, but found against SCE on the following three state law
questions and requested the California Supreme Court to review and
make the final determination on these state law issues:</font></p>

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<p><font size="3" face=
"Times New Roman">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;-&nbsp;&nbsp;</font></p>
</td>
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<p><font size="3" face="Times New Roman">whether the CPUC
Commissioners had the authority to enter into the stipulated
judgment in light of AB 1890,</font></p>
</td>
</tr>
</table>

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

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<td valign="top">
<p><font size="3" face=
"Times New Roman">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;-&nbsp;&nbsp;</font></p>
</td>
<td valign="top">
<p><font size="3" face="Times New Roman">whether the procedures
employed in entering the stipulated judgment violated California
law regarding open meetings; and</font></p>
</td>
</tr>
</table>

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

<table border="0" cellspacing="0" cellpadding="0">
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<td valign="top">
<p><font size="3" face=
"Times New Roman">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;-&nbsp;&nbsp;</font></p>
</td>
<td valign="top">
<p><font size="3" face="Times New Roman">whether the stipulated
judgment violated California law by altering SCE&rsquo;s rates
without a public hearing and issuance of findings.</font></p>
</td>
</tr>
</table>

<p><font size="3" face=
"Times New Roman">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;First,
the California Supreme Court rejected TURN&rsquo;s argument that
the settlement agreement illegally extended the rate freeze by
finding that AB 1890 does not require that rates be reduced or
changed at the end of the freeze period.&nbsp; The Court also found
that after the enactment of AB 6X in 2001, which required
electrical utilities to retain their generating plants until at
least 2006 and returned the utilities&rsquo; retained generating
asset rates to cost-based regulation, the CPUC was authorized to
approve rates allowing SCE to recover the costs covered by the
settlement agreement.&nbsp; The Court noted that AB 6X largely
eliminated the category of &ldquo;uneconomic&rdquo; generating
asset costs, the only costs whose recovery was limited under AB
1890.&nbsp;</font></p>

<p><font size="3" face=
"Times New Roman">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
Court noted that even if the effect of AB 6X were ignored, the SCE
settlement agreement did not violate AB 1890&rsquo;s prohibition
against post-rate freeze recovery of uneconomic generation-related
costs because the settlement agreement provided for post-rate
freeze recovery of energy procurement costs, the post-rate freeze
recovery of which was not prohibited by AB 1890.&nbsp; In
discussing the accounting change adopted by the CPUC in March 2001
at the request of TURN under which the amount of the
utilities&rsquo; undercollected procurement costs were transferred
to the balancing account used to track recovery of transition costs
(thereby transforming procurement costs to transition costs), the
Court stated that it did not fully accept the CPUC&rsquo;s equation
of SCE&rsquo;s procurement liabilities accumulated during the
energy crisis with its unrecovered transition costs.&nbsp; The
Court noted that SCE&rsquo;s true unrecovered transition costs
appear indeterminable in light of the CPUC&rsquo;s failure,
following AB 6X, to complete the planned transition to a
competitive market by assigning market values to SCE&rsquo;s
generating assets, a step that would have reduced the transition
cost balancing account by an unknown but potentially significant
amount.&nbsp; The Court observed that SCE had persuasively argued
that its 2001 transition cost balance was overstated because it did
not reflect the increased market value of its generation assets in
an environment of higher wholesale prices.&nbsp; The Court
concluded that although the CPUC maintains that the costs to be
recovered in SCE&rsquo;s rates are transition costs and that the
March 2001 accounting change may have been properly used to
determine that the rate freeze had not then ended, the Court stated
that it should not bind the Court to a counterfactual
characterization of all the procurement costs at issue.</font></p>

