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<title>12-22-03 Form 8K</title>
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<table border="0" cellspacing="0" cellpadding="0">
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<p align="center">SECURITIES AND EXCHANGE COMMISSION</p>
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<td colspan="4" valign="top">
<p align="center"><br />
 </p>
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<td colspan="4" valign="top">
<p align="center">Washington, D.C.&nbsp; 20549</p>
</td>
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<p align="center"><br />
<br />
 </p>
</td>
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<td colspan="4" valign="top"></td>
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<tr>
<td colspan="4" valign="top">
<p align="center">FORM 8-K</p>
</td>
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<td colspan="4" valign="top">
<p align="center"><br />
 </p>
</td>
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<tr>
<td colspan="4" valign="top">
<p align="center">CURRENT REPORT</p>
</td>
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<tr>
<td colspan="4" valign="top">
<p align="center"><br />
 </p>
</td>
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<tr>
<td colspan="4" valign="top">
<p align="center">Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934</p>
</td>
</tr>

<tr>
<td colspan="4" valign="top">
<p align="center"><br />
 </p>
</td>
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<td colspan="4" valign="top">
<p align="center">Date of Report: December 22, 2003</p>
</td>
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<p><br />
 </p>
</td>
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<tr>
<td colspan="4" valign="top">
<p>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</p>
</td>
</tr>

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

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

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

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

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

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

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

<p align="center"><br />
 </p>
</td>
</tr>

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

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

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

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

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

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

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

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

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

<p><br />
<br />
<br />
</p>

<br clear="all" />


<div align="center">

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

<p>Item 5.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Other Events</p>

<p>A.&nbsp; California Public Utilities Commission Approves
Proposed Settlement Agreement as Recommended to be Modified by
Pacific Gas and Electric Company and The Utility Reform Network</p>

<p>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;On
December 19, 2003, the California Public Utilities Commission
(CPUC) issued&nbsp; a decision approving modifications to the
proposed settlement agreement announced in June 2003 by PG&amp;E
Corporation, its subsidiary, Pacific Gas and Electric Company
(Utility), and the CPUC staff to jointly support a new plan of
reorganization of the Utility (Settlement Plan) in the
Utility&rsquo;s Chapter 11 proceeding pending before the U.S.
Bankruptcy Court for the Northern District of California
(Bankruptcy Court).&nbsp; The CPUC approved the proposed settlement
agreement as recommended to be modified by the Utility and The
Utility Reform Network (TURN) in their joint reply comments filed
with the CPUC on December 16, 2003.&nbsp; The CPUC found that the
modified settlement agreement (Settlement Agreement) is fair, just
and reasonable and in the public interest and authorized the
Executive Director of the CPUC to execute the Settlement Agreement
subject to certain conditions as described below.&nbsp;</p>

<p>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;As
previously disclosed, six proposed decisions had been issued for
the CPUC&rsquo;s consideration.&nbsp; The CPUC approved a modified
version of one of Commissioner Peevey&rsquo;s proposed decisions,
previously identified as Peevey Alternate 2.&nbsp; The Peevey
Alternate 2 stated that the CPUC has the authority to enter into a
settlement agreement and bind future Commissions and that the
Bankruptcy Court has jurisdiction to enforce it.&nbsp;</p>

<p>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Among
other modifications, the Utility and TURN had recommended that the
Peevey Alternate 2 be modified to include a proposal 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; The Utility and TURN
estimate that 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.</p>

<p>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;As
a condition precedent to the CPUC&rsquo;s execution of the
Settlement Agreement, the Utility would agree that after the
Settlement Plan is implemented and the Utility exits 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 up to an aggregate amount of $3 billion using a
securitized financing supported by a DRC, provided certain
conditions are met, including the enactment of authorizing
California legislation satisfactory to the CPUC, TURN and the
Utility.&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.&nbsp; The
CPUC decision states that at its meeting on January 8, 2004, it
will formally request the introduction of enabling legislation in
order to facilitate early introduction and expedited consideration
of the DRC proposal by the Legislature and the Governor.</p>

