Pacific Gas & Electric (PCG)

Senior Credit Facility

On December 10, 2004, PG&E Corporation entered into a $200 million revolving senior unsecured credit facility, or the senior credit facility, which includes a $50 million sublimit for the issuance of letters of credit and a $100 million sublimit for swing line loans (loans made available on a same day basis and repayable in full within thirty days).  Borrowings and letters of credit under the senior credit facility will be used for working capital and other corporate purposes.  On April 8, 2005, PG&E Corporation entered into an amendment, which became effective on April 12, 2005, to the senior credit facility to extend its term from three years to five years, with all amounts due and payable on December 10, 2009.  In addition, the amendment made other changes to the senior credit facility to conform the covenants, representations and events of default to those in the Utility’s working capital facility, discussed below.

At PG&E Corporation’s request and at the sole discretion of each lender, the senior credit facility may be extended for additional periods.  PG&E Corporation has the right to increase, in one or more requests given no more than once a year, the aggregate facility by up to $100 million provided certain conditions are met.  At March 31, 2005, PG&E Corporation had not made any borrowings or issued any letters of credit under the senior credit facility.

The fees and interest rates PG&E Corporation pays under the senior credit facility vary depending on the Utility’s unsecured debt ratings issued by S&P and Moody’s.  A facility fee based on the total amount of the senior credit facility (regardless of the usage) and a utilization fee based on the average daily amount outstanding under the senior credit facility are payable quarterly in arrears.  The utilization fee is payable during any quarter in which the average daily amount outstanding under the senior credit facility is in excess of 50% of the aggregate amount of the facility.  At PG&E Corporation’s option, any loan under the senior credit facility (other than swing line loans) bears interest at a rate equal to the “applicable margin” plus one of the following indexes: (i) LIBOR or (ii) the base rate (the higher of (a) the administrative agent’s base rate and (b) the Federal Funds rate plus 0.50%).  Each swing line loan bears interest at the applicable margin plus the base rate.  The applicable margin ranges between 0.50% and 1.35% for Eurodollar loans, and 0% and 0.5% for base rate loans.  The facility fee ranges between 0.15% and 0.40%, and the utilization fee ranges between 0.125% and 0.25%.  Interest is payable quarterly in arrears, or earlier for loans with shorter interest periods.

In addition, PG&E Corporation pays a fee for each letter of credit outstanding under the senior credit facility equal to the applicable margin for LIBOR loans to be shared by the lenders.  PG&E Corporation also pays a fronting fee of 0.125% to the issuer of a letter of credit.

The senior credit facility includes usual and customary covenants for credit facilities of this type, including covenants limiting liens, mergers, sales of all or substantially all of PG&E Corporation’s assets and other fundamental changes.  The senior credit facility requires that PG&E Corporation maintain a debt to capitalization ratio of at most 65% as of the end of each fiscal quarter and that PG&E Corporation own, directly or indirectly, at least 80% of the common stock and at least 70% of the voting securities of the Utility.

In the event of a default by PG&E Corporation under the senior credit facility, including cross-defaults relating to specified other debt of PG&E Corporation or any of its significant subsidiaries in excess of $100 million, the lenders may terminate the commitments under the senior credit facility and declare the amounts outstanding, including all accrued interest and unpaid fees, payable immediately.  The lenders may also enforce all rights and remedies created under applicable law, including set-off rights, and all rights and remedies under the senior credit facility.  For events of default relating to insolvency, bankruptcy or receivership, the commitments are automatically terminated and the amounts outstanding become payable immediately.

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Senior Credit Facility

On December 10, 2004, PG&E Corporation entered into a $200 million three-year revolving senior unsecured credit facility, or senior credit facility, with a syndicate of lenders. The aggregate facility of $200 million includes a $50 million sublimit for the issuance of letters of credit and a $100 million sublimit for swing line loans. Borrowings under the senior credit facility and letters of credit will be used primarily for working capital and other corporate purposes. The senior credit facility has a term of three years and all outstanding amounts are due and payable on December 10, 2007. PG&E Corporation can, at any time, repay amounts outstanding in whole or in part. At PG&E Corporation’s request and at the sole discretion of each lender, the senior

Senior Credit Facility

        On December 10, 2004, PG&E Corporation entered into a $200 million three-year revolving senior unsecured credit facility, or senior credit facility, with a syndicate of lenders. The aggregate facility of $200 million includes a $50 million sublimit for the issuance of letters of credit and a $100 million sublimit for swing line loans. Borrowings under the senior credit facility and letters of credit will be used primarily for working capital and other corporate purposes. The senior credit facility has a term of three years and all outstanding amounts are due and payable on December 10, 2007. PG&E Corporation can, at any time, repay amounts outstanding in whole or in part. At PG&E Corporation's request and at the sole discretion of each lender, the senior credit facility may be extended for additional periods. PG&E Corporation has the right to increase, in one or more requests given no more than once a year, the aggregate facility by up to $100 million provided certain conditions are met. At December 31, 2004, PG&E Corporation had not undertaken any borrowings or issued any letters of credit under the senior credit facility.

        Borrowings under the senior credit facility bear interest based, at PG&E Corporation's election, on a Eurodollar rate or a base rate, plus an applicable margin. The base rate equals the higher of the administrative agent-announced base rate or 0.5% above the federal funds rate. Interest is payable by PG&E Corporation at least quarterly, or earlier for loans with shorter interest periods. In addition, a facility fee based on the aggregate facility and a utilization fee based on the average daily amount outstanding under the senior credit facility are payable by PG&E Corporation quarterly in arrears (the utilization fee is levied during any quarter in which the average daily amount outstanding is in excess of 50% of the aggregate facility). The applicable margin, facility fee and utilization fee fluctuate with the Utility's credit rating. The applicable margin ranges between 0.70% and 1.35% for Eurodollar loans and 0% and 0.5% for base rate loans. The facility fee ranges between 0.175% and 0.4% and the utilization fee ranges between 0.125% and 0.25%.

        Amounts outstanding under letter of credit arrangements bear interest at the Eurodollar rate plus applicable margin, as detailed above. Interest, a fronting fee, to be determined between PG&E Corporation and the issuing lender, and normal lender costs of issuing and negotiating letter of credit arrangements are payable quarterly in arrears.

        The senior credit facility includes covenants requiring that PG&E Corporation maintain a ratio of total consolidated debt to total consolidated capitalization of at most 65% and that PG&E Corporation own, directly or indirectly, at least 80% of the common stock and at least 70% of the voting securities of PG&E Corporation.

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