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<p align="center"><font size="3" face="Times New Roman">SECURITIES
AND EXCHANGE COMMISSION</font></p>
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<p align="center"><font size="3" face="Times New Roman">Washington,
D.C.&nbsp; 20549</font></p>
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<p align="center"><font size="3" face="Times New Roman">FORM
8&#8209;K</font></p>
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<p align="center"><font size="3" face="Times New Roman">CURRENT
REPORT</font></p>
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<p align="center"><font size="3" face="Times New Roman">PURSUANT TO
SECTION 13 OR 15(d) OF THE</font></p>
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<p align="center"><font size="3" face="Times New Roman">SECURITIES
EXCHANGE ACT OF 1934</font></p>
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<p align="center"><font size="3" face="Times New Roman">Date of
Report: August 23, 2002</font></p>
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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>
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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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<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>

<p align="center"><font size="3" face="Times New Roman"><br />
 </font></p>
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<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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<td colspan="4" valign="top"></td>
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<td colspan="4" valign="top">
<p align="center"><font size="3" face="Times New Roman">(Address of
principal executive offices) (Zip Code)</font></p>
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<p align="center"><font size="3" face="Times New Roman"><br />
 </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>
</td>
<td colspan="2" valign="top">
<p align="center"><font size="3" face="Times New Roman">PG&amp;E
Corporation<br />
 (415) 267-7000</font></p>
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<p align="center"><font size="3" face=
"Times New Roman">(Registrant's telephone number, including area
code)</font></p>
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<p align="center"><font size="3" face="Times New Roman"><br />
</font></p>

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

<p><br />
<a name="_DV_M1"></a><a name="_DV_M2"></a><a name="_DV_M3"></a><a
name="_DV_M4"></a><a name="_DV_M5"></a><a name="_DV_M6"></a><a
name="_DV_M7"></a><a name="_DV_M8"></a><a name="_DV_M9"></a><a
name="_DV_M10"></a><a name="_DV_M11"></a><a name="_DV_M12"></a><a
name="_DV_M13"></a><a name="_DV_M14"></a><a name="_DV_M15"></a><a
name="_DV_M16"></a><a name="_DV_M17"></a><a name="_DV_M18"></a><a
name="_DV_M19"></a><a name="_DV_M20"></a><a name="_DV_M21"></a><a
name="_DV_M22"></a><a name="_DV_M23"></a><font size="3" face=
"Times New Roman">Item 5. Other Events</font></p>

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

<p><font size="3" face=
"Times New Roman">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The sections of this current report on Form 8-K discussing PG&amp;E
National Energy Group, Inc. (PG&amp;E NEG) include forward-looking
statements, including projections, that are necessarily subject to
various risks and uncertainties.&nbsp; These statements are based
on current expectations and assumptions which management believes
are reasonable and on information currently available to
management.&nbsp; Actual results could differ materially from those
contemplated by the forward-looking statements.&nbsp; These
statements should be read in conjunction with the forward-looking
statement factors set forth in the "Management's Discussion and
Analysis of Financial Condition and Results of Operations &ndash;
Liquidity and Financial Resources" in PG&amp;E Corporation's most
recent Quarterly Report on Form 10-Q/A for the quarter ended June
30, 2002 (Form 10-Q/A).</font></p>

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

<h5><font size="3" face=
"Times New Roman">A.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
PG&amp;E Corporation Credit Agreement Waiver Revision</font></h5>

<h5><font size="3" face="Times New Roman"></font></h5>

<p><font size="3" face="Times New Roman">General Electric Capital
Corporation and certain other lenders (collectively, the GE
Lenders) under PG&amp;E Corporation's $1.02 billion Amended and
Restated Credit Agreement dated as of June 25, 2002 (Credit
Agreement) have waived, until August 30, 2002, the requirement that
PG&amp;E Corporation's subsidiary, PG&amp;E NEG, continue to
maintain investment grade ratings with either Standard &amp; Poor's
(S&amp;P) or Moody's Investor Services, Inc. (Moody's).&nbsp; This
waiver, which had previously been extended until October 21,
2002&nbsp; was revised in light of amendments made on August 22,
2002 to PG&amp;E NEG's $1.25 billion credit agreement dated August
22, 2001 (PG&amp;E NEG Credit Agreement), which resulted in early
termination of the prior waiver and which are described more fully
below.&nbsp; The current waiver is subject to earlier termination
if, among other events, PG&amp;E NEG fails to maintain certain
levels of credit availability under the PG&amp;E NEG Credit
Agreement.&nbsp;</font></p>

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

<h5><font size="3" face="Times New Roman">The current waiver
agreement has been amended to require that, during the term of the
waiver agreement, at least $267 million remain available to
PG&amp;E NEG under the Tranche A facility (reduced from $400
million) and that at least $431 million remain available to
PG&amp;E NEG under the Tranche B facility.&nbsp; As previously
disclosed, in addition to requiring the maintenance of certain
levels of availability under the PG&amp;E NEG Credit Agreement, the
GE Lenders may also terminate the waiver if (1) the holders of
indebtedness of PG&amp;E NEG under the PG&amp;E NEG Credit
Agreement become entitled to accelerate the repayment of such
indebtedness before its stated maturity date, or (2) PG&amp;E
Corporation fails to perform any term or covenant of the waiver
agreement.&nbsp; In addition, as provided in the prior waiver,
during the term of the waiver PG&amp;E Corporation may not make any
investment, capital expenditure, or other payment to any of its
subsidiaries, in an amount that in the aggregate exceeds $15
million, except as may be required under applicable law or by
conditions established by the California Public Utilities
Commission (CPUC) in decisions approving the formation of PG&amp;E
Corporation to hold the stock of Pacific Gas and Electric Company
(Utility).&nbsp; A copy of the revised waiver agreement is filed as
Exhibit 99.1 hereto.</font></h5>

