Pacific Gas & Electric (PCG)

EARNINGS FROM OPERATIONS

          On a non-GAAP, earnings-from-operations basis, PG&E Corporation earned $226 million, or $0.56 per share in the first quarter of 2005, compared with $175 million, or $0.41 per share in the first quarter last year.  Pacific Gas and Electric Company contributed $227 million, or $0.56 per share, to earnings from operations in the first quarter, compared with $180 million, or $0.42 per share, in the first quarter of last year. 
          Earnings from operations excludes certain non-operating income and expenses reported in GAAP net income. These items are shown as “Items Impacting Comparability” on the accompanying financial tables, which reconcile earnings from operations with consolidated net income in accordance with GAAP.  For the first quarter, items impacting comparability totaled $0.02 per share, reflecting the net interest expense associated with Chapter 11 claims that are still pending. 
          As disclosed in the Corporation’s quarterly report on Form 10-Q for the quarter, accounting for stock options as an expense in the quarter would have reduced earnings by less than $0.01 per share.