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: December 22, 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) 973-700


Item 5.  Other Events

A.     California Public Utilities Commission Proceedings

       1.     Electric Industry Restructuring

On December 20, 1995, the CPUC, by a three to two vote, adopted an 
order providing for the restructuring of the California electric 
industry.  The restructuring contemplated in the order involves (1) 
the simultaneous implementation of a wholesale power pool (the power 
exchange) and direct access for certain customers which would be able 
to contract directly with power generation providers, beginning in 
1998, with direct access phased in for all customers by 2003; (2) 
establishment of an Independent System Operator (ISO) to manage and 
control the transmission system, and (3) recovery of utilities' 
stranded costs through a surcharge, or  competition transition charge 
(CTC), to be imposed on all customers taking retail electric service 
as of or after December 20, 1995.  The order, while effective 
immediately, also provides a 100-day period for legislative review and 
sets out an ambitious schedule calling for various implementing 
filings and comments over the next 30 to 175 days.

Market Structure

The CPUC order requires the three California investor-owned utilities 
(IOUs) to develop a detailed proposal for submission to the Federal 
Energy Regulatory Commission (FERC) for creation of the ISO.  The 
order contemplates that the IOUs will, after approvals from the FERC 
and the CPUC, turn over control, but not ownership, of their 
transmission systems to the ISO.  The ISO will control the power 
dispatch and transmission system and provide transmission service on a 
nondiscriminatory basis.  The order provides specific guidance as to 
the transmission pricing that should be incorporated into the ISO 
proposal to be filed with the FERC.

The order also requires the three IOUs, in conjunction with other 
interested parties, to work together to prepare a joint proposal for 
the creation of a wholesale power exchange (Exchange) which will be 
separate from and independent of the ISO.  The Exchange would manage 
bids for energy and set the market clearing price, and then submit its 
delivery schedule to the ISO for dispatch. The IOUs will be required 
to bid all their generation output into the Exchange and purchase all 
their energy from the Exchange during the five year transition period 
to full direct access.  Participation in the Exchange will be 
voluntary for all other market participants. 

The ISO and Exchange would be separate, independent entities subject 
to FERC jurisdiction.  The order instructs the IOUs to file an 
application to establish the ISO and Exchange with the CPUC and FERC 
within 130 days from the effective date of the CPUC order. 

Market Power

The CPUC concludes that market power issues associated with the 
restructuring of the electric industry mandate that the IOUs divest 
themselves of a substantial portion of their fossil generating assets. 
Accordingly, the order requires that the three IOUs file plans to 
voluntarily divest themselves of at least 50% of their fossil 
generation assets.  The order proposes a financial incentive to the 
IOUs to encourage their voluntary divestiture of 50% of their fossil 
fuel generating assets.  The order also directs the IOUs to file 
comments within 90 days on the feasibility, timing and consequences of 
a corporate restructuring to separate their operations and assets 
between the generation, transmission and distribution functions, 
including the option of a holding company structure.  

Customer Choice

Under the restructuring vision, IOUs would continue to provide 
distribution functions, as well as power production and procurement 
functions for those customers choosing to take bundled service from 
the utilities, all of which would be regulated under a performance-
based ratemaking scheme.  The CPUC order provides that by January 1, 
1998, a representative number of customers from each customer group 
(residential, industrial, commercial and agricultural) will be able 
singly or in an aggregate to participate in the first phase of direct 
access which will last one year, with the balance of customers phased 
in to direct access over a five year transition period.  Ultimately, 
it is contemplated that all customers will have the choice of buying 
power from their utility, entering into hedging contracts for power at 
a set price with a counterparty who will assume the risk of price 
changes at the wholesale level, or buying power directly from power 
generators through direct access bilateral contracts.