<h5><font size="3" face="Times New Roman"></font></h5>

<p><font size="3" face="Times New Roman">During the term of the
waiver, PG&amp;E Corporation has agreed not to allow PG&amp;E NEG
to sell any of its material assets, except for certain sales in the
ordinary course of business, or to incur additional debt, except
for (i) draws under PG&amp;E NEG's current credit facilities, (ii)
hedging and guarantees of hedging in the ordinary course of
business, and (iii) other indebtedness incurred in the ordinary
course of business up to an aggregate amount of $75 million,
without obtaining prior consent from the GE Lenders.&nbsp; The
terms of the revised waiver agreement further require PG&amp;E
Corporation to maintain an amount of cash held in two interest
reserve accounts under the Credit Agreement equal to 15 percent of
the now outstanding principal amount of the $1.02 billion in term
loans.&nbsp; Specifically, $153 million will be maintained in the
two interest accounts, which represents an increase from the
previous waiver's requirement that two years' worth of interest, or
approximately $117 million, be maintained in the interest reserve
accounts.&nbsp;</font></p>

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

<p><font size="3" face="Times New Roman">As previously disclosed,
subject to their respective rights as set forth in the
Intercreditor and Subordination Agreement, dated as of June 25,
2002, by and between the GE Lenders and certain other parties
thereto, the GE Lenders would, upon expiration of the waiver, have
the right to declare all amounts outstanding under the Credit
Agreement to be immediately due and payable.&nbsp; The failure of
PG&amp;E Corporation to repay this accelerated indebtedness would
entitle the GE Lenders, subject to the Intercreditor Agreement, to
exercise certain remedies, including their rights as secured
parties with respect to their collateral, i.e., the pledged
interests of PG&amp;E Corporation in PG&amp;E National Energy
Group, LLC (NEG, LLC), NEG LLC's pledged interests in PG&amp;E NEG,
and a pledged interest in an interest reserve account, which will
increase from approximately $117 million to $153 million as a
result of the current waiver agreement.&nbsp;</font></p>

<h5><font size="3" face="Times New Roman"></font></h5>

<h5><font size="3" face="Times New Roman">As previously disclosed,
with respect to the $280 million aggregate principal amount of 7.5%
Convertible Subordinated Notes issued by PG&amp;E Corporation
pursuant to an Indenture dated as of June 25, 2002 by and between
PG&amp;E Corporation and U.S. Bank, N.A., as trustee (Notes), if
the obligations under the Credit Agreement were accelerated and
PG&amp;E Corporation failed to pay such accelerated obligations as
described above and such failure continues for 30 days after
receipt of written notice from the trustee or holders of at least
25 percent of the aggregate principal amount of outstanding Notes,
the Notes would also be in default.&nbsp; Thereupon, and subject to
the subordination provisions of the Indenture, the trustee or the
Note holders would have the right to accelerate the Notes.&nbsp; A
similar cross-default situation could develop if creditors of
PG&amp;E Corporation's significant subsidiaries, including PG&amp;E
NEG, accelerated $150 million or more in aggregate principal amount
of indebtedness.&nbsp;</font></h5>

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

<h5><font size="3" face="Times New Roman">During the term of the
current waiver by the GE Lenders, PG&amp;E Corporation intends to
negotiate with the GE Lenders for a further extension of the waiver
and for the elimination of the credit rating maintenance covenant
from the Credit Agreement or for such other amendments as may be
needed to avoid a default of these obligations; however, PG&amp;E
Corporation cannot predict whether, or to what extent, it would be
successful in such efforts.&nbsp; Current PG&amp;E Corporation cash
balances are insufficient to repay the full amount of its
outstanding debt.&nbsp;</font></h5>

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

<h5><font size="3" face=
"Times New Roman">B.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Extension of PG&amp;E National Energy Group Credit Facility
Expiration Date</font></h5>

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

<p><font size="3" face="Times New Roman">As previously disclosed,
the PG&amp;E NEG Credit Agreement currently consists of a Tranche A
facility which expires on August 22, 2003 and a Tranche B facility
which was due to expire on August 22, 2002.&nbsp; On August 22,
2002, PG&amp;E NEG and the lenders under the PG&amp;E NEG Credit
Agreement entered into an amendment to the PG&amp;E NEG Credit
Agreement that extended the expiration and renewal date of the
Tranche B facility to October 21, 2002, and reduced the commitments
under the Tranche B facility to $500 million from $750
million.&nbsp; In addition, over the extension term, the amendment
(i) reduced the amount available to borrow under the Tranche B
facility to $431 million (the amount outstanding under the Tranche
B facility as of August 22, 2002) from $750 million and (ii)
reduced the amount available to borrow under the Tranche A facility
to $279 million (the amount outstanding under the Tranche A
facility as of August 22, 2002) from $500 million.&nbsp; Draws
above these amounts are available with 100 percent lender
approval.&nbsp; PG&amp;E NEG believes that these restrictions will
not prevent it from meeting its liquidity commitments during the
extension period.</font></p>

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

<h5><font size="3" face=
"Times New Roman">C.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
PG&amp;E NEG&nbsp; Projected Cash Management--Potential Sources and
Uses of Cash Table</font></h5>

