8-K

_____________________________________________________________________________________

UNITED STATES

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: August 7, 2007

(Date of earliest event reported)

Commission File Number	Exact Name of Registrant as specified in its charter	State or Other Jurisdiction of Incorporation or Organization	IRS Employer Identification Number
1-12609	PG&E CORPORATION	California	94-3234914
1-2348	PACIFIC GAS AND ELECTRIC COMPANY	California	94-0742640

PG&E Corporation One Market, Spear Tower Suite 2400 San Francisco, California 94105 (Address of principal executive offices) (Zip Code) (415) 267-7000 (Registrant's telephone number, including area code)	Pacific Gas and Electric Company 77 Beale Street P.O. Box 770000 San Francisco, California 94177 (Address of principal executive offices) (Zip Code) (415) 973-7000 (Registrant's telephone number, including area code)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

o Soliciting Material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)

o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Item 2.02 Results of Operations and Financial Condition

The information included in this Current Report on Form 8-K is being furnished, not filed, pursuant to Item 2.02 of Form 8-K.

On August 7, 2007, PG&E Corporation issued the press release attached hereto as Exhibit 99.1 announcing its financial results and the financial results of its subsidiary, Pacific Gas and Electric Company (Utility), for the quarter ended June 30, 2007.  Additional supplemental information relating to PG&E Corporation and the Utility is attached as Exhibit 99.2.  Much of this information is derived from PG&E Corporation’s and the Utility’s combined Quarterly Report on Form 10-Q for the quarter ended June 30, 2007, to be filed by PG&E Corporation and the Utility with the Securities and Exchange Commission (SEC), and should be read in conjunction with such Form 10-Q.  Exhibits 99.1 and 99.2 to this report also will be posted on the “Investors” section of PG&E Corporation’s website at www.pge-corp.com. 

In order to provide investors with a measure that reflects the underlying financial performance of the business and offer investors a basis on which to compare performance from one period to another, PG&E Corporation presents results and guidance on an “earnings from operations” basis, which excludes items that, in management’s judgment, are not reflective of the normal course of operations.

Item 7.01 Regulation FD Disclosure

The information included in Exhibit 99.2 is incorporated by reference in response to this Item 7.01, and is deemed to be furnished, not filed, pursuant to Item 7.01 of Form 8-K.

Item 9.01 Financial Statements and Exhibits

Exhibits

The following exhibits are being furnished, and are not deemed to be filed:

Exhibit 99.1	PG&E Corporation Press Release Dated August 7, 2007
Exhibit 99.2	Additional Supplemental Information

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SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrants have duly caused this report to be signed on their behalf by the undersigned thereunto duly authorized.

PG&E CORPORATION
By:	/s/ Linda Y.H. Cheng
	Linda Y.H. Cheng Vice President, Corporate Governance and Corporate Secretary
PACIFIC GAS AND ELECTRIC COMPANY
By:	/s/ Linda Y.H. Cheng
	Linda Y. H. Cheng Vice President, Corporate Governance and Corporate Secretary

Dated:                      August 7, 2007

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Exhibit Index

Exhibit 99.1	PG&E Corporation Press Release Dated August 7, 2007
Exhibit 99.2	Additional Supplemental Information

EX-99.1

Exhibit 99.1

Corporate Relations One Market, Spear Tower Suite 2400 San Francisco, CA  94105 1-800-743-6397 NEWS  

FOR IMMEDIATE RELEASE    August 7, 2007

CONTACT: PG&E Corporation

PG&E CORPORATION REPORTS SOLID SECOND QUARTER RESULTS

§   Consolidated net income reported under GAAP was $0.74 per share for PG&E Corporation for the quarter ended June 30, 2007, compared with $0.65 per share in the same quarter of 2006. (All “per share” amounts are presented on a diluted basis.)

§   Guidance for 2007 earnings from operations is reaffirmed in the $2.70-$2.80 per share range.  Guidance for 2008 earnings from operations is reaffirmed at $2.90-$3.00 per share.

(San Francisco) -- PG&E Corporation’s (NYSE: PCG) consolidated net income reported in accordance with generally accepted accounting principles (GAAP) was $269 million, or $0.74 per share, in the second quarter of 2007.  In the same period last year, consolidated net income was $232 million, or $0.65 per share.

"We are on track to achieve our 2007 expectations," said Peter A. Darbee, PG&E Corporation Chairman and CEO.  Darbee also noted, "We’ve entered into several contracts with solar and wind providers that will help us achieve our 20 percent renewable portfolio standard requirement. And, with the launch of our ClimateSmart program, our customers, who historically are some of the most efficient users of electricity and natural gas in the nation, now have the option to reduce the carbon footprint associated with their energy use.  Additionally, we will continue to focus on and invest heavily in infrastructure improvements to provide our customers with safe, reliable service.”

QUARTER-OVER-QUARTER COMPARISON

Earnings from operations for the second quarter of 2007 were $0.10 per share above levels for the same period in 2006.  The quarter-over-quarter difference primarily reflects earnings on a higher capital investment, consistent with early 2007 regulatory approvals of

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Pacific Gas and Electric Company’s 2007 General Rate Case and the most recent Federal Energy Regulatory Commission (FERC) transmission case.

EARNINGS GUIDANCE

PG&E Corporation reaffirmed its previous guidance for earnings from operations in the range of $2.70-$2.80 per share for 2007 and $2.90-$3.00 per share for 2008.

Guidance assumes that the utility earns at least its authorized return on equity while growing its asset base and controlling its costs in line with regulatory approvals, and that the ratemaking capital structure is maintained at 52 percent equity.

PG&E Corporation bases guidance on “earnings from operations” in order to provide a measure that allows investors to compare the underlying financial performance of the business from one period to another, exclusive of items that management believes do not reflect the normal course of operations. Earnings from operations are not a substitute or alternative for consolidated net income presented in accordance with GAAP (see the accompanying financial tables for a reconciliation of guidance of earnings from operations to guidance of consolidated net income in accordance with GAAP).  There was no difference between earnings from operations and consolidated net income as reported in accordance with GAAP for the three month period ended June 30, 2007.  In 2006, consolidated net income was $232 million, or $0.65 per share on a GAAP basis, versus $228 million, or $0.64 per share on an earnings from operations basis.

Supplemental Financial Information:

q   In addition to the financial information accompanying this release, an expanded package of supplemental financial and operational information for the quarter will be furnished to the Securities and Exchange Commission and also will be available shortly on PG&E Corporation’s website (www.pgecorp.com).

Conference Call with the Financial Community to Discuss Second Quarter Results:

q   Today’s call at 11:30 a.m. Eastern time is open to the public on a listen-only basis via web cast.  Please visit www.pgecorp.com for more information and instructions for accessing the web cast. The call will be archived on the website. Also, a toll-free replay will be accessible shortly after the live call through 9:00 p.m. EDT, on August 13, 2007, by dialing 877-690-2091. International callers may dial 402-220-0646.