CTC/Stranded Costs

The order provides for the collection by the IOUs of their transition 
costs through the imposition of a non-bypassable CTC, which shall not 
increase rates beyond the rate levels in effect as of January 1, 1996. 
Valuation of above market generation assets, contracts and commitments 
(other than qualifying facility (QF) commitments) for purposes of 
determining the CTC will be completed by 2003 with collection of all 
CTC to be completed by 2005, with the exception of QF CTC costs, which 
will be collected for the duration of their respective contracts.  The 
CTC will include the above market portion of the undepreciated book 
value of a utility's fossil fueled generation plant as reflected in 
rate base as of the date of the CPUC order at a reduced return on 
equity equal to 10 percent below the utility's embedded cost of debt, 
regulatory assets and the above market portion of existing purchase 
obligations for generation, including for QFs and nuclear power plant 
settlements.  Utility non-nuclear generating assets will be valued to 
the extent possible for market valuation purposes using market 
mechanisms. 

A transition cost account will be established for each utility.  The 
account will be adjusted annually and after a utility generation asset 
receives its market valuation through sale, spin-off or appraisal.  
Transition costs resulting from the operation of nuclear power plants 
and power purchases under existing wholesale and QF contracts will 
also be recorded in this account.  Transition costs for these 
resources will be calculated annually over the terms of the 
settlements and contracts or until the authorized transition cost 
recovery has been completed.  Transition costs associated with 
regulatory obligations will be included in the account as authorized 
by the CPUC.  If the utility retains ownership of a nuclear facility, 
decommissioning costs will also be included in the transition cost 
account.  

With respect to recovery of costs associated with the Company's Diablo 
Canyon Nuclear Power Plant (Diablo Canyon) and the Diablo Canyon rate 
case settlement, the order confirms that the CPUC will continue to 
honor regulatory commitments regarding the recovery of nuclear  power 
costs.  The order provides that (1) transition costs associated with 
Diablo Canyon will be calculated as the difference between the revised 
Diablo settlement price and the market prices as determined by the 
Exchange price; (2) Diablo Canyon transition costs will be calculated 
over the term of the settlement or until transition cost recovery is 
completed; and (3) the ISO will schedule power from Diablo Canyon on a 
must-take basis, consistent with the Diablo settlement.  The CPUC 
orders the Company to file an application within 100 days with a 
proposal for pricing Diablo Canyon generation at market prices by 2003 
and for completing recovery of Diablo Canyon CTC by 2005 while 
assuring no overall rate increase over January 1, 1996 levels.  The 
CPUC requires that at least one of the alternatives presented in the 
Company's proposal shall be structured in a manner similar to the 
settlement recently proposed by Southern California Edison (SCE) 
concerning rate recovery for its SONGS nuclear plant.  SCE's SONGS 
proposal provides for accelerated recovery of the existing 
undepreciated portion of the SONGS plant, at a reduced return tied to 
the embedded cost of debt, and a performance based ratemaking 
structure for recovery of operating costs and prospective capital 
additions.  The CPUC's requirement reflects its perception that 
disparate ratemaking treatment of Diablo Canyon and SONGS may create 
inequities for ratepayers in different parts of the state.  


Public Purpose Programs

The CPUC order suggests that the California State Legislature adopt a 
non-bypassable "public goods charge" on retail sales to fund research, 
development and demonstration and energy efficiency programs.  The 
CPUC also will support legislation authorizing a separate surcharge to 
fund low-income rate assistance and energy efficiency programs.

Implementation Schedule

The CPUC orders the IOUs to file a series of applications, comments 
and proposals addressing a number of issues.  These include proposals 
to establish performance based ratemaking for generation and 
distribution functions (to be filed within 60 days of the CPUC order), 
proposals concerning ratemaking treatment and CTC recovery for Diablo 
Canyon (to be filed simultaneously with the FERC and the CPUC within 
100 days) and proposals to establish the ISO and Exchange (to be filed 
within 130 days from the effective date of the order).

