<html>
<head>
<title>Form 8-K</title>
</head>
<body link="blue" vlink="purple">
<div>
<table border="0" cellspacing="0" cellpadding="0">
<tr>
<td colspan="5" valign="top">
<p align="center"><b>UNITED STATES</b></p>
</td>
</tr>

<tr>
<td colspan="5" valign="top">
<p align="center"><b>SECURITIES AND EXCHANGE COMMISSION</b></p>
</td>
</tr>

<tr>
<td colspan="5" valign="top">
<p align="center"><b>Washington, D.C.&nbsp; 20549</b></p>
</td>
</tr>

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

<tr>
<td colspan="5" valign="top">
<p align="center"><b>FORM 8-K</b></p>
</td>
</tr>

<tr>
<td colspan="5" valign="top">
<p align="center"><b>CURRENT REPORT</b></p>
</td>
</tr>

<tr>
<td colspan="5" valign="top">
<p align="center"><b>Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934</b></p>
</td>
</tr>

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

<tr>
<td colspan="5" valign="top">
<p align="center"><b>Date of Report: October 22, 2004<br>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</b></p>

</td>
</tr>

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

<tr>
<td colspan="5" valign="top">
<p><br />
 &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Check
the appropriate box below if the Form 8-K filing is intended to
simultaneously satisfy the filing obligation of the registrant
under any of the following provisions (see General Instruction A.2.
below):</p>
</td>
</tr>
</table>

<table border="0" cellspacing="0" cellpadding="0" width="624">
<tr>
<td valign="top">
<p>[&nbsp;]</p>
</td>
<td valign="top">
<p>&nbsp;&nbsp;&nbsp;</p>
</td>
<td valign="top">
<p>Written communications pursuant to Rule 425 under the Securities
Act (17 CFR 230.425)</p>
</td>
</tr>

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

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

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

<hr>

<p>Item 8.01 Other Events</p>

<p>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;On October 20, 2004, the Board of Directors of each of PG&amp;E
Corporation and its subsidiary, Pacific Gas and Electric Company
(Utility), took one more step along the path to re-establishing a
common stock dividend by approving a common stock dividend policy
and a target dividend payout ratio range (i.e., the proportion of
earnings paid out as dividends) of&nbsp; 50 percent to 70
percent.&nbsp; Although the Boards of Directors deferred the actual
declaration of a common stock dividend at least until after the
Utility achieves the target equity ratio discussed below, the Board
of Directors of PG&amp;E Corporation adopted an initial annual cash
dividend target of $1.20 per share ($0.30 quarterly).&nbsp;</p>

<p>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;PG&amp;E Corporation&rsquo;s and the Utility&rsquo;s dividend
policy was designed to meet the following three objectives:</p>

<ul type="disc">
<li><u>Comparability:</u>&nbsp; Pay a dividend competitive with the
securities of comparable companies based on payout ratio and, with
respect to PG&amp;E Corporation, yield (i.e., dividend divided by
share price).</li>
</ul>

<ul type="disc">
<li><u>Flexibility:</u>&nbsp; Allow sufficient cash to pay a
dividend and to fund investments while avoiding the necessity to
issue new equity, unless PG&amp;E Corporation&rsquo;s or the
Utility&rsquo;s capital expenditure requirements are growing
rapidly and PG&amp;E Corporation or the Utility can issue equity at
reasonable cost and terms.</li>
</ul>

<ul type="disc">
<li><u>Sustainability:</u>&nbsp; Avoid reduction or suspension of
the dividend despite fluctuations in financial performance, except
in extreme and unforeseen circumstances.</li>
</ul>

<p>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The target dividend payout ratio range was based on an analysis
of dividend payout ratios of comparable companies.&nbsp; The
initial dividend target was chosen in recognition of the
Utility&rsquo;s current credit rating and the potential capital
investments that the Utility may make in the future to provide
electricity resource adequacy in compliance with future regulatory
requirements and an approved long-term electricity resources
plan.</p>

<p>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;As previously reported, the Utility expects to resume payment of
common stock dividends to PG&amp;E Corporation upon attaining the
52 percent target equity ratio authorized by the December 19, 2003
settlement agreement entered into among PG&amp;E Corporation, the
Utility and the California Public Utilities Commission (CPUC) to
resolve the Utility&rsquo;s Chapter 11 case (Settlement
Agreement).&nbsp; Assuming that energy recovery bonds (ERBs) in the
approximate amount of $1.8 billion are issued in January 2005 to
refinance the regulatory asset provided under the Settlement
Agreement and that the proceeds are first used to rebalance the
Utility&rsquo;s capital structure, the Utility is expected to reach
the target equity ratio almost immediately after the ERBs are
issued.&nbsp; After the Utility reaches its target equity ratio, it
is anticipated that the Utility would use surplus cash to pay
dividends to, or repurchase common stock from, PG&amp;E Corporation
which PG&amp;E Corporation would use in turn to pay dividends to,
or repurchase stock from, its common stock shareholders.&nbsp;
Assuming the issuance of ERBs in January 2005 in the approximate
amount of $1.8 billion, PG&amp;E Corporation estimates that it
would have $2.7 billion available through the end of 2006 to
distribute to shareholders through dividends and stock repurchases
or for capital investments beyond the level of capital expenditures
already assumed.</p>