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 This press release contains forward-looking statements regarding management’s guidance for PG&E Corporation’s 2007 and 2008 earnings per share from operations. These statements are based on current expectations and various assumptions which management believes are reasonable. These statements and assumptions are necessarily subject to various risks and uncertainties, the realization or resolution of which are outside of management's control. Actual results may differ materially. Factors that could cause actual results to differ materially include:

·   the Utility’s ability to timely recover costs through rates;

·   the outcome of regulatory proceedings, including ratemaking proceedings pending at the California Public Utilities Commission (CPUC) and the FERC;

·   the adequacy and price of electricity and natural gas supplies, and the ability of the Utility to manage and respond to the volatility of the electricity and natural gas markets;

·   the effect of weather, storms, earthquakes, fires, floods, disease, other natural disasters, explosions, accidents, mechanical breakdowns, acts of terrorism, and other events or hazards on the Utility’s facilities and operations, its customers, and third parties on which the Utility relies;

·   the potential impacts of climate change on the Utility’s electricity and natural gas business;

·   changes in customer demand for electricity and natural gas resulting from unanticipated population growth or decline, general economic and financial market conditions, changes in technology including the development of alternative energy sources, or other reasons;

·   operating performance of the Utility’s Diablo Canyon nuclear generating facilities (Diablo Canyon), the occurrence of unplanned outages at Diablo Canyon, or the temporary or permanent cessation of operations at Diablo Canyon;

·   the ability of the Utility to recognize benefits from its initiatives to improve its business processes and customer service;

·   the ability of the Utility to timely complete its planned capital investment projects;

·   the impact of changes in federal or state laws, or their interpretation, on energy policy and the regulation of utilities and their holding companies;

·   the impact of changing wholesale electric or gas market rules, including the new rules of the California Independent System Operator to restructure the California wholesale electricity market;

·   how the CPUC administers the conditions imposed on PG&E Corporation when it became the Utility’s holding company;

·   the extent to which PG&E Corporation or the Utility incur costs and liabilities in connection with litigation that are not recoverable through rates, from third parties, or through insurance recoveries;

·   the ability of PG&E Corporation and/or the Utility to access capital markets and other sources of credit;

·   the impact of environmental laws and regulations and the costs of compliance and remediation;

·   the effect of municipalization, direct access, community choice aggregation, or other forms of bypass; and

·   other factors and risks discussed in PG&E Corporation’s and the Utility’s reports filed with the Securities and Exchange Commission.

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PG&E Corporation

Condensed Consolidated Statements of Income

(in millions, except per share amounts)

	(Unaudited)
	Three Months Ended						Six Months Ended
(in millions, except per share amounts)	June 30,						June 30,
	2007			2006			2007			2006
Operating Revenues
Electric	$	2,359		$	2,214		$	4,534		$	4,077
Natural gas		828			803			2,009			2,088
Total operating revenues		3,187			3,017			6,543			6,165
Operating Expenses
Cost of electricity		884			781			1,607			1,311
Cost of natural gas		396			368			1,150			1,241
Operating and maintenance		922			982			1,842			1,844
Depreciation, amortization, and decommissioning		430			421			860			835
Total operating expenses		2,632			2,552			5,459			5,231
Operating Income		555			465			1,084			934
Interest income		37			41			89			64
Interest expense		(185	)		(164	)		(375	)		(318	)
Other income, net		10			28			14			28
Income Before Income Taxes		417			370			812			708
Income tax provision		148			138			287			262
Net Income	$	269		$	232		$	525		$	446
Weighted Average Common Shares Outstanding, Basic		350			346			350			345
Net Earnings Per Common Share, Basic	$	0.75		$	0.65		$	1.46		$	1.26
Net Earnings Per Common Share, Diluted	$	0.74		$	0.65		$	1.45		$	1.25
Dividends Declared Per Common Share	$	0.36		$	0.33		$	0.72		$	0.66

Source:  PG&E Corporation’s and Pacific Gas and Electric Company’s Condensed Consolidated Financial Statements and Notes thereto included in PG&E Corporation’s and Pacific Gas and Electric Company's combined Quarterly Report on Form 10-Q for the quarter ended June 30, 2007.

Reconciliation of PG&E Corporation’s Earnings from Operations to Consolidated Net Income in Accordance with Generally Accepted Accounting Principles (“GAAP”)

Second Quarter and Year-to-Date, 2007 vs. 2006

(in millions, except per share amounts)

	Three months ended June 30,										Six months ended June 30,
	Earnings (Loss)					Earnings (Loss) per Common Share (Diluted)					Earnings (Loss)					Earnings (Loss) per Common Share (Diluted)
	2007		2006			2007		2006			2007		2006			2007		2006
PG&E Corporation Earnings from Operations (1)	$	269	$	228		$	0.74	$	0.64		$	525	$	442		$	1.45	$	1.24
Items Impacting Comparability (2)
Scheduling Coordinator Cost Recovery (3)		-		22			-		0.06			-		22			-		0.06
Environmental Remediation Liability (4)		-		(18	)		-		(0.05	)		-		(18	)		-		(0.05	)
Total		-		4			-		0.01			-		4			-		0.01
PG&E Corporation Earnings on a GAAP basis	$	269	$	232		$	0.74	$	0.65		$	525	$	446		$	1.45	$	1.25

1.	Earnings from operations exclude items impacting comparability.
2.	Items impacting comparability reconcile earnings from operations with consolidated net income as reported in accordance with GAAP.  For the three and six months ended June 30, 2007, PG&E Corporation did not have any items impacting comparability to report.
3.	Items impacting comparability for the three and six months ended June 30, 2006 reflect the recognition of approximately $22 million ($0.06 per common share), after tax, of a regulatory asset related to certain scheduling coordinator (“SC”) costs incurred from 1998 to 2005 and a reversal of a reserve for SC costs under the Scheduling Coordinator Services (“SCS”) Tariff offset by SCS refunds to the existing wholesale transmission customers.
4.	Items impacting comparability for the three and six months ended June 30, 2006 reflect an increase of approximately $18 million ($0.05 per common share), after-tax, in the estimated cost of environmental remediation associated with the Utility’s gas compressor station located near Hinkley, California as a result of changes in the California Regional Water Quality Control Board’s imposed remediation levels.

Reconciliation of Pacific Gas and Electric Company’s Earnings from Operations to Consolidated Net Income in Accordance with GAAP

Second Quarter and Year-to-Date, 2007 vs. 2006

(in millions)

	Three months ended June 30,					Six months ended June 30,
	Earnings (Loss)					Earnings (Loss)
	2007		2006			2007		2006
Pacific Gas and Electric Company   Earnings from Operations (1)	$	270	$	223		$	528	$	437
Items Impacting Comparability (2)
Scheduling Coordinator Cost Recovery (3)		-		22			-		22
Environmental Remediation Liability (4)		-		(18	)		-		(18	)
Total		-		4			-		4
Pacific Gas and Electric Company Earnings   on a GAAP basis	$	270	$	227		$	528	$	441

1.	Earnings from operations exclude items impacting comparability.
2.	Items impacting comparability reconcile earnings from operations with consolidated net income as reported in accordance with GAAP.  For the three and six months ended June 30, 2007, Pacific Gas and Electric Company did not have any items impacting comparability to report.
3.	Items impacting comparability for the three and six months ended June 30, 2006 reflect the recognition of approximately $22 million, after tax, of a regulatory asset related to certain SC costs incurred from 1998 to 2005 and a reversal of a reserve for SC costs under the SCS Tariff offset by SCS refunds to the existing wholesale transmission customers.
4.	Items impacting comparability for the three and six months ended June 30, 2006 reflect an increase of approximately $18 million, after-tax, in the estimated cost of environmental remediation associated with the Utility’s gas compressor station located near Hinkley, California as a result of changes in the California Regional Water Quality Control Board’s imposed remediation levels.