<p><font size="3" face="Times New Roman">As previously disclosed,
PG&amp;E Corporation's Form 10-Q/A included a table which provided
an estimate of PG&amp;E NEG's potential sources and uses of cash
for the next 12 months based upon assumptions regarding exposure
and negotiations with and payments to counterparties, and calls on
PG&amp;E NEG's liquidity.&nbsp; (See section entitled "Management's
Discussion and Analysis of Financial Condition and Results of
Operations &ndash; Liquidity and Financial Resources" in PG&amp;E
Corporation's Form 10-Q/A.)&nbsp; As a result of the changes to the
PG&amp;E NEG Credit Agreement described above and PG&amp;E NEG's
ongoing review of its potential sources and uses of cash, PG&amp;E
NEG has revised certain of its projections.&nbsp; Although the
potential sources and uses of cash in this table represented an
estimate for an entire year, PG&amp;E NEG expects to undertake a
significant debt restructuring effort over the next 60 days.&nbsp;
Since PG&amp;E Corporation and PG&amp;E NEG are unable to predict
the outcome of such debt restructuring efforts, the table set forth
below covers only the period from August 21, 2002 through October
31, 2002. These projections are calculated as if the 364-day
Tranche B revolving credit facility does not expire prior to
October 31, 2002, and do not include any changes resulting from the
implementation of any debt restructuring, or other sales or
reorganization of existing operations.</font></p>

<p><font size="3" face="Times New Roman">These projections
represent sources and uses of cash at various PG&amp;E NEG and
subsidiary entities.&nbsp; While these entities are subject to
certain restrictions with respect to distributions of cash, in the
aggregate the sources described are expected to be available for
the expected uses in compliance with these restrictions.</font></p>

<table border="0" cellspacing="0" cellpadding="0">
<tr>
<td colspan="2" valign="top">
<p align="center"><b><font size="3" face="Times New Roman">PG&amp;E
National Energy Group</font></b></p>
</td>
</tr>

<tr>
<td colspan="2" valign="top">
<p align="center"><b><font size="3" face=
"Times New Roman">Projected Cash Management &mdash; Potential
Sources and Uses of Cash</font></b></p>
</td>
</tr>

<tr>
<td colspan="2" valign="top">
<p align="center"><b><u><font size="3" face=
"Times New Roman">August 21, 2002 through October 31,
2002</font></u></b></p>
</td>
</tr>

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

<tr>
<td valign="top"></td>
<td valign="top">
<p align="right"><font size="3" face="Times New Roman">($
millions)</font></p>
</td>
</tr>

<tr>
<td valign="top">
<p><u><font size="3" face="Times New Roman">Sources of
Cash</font></u></p>
</td>
<td valign="top"></td>
</tr>

<tr>
<td valign="top">
<p><font size="3" face="Times New Roman">Unrestricted cash on hand
at PG&amp;E NEG and various subsidiaries at August 20,
2002</font></p>
</td>
<td valign="top">
<p align="right"><font size="3" face="Times New Roman"></font></p>

<p align="right"><font size="3" face=
"Times New Roman">557</font></p>
</td>
</tr>

<tr>
<td valign="top">
<p><font size="3" face="Times New Roman">Estimated distributions
and dividends from PG&amp;E NEG subsidiaries through October 31,
2002</font></p>
</td>
<td valign="top">
<p align="right"><font size="3" face="Times New Roman"></font></p>

<p align="right"><font size="3" face=
"Times New Roman">117</font></p>
</td>
</tr>

<tr>
<td valign="top">
<p><font size="3" face="Times New Roman">Available capacity under
$500 million two-year revolver expiring August 23, 2003
(1)&nbsp;&nbsp;&nbsp;</font></p>
</td>
<td valign="top">
<p align="right"><font size="3" face=
"Times New Roman">-&nbsp;</font></p>
</td>
</tr>

<tr>
<td valign="top">
<p><font size="3" face="Times New Roman">Available capacity under
$500 million 364-day revolver expiring October 21, 2002
(2)</font></p>
</td>
<td valign="top">
<p align="right"><font size="3" face=
"Times New Roman">-&nbsp;</font></p>
</td>
</tr>

<tr>
<td valign="top">
<p><font size="3" face="Times New Roman">Available capacity under
USGen New England $100 million credit facility</font></p>
</td>
<td valign="top">
<p align="right"><font size="3" face=
"Times New Roman">13</font></p>
</td>
</tr>

<tr>
<td valign="top">
<p><font size="3" face="Times New Roman">Available capacity under
PG&amp;E Gas Transmission, Northwest Corporation (PG&amp;E GTN)
$125 million facility</font></p>
</td>
<td valign="top">
<p align="right"><font size="3" face="Times New Roman"></font></p>

<p align="right"><font size="3" face=
"Times New Roman">125</font></p>
</td>
</tr>

<tr>
<td valign="top">
<p><font size="3" face="Times New Roman">Available capacity under
other credit facilities with $120 million capacity</font></p>
</td>
<td valign="top">
<p align="right"><font size="3" face=
"Times New Roman">12</font></p>
</td>
</tr>

<tr>
<td valign="top">
<p><font size="3" face="Times New Roman">Total Potential Sources of
Cash</font></p>
</td>
<td valign="top">
<p align="right"><font size="3" face=
"Times New Roman">824</font></p>
</td>
</tr>

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

<tr>
<td valign="top">
<p><font size="3" face="Times New Roman">Total Potential Sources of
Cash excluding PG&amp;E GTN (3)</font></p>
</td>
<td valign="top">
<p align="right"><font size="3" face=
"Times New Roman">699</font></p>
</td>
</tr>

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

<tr>
<td valign="top">
<p><u><font size="3" face="Times New Roman">Uses of
Cash</font></u></p>
</td>
<td valign="top"></td>
</tr>

<tr>
<td valign="top">
<p><font size="3" face="Times New Roman">Operating and debt service
costs</font></p>
</td>
<td valign="top">
<p align="right"><font size="3" face=
"Times New Roman">49</font></p>
</td>
</tr>

<tr>
<td valign="top">
<p><font size="3" face="Times New Roman">Capital requirements for
current construction program</font></p>
</td>
<td valign="top">
<p align="right"><font size="3" face=
"Times New Roman">272</font></p>
</td>
</tr>