<p><font size="3" face=
"Times New Roman">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
Court also found that the passage of AB 6X authorized the CPUC to
permit SCE such recovery of past costs as necessary to render the
utility financially viable and to ensure that SCE would be able to
continue serving its customers using electricity generated in its
retained plants.&nbsp; The Court noted that under AB 1890 the CPUC
has the authority to determine what costs are
&ldquo;uneconomic&rdquo; and thus eligible for recovery as
transition costs.&nbsp; The CPUC has determined that with the
passage of AB 6X generation-related costs are no longer
&ldquo;uneconomic&rdquo; within the meaning of AB1890.&nbsp; The
Court concluded that whether it regards the costs to be recovered
under the settlement agreement as procurement costs or
generation-related costs, they were not &ldquo;uneconomic&rdquo;
costs subject to the AB 1890 restrictions on recovery.</font></p>

<p><font size="3" face=
"Times New Roman">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;As
to the second and third questions, the Court found that there were
no procedural deficiencies in the manner in which the CPUC entered
into the settlement because the settlement did not change
SCE&rsquo;s rates.&nbsp;</font></p>

<p><font size="3" face=
"Times New Roman">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Now
that the California Supreme Court has issued its decision on the
state law questions, the matter will return to the Ninth Circuit
for final disposition, subject to any efforts by TURN to seek a
rehearing before the California Supreme Court or pursue further
judicial appeals.</font></p>

<p><font size="3" face=
"Times New Roman">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Under
PG&amp;E Corporation&rsquo;s and the Utility&rsquo;s proposed
settlement agreement, the CPUC would agree to permit the Utility to
establish a new regulatory asset ($3.7 billion, pre-tax) to restore
the Utility to financial health and to maintain and improve the
Utility's financial health in the future.&nbsp; In addition, the
CPUC would agree that the Utility's rate base for the
Utility&rsquo;s retained generation 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.&nbsp; This would result in
the recording of an additional regulatory asset of approximately
$1.3 billion, pre-tax, for the future recovery of
generation-related assets that were charged to expense in 2000 in
connection with the energy crisis.</font></p>

<p><font size="3" face=
"Times New Roman">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Further,
the CPUC would agree and acknowledge that certain revenues accrued
or collected by the Utility through and including December 31,
2003, are the property of the Utility's Chapter 11 estate, have
been or will be used for utility purposes, including to pay
creditors in the Utility's Chapter 11 proceeding, have been
included in the Utility's retail electric rates consistent with
state and federal law, and are not subject to refund.&nbsp; The
proposed settlement agreement notes that it is in the public
interest to restore the Utility's financial health and to allow the
Utility to recover, over a reasonable time, prior uncollected
costs.&nbsp;</font></p>

<p><font size="3" face=
"Times New Roman">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In
addition, the CPUC would maintain the Utility's retail electric
rates at current levels through December 31, 2003.&nbsp; Beginning
January 1, 2004, the CPUC may adjust the Utility's retail electric
rates prospectively consistent with the proposed settlement
agreement, the Settlement Plan, the order confirming the Settlement
Plan, and California law.&nbsp; The proposed settlement agreement
contemplates that retail electric rates would be reduced in January
2004, with further reductions expected thereafter.&nbsp; (The
proposed settlement agreement is further described in PG&amp;E
Corporation&rsquo;s and the Utility&rsquo;s combined quarterly
report on Form 10-Q for the quarter ended June 30,
2003.)</font></p>

<p><font size="3" face=
"Times New Roman">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
CPUC will conduct evidentiary hearings during September 2003 before
deciding whether or not to approve the proposed settlement
agreement.&nbsp; The CPUC currently is expected to vote on the
settlement agreement on December 18, 2003.&nbsp; PG&amp;E
Corporation and the Utility are unable to predict whether and when
the proposed settlement agreement will become effective or whether
the Settlement Plan will be confirmed or
implemented.&nbsp;</font></p>

<p><u><font size="3" face="Times New Roman">California Department
of Water Resources&rsquo; (DWR) 2003 Revenue
Requirement</font></u></p>

