Pacific Gas & Electric (PCG)

Item 1.01 Entry into a Material Definitive Agreement 

            On September 21, 2005, the Board of Directors of PG&E Corporation elected Peter A. Darbee, 52, currently President and Chief Executive Officer of PG&E Corporation, to serve as Chairman of the Boards of Directors of PG&E Corporation and Pacific Gas and Electric Company (Utility) and as Chief Executive Officer and President of PG&E Corporation, effective January 1, 2006, replacing Robert D. Glynn, Jr. who is retiring as Chairman of the Boards of Directors on December 31, 2005, as previously announced.  Mr. Darbee has served as President and Chief Executive Officer of PG&E Corporation since January 1, 2005.  From September 20, 1999 to December 31, 2004, Mr. Darbee served as Senior Vice President and Chief Financial Officer of PG&E Corporation.  He also served as the Treasurer of PG&E Corporation until July 8, 2001. 

            In addition, the Boards of Directors of PG&E Corporation and the Utility elected Thomas B. King, 43, currently Executive Vice President and Chief Operating Officer of the Utility, to serve as President and Chief Executive Officer of the Utility, as a director of the Utility, and as a Senior Vice President of PG&E Corporation, effective January 1, 2006.  Mr. King will succeed Gordon R. Smith, currently President and Chief Executive Officer and a director of the Utility and a Senior Vice President of PG&E Corporation.

            On September 21, 2005, PG&E Corporation and Mr. Smith voluntarily entered into a severance agreement that provides that Mr. Smith will resign from all his positions with the Utility and PG&E Corporation effective December 31, 2005.  The agreement sets forth the terms and conditions of Mr. Smith’s separation from PG&E Corporation.  Among other terms, the agreement provides that Mr. Smith will be entitled to receive a lump sum payment equal to two times his annual base salary plus the amount of his 2005 target bonus under the PG&E Corporation Short-Term Incentive Plan (STIP) for an aggregate amount of $2.8 million.  In consideration of the payments and benefits to be received under the agreement, Mr. Smith agrees to release PG&E Corporation, the Utility, their subsidiaries, officers, directors, and others, from all claims, liabilities or obligations of any kind and nature, whether known or unknown, as specified in the agreement.  Mr. Smith also agrees not to engage in unfair competition against PG&E Corporation and agrees that for a period of one year beginning January 1, 2006, he will not solicit employees, existing or prospective customers, or existing or prospective vendors.