PG&E Corporation Earnings per Common Share ("EPS") from Operations

Second Quarter 2007 vs. Second Quarter 2006

 ($/Share, Diluted)

Q2 2006 EPS from Operations (1)	$	0.64
Rate base revenue increase		0.09
Gas transmission revenue		0.02
Miscellaneous items		0.01
Environmental remediation		(0.01	)
Share variance		(0.01	)
Q2 2007 EPS from Operations (1)	$	0.74

Year-to-Date 2007 vs. Year-to-Date 2006

 ($/Share, Diluted)

Q2 2006 YTD EPS from Operations (1)	$	1.24
Rate base revenue increase		0.16
Gas transmission revenue		0.02
Storm costs (2)		0.02
Miscellaneous items		0.03
Environmental remediation		(0.01	)
Share variance		(0.01	)
Q2 2007 YTD EPS from Operations (1)	$	1.45

1.	For a reconciliation of EPS from operations to EPS on a GAAP basis, see table titled Reconciliation of PG&E Corporation’s Earnings from Operations to Consolidated Net Income in Accordance with GAAP.
2.	Costs incurred in 2006 with lower level of costs in 2007.

PG&E Corporation EPS Guidance

2007 EPS Guidance

	Low		High
EPS Guidance on an Earnings from Operations Basis	$	2.70	$	2.80
Estimated Items Impacting Comparability	$	0.00	$	0.00
EPS Guidance on a GAAP Basis	$	2.70	$	2.80

2008 EPS Guidance

	Low		High
EPS Guidance on an Earnings from Operations Basis	$	2.90	$	3.00
Estimated Items Impacting Comparability	$	0.00	$	0.00
EPS Guidance on a GAAP Basis	$	2.90	$	3.00

Management's statements regarding 2007 and 2008 guidance for earnings from operations per common share for PG&E Corporation constitute forward-looking statements that are based on current expectations and assumptions which management believes are reasonable, including that the Utility earns at least its authorized rate of return on equity while growing its asset base and controlling its costs in line with regulatory approvals, and that the ratemaking capital structure is maintained at 52 percent equity.  These statements and assumptions are necessarily subject to various risks and uncertainties. Actual results may differ materially. Factors that could cause actual results to differ materially include:

· the Utility’s ability to timely recover costs through rates;

· the outcome of regulatory proceedings, including ratemaking proceedings pending at the California Public Utilities Commission (“CPUC”) and the Federal Energy Regulatory Commission (“FERC”);

· the adequacy and price of electricity and natural gas supplies, and the ability of the Utility to manage and respond to the volatility of the electricity and natural gas markets;

· the effect of weather, storms, earthquakes, fires, floods, disease, other natural disasters, explosions, accidents, mechanical breakdowns, acts of terrorism, and other events or hazards on the Utility’s facilities and operations, its customers and third parties on which the Utility relies;

· the potential impacts of climate change on the Utility’s electricity and natural gas businesses;

· changes in customer demand for electricity and natural gas resulting from unanticipated population growth or decline, general economic and financial market conditions, changes in technology, including the development of alternative energy sources, or other reasons;

· operating performance of the Utility’s Diablo Canyon nuclear generating facilities (“Diablo Canyon”), the occurrence of unplanned outages at Diablo Canyon, or the temporary or permanent cessation of operations at Diablo Canyon;

· the ability of the Utility to recognize benefits from its initiatives to improve its business processes and customer service;

· the ability of the Utility to timely complete its planned capital investment projects;

· the impact of changes in federal or state laws, or their interpretation, on energy policy and the regulation of utilities and their holding companies;

· the impact of changing wholesale electric or gas market rules, including new rules of the California Independent System Operator to restructure the California wholesale electricity market;

· how the CPUC administers the conditions imposed on PG&E Corporation when it became the Utility’s holding company;

· the extent to which PG&E Corporation or the Utility incur costs and liabilities in connection with litigation that are not recoverable through rates, from third parties, or through insurance recoveries;

· the ability of PG&E Corporation and/or the Utility to access capital markets and other sources of credit;

· the impact of environmental laws and regulations and the costs of compliance and remediation;

· the effect of municipalization, direct access, community choice aggregation, or other forms of bypass; and

· other risks and factors disclosed in PG&E Corporation’s and Pacific Gas and Electric Company’s SEC reports.

EX-99.2

Exhibit 99.2

Table 1: PG&E Corporation Business Priorities 2007-2011

1.    Advance business transformation

2.    Provide attractive shareholder returns

3.    Increase investment in utility infrastructure

4.    Implement an effective energy procurement plan

5.    Improve reputation through more effective communications

6.    Evaluate the evolving industry and related investment opportunities

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Table 2: Reconciliation of PG&E Corporation’s Earnings from Operations to Consolidated Net Income in Accordance with Generally Accepted Accounting Principles ("GAAP")

Second Quarter and Year-to-Date, 2007 vs. 2006

(in millions, except per share amounts)

	Three months ended June 30,										Six months ended June 30,
	Earnings (Loss)					Earnings (Loss) per Common Share (Diluted)					Earnings (Loss)					Earnings (Loss) per Common Share (Diluted)
	2007		2006			2007		2006			2007		2006			2007		2006
PG&E Corporation Earnings from Operations (1)	$	269	$	228		$	0.74	$	0.64		$	525	$	442		$	1.45	$	1.24
Items Impacting     Comparability (2)
Scheduling Coordinator Cost Recovery (3)		-		22			-		0.06			-		22			-		0.06
Environmental Remediation Liability (4)		-		(18	)		-		(0.05	)		-		(18	)		-		(0.05	)
Total		-		4			-		0.01			-		4			-		0.01
PG&E Corporation Earnings on a GAAP basis	$	269	$	232		$	0.74	$	0.65		$	525	$	446		$	1.45	$	1.25

1.	Earnings from operations exclude items impacting comparability.
2.	Items impacting comparability reconcile earnings from operations with consolidated net income as reported in accordance with GAAP.  For the three and six months ended June 30, 2007, PG&E Corporation did not have any items impacting comparability to report.
3.	Items impacting comparability for the three and six months ended June 30, 2006 reflect the recognition of approximately $22 million ($0.06 per common share), after tax, of a regulatory asset related to certain scheduling coordinator ("SC") costs incurred from 1998 to 2005 and a reversal of a reserve for SC costs under the Scheduling Coordinator Services ("SCS") Tariff offset by SCS refunds to the existing wholesale transmission customers.
4.	Items impacting comparability for the three and six months ended June 30, 2006 reflect an increase of approximately $18 million ($0.05 per common share), after-tax, in the estimated cost of environmental remediation associated with the Utility’s gas compressor station located near Hinkley, California as a result of changes in the California Regional Water Quality Control Board’s imposed remediation levels.

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Table 3: Reconciliation of Pacific Gas and Electric Company’s Earnings from Operations to Consolidated Net Income in Accordance with GAAP

Second Quarter and Year-to-Date, 2007 vs. 2006

(in millions)

	Three months ended June 30,					Six months ended June 30,
	Earnings (Loss)					Earnings (Loss)
	2007		2006			2007		2006
Pacific Gas and Electric Company Earnings from Operations (1)	$	270	$	223		$	528	$	437
Items Impacting Comparability (2)
Scheduling Coordinator Cost Recovery (3)		-		22			-		22
Environmental Remediation Liability (4)		-		(18	)		-		(18	)
Total		-		4			-		4
Pacific Gas and Electric Company Earnings on a GAAP basis	$	270	$	227		$	528	$	441

1.	Earnings from operations exclude items impacting comparability.
2.	Items impacting comparability reconcile earnings from operations with consolidated net income as reported in accordance with GAAP.  For the three and six months ended June 30, 2007, Pacific Gas and Electric Company did not have any items impacting comparability to report.
3.	Items impacting comparability for the three and six months ended June 30, 2006 reflect the recognition of approximately $22 million, after tax, of a regulatory asset related to certain SC costs incurred from 1998 to 2005 and a reversal of a reserve for SC costs under the SCS Tariff offset by SCS refunds to the existing wholesale transmission customers.
4.	Items impacting comparability for the three and six months ended June 30, 2006 reflect an increase of approximately $18 million, after-tax, in the estimated cost of environmental remediation associated with the Utility’s gas compressor station located near Hinkley, California as a result of changes in the California Regional Water Quality Control Board’s imposed remediation levels.