<p><font size="3" face=
"Times New Roman">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;On
August 20, 2003, a CPUC administrative law judge (ALJ) issued a
draft decision regarding the allocation of the $1 billion reduction
based on the DWR&rsquo;s 2003 supplemental revenue requirement
among the three California investor owned electric utilities.&nbsp;
As previously disclosed, the April 2003 operating agreement between
the Utility and the DWR provides that the Utility will begin
passing through additional revenues to the DWR consistent with the
DWR's requests for amendments to the formula that determines the
amount the Utility is required to remit to the DWR.&nbsp;&nbsp; In
submitting its 2003 supplemental revenue requirement determination
to the CPUC to reduce the amount of revenues it estimated it needed
by $1 billion, the DWR expressly assumed that the Utility would pay
the DWR the estimated amount of additional pass-through revenues
that the Utility had accrued to reflect the DWR&rsquo;s requested
amendments to the remittance formula.&nbsp;&nbsp; As previously
disclosed, as of June 30, 2003, the Utility had accrued a $516
million, pre-tax, obligation for these estimated pass-through
revenues.&nbsp;&nbsp; The DWR currently estimates that the Utility
owes the DWR approximately $526 million.</font></p>

<p><font size="3" face=
"Times New Roman">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
draft decision would allocate approximately $444 million of the
2003 revenue requirement reduction to the Utility&rsquo;s customers
and would require the Utility to immediately remit to the DWR $82
million, the difference between $526 million and $444
million.&nbsp; The draft decision would require the Utility to
track amounts up to $444 million in a memorandum account. The draft
decision acknowledges that the proposed settlement agreement in the
Utility&rsquo;s Chapter 11 proceeding would require the CPUC to
maintain existing retail rates through the end of 2003.&nbsp; The
ALJ notes that although an immediate bill credit for $444 million
while existing rates are left in place may not technically violate
the proposed settlement agreement, requiring an immediate bill
credit and immediate payment to the DWR may not be consistent with
the proposed settlement agreement.&nbsp; The draft decision would
permit the Utility to seek permission to use the funds in the
memorandum account for another purpose, such as using the funds to
pay creditors.&nbsp; The draft decision provides that the ultimate
disposition of the funds in this memorandum account would be
subject to the direction of the CPUC.</font></p>

<p><font size="3" face=
"Times New Roman">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Two
CPUC Commissioners joined in issuing an alternate draft decision on
August 20, 2003.&nbsp; The alternate draft decision would require
the Utility to immediately remit to the DWR $526 million, subject
to true-up once 2003 actual data becomes available.&nbsp;&nbsp; The
alternate draft decision would require the Utility to provide bill
credits in the amount of $444 million to customers no later than 45
days after the effective date of the decision.&nbsp; The Utility
must explain in its comments to the draft decision (due August 28,
2003) what record evidence supports using these funds for another
purpose or file a motion by August 25, 2003 seeking permission to
use the funds for another purpose.&nbsp; The draft decision would
also reduce the Utility&rsquo;s DWR power charge remittance rate
from the current 10.5 cents per kilowatt-hour (kWh) to 7.5 cents
per kWh effective immediately.&nbsp; The Utility estimates it would
require approximately nine months to recover the entire $444
million from the difference collected from customers under existing
rates and the approximate 3 cent per kWh reduction in power charge
remittance rates.</font></p>

<p><font size="3" face=
"Times New Roman">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Finally,
a third draft decision was issued on August 20, 2003 by another
CPUC Commissioner.&nbsp; This draft decision is substantially the
same as the second alternate draft decision except that no
provision is made for the Utility to seek permission to use the
$444 million for another purpose, and the bill credits would be
required to be made within 60 days of the effective date of the
decision.</font></p>

<p><font size="3" face=
"Times New Roman">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;It
is expected that the CPUC will consider the draft decisions at its
meeting on September 4, 2003.&nbsp; The Utility cannot predict the
ultimate outcome of this matter.&nbsp; If the CPUC adopts a
decision that requires the Utility to pay the DWR $526 million,
subject to true-up for 2003 actual data, immediately and requires
the Utility to provide an immediate bill credit of $444 million to
customers, the Utility&rsquo;s cash flows would be materially
adversely affected.&nbsp;</font></p>

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

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<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>
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<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>