<tr>
<td valign="top">
<p><font size="3" face="Times New Roman">Scheduled principal
payment under equipment revolver</font></p>
</td>
<td valign="top">
<p align="right"><font size="3" face=
"Times New Roman">16</font></p>
</td>
</tr>

<tr>
<td valign="top">
<p><font size="3" face="Times New Roman">Collateral requirements to
cover current exposure in trading and asset businesses
(4)</font></p>
</td>
<td valign="top">
<p align="right"><font size="3" face="Times New Roman"></font></p>

<p align="right"><font size="3" face=
"Times New Roman">203</font></p>
</td>
</tr>

<tr>
<td valign="top">
<p><font size="3" face="Times New Roman">Equity funding requirement
on La Paloma project due to ratings downgrades</font></p>
</td>
<td valign="top">
<p align="right"><font size="3" face=
"Times New Roman">23</font></p>
</td>
</tr>

<tr>
<td valign="top">
<p><font size="3" face="Times New Roman">Total Potential
Uses</font></p>
</td>
<td valign="top">
<p align="right"><font size="3" face=
"Times New Roman">563</font></p>
</td>
</tr>

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

<tr>
<td valign="top">
<p><font size="3" face="Times New Roman">Net Liquidity
Position</font></p>
</td>
<td valign="top">
<p align="right"><font size="3" face=
"Times New Roman">262</font></p>
</td>
</tr>

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

<tr>
<td valign="top">
<p><font size="3" face="Times New Roman">Net Liquidity Position
excluding PG&amp;E GTN (3)</font></p>
</td>
<td valign="top">
<p align="right"><font size="3" face=
"Times New Roman">137</font></p>
</td>
</tr>
</table>

<p><font size="1" face="Times New Roman"></font></p>

<table border="0" cellspacing="0" cellpadding="0">
<tr>
<td valign="top">
<p><font size="3" face="Times New Roman">(1)</font></p>
</td>
<td valign="top">
<p><font size="3" face="Times New Roman">The two-year revolver
facility is currently limited to a total outstanding amount of
$278.7 million unless additional letters of credit are approved by
100 percent of the lenders.</font></p>
</td>
</tr>

<tr>
<td valign="top">
<p><font size="3" face="Times New Roman">(2)</font></p>
</td>
<td valign="top">
<p><font size="3" face="Times New Roman">The 364-day revolver
facility was extended for 60 days on August&nbsp;22, 2002.&nbsp;
The amount currently outstanding under this facility is $431
million. No additional draws are permitted without 100 percent
lender approval.</font></p>
</td>
</tr>

<tr>
<td valign="top">
<p><font size="3" face="Times New Roman">(3)</font></p>
</td>
<td valign="top">
<p><font size="3" face="Times New Roman">PG&amp;E GTN debt capacity
is separately identified because recent Federal Energy Regulatory
Commission (FERC) proposed rule changes and certain ring-fencing
restrictions may limit availability to affiliates.</font></p>
</td>
</tr>

<tr>
<td valign="top">
<p><font size="3" face="Times New Roman">(4)</font></p>
</td>
<td valign="top">
<p><font size="3" face="Times New Roman">Covers pipeline transport,
gas storage, and power pool collateral requirements and exposure
for all trading agreements having financial covenants for below
investment grade entities, net of collateral provided from July 31,
2002 through August 20, 2002 ($196 million). This estimate will
change with changes in the prices of the underlying
commodities.</font></p>
</td>
</tr>
</table>

<p><font size="3" face="Times New Roman">From July 31, 2002 through
August 20, 2002, PG&amp;E NEG posted collateral in the form of cash
or letters of credit totaling approximately $196 million to cover
exposure under guarantees which were triggered as a result of the
ratings actions taken by S&amp;P and Moody's on July 31, 2002 and
August 5, 2002, respectively.&nbsp; This amount has reduced the
potential use of cash for collateral requirements from the amount
previously disclosed of $399 million.&nbsp; As identified above,
PG&amp;E NEG estimates its remaining exposure to be approximately
$203 million.</font></p>

<p><font size="3" face="Times New Roman">The actual calls on
PG&amp;E NEG's liquidity will depend largely upon counterparties'
reactions to the ratings downgrades, the continued performance of
PG&amp;E NEG companies under the underlying agreements and the
counterparties' other commercial considerations.&nbsp; In the past,
PG&amp;E NEG has been able to negotiate acceptable arrangements and
reduce its overall exposure to counterparties when PG&amp;E NEG or
its counterparties have faced similar situations. However, PG&amp;E
NEG cannot quantify with any certainty the actual future calls on
its liquidity and there can be no assurance that PG&amp;E NEG could
negotiate acceptable arrangements in the current
circumstances.</font></p>

<p><font size="3" face="Times New Roman">On August 8, 2002,
PG&amp;E NEG replaced the ratings triggers contained in $545
million of guarantees for the performance of the contractors
building the Harquahala and Covert power projects with financial
covenants that are consistent with those contained in PG&amp;E
NEG's revolving credit and other loan facilities. These covenants
include requirements to exceed a specified cash flow to fixed
charges ratio and a specified net worth as well as to maintain less
than a specified total debt to total capitalization ratio and are
set forth in PG&amp;E NEG's revolving credit agreement filed as
Exhibit&nbsp;10.21 to PG&amp;E NEG's 2001 Annual Report on
Form&nbsp;10-K.&nbsp; PG&amp;E NEG is currently in compliance with
these covenants.</font></p>