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Table 4: PG&E Corporation Earnings per Common Share ("EPS") from Operations

Second Quarter 2007 vs. Second Quarter 2006

 ($/Share, Diluted)

Q2 2006 EPS from Operations (1)	$	0.64
Rate base revenue increase		0.09
Gas transmission revenue		0.02
Miscellaneous items		0.01
Environmental remediation		(0.01	)
Share variance		(0.01	)
Q2 2007 EPS from Operations (1)	$	0.74

Year-to-Date 2007 vs. Year-to-Date 2006

 ($/Share, Diluted)

Q2 2006 YTD EPS from Operations (1)	$	1.24
Rate base revenue increase		0.16
Gas transmission revenue		0.02
Storm costs (2)		0.02
Miscellaneous items		0.03
Environmental remediation		(0.01	)
Share variance		(0.01	)
Q2 2007 YTD EPS from Operations (1)	$	1.45

1.	See Table 2 for a reconciliation of EPS from operations to EPS on a GAAP basis.
2.	Costs incurred in 2006 with lower level of costs in 2007.

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Table 5: PG&E Corporation Share Statistics

Second Quarter 2007 vs. Second Quarter 2006

(in millions, except per share amounts)

	Second Quarter  2007		Second Quarter  2006		% Change
Common Stock Data
Book Value per share – end of period (1)	$	22.09	$	20.40		8.28	%
Weighted average common shares outstanding, basic		350		346		1.16	%
Employee stock-based compensation		2		3		(33.33	)%
Weighted average common shares outstanding, diluted		352		349		0.86	%
9.5% Convertible Subordinated Notes (participating securities)		19		19		-
Weighted average common shares outstanding and participating securities, diluted		371		368		0.82	%

1.    Common shareholders’ equity per common share outstanding at period end.

Source:    PG&E Corporation’s Condensed Consolidated Financial Statements and Notes thereto included in PG&E Corporation’s and Pacific Gas and Electric Company's combined Quarterly Report on Form 10-Q for the quarter ended June 30, 2007.

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Table 6: Operational Performance Metrics

Second Quarter Actual 2007 vs. Targets 2007

			2007
	Percentage Weight (1)		Q2 YTD Actual		Q2 YTD Target		EOY Target
1. Earnings from operations (in millions) (Earnings from ongoing core operations)		50%	$	525	See note (2)		See note (2)
2. J.D. Power Customer Satisfaction Index (Composite of J.D. Power residential and business customer surveys)		20%		693		678		676
3. Business Transformation Performance (Composite of five Transformation metrics)		20%		0.98		1.00		1.00
4. Employee Engagement Premier Survey (Measurement of employee engagement at PG&E)		5%	See note (3)		N/A			66%
5. Safety Performance (Measurement of occupational injury or illness based on OSHA Recordables)		5%		4.36		4.48		4.50

1.	Represents weighting used in calculating PG&E Corporation Short-Term Incentive Plan performance for management employees.
2.	Internal target not publicly disclosed but is consistent with publicly disclosed guidance for 2007 EPS from operations of $2.70 - $2.80.
3.	Annual survey results will be available in early February 2008.

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 DEFINITIONS OF 2007 OPERATIONAL PERFORMANCE METRICS FROM TABLE 6:

1.	Earnings from Operations:
	Earnings from operations measures PG&E Corporation’s earnings power from ongoing core operations.  It allows investors to compare the underlying financial performance of the business from one period to another, exclusive of items that management believes do not reflect the normal course of operations (items impacting comparability).  The measurement is not in accordance with GAAP.  For a reconciliation of earnings from operations to consolidated net income in accordance with GAAP, see Tables 2 and 3 above. The 2007 target for earnings from operations is based on the Utility’s 2007 authorized return on equity.  This target is not publicly reported but is consistent with PG&E Corporation’s publicly disclosed guidance range provided for 2007 EPS from operations of $2.70-$2.80.
2.	J.D. Power Customer Satisfaction Index:
	Pacific Gas and Electric Company measures residential and business customer satisfaction with annual industry-wide surveys conducted by J.D. Power and Associates, as well as with proprietary studies using the same survey methodology in interim periods.  The overall customer satisfaction metric represents the year-to-date average of the residential and business overall customer satisfaction scores from both the J.D. Power-administered and proprietary surveys. The metric is calculated by first combining the available residential and business satisfaction scores (weighted 60% and 40%, respectively) in each period surveyed and then averaging all available composite scores for the year-to-date metric value.
3.	Business Transformation Performance:
	The Business Transformation (BT) index is comprised of five measurement points that define success in achieving key BT operational, financial, and post-BT implementation objectives.  These five measurement points are: a.             Overall BT cost performance in comparison to budgeted amounts; b.             Overall BT benefit performance in comparison to planned/budgeted amounts; c.             New business customer connection performance improvement for cycle time and number of customer commitments met;  d.             SmartMeterTM project performance for number of meters installed and activated; and e.             BT Foundational release schedule and scope success. The measurement points are individually scored on an index scaled from 0 to 2.  These scores then are averaged with equal weighting to calculate the overall BT performance index score.
4.	Employee Engagement Premier Survey:
	The employee engagement premier survey is designed around 15 key drivers of employee engagement.  The average overall employee engagement score provides a comprehensive metric that is derived by averaging the percent favorable responses from all 40 core survey items (all fall into one of the 15 key drivers).
5.	Safety Performance:
	An OSHA Recordable is an occupational (job-related) injury or illness that requires medical treatment beyond first aid, or results in work restrictions, death, or loss of consciousness.  The OSHA Recordable Rate is the number of OSHA Recordables per 200,000 hours worked (a rule of thumb is that the OSHA Recordable Rate represents the number of OSHA Recordables per year for every 100 employees).

7

Table 7: Pacific Gas and Electric Company Operating Statistics

Second Quarter and Year-to-Date, 2007 vs. 2006

	Three Months Ending June 30,						Six Months Ending June 30,
	2007			2006			2007			2006
Electric Sales (in millions kWh)
Residential		6,973			7,100			14,939			14,841
Commercial		8,399			8,129			16,293			15,935
Industrial		3,764			3,748			7,140			7,382
Agricultural		1,602			791			2,227			1,316
BART, public street and highway lighting		202			200			408			405
Other electric utilities		1			3			2			6
Sales from Energy Deliveries		20,941			19,971			41,009			39,885
Total Electric Customers at June 30								5,097,571			5,039,918
Bundled Gas Sales (in millions MCF)
Residential		38			44			125			123
Commercial		15			18			40			43
Total Bundled Gas Sales		53			62			165			166
Transportation Only		112			105			255			220
Total Gas Sales		165			167			420			386
Total Gas Customers at June 30								4,253,217			4,206,708
Sources of Electric Energy (in millions kWh)
Utility Generation
Nuclear		4,034			3,799			8,943			8,604
Hydro (net)		1,548			4,222			3,691			7,960
Fossil		109			141			234			407
Total Utility Generation		5,691			8,162			12,868			16,971
Purchased Power
Qualifying Facilities		4,137			4,121			8,006			7,711
Irrigation Districts		670			1,797			1,282			3,452
Other Purchased Power		370			650			539			856
Spot Market Purchases/Sales, net		4,610			1,125			7,281			1,162
Total Purchased Power (1)		9,787			7,693			17,108			13,181
Delivery from DWR		4,764			4,261			10,054			9,057
Delivery to Direct Access Customers		1,724			1,900			3,400			3,881
Others (includes energy loss)		(1,025	)		(2,045	)		(2,421	)		(3,205	)
Total Electric Energy Delivered		20,941			19,971			41,009			39,885
Diablo Canyon Performance
Overall capacity factor (including refuelings)		83	%		79	%		93	%		91	%
Refueling outage period	4/30/07-5/29/07			4/17/06-5/25/06			4/30/07-5/29/07			4/17/06-5/25/06
Refueling outage duration during the period (days)		29.8			38.8			29.8			38.8

1. For the three months ended June 30, 2007 and 2006, Total Purchased Power is net of Spot Market Sales of 842 million kWh and 2,609 million kWh, respectively.  For the six months ended June 30, 2007 and 2006, Total Purchased Power is net of Spot Market Sales of 1,575 million kWh and 5,077 million kWh, respectively.