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<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<br />
 &nbsp;&nbsp;&nbsp;&nbsp;&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;&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; 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;</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;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">
<p><font size="3" face=
"Times New Roman">&nbsp;&nbsp;&nbsp;&nbsp;&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;&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<br />
 &nbsp;&nbsp;&nbsp;&nbsp;&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;&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;KENT M.
HARVEY</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;</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;KENT M.
HARVEY<br />
 &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Senior Vice President,
Chief Financial Officer<br />
 &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;and
Treasurer</font></p>
</td>
</tr>
</table>

<p><font size="3" face="Times New Roman">Dated:&nbsp; August 22,
2003</font></p>

<p><font size="3" face="Times New Roman"><br />
&nbsp;</font></p>
</div>
</body>
</html>
[{"type": "8-K", "sequence": "1", "filename": "final0825.htm", "description": "FORM 8-K", "secsgml_size_bytes": 31931}]
{"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": "03863660"}, "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: August 25, 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
California
Supreme Court Decision
As
previously disclosed, on June 19, 2003, PG&E Corporation, its
subsidiary, Pacific Gas and Electric Company (Utility), and the
staff of the California Public Utilities Commission (CPUC)
announced a proposed settlement agreement that contemplates a new
plan of reorganization (Settlement Plan) to supersede the competing
plans of reorganization submitted in the Utility's Chapter 11
proceeding.  As discussed below, on August 21, 2003, the
California Supreme Court issued a decision concluding that the CPUC
had the authority to enter into the settlement agreement with
another California investor-owned utility, Southern California
Edison (SCE), and that the settlement agreement did not violate
California law.   The CPUC and SCE had entered into the
settlement agreement to resolve SCE's lawsuit against the
CPUC Commissioners to recover its costs to procure electricity
during the energy crisis under the federal filed rate doctrine;
i.e., that utilities should be allowed to recover in
state-regulated retail rates the costs of electricity purchases
made under federally approved tariffs.  Although the
Utility's proposed settlement agreement remains subject to
the approval of the CPUC, among other conditions, PG&E
Corporation and the Utility believe that the California Supreme
Court's validation of the SCE-CPUC settlement agreement
supports the authority of the CPUC to enter into the proposed
settlement agreement with PG&E Corporation and the
Utility.
In
the CPUC-SCE settlement agreement, which was reflected in a
stipulated judgment entered by the U.S. District Court for the
Central District of California, the CPUC agreed to permit SCE to
recover its past procurement related costs by maintaining the
existing rates until the end of 2005, if necessary.  A
consumer group, The Utility Reform Network (TURN), intervened in
the action and challenged the settlement and the stipulated
judgment as violating the provisions of California Assembly Bill
(AB) 1890 which required the retail rate freeze to end no later
than March 31, 2002 and prohibited the utilities from recovering
their uneconomic generation-related costs after December 31,
2002.
In
September 2002, the United States Court of Appeals for the Ninth
Circuit affirmed that the federal filed rate doctrine was
applicable, but found against SCE on the following three state law
questions and requested the California Supreme Court to review and
make the final determination on these state law issues:
-
whether the CPUC
Commissioners had the authority to enter into the stipulated
judgment in light of AB 1890,
-
whether the procedures
employed in entering the stipulated judgment violated California
law regarding open meetings; and
-
whether the stipulated
judgment violated California law by altering SCE's rates
without a public hearing and issuance of findings.
First,
the California Supreme Court rejected TURN's argument that
the settlement agreement illegally extended the rate freeze by
finding that AB 1890 does not require that rates be reduced or
changed at the end of the freeze period.  The Court also found
that after the enactment of AB 6X in 2001, which required
electrical utilities to retain their generating plants until at
least 2006 and returned the utilities' retained generating
asset rates to cost-based regulation, the CPUC was authorized to
approve rates allowing SCE to recover the costs covered by the
settlement agreement.  The Court noted that AB 6X largely
eliminated the category of "uneconomic" generating