<p>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The initial annual cash dividend target of $1.20 per share is
based on many assumptions, including that:</p>

<ul>
  <li>The Utility remains under cost-of-service regulation by the CPUC
and, with respect to electric transmission, the Federal Energy
Regulatory Commission (FERC).<br>
  </li>
  <li>The CPUC and the FERC authorize sufficient revenues for the
Utility to recover its energy procurement and base
expenses.&nbsp;<br>
  </li>
  <li>The Utility&rsquo;s authorized return on equity (ROE) for all
operations remains at least at 11.22 percent.<br>
  </li>
<li>The first series of ERBs in the approximate amount of $1.8
billion is issued in early 2005 and the second series is issued in
early 2006.&nbsp;</li>
</ul>

<ul type="disc">
<li>Annual Utility capital expenditures average $1.9 billion in
2005 and 2006.&nbsp; (These forecasted capital expenditures do not
include amounts for new generation development or implementation of
an advanced metering system.)</li>
</ul>

<ul type="disc">
<li>Total gas and electric rate base, including retained generation
facilities and the regulatory asset provided under the Settlement
Agreement, of approximately $15.3 billion for 2005 and $16.0
billion for 2006.</li>
</ul>

<ul type="disc">
<li>The Utility manages its operating expenses and capital
expenditures to earn the full authorized rate of return within
revenues authorized under the CPUC&rsquo;s decision in the
Utility&rsquo;s 2003 General Rate Case (GRC) and subsequent
adjustments for inflation through 2006.</li>
</ul>

<p align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Each Board of Directors retains authority to change
its common stock dividend policy and its dividend payout ratio at
any time, especially if unexpected events occur that would change
the Board&rsquo;s views as to the prudent level of cash
conservation.&nbsp; No dividends are payable until after the
respective Board of Directors declares a dividend.&nbsp; In order
to declare a dividend, each Board of Directors must determine that
the applicable requirements of California law and the CPUC have
been satisfied.</p>

<p>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;This report contains forward-looking statements regarding the
anticipated payment of future common stock dividends and stock
repurchases based on various assumptions, including anticipated
cash flows in 2005 and 2006.&nbsp; These statements are based on
current expectations and assumptions which management believes are
reasonable and on information currently available to management but
are necessarily subject to various risks and uncertainties.&nbsp;
In addition to the risk that the assumptions (described above)
underlying the target dividend payout ratio and initial target
annual dividend amount prove to be inaccurate, other factors that
could cause actual results to differ materially from those
contemplated by the forward-looking statements include:<br />
</p>

<ul type="disc">
<li>The timing and resolution of the petitions for review that were
filed in the California Court of Appeal seeking review of (i) the
CPUC's December 18, 2003 decision approving the Settlement
Agreement, and (ii) the CPUC's March 16, 2004 denial of
applications for rehearing of the December 18, 2003 decision;</li>

<li>The timing and resolution of the pending appeals of the
bankruptcy court's order confirming the Utility&rsquo;s plan of
reorganization under Chapter 11,</li>

<li>Whether the CPUC approves the Utility's long-term electricity
resource plan and adopts the Utility's related ratemaking
proposals, whether the assumptions and forecasts underlying the
long-term resource plan prove to be accurate, and the terms and
conditions of the long-term resource commitments the Utility enters
into in connection with its long-term resource plan;</li>

<li>The operation of the Utility's Diablo Canyon nuclear power
plant which exposes the Utility to potentially significant
environmental and capital expenditure outlays;</li>

<li>The extent to which the CPUC or the FERC delays or denies
recovery of the Utility's costs from customers due to a regulatory
determination that such costs were not reasonable or prudent or for
other reasons resulting in write-offs of regulatory balancing
accounts;</li>

<li>How the CPUC administers the capital structure, stand-alone
dividend and first priority conditions of the CPUC's decisions
permitting the establishment of holding companies for California
investor-owned electric utilities;</li>