<p><font size="3" face="Times New Roman">By letter dated August 7,
2002, Liberty Electric Power, LLC (Liberty) provided notice to
PG&amp;E Energy Trading - Power, L.P. (PGET) that the downgrade of
PG&amp;E NEG constituted a material adverse change under the
tolling agreement between PGET and Liberty and that PGET was
required to post replacement security or an event of default under
the tolling agreement would arise within 10 business days.&nbsp;
PGET has not posted replacement security.&nbsp; This notice by
Liberty is not expected to impact other agreements of PG&amp;E
NEG.&nbsp; PGET had previously provided guarantees from PG&amp;E
NEG and PG&amp;E GTN each in the amount of $150 million. Under the
terms of the tolling agreement, Liberty may issue a termination
notice and immediately cease performance and/or withhold any
payments.&nbsp; If the agreement is terminated, Liberty must in
good faith calculate the gains, losses, and costs resulting from
the termination and must provide this determination to PGET.&nbsp;
If PGET disputes the determination, it may submit the matter to
arbitration.&nbsp; PGET has submitted to Liberty a proposal to
replace the guarantees' ratings triggers with a covenant package
similar to that implemented for PG&amp;E NEG's debt
facilities.&nbsp; To date, Liberty has neither accepted the
proposal nor sent a notice of termination.&nbsp;</font></p>

<p><font size="3" face="Times New Roman">PG&amp;E NEG is continuing
to explore options to raise equity, lower debt, and reduce ongoing
guarantee and working capital requirements.&nbsp; These options
include, but are not limited to, sales of assets and businesses,
debt restructuring, and reorganization of existing
operations.&nbsp; The implementation of most of these options would
be subject to obtaining necessary lender approvals and would
require compliance with PG&amp;E NEG's other agreements and
applicable laws and regulations.</font></p>

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

<h5><font size="3" face=
"Times New Roman">D.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Pacific Gas and Electric Company Bankruptcy</font></h5>

<p><font size="3" face="Times New Roman">On August 22, 2002, the
California Public Utilities Commission (CPUC) announced that it has
entered into an agreement with the Official Committee of Unsecured
Creditors (OCC) regarding modifications to its current plan of
reorganization for Pacific Gas and Electric Company
(Utility).&nbsp; Under the terms of the agreement, the CPUC and the
OCC will seek permission from the U.S. Bankruptcy Court for the
Northern District of California (Bankruptcy Court) to amend the
CPUC&rsquo;s plan of reorganization and to reopen the creditor
voting period, which ended on August 12, 2002.&nbsp; The agreement
also states that the OCC will become a co-proponent of the
CPUC&rsquo;s amended plan and will recommend that creditors vote in
favor of the CPUC&rsquo;s modified plan and state a preference for
it.</font></p>

<p><font size="3" face="Times New Roman">Among other modifications,
the CPUC is now proposing to issue preferred stock in lieu of the
common stock previously proposed and to provide for a
&ldquo;reorganization agreement&rdquo; under which the CPUC will
establish retail electric rates sufficient for the Utility to
facilitate achieving and maintaining investment grade credit
ratings and to recover in rates (i) the interest and dividends
payable on, and the amortization and redemption of, the securities
to be issued in connection with the CPUC&rsquo;s modified plan and
(ii) certain recoverable costs.</font></p>

<p><font size="3" face="Times New Roman">Neither the Utility nor
PG&amp;E Corporation can predict whether the Bankruptcy Court will
approve the CPUC&rsquo;s modified plan of reorganization, or
whether it will affect the current confirmation proceeding
scheduled to commence on November 12, 2002.&nbsp;</font></p>

<table border="0" cellspacing="0" cellpadding="0">
<tr>
<td valign="top">
<p><font size="3" face="Times New Roman">Item 7.</font></p>
</td>
<td valign="top"></td>
<td valign="top">
<p><font size="3" face="Times New Roman">Financial Statements, Pro
Forma Financial Information, and Exhibits</font></p>
</td>
</tr>

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

<tr>
<td valign="top">
<p><font size="3" face="Times New Roman">Exhibit No.</font></p>
</td>
<td valign="top"></td>
<td valign="top">
<p><font size="3" face="Times New Roman">Description of
Exhibit</font></p>
</td>
</tr>

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

<tr>
<td valign="top">
<p><font size="3" face="Times New Roman">99.1</font></p>
</td>
<td valign="top"></td>
<td valign="top">
<p><font size="3" face="Times New Roman">Waiver and Amendment
Agreement, dated August 22, 2002, by and among PG&amp;E
Corporation, PG&amp;E National Energy Group, LLC, Lehman Commercial
Paper Inc. as administrative agent, and the lenders party to the
Amended and Restated Credit Agreement dated as of June 25,
2002</font></p>
</td>
</tr>
</table>

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

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

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

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

<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>

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

<table border="0" cellspacing="0" cellpadding="0">
<tr>
<td valign="top">
<p><font size="3" face=
"Times New Roman">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&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 />
 </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;</font></p>
</td>
<td valign="top">
<p><font size="3" face="Times New Roman">By:&nbsp; /s/ CHRISTOPHER
P. JOHNS</font></p>
</td>
</tr>

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

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

<tr height="53">
<td height="53" valign="top">
<p><font size="3" face=
"Times New Roman">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</font></p>
</td>
<td height="53" valign="top">
<p><font size="3" face="Times New Roman">PACIFIC GAS AND ELECTRIC
COMPANY<br />
 </font></p>
</td>
</tr>

<tr>
<td valign="top">
<p><font size="3" face=
"Times New Roman">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</font></p>
</td>
<td valign="top">
<p><font size="3" face="Times New Roman">By:&nbsp;&nbsp;/s/ DINYAR
B. MISTRY</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;</font></p>
</td>
<td valign="top">
<p><font size="3" face="Times New Roman">&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;&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;</font></p>
</td>
<td valign="top">
<p><font size="3" face=
"Times New Roman">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;DINYAR B.
MISTRY<br />
 &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Vice President and
Controller</font></p>
</td>
</tr>
</table>

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

<p><font size="3" face="Times New Roman">Dated:&nbsp; August 23,
2002</font></p>

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

<table border="0" cellspacing="0" cellpadding="0">
<tr>
<td colspan="3" valign="top"><font size="3" face=
"Times New Roman"><br clear="all" />
</font>