asset costs, the only costs whose recovery was limited under AB
1890.
The
Court noted that even if the effect of AB 6X were ignored, the SCE
settlement agreement did not violate AB 1890's prohibition
against post-rate freeze recovery of uneconomic generation-related
costs because the settlement agreement provided for post-rate
freeze recovery of energy procurement costs, the post-rate freeze
recovery of which was not prohibited by AB 1890.  In
discussing the accounting change adopted by the CPUC in March 2001
at the request of TURN under which the amount of the
utilities' undercollected procurement costs were transferred
to the balancing account used to track recovery of transition costs
(thereby transforming procurement costs to transition costs), the
Court stated that it did not fully accept the CPUC's equation
of SCE's procurement liabilities accumulated during the
energy crisis with its unrecovered transition costs.  The
Court noted that SCE's true unrecovered transition costs
appear indeterminable in light of the CPUC's failure,
following AB 6X, to complete the planned transition to a
competitive market by assigning market values to SCE's
generating assets, a step that would have reduced the transition
cost balancing account by an unknown but potentially significant
amount.  The Court observed that SCE had persuasively argued
that its 2001 transition cost balance was overstated because it did
not reflect the increased market value of its generation assets in
an environment of higher wholesale prices.  The Court
concluded that although the CPUC maintains that the costs to be
recovered in SCE's rates are transition costs and that the
March 2001 accounting change may have been properly used to
determine that the rate freeze had not then ended, the Court stated
that it should not bind the Court to a counterfactual
characterization of all the procurement costs at issue.
The
Court also found that the passage of AB 6X authorized the CPUC to
permit SCE such recovery of past costs as necessary to render the
utility financially viable and to ensure that SCE would be able to
continue serving its customers using electricity generated in its
retained plants.  The Court noted that under AB 1890 the CPUC
has the authority to determine what costs are
"uneconomic" and thus eligible for recovery as
transition costs.  The CPUC has determined that with the
passage of AB 6X generation-related costs are no longer
"uneconomic" within the meaning of AB1890.  The
Court concluded that whether it regards the costs to be recovered
under the settlement agreement as procurement costs or
generation-related costs, they were not "uneconomic"
costs subject to the AB 1890 restrictions on recovery.
As
to the second and third questions, the Court found that there were
no procedural deficiencies in the manner in which the CPUC entered
into the settlement because the settlement did not change
SCE's rates.
Now
that the California Supreme Court has issued its decision on the
state law questions, the matter will return to the Ninth Circuit
for final disposition, subject to any efforts by TURN to seek a
rehearing before the California Supreme Court or pursue further
judicial appeals.
Under
PG&E Corporation's and the Utility's proposed
settlement agreement, the CPUC would agree to permit the Utility to
establish a new regulatory asset ($3.7 billion, pre-tax) to restore
the Utility to financial health and to maintain and improve the
Utility's financial health in the future.  In addition, the
CPUC would agree that the Utility's rate base for the
Utility's retained generation 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.  This would result in
the recording of an additional regulatory asset of approximately
$1.3 billion, pre-tax, for the future recovery of
generation-related assets that were charged to expense in 2000 in
connection with the energy crisis.
Further,
the CPUC would agree and acknowledge that certain revenues accrued
or collected by the Utility through and including December 31,
2003, are the property of the Utility's Chapter 11 estate, have
been or will be used for utility purposes, including to pay
creditors in the Utility's Chapter 11 proceeding, have been
included in the Utility's retail electric rates consistent with
state and federal law, and are not subject to refund.  The
proposed settlement agreement notes that it is in the public
interest to restore the Utility's financial health and to allow the
Utility to recover, over a reasonable time, prior uncollected
costs.
In
addition, the CPUC would maintain the Utility's retail electric
rates at current levels through December 31, 2003.  Beginning
January 1, 2004, the CPUC may adjust the Utility's retail electric
rates prospectively consistent with the proposed settlement
agreement, the Settlement Plan, the order confirming the Settlement
Plan, and California law.  The proposed settlement agreement
contemplates that retail electric rates would be reduced in January
2004, with further reductions expected thereafter.  (The
proposed settlement agreement is further described in PG&E