<p>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;As
a further condition precedent to the CPUC&rsquo;s execution of the
Settlement Agreement, the Peevey Alternate 2 was further modified
to provide that 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; (As of September 30, 2003, PG&amp;E
Corporation had incurred approximately $128 million in professional
fees and expenses 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;</p>

<p>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
modifications to the Peevey Alternate 2 proposed by the Utility and
TURN and accepted by the CPUC are in addition to the modifications
recommended in the original Peevey Alternate 2 to:</p>

<ul>
  <li>delete the provisions restricting the CPUC&rsquo;s authority to
restrict the ability of the boards of directors of either 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 PG&amp;E Corporation,<br>
  </li>
  <li>delete the phrase &ldquo;notwithstanding any contrary state
law&rdquo; from the provisions which state that the Settlement
Agreement, the Settlement Plan, and the confirmation order would be
enforceable in accordance with federal law, notwithstanding any
contrary state law, and<br>
  </li>
  <li>require the Utility to increase its funding to support
environmental enhancement activities to $100 million over 10 years,
as compared to $70 million originally proposed in the Settlement
Agreement which amount is recoverable from ratepayers, and<br>
  </li>
  <li>require the Utility to increase its funding to support research
and investment in clean energy technology to $30 million over five
years, as compared to $15 million originally proposed in the
Settlement Agreement, which amount is not recoverable from
ratepayers.</li>
</ul>

<p>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;On
December 19, 2003, the Settlement Agreement was executed by the
CPUC, the Utility and PG&amp;E Corporation and filed with the
Bankruptcy Court along with the Settlement Plan, as modified to
reflect the modified Settlement Agreement.</p>

<p>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;A
copy of the Settlement Agreement, together with a copy of the
CPUC&rsquo;s final decision, is attached to this report as an
exhibit.</p>

<p>B.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; CPUC Approves
Gas Accord II</p>

<p>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;On
December 18, 2003, the CPUC issued a decision regarding the
Utility&rsquo;s Gas Accord II application, adopting an alternate
decision sponsored by CPUC Commissioner Peevey.&nbsp; The CPUC
approved the Utility&rsquo;s Gas Accord market structure for 2004
and 2005 and resolved the rates, and terms and conditions of
service for the Utility&rsquo;s natural gas transmission and
storage system for 2004.&nbsp; The CPUC adopted a 2004 revenue
requirement of $436.4 million, representing a 2.9 percent increase
from the Utility&rsquo;s current revenues.&nbsp; Under this
decision, bundled core rates will increase by 0.52 percent, and
noncore transportation rates will increase by 6.12 percent.&nbsp;
In addition, the decision extends the Utility&rsquo;s existing
incentive mechanism for recovery of core procurement costs (the
core procurement incentive mechanism, or CPIM) through 2005, unless
a revised mechanism is adopted before that time.&nbsp;</p>

<p>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;This
decision also adopts the Utility&rsquo;s proposals for extending
natural gas transportation contracts and for soliciting new natural
gas transportation contracts; i.e., an open season, and enables the
Utility to complete its open season and have contracts in place by
January 1, 2004.&nbsp;</p>

<p>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Finally,
beginning in 2005, the decision exempts certain customers connected
to the Utility&rsquo;s backbone transmission facilities from paying
local transmission rates and orders the Utility to develop rate
proposals that include a surcharge for these departing
customers.&nbsp; (The Utility&rsquo;s backbone transmission
facilities connect gas transmission pipelines delivering gas from
the California border and from California production and storage
sources to the local gas transmission system.)</p>

<p>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Under
the Gas Accord II, the Utility continues to be at risk of not
recovering its natural gas transportation and storage costs and
does not have regulatory balancing account provisions for
over-collections or under-collections of natural gas transportation
or storage revenues.&nbsp; The Utility may experience a material
reduction in operating revenues if throughput levels or market
conditions are significantly less favorable than reflected in rates
for these services.</p>

<p>Item 7.&nbsp; Financial Statements, Pro Forma Financial
Information, and Exhibits</p>