<p align="center"><font size="3" face="Times New Roman">EXHIBIT
INDEX<a name="_DV_M141"></a></font></p>
</td>
</tr>

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

<tr>
<td valign="top">
<p><font size="3" face="Times New Roman">Exhibit No.</font></p>
</td>
<td valign="top"></td>
<td valign="top">
<p><font size="3" face="Times New Roman">Description of
Exhibit</font></p>
</td>
</tr>

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

<tr>
<td valign="top">
<p><font size="3" face="Times New Roman">99.1</font></p>
</td>
<td valign="top"></td>
<td valign="top">
<p><font size="3" face="Times New Roman">Waiver and Amendment
Agreement, dated August 22, 2002, by and among PG&amp;E
Corporation, PG&amp;E National Energy Group, LLC, Lehman Commercial
Paper Inc. as administrative agent, and the lenders party to the
Amended and Restated Credit Agreement dated as of June 25,
2002</font></p>
</td>
</tr>
</table>

<p><font size="3" face="Times New Roman"></font></p>
</div>
</body>
</html>
[{"type": "8-K", "sequence": "1", "filename": "final823b.htm", "description": "FORM 8-K", "secsgml_size_bytes": 39872}]
{"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": "02747520"}, "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 23, 2002
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
The sections of this current report on Form 8-K discussing PG&E
National Energy Group, Inc. (PG&E NEG) include forward-looking
statements, including projections, that are necessarily subject to
various risks and uncertainties.  These statements are based
on current expectations and assumptions which management believes
are reasonable and on information currently available to
management.  Actual results could differ materially from those
contemplated by the forward-looking statements.  These
statements should be read in conjunction with the forward-looking
statement factors set forth in the "Management's Discussion and
Analysis of Financial Condition and Results of Operations –
Liquidity and Financial Resources" in PG&E Corporation's most
recent Quarterly Report on Form 10-Q/A for the quarter ended June
30, 2002 (Form 10-Q/A).
A.       
PG&E Corporation Credit Agreement Waiver Revision
General Electric Capital
Corporation and certain other lenders (collectively, the GE
Lenders) under PG&E Corporation's $1.02 billion Amended and
Restated Credit Agreement dated as of June 25, 2002 (Credit
Agreement) have waived, until August 30, 2002, the requirement that
PG&E Corporation's subsidiary, PG&E NEG, continue to
maintain investment grade ratings with either Standard & Poor's
(S&P) or Moody's Investor Services, Inc. (Moody's).  This
waiver, which had previously been extended until October 21,
2002  was revised in light of amendments made on August 22,
2002 to PG&E NEG's $1.25 billion credit agreement dated August
22, 2001 (PG&E NEG Credit Agreement), which resulted in early
termination of the prior waiver and which are described more fully
below.  The current waiver is subject to earlier termination
if, among other events, PG&E NEG fails to maintain certain
levels of credit availability under the PG&E NEG Credit
Agreement.
The current waiver
agreement has been amended to require that, during the term of the
waiver agreement, at least $267 million remain available to
PG&E NEG under the Tranche A facility (reduced from $400
million) and that at least $431 million remain available to
PG&E NEG under the Tranche B facility.  As previously
disclosed, in addition to requiring the maintenance of certain
levels of availability under the PG&E NEG Credit Agreement, the
GE Lenders may also terminate the waiver if (1) the holders of
indebtedness of PG&E NEG under the PG&E NEG Credit
Agreement become entitled to accelerate the repayment of such
indebtedness before its stated maturity date, or (2) PG&E
Corporation fails to perform any term or covenant of the waiver
agreement.  In addition, as provided in the prior waiver,
during the term of the waiver PG&E Corporation may not make any
investment, capital expenditure, or other payment to any of its
subsidiaries, in an amount that in the aggregate exceeds $15
million, except as may be required under applicable law or by
conditions established by the California Public Utilities
Commission (CPUC) in decisions approving the formation of PG&E
Corporation to hold the stock of Pacific Gas and Electric Company
(Utility).  A copy of the revised waiver agreement is filed as
Exhibit 99.1 hereto.
During the term of the
waiver, PG&E Corporation has agreed not to allow PG&E NEG
to sell any of its material assets, except for certain sales in the
ordinary course of business, or to incur additional debt, except
for (i) draws under PG&E NEG's current credit facilities, (ii)
hedging and guarantees of hedging in the ordinary course of
business, and (iii) other indebtedness incurred in the ordinary
course of business up to an aggregate amount of $75 million,
without obtaining prior consent from the GE Lenders.  The
terms of the revised waiver agreement further require PG&E
Corporation to maintain an amount of cash held in two interest
reserve accounts under the Credit Agreement equal to 15 percent of
the now outstanding principal amount of the $1.02 billion in term
loans.  Specifically, $153 million will be maintained in the
two interest accounts, which represents an increase from the
previous waiver's requirement that two years' worth of interest, or
approximately $117 million, be maintained in the interest reserve
accounts.
As previously disclosed,
subject to their respective rights as set forth in the
Intercreditor and Subordination Agreement, dated as of June 25,
2002, by and between the GE Lenders and certain other parties
thereto, the GE Lenders would, upon expiration of the waiver, have
the right to declare all amounts outstanding under the Credit
Agreement to be immediately due and payable.  The failure of
PG&E Corporation to repay this accelerated indebtedness would
entitle the GE Lenders, subject to the Intercreditor Agreement, to
exercise certain remedies, including their rights as secured
parties with respect to their collateral, i.e., the pledged
interests of PG&E Corporation in PG&E National Energy
Group, LLC (NEG, LLC), NEG LLC's pledged interests in PG&E NEG,
and a pledged interest in an interest reserve account, which will
increase from approximately $117 million to $153 million as a
result of the current waiver agreement.
As previously disclosed,