Corporation's and the Utility's combined quarterly
report on Form 10-Q for the quarter ended June 30,
2003.)
The
CPUC will conduct evidentiary hearings during September 2003 before
deciding whether or not to approve the proposed settlement
agreement.  The CPUC currently is expected to vote on the
settlement agreement on December 18, 2003.  PG&E
Corporation and the Utility are unable to predict whether and when
the proposed settlement agreement will become effective or whether
the Settlement Plan will be confirmed or
implemented.
California Department
of Water Resources' (DWR) 2003 Revenue
Requirement
On
August 20, 2003, a CPUC administrative law judge (ALJ) issued a
draft decision regarding the allocation of the $1 billion reduction
based on the DWR's 2003 supplemental revenue requirement
among the three California investor owned electric utilities. 
As previously disclosed, the April 2003 operating agreement between
the Utility and the DWR provides that the Utility will begin
passing through additional revenues to the DWR consistent with the
DWR's requests for amendments to the formula that determines the
amount the Utility is required to remit to the DWR.   In
submitting its 2003 supplemental revenue requirement determination
to the CPUC to reduce the amount of revenues it estimated it needed
by $1 billion, the DWR expressly assumed that the Utility would pay
the DWR the estimated amount of additional pass-through revenues
that the Utility had accrued to reflect the DWR's requested
amendments to the remittance formula.   As previously
disclosed, as of June 30, 2003, the Utility had accrued a $516
million, pre-tax, obligation for these estimated pass-through
revenues.   The DWR currently estimates that the Utility
owes the DWR approximately $526 million.
The
draft decision would allocate approximately $444 million of the
2003 revenue requirement reduction to the Utility's customers
and would require the Utility to immediately remit to the DWR $82
million, the difference between $526 million and $444
million.  The draft decision would require the Utility to
track amounts up to $444 million in a memorandum account. The draft
decision acknowledges that the proposed settlement agreement in the
Utility's Chapter 11 proceeding would require the CPUC to
maintain existing retail rates through the end of 2003.  The
ALJ notes that although an immediate bill credit for $444 million
while existing rates are left in place may not technically violate
the proposed settlement agreement, requiring an immediate bill
credit and immediate payment to the DWR may not be consistent with
the proposed settlement agreement.  The draft decision would
permit the Utility to seek permission to use the funds in the
memorandum account for another purpose, such as using the funds to
pay creditors.  The draft decision provides that the ultimate
disposition of the funds in this memorandum account would be
subject to the direction of the CPUC.
Two
CPUC Commissioners joined in issuing an alternate draft decision on
August 20, 2003.  The alternate draft decision would require
the Utility to immediately remit to the DWR $526 million, subject
to true-up once 2003 actual data becomes available.   The
alternate draft decision would require the Utility to provide bill
credits in the amount of $444 million to customers no later than 45
days after the effective date of the decision.  The Utility
must explain in its comments to the draft decision (due August 28,
2003) what record evidence supports using these funds for another
purpose or file a motion by August 25, 2003 seeking permission to
use the funds for another purpose.  The draft decision would
also reduce the Utility's DWR power charge remittance rate
from the current 10.5 cents per kilowatt-hour (kWh) to 7.5 cents
per kWh effective immediately.  The Utility estimates it would
require approximately nine months to recover the entire $444
million from the difference collected from customers under existing
rates and the approximate 3 cent per kWh reduction in power charge
remittance rates.
Finally,
a third draft decision was issued on August 20, 2003 by another
CPUC Commissioner.  This draft decision is substantially the
same as the second alternate draft decision except that no
provision is made for the Utility to seek permission to use the
$444 million for another purpose, and the bill credits would be
required to be made within 60 days of the effective date of the
decision.
It
is expected that the CPUC will consider the draft decisions at its
meeting on September 4, 2003.  The Utility cannot predict the
ultimate outcome of this matter.  If the CPUC adopts a
decision that requires the Utility to pay the DWR $526 million,
subject to true-up for 2003 actual data, immediately and requires
the Utility to provide an immediate bill credit of $444 million to
customers, the Utility's cash flows would be materially
adversely affected.
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: KENT M.
HARVEY
KENT M.
HARVEY
Senior Vice President,
Chief Financial Officer
and
Treasurer
Dated:  August 22,
2003