<li>The impact of future legislative or regulatory actions or
policies;</li>

<li>Increased competition;</li>

<li>The outcome of pending litigation; and</li>

<li>Other factors discussed in PG&amp;E Corporation's and the
Utility&rsquo;s SEC reports.</li>
</ul>

<br clear="all" />


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

<p>&nbsp;</p>

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

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

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

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

<p></p>

<p></p>

<table border="0" cellspacing="0" cellpadding="0" width="624">
<tr>
<td valign="top"></td>
<td colspan="2" valign="top">
<p>PG&amp;E CORPORATION</p>
</td>
</tr>

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

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

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

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

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

<tr>
<td valign="top">
<p>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</p>
</td>
<td valign="top">
<p>By:&nbsp;&nbsp;</p>
</td>
<td valign="top">
<div>
<p><u>DINYAR B. MISTRY</u></p>
</div>
</td>
</tr>

<tr>
<td valign="top">
<p>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</p>
</td>
<td valign="top"></td>
<td valign="top">
<p>Dinyar Mistry<br />
 Vice President and Controller</p>
</td>
</tr>
</table>

<p>Dated:&nbsp; October 22, 2004</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": "041090917"}, "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"}}
Form 8-K
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C.  20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report: October 22, 2004
PG&E CORPORATION
(Exact Name of Registrant as specified in
Charter)
California
1-2609
94-323914
(State or other jurisdiction of
incorporation)
(Commission File Number)
(IRS Employer
Identification No.)
One Market, Spear Tower, Suite 2400, San
Francisco, CA
94105
(Address of principal executive offices)
(Zip code)
415-267-7000
(Registrant's Telephone Number,
Including Area Code)
N/A
(Former Name or Former Address, if Changed
Since Last Report)
PACIFIC GAS AND ELECTRIC COMPANY
(Exact Name of Registrant as specified in
Charter)
California
1-2348
94-0742640
(State or other jurisdiction of
incorporation)
(Commission File Number)
(IRS Employer
Identification No.)
77 Beale Street, P. O. Box 770000, San
Francisco, California
94177
(Address of principal executive offices)
(Zip code)
(415) 973-7000
(Registrant's Telephone Number,
Including Area Code)
N/A
(Former Name or Former Address, if Changed
Since Last Report)
Check
the appropriate box below if the Form 8-K filing is intended to
simultaneously satisfy the filing obligation of the registrant
under any of the following provisions (see General Instruction A.2.
below):
[ ]
Written communications pursuant to Rule 425 under the Securities
Act (17 CFR 230.425)
[ ]
Soliciting Material pursuant to Rule 14a-12 under the Exchange
Act (17 CFR 240.14a-12)
[ ]
Pre-commencement communications pursuant to Rule 14d-2(b) under
the Exchange Act
(17 CFR 240.14d-2(b)
[ ]
Pre-commencement communications pursuant to Rule 13e-4(c) under
the Exchange Act
(17 CFR 240.13e-4(c))
Item 8.01 Other Events
On October 20, 2004, the Board of Directors of each of PG&E
Corporation and its subsidiary, Pacific Gas and Electric Company
(Utility), took one more step along the path to re-establishing a
common stock dividend by approving a common stock dividend policy
and a target dividend payout ratio range (i.e., the proportion of
earnings paid out as dividends) of  50 percent to 70
percent.  Although the Boards of Directors deferred the actual
declaration of a common stock dividend at least until after the
Utility achieves the target equity ratio discussed below, the Board
of Directors of PG&E Corporation adopted an initial annual cash
dividend target of $1.20 per share ($0.30 quarterly).
PG&E Corporation's and the Utility's dividend
policy was designed to meet the following three objectives:
Comparability:
Pay a dividend competitive with the
securities of comparable companies based on payout ratio and, with
respect to PG&E Corporation, yield (i.e., dividend divided by
share price).
Flexibility:
Allow sufficient cash to pay a
dividend and to fund investments while avoiding the necessity to
issue new equity, unless PG&E Corporation's or the
Utility's capital expenditure requirements are growing
rapidly and PG&E Corporation or the Utility can issue equity at
reasonable cost and terms.
Sustainability:
Avoid reduction or suspension of
the dividend despite fluctuations in financial performance, except
in extreme and unforeseen circumstances.
The target dividend payout ratio range was based on an analysis
of dividend payout ratios of comparable companies.  The
initial dividend target was chosen in recognition of the
Utility's current credit rating and the potential capital
investments that the Utility may make in the future to provide
electricity resource adequacy in compliance with future regulatory
requirements and an approved long-term electricity resources
plan.
As previously reported, the Utility expects to resume payment of
common stock dividends to PG&E Corporation upon attaining the
52 percent target equity ratio authorized by the December 19, 2003
settlement agreement entered into among PG&E Corporation, the
Utility and the California Public Utilities Commission (CPUC) to