with respect to the $280 million aggregate principal amount of 7.5%
Convertible Subordinated Notes issued by PG&E Corporation
pursuant to an Indenture dated as of June 25, 2002 by and between
PG&E Corporation and U.S. Bank, N.A., as trustee (Notes), if
the obligations under the Credit Agreement were accelerated and
PG&E Corporation failed to pay such accelerated obligations as
described above and such failure continues for 30 days after
receipt of written notice from the trustee or holders of at least
25 percent of the aggregate principal amount of outstanding Notes,
the Notes would also be in default.  Thereupon, and subject to
the subordination provisions of the Indenture, the trustee or the
Note holders would have the right to accelerate the Notes.  A
similar cross-default situation could develop if creditors of
PG&E Corporation's significant subsidiaries, including PG&E
NEG, accelerated $150 million or more in aggregate principal amount
of indebtedness.
During the term of the
current waiver by the GE Lenders, PG&E Corporation intends to
negotiate with the GE Lenders for a further extension of the waiver
and for the elimination of the credit rating maintenance covenant
from the Credit Agreement or for such other amendments as may be
needed to avoid a default of these obligations; however, PG&E
Corporation cannot predict whether, or to what extent, it would be
successful in such efforts.  Current PG&E Corporation cash
balances are insufficient to repay the full amount of its
outstanding debt.
B.        
Extension of PG&E National Energy Group Credit Facility
Expiration Date
As previously disclosed,
the PG&E NEG Credit Agreement currently consists of a Tranche A
facility which expires on August 22, 2003 and a Tranche B facility
which was due to expire on August 22, 2002.  On August 22,
2002, PG&E NEG and the lenders under the PG&E NEG Credit
Agreement entered into an amendment to the PG&E NEG Credit
Agreement that extended the expiration and renewal date of the
Tranche B facility to October 21, 2002, and reduced the commitments
under the Tranche B facility to $500 million from $750
million.  In addition, over the extension term, the amendment
(i) reduced the amount available to borrow under the Tranche B
facility to $431 million (the amount outstanding under the Tranche
B facility as of August 22, 2002) from $750 million and (ii)
reduced the amount available to borrow under the Tranche A facility
to $279 million (the amount outstanding under the Tranche A
facility as of August 22, 2002) from $500 million.  Draws
above these amounts are available with 100 percent lender
approval.  PG&E NEG believes that these restrictions will
not prevent it from meeting its liquidity commitments during the
extension period.
C.       
PG&E NEG  Projected Cash Management--Potential Sources and
Uses of Cash Table
As previously disclosed,
PG&E Corporation's Form 10-Q/A included a table which provided
an estimate of PG&E NEG's potential sources and uses of cash
for the next 12 months based upon assumptions regarding exposure
and negotiations with and payments to counterparties, and calls on
PG&E NEG's liquidity.  (See section entitled "Management's
Discussion and Analysis of Financial Condition and Results of
Operations – Liquidity and Financial Resources" in PG&E
Corporation's Form 10-Q/A.)  As a result of the changes to the
PG&E NEG Credit Agreement described above and PG&E NEG's
ongoing review of its potential sources and uses of cash, PG&E
NEG has revised certain of its projections.  Although the
potential sources and uses of cash in this table represented an
estimate for an entire year, PG&E NEG expects to undertake a
significant debt restructuring effort over the next 60 days. 
Since PG&E Corporation and PG&E NEG are unable to predict
the outcome of such debt restructuring efforts, the table set forth
below covers only the period from August 21, 2002 through October
31, 2002. These projections are calculated as if the 364-day
Tranche B revolving credit facility does not expire prior to
October 31, 2002, and do not include any changes resulting from the
implementation of any debt restructuring, or other sales or
reorganization of existing operations.
These projections
represent sources and uses of cash at various PG&E NEG and
subsidiary entities.  While these entities are subject to
certain restrictions with respect to distributions of cash, in the
aggregate the sources described are expected to be available for
the expected uses in compliance with these restrictions.
PG&E
National Energy Group
Projected Cash Management — Potential
Sources and Uses of Cash
August 21, 2002 through October 31,
2002
($
millions)
Sources of
Cash
Unrestricted cash on hand
at PG&E NEG and various subsidiaries at August 20,
2002
557
Estimated distributions
and dividends from PG&E NEG subsidiaries through October 31,
2002
117
Available capacity under
$500 million two-year revolver expiring August 23, 2003
(1)
-
Available capacity under
$500 million 364-day revolver expiring October 21, 2002
(2)
-
Available capacity under
USGen New England $100 million credit facility
13
Available capacity under
PG&E Gas Transmission, Northwest Corporation (PG&E GTN)
$125 million facility
125
Available capacity under
other credit facilities with $120 million capacity
12
Total Potential Sources of
Cash
824
Total Potential Sources of
Cash excluding PG&E GTN (3)
699
Uses of
Cash
Operating and debt service
costs
49
Capital requirements for
current construction program
272
Scheduled principal
payment under equipment revolver
16
Collateral requirements to
cover current exposure in trading and asset businesses
(4)
203
Equity funding requirement
on La Paloma project due to ratings downgrades
23
Total Potential
Uses
563
Net Liquidity
Position
262
Net Liquidity Position
excluding PG&E GTN (3)
137
(1)
The two-year revolver
facility is currently limited to a total outstanding amount of
$278.7 million unless additional letters of credit are approved by
100 percent of the lenders.
(2)
The 364-day revolver
facility was extended for 60 days on August 22, 2002. 
The amount currently outstanding under this facility is $431
million. No additional draws are permitted without 100 percent
lender approval.
(3)
PG&E GTN debt capacity
is separately identified because recent Federal Energy Regulatory
Commission (FERC) proposed rule changes and certain ring-fencing
restrictions may limit availability to affiliates.
(4)