8

Table 8: PG&E Corporation EPS Guidance

2007 EPS Guidance

	Low		High
EPS Guidance on an Earnings from Operations Basis	$	2.70	$	2.80
Estimated Items Impacting Comparability	$	0.00	$	0.00
EPS Guidance on a GAAP Basis	$	2.70	$	2.80

2008 EPS Guidance

	Low		High
EPS Guidance on an Earnings from Operations Basis	$	2.90	$	3.00
Estimated Items Impacting Comparability	$	0.00	$	0.00
EPS Guidance on a GAAP Basis	$	2.90	$	3.00

The EPS guidance for 2007 and 2008 are forward-looking statements that are based on various assumptions that may prove to be inaccurate.  Actual results may differ materially.  For a discussion of the factors that may affect future results, see the factors listed in Table 10, the discussion of risk factors in PG&E Corporation’s and Pacific Gas and Electric Company's combined Quarterly Report on Form 10-Q for the quarter ended June 30, 2007, and the discussion of risk factors in PG&E Corporation's and Pacific Gas and Electric Company's combined Annual Report on Form 10-K for the year ended December 31, 2006.

9

Table 9: Rate Base - Pacific Gas and Electric Company

	2006		2007		2008
	Recorded		Estimated		Estimated
Total Weighted Average Rate Base (in billions)	$	15.9	$	17.0	$	18.7

The estimates of rate base for 2007 and 2008 and the forecast of capital expenditures on which the estimates are based, are forward-looking statements that are subject to various risks and uncertainties, including whether the forecasted expenditures will be made within the time periods assumed.  Actual results may differ materially.  For a discussion of the factors that may affect future results, see the factors listed in Table 10, the discussion of risk factors in PG&E Corporation’s and Pacific Gas and Electric Company's combined Quarterly Report on Form 10-Q for the quarter ended June 30, 2007, and the discussion of risk factors in PG&E Corporation's and Pacific Gas and Electric Company's combined Annual Report on Form 10-K for the year ended December 31, 2006.

10

Table 10: General Earnings Sensitivities for 2007 and 2008

PG&E Corporation and Pacific Gas and Electric Company

Variable	Description of Change	Estimated Earnings Impact for 2007	Estimated Earnings Impact for 2008
Rate base	+/- $100 million change in rate base (1)	+/- $6 million	+/- $6 million
Return on equity (ROE)	+/- 0.1% change in earned ROE	+/- $9 million	+/- $10 million
Share count	+/- 1% change in average shares outstanding	-/+ $0.03 per share	-/+ $0.03 per share
Revenues	+/- $7 million change in revenues (pre-tax), including Electric Transmission and California Gas Transmission	+/- $0.01 per share	+/- $0.01 per share

1.    Assumes earning 11.35% on equity portion (52%).

11

DISCUSSION RELATED TO TABLES 8, 9, and 10:

Management's statements regarding 2007 and 2008 guidance for earnings from operations per common share for PG&E Corporation, estimated rate base for 2007 and 2008, and general sensitivities for 2007 and 2008 earnings, constitute forward-looking statements that are based on current expectations and assumptions which management believes are reasonable, including that the Utility earns at least its authorized rate of return on equity while growing its asset base and controlling its costs in line with regulatory approvals, and that the ratemaking capital structure is maintained at 52 percent equity. These statements and assumptions are necessarily subject to various risks and uncertainties. Actual results may differ materially. Factors that could cause actual results to differ materially include:

· the Utility’s ability to timely recover costs through rates;

· the outcome of regulatory proceedings, including ratemaking proceedings pending at the California Public Utilities Commission ("CPUC") and the Federal Energy Regulatory Commission, ("FERC");

· the adequacy and price of electricity and natural gas supplies, and the ability of the Utility to manage and respond to the volatility of the electricity and natural gas markets;

· the effect of weather, storms, earthquakes, fires, floods, disease, other natural disasters, explosions, accidents, mechanical breakdowns, acts of terrorism, and other events or hazards on the Utility’s facilities and operations, its customers and third parties on which the Utility relies;

· the potential impacts of climate change on the Utility’s electricity and natural gas businesses;

· changes in customer demand for electricity and natural gas resulting from unanticipated population growth or decline, general economic and financial market conditions, changes in technology, including the development of alternative energy sources, or other reasons;

· operating performance of the Utility’s Diablo Canyon nuclear generating facilities (“Diablo Canyon”), the occurrence of unplanned outages at Diablo Canyon, or the temporary or permanent cessation of operations at Diablo Canyon;

· the ability of the Utility to recognize benefits from its initiatives to improve its business processes and customer service;

· the ability of the Utility to timely complete its planned capital investment projects;

· the impact of changes in federal or state laws, or their interpretation, on energy policy and the regulation of utilities and their holding companies;

· the impact of changing wholesale electric or gas market rules, including new rules of the California Independent System Operator to restructure the California wholesale electricity market;

· how the CPUC administers the conditions imposed on PG&E Corporation when it became the Utility’s holding company;

· the extent to which PG&E Corporation or the Utility incur costs and liabilities in connection with litigation that are not recoverable through rates, from third parties, or through insurance recoveries;

· the ability of PG&E Corporation and/or the Utility to access capital markets and other sources of credit;

· the impact of environmental laws and regulations and the costs of compliance and remediation;

· the effect of municipalization, direct access, community choice aggregation, or other forms of bypass; and

· other risks and factors disclosed in PG&E Corporation’s and Pacific Gas and Electric Company’s SEC reports.

12

Table 11: Cash Flow Sources and Uses

Year-to-Date 2007

PG&E Corporation

(in millions)

Cash and Cash Equivalents, December 31, 2006	$	456
Sources of Cash
Cash from operations	$	1,236
Net proceeds from sale of assets		8
Net proceeds from issuance of commercial paper		109
Net proceeds from issuance of long-term debt		690
Common stock issued		89
Other		14
	$	2,146
Uses of Cash
Capital expenditures	$	1,320
Increase in restricted cash		13
Investments in and proceeds from nuclear decommissioning trust, net		58
Repayments under credit facilities		300
Rate reduction bonds matured		143
Energy recovery bonds matured		160
Common stock dividends paid		242
	$	2,236
Cash and Cash Equivalents, June 30, 2007	$	366

Source:  PG&E Corporation’s Condensed Consolidated Statements of Cash Flows included in PG&E Corporation’s and Pacific Gas and Electric Company’s combined Quarterly Report on Form 10-Q for the quarter ended June 30, 2007.