resolve the Utility's Chapter 11 case (Settlement
Agreement).  Assuming that energy recovery bonds (ERBs) in the
approximate amount of $1.8 billion are issued in January 2005 to
refinance the regulatory asset provided under the Settlement
Agreement and that the proceeds are first used to rebalance the
Utility's capital structure, the Utility is expected to reach
the target equity ratio almost immediately after the ERBs are
issued.  After the Utility reaches its target equity ratio, it
is anticipated that the Utility would use surplus cash to pay
dividends to, or repurchase common stock from, PG&E Corporation
which PG&E Corporation would use in turn to pay dividends to,
or repurchase stock from, its common stock shareholders. 
Assuming the issuance of ERBs in January 2005 in the approximate
amount of $1.8 billion, PG&E Corporation estimates that it
would have $2.7 billion available through the end of 2006 to
distribute to shareholders through dividends and stock repurchases
or for capital investments beyond the level of capital expenditures
already assumed.
The initial annual cash dividend target of $1.20 per share is
based on many assumptions, including that:
The Utility remains under cost-of-service regulation by the CPUC
and, with respect to electric transmission, the Federal Energy
Regulatory Commission (FERC).
The CPUC and the FERC authorize sufficient revenues for the
Utility to recover its energy procurement and base
expenses.
The Utility's authorized return on equity (ROE) for all
operations remains at least at 11.22 percent.
The first series of ERBs in the approximate amount of $1.8
billion is issued in early 2005 and the second series is issued in
early 2006.
Annual Utility capital expenditures average $1.9 billion in
2005 and 2006.  (These forecasted capital expenditures do not
include amounts for new generation development or implementation of
an advanced metering system.)
Total gas and electric rate base, including retained generation
facilities and the regulatory asset provided under the Settlement
Agreement, of approximately $15.3 billion for 2005 and $16.0
billion for 2006.
The Utility manages its operating expenses and capital
expenditures to earn the full authorized rate of return within
revenues authorized under the CPUC's decision in the
Utility's 2003 General Rate Case (GRC) and subsequent
adjustments for inflation through 2006.
Each Board of Directors retains authority to change
its common stock dividend policy and its dividend payout ratio at
any time, especially if unexpected events occur that would change
the Board's views as to the prudent level of cash
conservation.  No dividends are payable until after the
respective Board of Directors declares a dividend.  In order
to declare a dividend, each Board of Directors must determine that
the applicable requirements of California law and the CPUC have
been satisfied.
This report contains forward-looking statements regarding the
anticipated payment of future common stock dividends and stock
repurchases based on various assumptions, including anticipated
cash flows in 2005 and 2006.  These statements are based on
current expectations and assumptions which management believes are
reasonable and on information currently available to management but
are necessarily subject to various risks and uncertainties. 
In addition to the risk that the assumptions (described above)
underlying the target dividend payout ratio and initial target
annual dividend amount prove to be inaccurate, other factors that
could cause actual results to differ materially from those
contemplated by the forward-looking statements include:
The timing and resolution of the petitions for review that were
filed in the California Court of Appeal seeking review of (i) the
CPUC's December 18, 2003 decision approving the Settlement
Agreement, and (ii) the CPUC's March 16, 2004 denial of
applications for rehearing of the December 18, 2003 decision;
The timing and resolution of the pending appeals of the
bankruptcy court's order confirming the Utility's plan of
reorganization under Chapter 11,
Whether the CPUC approves the Utility's long-term electricity
resource plan and adopts the Utility's related ratemaking
proposals, whether the assumptions and forecasts underlying the
long-term resource plan prove to be accurate, and the terms and
conditions of the long-term resource commitments the Utility enters
into in connection with its long-term resource plan;
The operation of the Utility's Diablo Canyon nuclear power
plant which exposes the Utility to potentially significant
environmental and capital expenditure outlays;
The extent to which the CPUC or the FERC delays or denies
recovery of the Utility's costs from customers due to a regulatory
determination that such costs were not reasonable or prudent or for
other reasons resulting in write-offs of regulatory balancing
accounts;
How the CPUC administers the capital structure, stand-alone
dividend and first priority conditions of the CPUC's decisions
permitting the establishment of holding companies for California
investor-owned electric utilities;
The impact of future legislative or regulatory actions or
policies;
Increased competition;
The outcome of pending litigation; and
Other factors discussed in PG&E Corporation's and the
Utility's SEC reports.
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:
DINYAR B. MISTRY
Dinyar Mistry
Vice President and Controller
Dated:  October 22, 2004