Covers pipeline transport,
gas storage, and power pool collateral requirements and exposure
for all trading agreements having financial covenants for below
investment grade entities, net of collateral provided from July 31,
2002 through August 20, 2002 ($196 million). This estimate will
change with changes in the prices of the underlying
commodities.
From July 31, 2002 through
August 20, 2002, PG&E NEG posted collateral in the form of cash
or letters of credit totaling approximately $196 million to cover
exposure under guarantees which were triggered as a result of the
ratings actions taken by S&P and Moody's on July 31, 2002 and
August 5, 2002, respectively.  This amount has reduced the
potential use of cash for collateral requirements from the amount
previously disclosed of $399 million.  As identified above,
PG&E NEG estimates its remaining exposure to be approximately
$203 million.
The actual calls on
PG&E NEG's liquidity will depend largely upon counterparties'
reactions to the ratings downgrades, the continued performance of
PG&E NEG companies under the underlying agreements and the
counterparties' other commercial considerations.  In the past,
PG&E NEG has been able to negotiate acceptable arrangements and
reduce its overall exposure to counterparties when PG&E NEG or
its counterparties have faced similar situations. However, PG&E
NEG cannot quantify with any certainty the actual future calls on
its liquidity and there can be no assurance that PG&E NEG could
negotiate acceptable arrangements in the current
circumstances.
On August 8, 2002,
PG&E NEG replaced the ratings triggers contained in $545
million of guarantees for the performance of the contractors
building the Harquahala and Covert power projects with financial
covenants that are consistent with those contained in PG&E
NEG's revolving credit and other loan facilities. These covenants
include requirements to exceed a specified cash flow to fixed
charges ratio and a specified net worth as well as to maintain less
than a specified total debt to total capitalization ratio and are
set forth in PG&E NEG's revolving credit agreement filed as
Exhibit 10.21 to PG&E NEG's 2001 Annual Report on
Form 10-K.  PG&E NEG is currently in compliance with
these covenants.
By letter dated August 7,
2002, Liberty Electric Power, LLC (Liberty) provided notice to
PG&E Energy Trading - Power, L.P. (PGET) that the downgrade of
PG&E NEG constituted a material adverse change under the
tolling agreement between PGET and Liberty and that PGET was
required to post replacement security or an event of default under
the tolling agreement would arise within 10 business days. 
PGET has not posted replacement security.  This notice by
Liberty is not expected to impact other agreements of PG&E
NEG.  PGET had previously provided guarantees from PG&E
NEG and PG&E GTN each in the amount of $150 million. Under the
terms of the tolling agreement, Liberty may issue a termination
notice and immediately cease performance and/or withhold any
payments.  If the agreement is terminated, Liberty must in
good faith calculate the gains, losses, and costs resulting from
the termination and must provide this determination to PGET. 
If PGET disputes the determination, it may submit the matter to
arbitration.  PGET has submitted to Liberty a proposal to
replace the guarantees' ratings triggers with a covenant package
similar to that implemented for PG&E NEG's debt
facilities.  To date, Liberty has neither accepted the
proposal nor sent a notice of termination.
PG&E NEG is continuing
to explore options to raise equity, lower debt, and reduce ongoing
guarantee and working capital requirements.  These options
include, but are not limited to, sales of assets and businesses,
debt restructuring, and reorganization of existing
operations.  The implementation of most of these options would
be subject to obtaining necessary lender approvals and would
require compliance with PG&E NEG's other agreements and
applicable laws and regulations.
D.       
Pacific Gas and Electric Company Bankruptcy
On August 22, 2002, the
California Public Utilities Commission (CPUC) announced that it has
entered into an agreement with the Official Committee of Unsecured
Creditors (OCC) regarding modifications to its current plan of
reorganization for Pacific Gas and Electric Company
(Utility).  Under the terms of the agreement, the CPUC and the
OCC will seek permission from the U.S. Bankruptcy Court for the
Northern District of California (Bankruptcy Court) to amend the
CPUC's plan of reorganization and to reopen the creditor
voting period, which ended on August 12, 2002.  The agreement
also states that the OCC will become a co-proponent of the
CPUC's amended plan and will recommend that creditors vote in
favor of the CPUC's modified plan and state a preference for
it.
Among other modifications,
the CPUC is now proposing to issue preferred stock in lieu of the
common stock previously proposed and to provide for a
"reorganization agreement" under which the CPUC will
establish retail electric rates sufficient for the Utility to
facilitate achieving and maintaining investment grade credit
ratings and to recover in rates (i) the interest and dividends
payable on, and the amortization and redemption of, the securities
to be issued in connection with the CPUC's modified plan and
(ii) certain recoverable costs.
Neither the Utility nor
PG&E Corporation can predict whether the Bankruptcy Court will
approve the CPUC's modified plan of reorganization, or
whether it will affect the current confirmation proceeding
scheduled to commence on November 12, 2002.
Item 7.
Financial Statements, Pro
Forma Financial Information, and Exhibits
Exhibit No.
Description of
Exhibit
99.1
Waiver and Amendment
Agreement, dated August 22, 2002, by and among PG&E
Corporation, PG&E National Energy Group, LLC, Lehman Commercial
Paper Inc. as administrative agent, and the lenders party to the
Amended and Restated Credit Agreement dated as of June 25,
2002
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/ DINYAR
B. MISTRY
DINYAR B.
MISTRY
Vice President and
Controller
Dated:  August 23,
2002
EXHIBIT
INDEX
Exhibit No.
Description of
Exhibit
99.1
Waiver and Amendment
Agreement, dated August 22, 2002, by and among PG&E
Corporation, PG&E National Energy Group, LLC, Lehman Commercial
Paper Inc. as administrative agent, and the lenders party to the
Amended and Restated Credit Agreement dated as of June 25,
2002