13

Table 12: PG&E Corporation’s and Pacific Gas and Electric Company’s Consolidated Cash Position

Second Quarter 2007 vs. Second Quarter 2006

(in millions)

	2007		2006		Change
Cash Flow from Operating Activities (YTD June 30)
PG&E Corporation	$	1	$	30	$	(29	)
Pacific Gas and Electric Company		1,235		1,510		(275	)
	$	1,236	$	1,540	$	(304	)
Consolidated Cash Balance (at June 30)
PG&E Corporation	$	288	$	256	$	32
Pacific Gas and Electric Company		78		165		(87	)
	$	366	$	421	$	(55	)
Consolidated Restricted Cash Balance (at June 30)
PG&E Corporation	$	-	$	-	$	-
Pacific Gas and Electric Company 1		1,445		1,498		(53	)
	$	1,445	$	1,498	$	(53	)

1.    Includes $17 million of restricted cash classified as Other Noncurrent Assets – Other at June 30, 2007.

Source:  PG&E Corporation’s and Pacific Gas and Electric Company’s Condensed Consolidated Financial Statements included in PG&E Corporation’s and Pacific Gas and Electric Company’s combined Quarterly Reports on Form 10-Q for the quarters ended June 30, 2007 and June 30, 2006.

14

Table 13: PG&E Corporation’s and Pacific Gas and Electric Company’s Long-Term Debt

Second Quarter 2007 vs. Year-End 2006

(in millions)

	Balance at
	June 30, 2007			December 31, 2006
PG&E Corporation
Convertible subordinated notes, 9.50%, due 2010	$	280		$	280
Less: current portion(1)		-			(280	)
		280			-
Utility
Senior notes:
3.60% to 6.05% bonds, due 2009-2037		5,800			5,100
Unamortized discount, net of premium		(20	)		(16	)
Total senior notes		5,780			5,084
Pollution control bond loan agreements, variable rates(2), due 2026(3)		614			614
Pollution control bond loan agreement, 5.35%, due 2016		200			200
Pollution control bond loan agreements, 4.75%, due 2023		345			345
Pollution control bond loan agreements, variable rates(4), due 2016-2026		454			454
Other		-			1
Less: current portion		-			(1	)
Long-term debt, net of current portion		7,393			6,697
Total consolidated long-term debt, net of current portion	$	7,673		$	6,697

1.	Since no holders of the Convertible Subordinated Notes exercised the one-time right to require PG&E Corporation to repurchase the Convertible Subordinated Notes on June 30, 2007, PG&E Corporation has classified the Convertible Subordinated Notes as a noncurrent liability (in Noncurrent Liabilities - Long-Term Debt) in PG&E Corporation’s Condensed Consolidated Balance Sheets as of June 30, 2007.
2.	At June 30, 2007, interest rates on these loans ranged from 3.84% to 3.91%.
3.	These bonds are supported by $620 million of letters of credit which expire on February 24, 2012.  Although the stated maturity date is 2026, the bonds will remain outstanding only if the Utility extends or replaces the letters of credit.
4.	At June 30, 2007, interest rates on these loans ranged from 3.65 % to 3.85%.

15

Table 14: PG&E Corporation and Pacific Gas and Electric Company Repayment Schedule and Interest Rates - Long-Term Debt, Rate Reduction Bonds and Energy Recovery Bonds as of June 30, 2007

(in millions, except interest rates)

	2007		2008		2009			2010			2011			Thereafter			Total
Long-term debt:
PG&E Corporation
Average fixed interest rate		-		-		-			9.50	%		-			-			9.50	%
Fixed rate obligations	$	-	$	-	$	-		$	280		$	-		$	-		$	280
Utility
Average fixed interest rate		-		-		3.60	%		-			4.20	%		5.67	%		5.36	%
Fixed rate obligations	$	-	$	-	$	600		$	-		$	500		$	5,245		$	6,345
Variable interest rate as of June 30, 2007															3.82	%		3.82	%
Variable rate obligations	$	-	$	-	$	-		$	-		$	-		$	1,068		$	1,068
Less: current portion	$	-	$	-	$	-		$	-		$	-		$	-		$	-
Total consolidated long-term debt	$	-	$	-	$	600		$	280		$	500		$	6,313		$	7,693

	2007			2008			2009			2010			2011			Thereafter			Total
Utility
Average fixed interest rate		6.48	%		-			-			-			-			-			6.48	%
Rate reduction bonds	$	147		$	-		$	-		$	-		$	-		$	-		$	147
Average fixed interest rate		4.18	%		4.19	%		4.36	%		4.49	%		4.61	%		4.64	%		4.44	%
Energy recovery bonds	$	179		$	354		$	370		$	386		$	424		$	403		$	2,116

16

Table 15: Pacific Gas and Electric Company

Docket Numbers of Selected Regulatory Cases

Name	Brief Description	Docket Number
Gas Accord IV	CPUC proceeding to set rates, terms and conditions for gas transmission and storage services effective January 1, 2008 through 2010.  Settlement filed on March 15, 2007.  Final decision expected by year-end 2007.	A.07-03-012
Cost of Capital 2008	CPUC proceeding to establish capital structure and increase the currently authorized rate of return on equity and rate base for 2008.  Final decision expected by year-end 2007.	A.07-05-008
2006 Long Term Procurement Plan (2006 LTPP)	CPUC proceeding to determine need for new generation in the 10-year period 2007 through 2016.  Also determines how costs associated with new generation will be recovered from customers.  In 2006 plan, PG&E seeks approval to procure up to 2300 MW of new generation.  Final decision expected by year-end 2007.	R.06-02-013
Billing and Collection Investigation	CPUC investigation into past billing and collection practices.  Final decision expected by third quarter 2007.	I.03-01-012
QF Pricing and Policy	CPUC rulemaking proceeding considering various policy and pricing issues related to power purchased from Qualifying Facilities.  Final decision expected by third quarter 2007.	R.04-04-003
Transmission Owner 9 Rate Case (TO9)	Primary FERC rate-making proceeding to determine electric transmission revenues and wholesale and retail transmission rates effective March 1, 2007.  FERC Order approving settlement issued on June 7, 2007.	ER06-1325-000
Transmission Owner 10 Rate Case (TO10)	Primary FERC rate-making proceeding to determine electric transmission revenues and wholesale and retail transmission rates effective October 1, 2007.  Application filed on July 30, 2007.  Final decision expected May 2008.	ER07-1213-000
2007 Renewable Resources  Solicitation and Implementation	2007 Renewable Portfolio Standards solicitation approved in February 2007.  Contracts are expected to be executed by year-end 2007.  A decision on the use of short-term contracts is expected by third quarter 2007.  A decision on the use of tradable Renewable Energy Credits is expected by year-end 2007.	R.06-05-027 D.07-02-011 R.06-02-012 D.07-07-027
Energy Efficiency Order Instituting Rulemaking (OIR) Post-2005	Rulemaking to determine Energy Efficiency policies and programs including shareholder risk/return mechanism.  A final decision on shareholder incentives is expected by year-end 2007.	R.06-04-010
Catastrophic Event Memorandum Account (CEMA)	CPUC proceeding to recover costs of responding to the 2005-2006 winter storms and the July 2006 “heat storm.” A decision denying heat storm costs was issued in July 2007. PG&E Corporation and the Utility are unable to predict when a final decision regarding winter storm costs will be issued.	A.06-11-005 D.07-07-041

For a discussion of these regulatory cases, see PG&E Corporation's and Pacific Gas and Electric Company's combined Quarterly Report on Form 10-Q for the quarter ended June 30, 2007, and PG&E Corporation’s and Pacific Gas and Electric Company's Annual Report on Form 10-K for the year ended December 31, 2006.