<p>Exhibit 99 - Settlement Agreement among California Public
Utilities Commission, Pacific Gas and Electric Company and PG&amp;E
Corporation, dated as of December19, 2003, together with
appendices</p>


<p></p>

<div align="center">
  <center>

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

  </center>
</div>

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

<p></p>

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

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

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

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

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

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

<tr>
<td valign="top">
<p>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</p>
</td>
<td valign="top">
<p>By:&nbsp;&nbsp;/s/ LINDA Y.H. CHENG</p>
</td>
</tr>

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

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

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

<p></p>

<p>Dated:&nbsp; December 22, 2003</p>

<hr>


<p align="center">EXHIBIT INDEX</p>

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

<table border="0" cellspacing="0" cellpadding="0" width="607">
<tr>
<td valign="top">
<p align="center">Exhibit No.</p>
</td>
<td valign="top">
<p align="center">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</p>
</td>
<td valign="top">
<p>Description of Exhibit</p>

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

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

<tr>
<td valign="top">
<p align="center">99</p>
</td>
<td valign="top"></td>
<td valign="top">
<p>Settlement Agreement among California Public Utilities
Commission, Pacific Gas and Electric Company and PG&amp;E
Corporation, dated as of December19, 2003, together with
appendices</p>
</td>
</tr>
</table>

