• Net income for PG&E Corporation was $0.70 per share, compared with $0.88 per share in the same quarter of 2004. (All “per share” amounts in this release are common shares on a diluted basis.)

• Earnings from operations for PG&E Corporation were $0.69 per share, compared with $0.70 per share in the same quarter of 2004.

• Guidance for 2005 earnings from operations is raised by $0.05 per share to a range of $2.20-$2.30 per share. Guidance for 2006 earnings from operations is also raised by $0.05 per share to a range of $2.35-$2.45 per share.

(San Francisco) -- PG&E Corporation’s (NYSE: PCG) consolidated net income reported in accordance with generally accepted accounting principles (GAAP) was $267 million, or $0.70 per share, in the second quarter of 2005. In the same period last year, consolidated net income was $372 million, or $0.88 per share. The difference in quarterly results is primarily attributable to the effects of a delayed final decision in Pacific Gas and Electric Company’s General Rate Case (GRC) for 2003. Because the 2003 GRC decision was not issued until May 2004, the company’s second quarter results last year included several quarters worth of revenues primarily for its electric and gas distribution business.

“Second quarter results put PG&E in a solid position at the mid-year mark,” said Peter A. Darbee, PG&E Corporation President and CEO. “PG&E’s sound financial health and stable business climate continue to provide an excellent platform for the company to deliver value to customers and shareholders alike. We look forward to solid results for the year and taking further steps to invest in our infrastructure and people with the goal of strengthening service and ensuring a reliable energy future for California.”

EARNINGS FROM OPERATIONS

On a non-GAAP basis, PG&E Corporation’s earnings from operations were $262 million, or $0.69 per share, in the second quarter of 2005, compared with $298 million, or $0.70 per share, in the same period last year.

Earnings from operations excludes certain non-operating income and expenses reported in GAAP net income (see “Items Impacting Comparability” on the accompanying financial tables, which reconcile earnings from operations with consolidated net income in accordance with GAAP). For the second quarter, these items totaled $0.01 per share.

As disclosed in the Corporation’s Form 10-Q, accounting for stock options as an expense in the quarter would have reduced earnings by $0.01 per share.

QUARTER-OVER-QUARTER COMPARISON

Earnings from operations for the second quarter of 2005 were $0.01 per share below levels for the same period in 2004 reflecting the net impact of a number of factors.

Specifically, second quarter results for 2005 are $0.16 per share lower by comparison due to the impact of the 2003 GRC decision on second quarter results last year, which included the cumulative year-to-date revenue increases authorized in the decision. Second quarter 2005 results are also lower by $0.07 per share compared with second quarter 2004 due to the earnings impact associated with the elimination of the regulatory asset established under the settlement resolving Pacific Gas and Electric Company’s Chapter 11 case. The regulatory asset was refinanced in February 2005 in order to deliver as much as $1 billion in savings to customers.

Offsetting the absence of these items in the second quarter of 2005 were $0.08 per share reflecting the positive effects of share repurchases over the last year; $0.04 per share reflecting lower expenses at the Diablo Canyon power plant, which underwent a refueling outage in the second quarter of last year; $0.03 per share of earnings related to settlements between the utility and certain wholesale customers resolving outstanding disputes over electric transmission contracts; $0.02 per share of additional equity earnings on rate base, resulting from the increase of the utility’s equity ratio from 49 percent to 52 percent; $0.02 per share reflecting lower interest expense at the holding company; and $0.03 of other items.

EARNINGS GUIDANCE

PG&E Corporation is raising its previously issued 2005 guidance for earnings from operations by $0.05 per share. Guidance for 2005 is increased to a range of $2.20-$2.30 per share, reflecting the positive impacts of the electric transmission-related items referenced above in combination with solid year-to-date financial performance. PG&E Corporation is also raising its previously issued guidance for 2006 earnings from operations to a range of $2.35-$2.45 per share.

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.

Supplemental Financial Information:

• In addition to the financial information accompanying this release, an expanded package of supplemental financial material 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:

• Today’s call at 2:00 p.m. Eastern time is open to the public on a listen-only basis via webcast. Please visit www.pgecorp.com for more information and instructions for accessing the webcast. 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 10, 2005, by dialing 877-690-2094. International callers may dial 402-220-0649.

This press release and the attachment contain forward-looking statements regarding 2005 and 2006 guidance for earnings from operations per share for PG&E Corporation that are based on current expectations and assumptions which management believes are reasonable and on information currently available to management. These statements are necessarily subject to various risks and uncertainties. In addition to the risk that the assumptions on which the statements are based (including that Pacific Gas and Electric Company (Utility) earns an authorized return on equity of 11.22 percent, the second series of energy recovery bonds is issued in November 2005 in the approximate amount of $800 million, the Utility makes certain capital expenditures, and that PG&E Corporation repurchases additional shares of its common stock) prove to be inaccurate, factors that could cause actual results to differ materially from those contemplated by the forward-looking statements include:

• Unanticipated changes in operating expenses or capital expenditures, which may affect the Utility’s ability to earn its authorized rate of return;
• The level and volatility of wholesale electricity and natural gas prices and supplies, the Utility’s ability to manage and respond to the levels and volatility successfully, and the extent to which the Utility is able to timely recover increased costs related to such volatility;
• The operation of the Utility’s Diablo Canyon nuclear power plant, which exposes the Utility to potentially significant environmental costs and capital expenditure outlays;
• The impact of current and future ratemaking actions of the California Public Utilities Commission (CPUC) and the Federal Energy Regulatory Commission (FERC), including the risk of material differences between forecasted costs used to determine rates and actual costs incurred;
• Whether the assumptions and forecasts underlying the Utility’s CPUC-approved long-term electricity procurement plan prove to be accurate, the terms and conditions of the generation or procurement commitments the Utility enters into in connection with its plan, the extent to which the Utility is able to recover the costs it incurs in connection with these commitments, and the extent to which a failure to perform by any of the counterparties to the Utility’s electricity purchase contracts or the California Department of Water Resources’ contracts allocated to the Utility’s customers affects the Utility’s ability to meet its obligations or to recover its costs;
• The extent to which the CPUC or the FERC delays or denies recovery of the Utility’s costs, including electricity purchase costs, from customers due to a regulatory determination that such costs were not reasonable or prudent or for other reasons, resulting in write-offs of regulatory balancing accounts;
• How the CPUC administers the capital structure, stand-alone dividend, and first priority conditions of the CPUC’s decisions permitting the establishment of holding companies for the California investor-owned electric utilities;
• The impact of future legislative or regulatory actions or policies;
• The timing and resolution of the pending appeal of the bankruptcy court’s confirmation of the Utility’s plan of reorganization;
• The outcome of regulatory proceedings pending at the CPUC and the FERC, including the Utility’s request for a revenue requirement to fund pension contributions that may be required in the future;
• The outcome of the litigation pending against the Utility in California state court involving allegations of injury allegedly caused by exposure to chromium at certain of the Utility's gas compressor stations and other pending litigation;
• Increased competition; and
• Other factors discussed in PG&E Corporation's SEC reports.