17

Table 16: PG&E Corporation

Condensed Consolidated Statements of Income

(in millions, except per share amounts)

	(Unaudited)
	Three Months Ended						Six Months Ended
(in millions, except per share amounts)	June 30,						June 30,
	2007			2006			2007			2006
Operating Revenues
Electric	$	2,359		$	2,214		$	4,534		$	4,077
Natural gas		828			803			2,009			2,088
Total operating revenues		3,187			3,017			6,543			6,165
Operating Expenses
Cost of electricity		884			781			1,607			1,311
Cost of natural gas		396			368			1,150			1,241
Operating and maintenance		922			982			1,842			1,844
Depreciation, amortization, and decommissioning		430			421			860			835
Total operating expenses		2,632			2,552			5,459			5,231
Operating Income		555			465			1,084			934
Interest income		37			41			89			64
Interest expense		(185	)		(164	)		(375	)		(318	)
Other income, net		10			28			14			28
Income Before Income Taxes		417			370			812			708
Income tax provision		148			138			287			262
Net Income	$	269		$	232		$	525		$	446
Weighted Average Common Shares Outstanding, Basic		350			346			350			345
Net Earnings Per Common Share, Basic	$	0.75		$	0.65		$	1.46		$	1.26
Net Earnings Per Common Share, Diluted	$	0.74		$	0.65		$	1.45		$	1.25
Dividends Declared Per Common Share	$	0.36		$	0.33		$	0.72		$	0.66

Source:  PG&E Corporation’s and Pacific Gas and Electric Company’s Condensed Consolidated Financial Statements and Notes thereto included in PG&E Corporation’s and Pacific Gas and Electric Company's combined Quarterly Report on Form 10-Q for the quarter ended June 30, 2007.

18

Table 17: PG&E Corporation

Condensed Consolidated Balance Sheets

(in millions)

	Balance At
(in millions)	June 30, 2007 (Unaudited)			December 31, 2006
ASSETS
Current Assets
Cash and cash equivalents	$	366		$	456
Restricted cash		1,428			1,415
Accounts receivable:
Customers (net of allowance for doubtful accounts of $47 million in 2007 and  $50 million in 2006)		2,201			2,343
Regulatory balancing accounts		886			607
Inventories:
Gas stored underground and fuel oil		191			181
Materials and supplies		161			149
Income taxes receivable		175			-
Prepaid expenses and other		435			716
Total current assets		5,843			5,867
Property, Plant, and Equipment
Electric		24,687			24,036
Gas		9,277			9,115
Construction work in progress		1,288			1,047
Other		16			16
Total property, plant, and equipment		35,268			34,214
Accumulated depreciation		(12,726	)		(12,429	)
Net property, plant, and equipment		22,542			21,785
Other Noncurrent Assets
Regulatory assets		4,626			4,902
Nuclear decommissioning funds		1,934			1,876
Other		488			373
Total other noncurrent assets		7,048			7,151
TOTAL ASSETS	$	35,433		$	34,803

Source:  PG&E Corporation’s and Pacific Gas and Electric Company’s Condensed Consolidated Financial Statements and Notes thereto included in PG&E Corporation’s and Pacific Gas and Electric Company's combined Quarterly Report on Form 10-Q for the quarter ended June 30, 2007.

19

Table 17 (continued): PG&E Corporation

Condensed Consolidated Balance Sheets

(in millions)

	Balance At
(in millions, except share amounts)	June 30, 2007 (Unaudited)			December 31, 2006
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities
Short-term borrowings	$	575		$	759
Long-term debt, classified as current		-			281
Rate reduction bonds, classified as current		147			290
Energy recovery bonds, classified as current		345			340
Accounts payable:
Trade creditors		822			1,075
Disputed claims and customer refunds		1,648			1,709
Regulatory balancing accounts		747			1,030
Other		429			420
Interest payable		638			583
Income taxes payable		-			102
Deferred income taxes		208			148
Other		1,391			1,513
Total current liabilities		6,950			8,250
Noncurrent Liabilities
Long-term debt		7,673			6,697
Energy recovery bonds		1,771			1,936
Regulatory liabilities		3,862			3,392
Asset retirement obligations		1,502			1,466
Income taxes payable		231			-
Deferred income taxes		2,889			2,840
Deferred tax credits		103			106
Other		2,004			2,053
Total noncurrent liabilities		20,035			18,490
Commitments and Contingencies (Notes 2, 4, 5, 9, and 10)
Preferred Stock of Subsidiaries		252			252
Preferred Stock
Preferred stock, no par value, authorized 80,000,000 shares, $100 par value, authorized 5,000,000 shares, none issued		-			-
Common Shareholders' Equity
Common stock, no par value, authorized 800,000,000 shares, issued 374,136,073 common and 1,283,877 restricted shares in 2007 and issued 372,803,521 common and 1,377,538 restricted shares in 2006		5,999			5,877
Common stock held by subsidiary, at cost, 24,665,500 shares		(718	)		(718	)
Reinvested earnings		2,925			2,671
Accumulated other comprehensive loss		(10	)		(19	)
Total common shareholders' equity		8,196			7,811
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY	$	35,433		$	34,803

Source:  PG&E Corporation’s and Pacific Gas and Electric Company’s Condensed Consolidated Financial Statements and Notes thereto included in PG&E Corporation’s and Pacific Gas and Electric Company's combined Quarterly Report on Form 10-Q for the quarter ended June 30, 2007.

20

Table 18: PG&E Corporation

Condensed Consolidated Statements of Cash Flows

(in millions)

	(Unaudited)
	Six Months Ended
(in millions)	June 30,
	2007			2006
Cash Flows From Operating Activities
Net income	$	525		$	446
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation, amortization, decommissioning, and allowance for equity funds used during construction		914			868
Deferred income taxes and tax credits, net		102			69
Other deferred charges and noncurrent liabilities		130			155
Gain on sale of assets		(1	)		(15	)
Net effect of changes in operating assets and liabilities:
Accounts receivable		142			373
Inventories		(22	)		60
Accounts payable		(214	)		(232	)
Accrued taxes and income taxes receivable		(61	)		(79	)
Regulatory balancing accounts, net		(483	)		18
Other current assets		273			(56	)
Other current liabilities		(46	)		(103	)
Other		(23	)		36
Net cash provided by operating activities		1,236			1,540
Cash Flows From Investing Activities
Capital expenditures		(1,320	)		(1,178	)
Net proceeds from sale of assets		8			7
Decrease (increase) in restricted cash		(13	)		48
Proceeds from nuclear decommissioning trust sales		548			757
Purchases of nuclear decommissioning trust investments		(606	)		(799	)
Net cash used in investing activities		(1,383	)		(1,165	)
Cash Flows From Financing Activities
Borrowings under accounts receivable facility and working capital facility		-			50
Repayments under accounts receivable facility and working capital facility		(300	)		(310	)
Net issuance of commercial paper, net of $2 million discount in 2007		109			213
Proceeds from issuance of long-term debt, net of discount and issuance costs of $10 million in 2007		690			-
Rate reduction bonds matured		(143	)		(141	)
Energy recovery bonds matured		(160	)		(130	)
Common stock issued		89			77
Common stock repurchased		-			(114	)
Common stock dividends paid		(242	)		(228	)
Other		14			(84	)
Net cash (used in) provided by financing activities		57			(667	)
Net change in cash and cash equivalents		(90	)		(292	)
Cash and cash equivalents at January 1		456			713
Cash and cash equivalents at June 30	$	366		$	421
Supplemental disclosures of cash flow information
Cash paid for:
Interest (net of amounts capitalized)	$	239		$	270
Income taxes paid, net		282			247
Supplemental disclosures of noncash investing and financing activities
Common stock dividends declared but not yet paid	$	128		$	115

Source:  PG&E Corporation’s and Pacific Gas and Electric Company’s Condensed Consolidated Financial Statements and Notes thereto included in PG&E Corporation’s and Pacific Gas and Electric Company's combined Quarterly Report on Form 10-Q for the quarter ended June 30, 2007.