       2.     1996 Rate Case Proceedings

On December 20, 1995, the California Public Utilities Commission 
(CPUC) issued decisions which authorize for the Company a consolidated 
annual electric revenue decrease of $443 million and an annual gas 
revenue decrease of $210 million.  This represents an electric and gas 
revenue decrease of 5.6% and 9.4%, respectively.  The rate decreases 
will become effective January 1, 1996.  However, copies of the final 
decisions are not yet available and the following information is 
subject to confirmation of the text of the final decisions.  

The CPUC's decision in the Company's 1996 general rate case (GRC) 
authorizes annual electric and gas revenue decreases of approximately 
$300 million and $270 million, respectively, from rates currently in 
effect.  The total $570 million revenue decrease in the GRC decision 
incorporates the rate impact of the previously reported 11.60% return 
on equity authorized by the CPUC in the Company's cost of capital 
proceeding and the resulting 9.49% overall authorized utility rate of 
return for 1996.  The GRC proceeding is held open to consider, among 
other things, the cost effectiveness of the Helms Pumped Storage Plant 
and the Company's response to outages caused by recent storms (see 
Item 5.A.3 below).

The CPUC also issued a decision in the Company's Energy Cost 
Adjustment Clause (ECAC) proceeding.  The decision reduces electric 
revenues by approximately $112 million for the twelve-month forecast 
period beginning January 1, 1996.  The decrease is composed of a 
decrease of approximately $263 million in the ECAC revenue 
requirement, an increase in the Electric Revenue Adjustment Mechanism 
of approximately $157 million, a decrease of approximately $12 million 
under the Annual Energy Rate and an increase of approximately $6 
million under the California Alternative Rates for Energy.  

In addition, the CPUC issued a decision in the Company's Biennial Cost 
Allocation Proceeding (BCAP) authorizing an approximately $65 million 
annual increase in gas revenues, for a two-year period beginning 
January 1, 1996.  The BCAP decision also orders a one-time refund, to 
be made in February 1996, of $161 million, which represents an 
overcollection in certain gas procurement balancing accounts.  

Finally, the CPUC issued a decision in the Annual Earnings Assessment 
Proceeding, which determines the shareholder incentives earned for the 
Company's energy efficiency payments programs.  The decision adopts 
the Company's requested incentive payment of $19.3 million for its 
1994 programs, to be collected in installments over a 10-year period. 
However, because the incentives from the Company's 1991 programs are 
expiring, the net revenue change in 1996 from energy efficiency 
shareholder incentives is an electric decrease of $12.8 million and a 
gas decrease of $3.1 million, which are reflected in the ECAC and BCAP 
decisions discussed above.

       3.     Storm Response Proceedings

As part of the Company's 1996 GRC, the CPUC held hearings in April 
1995 addressing issues relating to customer service and the Company's 
response to service interruptions caused by severe storms in January 
and March of 1995.  A CPUC order issued in September 1995 required the 
Company to implement improvements in its telephone system and public 
information activities and to report on those improvements by  
December 31, 1995.

In early December 1995, the Company's service territory experienced 
storms and hurricane-force winds which caused electrical service 
outages for approximately 1.6 million customers.  On December 19, 
1995, the assigned commissioner in the Company's 1996 GRC issued a 
ruling which orders hearings on various issues arising out of the 
Company's response to those wind storms.  First, the ruling orders the 
Company to include in a report due to be filed on December 31, 1995 an 
explanation of the Company's compliance with the telephone system and 
public information improvements that were to be implemented pursuant 
to a CPUC decision issued in the storm response hearings held in April 
as part of the 1996 GRC, and how these improvements, or lack thereof, 
may have affected the Company's response to the December storms.  The 
order schedules a hearing to address the telephone system and public 
information issues in February 1996, and indicates that the Company 
may be subject to penalties if the CPUC finds that the Company has 
failed to comply with the earlier decision without adequate 
justification.

Second, the ruling orders further proceedings to consider whether the 
Company acted reasonably in maintaining its system to assure integrity 
during storms and other natural disasters and in responding to its 
customers during the December storms.  The order advises parties that 
the hearings will address potential remedies, including reparations to 
customers for reduced reliability, penalties, disallowances and 
damages to customers for property loss.  A prehearing conference has 
been set for January 5, 1996, to establish the scope of this 
proceeding.

