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:  May 17, 1995




                PACIFIC GAS AND ELECTRIC COMPANY
     (Exact name of registrant as specified in its charter)



California                    1-2348              94-0742640     

(State or other juris-      (Commission         (IRS Employer
diction of incorporation)   File Number)   Identification Number)

77 Beale Street, P.O.Box 770000, San Francisco, California 94177
       (Address of principal executive offices) (Zip Code)








Registrant's telephone number, including area code:(415) 973-7000






Item 5.  Other Events

A.    California Public Utilities Commission Proceedings - Diablo
      Canyon Rate Case Settlement

On May 12, 1995, the California Public Utilities Commission
(CPUC) issued agenda materials for its May 24, 1995 meeting. 
Included in the agenda materials was a draft decision approving a
proposed settlement agreement providing for a modification to the
pricing provisions of the Diablo Canyon rate case settlement
(Diablo Settlement).  The proposed settlement was executed in
December 1994 by the Company, the CPUC's Division of Ratepayer
Advocates (DRA), the California Attorney General and several
other parties representing energy consumers and submitted to the
CPUC for approval.  The draft decision also denies a request by a
consumer advocacy group for public hearings on the proposed
pricing modification.

Under the modification approved in the draft decision, the price
for power produced by the Company's Diablo Canyon Nuclear Power
Plant (Diablo Canyon) would be reduced from the level set in the
Diablo Settlement as originally adopted in 1988; all other terms
and conditions of the Diablo Settlement would remain unchanged. 
The new prices are shown in the table below.  Based on Diablo
Canyon's current operating performance, the modification would
result in approximately $2.1 billion less revenue over the next
five years, compared to the original pricing provisions of the
Diablo Settlement.


Diablo Canyon Price (cents) per kilowatt-hour


                                              1995   1996  1997   1998   1999
                                                           
Original Settlement Agreement Price*      12.15  12.42  12.70  12.98  13.28
Modified Price                                11.00  10.50  10.00   9.50   9.00


______________
* Assumes 3.5% inflation



After December 31, 1999, the escalating portion of the Diablo
Canyon price would increase using the same formula specified in
the Diablo Settlement.  The modification provides the Company
with the right to reduce the price below the amount specified if
it so chooses.

The draft decision approving the modification adopts the parties'
proposal that the difference between the Company's revenue
requirement under the original Diablo Canyon settlement prices
and the proposed prices be applied to the Company's energy cost
balancing account until the undercollection in that account as of
December 31, 1995 is fully amortized.

The draft decision has not yet been adopted by the CPUC and is
scheduled for CPUC action, which may include modification, at its
regularly scheduled meeting on May 24, 1995.  The draft decision
was released pursuant to state law which requires that agenda
items be made available for review prior to the time they are
proposed to be considered by the CPUC for action.



                         SIGNATURE



Pursuant to the requirements of the Securities Exchange Act of
1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned thereunto duly authorized.


                              PACIFIC GAS AND ELECTRIC COMPANY


                                          
                                 GORDON R. SMITH
                              By ________________________________
                                 GORDON R. SMITH
                                 Vice President and
                                 Chief Financial Officer

Dated:  May 17, 1995