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Table 19: Pacific Gas and Electric Company

Condensed Consolidated Statements of Income

(in millions)

	(Unaudited)
	Three Months Ended						Six Months Ended
(in millions)	June 30,						June 30,
	2007			2006			2007			2006
Operating Revenues
Electric	$	2,359		$	2,214		$	4,534		$	4,077
Natural gas		828			803			2,009			2,088
Total operating revenues		3,187			3,017			6,543			6,165
Operating Expenses
Cost of electricity		884			781			1,607			1,311
Cost of natural gas		396			368			1,150			1,241
Operating and maintenance		921			982			1,840			1,844
Depreciation, amortization and decommissioning		430			421			859			834
Total operating expenses		2,631			2,552			5,456			5,230
Operating Income		556			465			1,087			935
Interest income		35			39			83			58
Interest expense		(178	)		(157	)		(360	)		(303	)
Other income, net		15			25			24			31
Income Before Income Taxes		428			372			834			721
Income tax provision		154			141			299			273
Net Income		274			231			535			448
Preferred stock dividend requirement		4			4			7			7
Income Available for Common Stock	$	270		$	227		$	528		$	441

Source:  PG&E Corporation’s and Pacific Gas and Electric Company’s Condensed Consolidated Financial Statements and Notes thereto included in PG&E Corporation’s and Pacific Gas and Electric Company's combined Quarterly Report on Form 10-Q for the quarter ended June 30, 2007.

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Table 20: Pacific Gas and Electric Company

Condensed Consolidated Balance Sheets

(in millions)

	Balance At
(in millions)	June 30, 2007 (Unaudited)			December 31, 2006
ASSETS
Current Assets
Cash and cash equivalents	$	78		$	70
Restricted cash		1,428			1,415
Accounts receivable:
Customers (net of allowance for doubtful accounts of $47 million in 2007 and $50 million in 2006)		2,201			2,343
Related parties		5			6
Regulatory balancing accounts		886			607
Inventories:
Gas stored underground and fuel oil		191			181
Materials and supplies		161			149
Income taxes receivable		127			20
Prepaid expenses and other		433			714
Total current assets		5,510			5,505
Property, Plant, and Equipment
Electric		24,687			24,036
Gas		9,277			9,115
Construction work in progress		1,288			1,047
Total property, plant, and equipment		35,252			34,198
Accumulated depreciation		(12,711	)		(12,415	)
Net property, plant, and equipment		22,541			21,783
Other Noncurrent Assets
Regulatory assets		4,626			4,902
Nuclear decommissioning funds		1,934			1,876
Related parties receivable		25			25
Other		389			280
Total other noncurrent assets		6,974			7,083
TOTAL ASSETS	$	35,025		$	34,371

Source:  PG&E Corporation’s and Pacific Gas and Electric Company’s Condensed Consolidated Financial Statements and Notes thereto included in PG&E Corporation’s and Pacific Gas and Electric Company's combined Quarterly Report on Form 10-Q for the quarter ended June 30, 2007.

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Table 20 (continued): Pacific Gas and Electric Company

Condensed Consolidated Balance Sheets

(in millions)

	Balance At
(in millions, except share amounts)	June 30, 2007 (Unaudited)			December 31, 2006
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities
Short-term borrowings	$	575		$	759
Long-term debt, classified as current		-			1
Rate reduction bonds, classified as current		147			290
Energy recovery bonds, classified as current		345			340
Accounts payable:
Trade creditors		822			1,075
Disputed claims and customer refunds		1,648			1,709
Related parties		30			40
Regulatory balancing accounts		747			1,030
Other		412			402
Interest payable		625			570
Deferred income taxes		212			118
Other		1,224			1,346
Total current liabilities		6,787			7,680
Noncurrent Liabilities
Long-term debt		7,393			6,697
Energy recovery bonds		1,771			1,936
Regulatory liabilities		3,862			3,392
Asset retirement obligations		1,502			1,466
Income taxes payable		100			-
Deferred income taxes		2,950			2,972
Deferred tax credits		103			106
Other		1,879			1,922
Total noncurrent liabilities		19,560			18,491
Commitments and Contingencies (Notes 2, 4, 5, 9 and 10)
Shareholders' Equity
Preferred stock without mandatory redemption provisions:
Nonredeemable, 5.00% to 6.00%, outstanding 5,784,825 shares		145			145
Redeemable, 4.36% to 5.00%, outstanding 4,534,958 shares		113			113
Common stock, $5 par value, authorized 800,000,000 shares, issued 279,624,823 shares		1,398			1,398
Common stock held by subsidiary, at cost, 19,481,213 shares		(475	)		(475	)
Additional paid-in capital		2,036			1,822
Reinvested earnings		5,467			5,213
Accumulated other comprehensive loss		(6	)		(16	)
Total shareholders' equity		8,678			8,200
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY	$	35,025		$	34,371

Source:  PG&E Corporation’s and Pacific Gas and Electric Company’s Condensed Consolidated Financial Statements and Notes thereto included in PG&E Corporation’s and Pacific Gas and Electric Company's combined Quarterly Report on Form 10-Q for the quarter ended June 30, 2007.

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Table 21: Pacific Gas and Electric Company

Condensed Consolidated Statements of Cash Flows

(in millions)

	(Unaudited)
	Six Months Ended
(in millions)	June 30,
	2007			2006
Cash Flows From Operating Activities
Net income	$	535		$	448
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation, amortization, decommissioning, and allowance for equity funds used during construction		913			867
Deferred income taxes and tax credits, net		101			73
Other deferred charges and noncurrent liabilities		129			153
Gain on sale of assets		(1	)		(15	)
Net effect of changes in operating assets and liabilities:
Accounts receivable		143			373
Inventories		(22	)		60
Accounts payable		(221	)		(233	)
Accrued taxes and income taxes receivable		(59	)		(110	)
Regulatory balancing accounts, net		(483	)		18
Other current assets		271			(52	)
Other current liabilities		(48	)		(70	)
Other		(23	)		(2	)
Net cash provided by operating activities		1,235			1,510
Cash Flows From Investing Activities
Capital expenditures		(1,320	)		(1,178	)
Net proceeds from sale of assets		8			7
Decrease (increase) in restricted cash		(13	)		48
Proceeds from nuclear decommissioning trust sales		548			757
Purchases of nuclear decommissioning trust investments		(606	)		(799	)
Net cash used in investing activities		(1,383	)		(1,165	)
Cash Flows From Financing Activities
Borrowings under accounts receivable facility and working capital facility		-			50
Repayments under accounts receivable facility and working capital facility		(300	)		(310	)
Net issuance of commercial paper, net of $2 million discount in 2007		109			213
Proceeds from issuance of long-term debt, net of discount and issuance costs of $10 million in 2007		690			-
Rate reduction bonds matured		(143	)		(141	)
Energy recovery bonds matured		(160	)		(130	)
Common stock dividends paid		(254	)		(230	)
Preferred stock dividends paid		(7	)		(7	)
Equity infusion from PG&E Corporation		200			-
Other		21			(88	)
Net cash (used in) provided by financing activities		156			(643	)
Net change in cash and cash equivalents		8			(298	)
Cash and cash equivalents at January 1		70			463
Cash and cash equivalents at June 30	$	78		$	165
Supplemental disclosures of cash flow information
Cash paid for:
Interest (net of amounts capitalized)	$	226		$	243
Income taxes paid, net		299			308

Source:  PG&E Corporation’s and Pacific Gas and Electric Company’s Condensed Consolidated Financial Statements and Notes thereto included in PG&E Corporation’s and Pacific Gas and Electric Company's combined Quarterly Report on Form 10-Q for the quarter ended June 30, 2007.

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