       4.     Gas Reasonableness - Transwestern Capacity Costs

In 1992, the Company entered into 15-year gas transportation contracts 
with Transwestern Pipeline Company (Transwestern) for 200 million 
cubic feet per day (MMcf/d) of firm capacity.  Currently, the annual 
demand charges for the Transwestern capacity are approximately $28 
million.

On December 18, 1995, the CPUC issued a decision in the Company's gas 
reasonableness decision for the 1992 record period which concludes 
that it was unreasonable for the Company to subscribe for Transwestern 
capacity.  The decision finds the Company acted unreasonably in 
deciding to undertake its Transwestern subscription at a time when its 
procurement and intrastate transportation roles were being 
significantly reduced and contemporaneously with its decision to go 
forward with its own pipeline expansion to Canada, knowing it would 
thereby strand significant amounts of Southwest capacity.  The Company 
currently holds approximately 1100 MMcf of capacity on El Paso Natural 
Gas Company's pipeline through the end of 1997.  The decision also 
finds that the Company failed to offer evidence showing that the 
benefits of the subscription outweighed the costs during 1992, and 
orders that all costs incurred by the Company for Transwestern 
capacity in that year (approximately $18 million) be disallowed.  The 
decision further orders that costs for the capacity in subsequent 
years of the 15-year contracts be disallowed unless the Company can 
establish by clear and convincing evidence that the benefits of the 
Transwestern capacity exceeded the costs of such capacity in that 
year.  

The Company plans to file in January 1996 a request for rehearing of 
this decision.  In the meantime, the Company continues to pursue the 
resolution of issues concerning past and future Transwestern costs as 
part of its Gas Accord negotiations.

The Company believes that the ultimate resolution of Transwestern 
costs will not have a significant adverse impact on its financial 
position or results of operations.

B.  Legal Proceedings - Antitrust Litigation

As previously disclosed in the Company's Annual Report on Form 10-K 
for the fiscal year ended December 31, 1995, in December 1993, the 
County of Stanislaus and a residential customer of the Company filed a 
complaint in the U.S. District Court, Eastern District of California, 
against the Company and its wholly owned subsidiary, Pacific Gas 
Transmission Company (PGT), as a purported class action on behalf of 
all natural gas customers of the Company during the period of February 
1988 through October 1993.  The complaint alleged that the purchase of 
natural gas in Canada was accomplished in violation of various 
antitrust laws and sought damages of as much as $950 million, before 
trebling. In August 1994, the District Court dismissed plaintiffs' 
antitrust claims, and in September 1994, the plaintiffs filed an 
amended complaint which added Alberta and Southern Gas Co. Ltd. (A&S), 
the Company's wholly owned gas purchasing subsidiary, as a defendant. 
The amended complaint reiterated price fixing claims and also alleged 
that the defendants, through anticompetitive practices, foreclosed 
access to over the PGT pipeline to alternative sources of gas in 
Canada.

On December 18, 1995, the District Court dismissed the plaintiffs' 
amended complaint with prejudice.  In dismissing the lawsuit, the 
District Court determined that plaintiffs were barred from making 
price fixing allegations because gas rates had been reviewed by 
various federal authorities and the CPUC.  The District Court also 
found that plaintiffs were barred from making foreclosure of access 
claims because the volume of imports of gas had been reviewed by 
federal authorities, and the CPUC had actively overseen the allocation 
of pipeline capacity.  Plaintiffs have the right to appeal the 
dismissal to the Court of Appeals.

The Company believes that the ultimate outcome of this matter will not 
have a significant adverse impact on its financial position or results 
of operations. 


                              PACIFIC GAS AND ELECTRIC COMPANY

                                   BRUCE R. WORTHINGTON

                              By ________________________________
                                 BRUCE R. WORTHINGTON
                                 Senior Vice President and 
                                 General Counsel




Dated:  December 22, 1995