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

<p></p>
</div>
</body>
</html>
[{"type": "8-K", "sequence": "1", "filename": "final122203.htm", "description": "FORM 8-K", "secsgml_size_bytes": 20438}]
{"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": "031067799"}, "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"}}
12-22-03 Form 8K
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 22, 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
A.  California Public Utilities Commission Approves
Proposed Settlement Agreement as Recommended to be Modified by
Pacific Gas and Electric Company and The Utility Reform Network
On
December 19, 2003, the California Public Utilities Commission
(CPUC) issued  a decision approving modifications to the
proposed settlement agreement announced in June 2003 by PG&E
Corporation, its subsidiary, Pacific Gas and Electric Company
(Utility), and the CPUC staff to jointly support a new plan of
reorganization of the Utility (Settlement Plan) in the
Utility's Chapter 11 proceeding pending before the U.S.
Bankruptcy Court for the Northern District of California
(Bankruptcy Court).  The CPUC approved the proposed settlement
agreement as recommended to be modified by the Utility and The
Utility Reform Network (TURN) in their joint reply comments filed
with the CPUC on December 16, 2003.  The CPUC found that the
modified settlement agreement (Settlement Agreement) is fair, just
and reasonable and in the public interest and authorized the
Executive Director of the CPUC to execute the Settlement Agreement
subject to certain conditions as described below.
As
previously disclosed, six proposed decisions had been issued for
the CPUC's consideration.  The CPUC approved a modified
version of one of Commissioner Peevey's proposed decisions,
previously identified as Peevey Alternate 2.  The Peevey
Alternate 2 stated that the CPUC has the authority to enter into a
settlement agreement and bind future Commissions and that the
Bankruptcy Court has jurisdiction to enforce it.
Among
other modifications, the Utility and TURN had recommended that the
Peevey Alternate 2 be modified to include a proposal 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).  The Utility and TURN
estimate that 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 condition precedent to the CPUC's execution of the
Settlement Agreement, the Utility would agree that after the
Settlement Plan is implemented and the Utility exits 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 up to an aggregate amount of $3 billion using a
securitized financing supported by a DRC, provided certain
conditions are met, including the enactment of authorizing
California legislation satisfactory to the CPUC, TURN and the
Utility.  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
CPUC decision states that at its meeting on January 8, 2004, it
will formally request the introduction of enabling legislation in
order to facilitate early introduction and expedited consideration
of the DRC proposal by the Legislature and the Governor.
As
a further condition precedent to the CPUC's execution of the
Settlement Agreement, the Peevey Alternate 2 was further modified
to provide that 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.  (As of September 30, 2003, PG&E
Corporation had incurred approximately $128 million in professional
fees and expenses 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.
The
modifications to the Peevey Alternate 2 proposed by the Utility and
TURN and accepted by the CPUC are in addition to the modifications
recommended in the original Peevey Alternate 2 to:
delete the provisions restricting the CPUC's authority to
restrict the ability of the boards of directors of either 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 PG&E Corporation,
delete the phrase "notwithstanding any contrary state
law" from the provisions which state that the Settlement
Agreement, the Settlement Plan, and the confirmation order would be
enforceable in accordance with federal law, notwithstanding any
contrary state law, and
require the Utility to increase its funding to support
environmental enhancement activities to $100 million over 10 years,
as compared to $70 million originally proposed in the Settlement
Agreement which amount is recoverable from ratepayers, and
require the Utility to increase its funding to support research
and investment in clean energy technology to $30 million over five
years, as compared to $15 million originally proposed in the
Settlement Agreement, which amount is not recoverable from
ratepayers.
On
December 19, 2003, the Settlement Agreement was executed by the
CPUC, the Utility and PG&E Corporation and filed with the
Bankruptcy Court along with the Settlement Plan, as modified to
reflect the modified Settlement Agreement.
A
copy of the Settlement Agreement, together with a copy of the
CPUC's final decision, is attached to this report as an
exhibit.
B.         CPUC Approves
Gas Accord II
On
December 18, 2003, the CPUC issued a decision regarding the
Utility's Gas Accord II application, adopting an alternate
decision sponsored by CPUC Commissioner Peevey.  The CPUC
approved the Utility's Gas Accord market structure for 2004
and 2005 and resolved the rates, and terms and conditions of
service for the Utility's natural gas transmission and
storage system for 2004.  The CPUC adopted a 2004 revenue
requirement of $436.4 million, representing a 2.9 percent increase
from the Utility's current revenues.  Under this
decision, bundled core rates will increase by 0.52 percent, and
noncore transportation rates will increase by 6.12 percent. 
In addition, the decision extends the Utility's existing
incentive mechanism for recovery of core procurement costs (the
core procurement incentive mechanism, or CPIM) through 2005, unless
a revised mechanism is adopted before that time.
This
decision also adopts the Utility's proposals for extending
natural gas transportation contracts and for soliciting new natural
gas transportation contracts; i.e., an open season, and enables the
Utility to complete its open season and have contracts in place by
January 1, 2004.
Finally,
beginning in 2005, the decision exempts certain customers connected
to the Utility's backbone transmission facilities from paying
local transmission rates and orders the Utility to develop rate
proposals that include a surcharge for these departing
customers.  (The Utility's backbone transmission
facilities connect gas transmission pipelines delivering gas from
the California border and from California production and storage
sources to the local gas transmission system.)
Under
the Gas Accord II, the Utility continues to be at risk of not
recovering its natural gas transportation and storage costs and
does not have regulatory balancing account provisions for
over-collections or under-collections of natural gas transportation
or storage revenues.  The Utility may experience a material
reduction in operating revenues if throughput levels or market
conditions are significantly less favorable than reflected in rates
for these services.
Item 7.  Financial Statements, Pro Forma Financial
Information, and Exhibits
Exhibit 99 - Settlement Agreement among California Public
Utilities Commission, Pacific Gas and Electric Company and PG&E
Corporation, dated as of December19, 2003, together with
appendices
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of
1934, the registrants have duly caused this report to be signed on
their behalf by the undersigned thereunto duly authorized.
PG&E CORPORATION
By:  /s/ CHRISTOPHER P. JOHNS
CHRISTOPHER P.
JOHNS
Senior Vice President
and Controller
PACIFIC GAS AND ELECTRIC COMPANY
By:  /s/ LINDA Y.H. CHENG
LINDA Y.H. CHENG
Corporate Secretary
Dated:  December 22, 2003
EXHIBIT INDEX
Exhibit No.
Description of Exhibit
99
Settlement Agreement among California Public Utilities
Commission, Pacific Gas and Electric Company and PG&E
Corporation, dated as of December19, 2003, together with
appendices