(San Francisco) – In remarks at the annual Banc of America Securities Investment Conference today, PG&E Corporation Chairman, CEO and President Robert D. Glynn, Jr., highlighted the company’s financial strengths and the opportunities created by the stable environment in which the business is now operating.

“Investors looking at PG&E Corporation today see substantial and predictable cash flow, a clearly articulated aspiration for distributing cash to shareholders, future opportunities to improve and grow our core utility business, and an ability to work constructively with regulators and other key stakeholders,” said Glynn.

The basis for the company’s positive outlook is a series of multi-year agreements reached with regulators, customer groups and others in 2003 and 2004, Glynn said, along with “the intention to earn not less than the authorized rate of return” approved by the California Public Utilities Commission. The various agreements provide for stable base rates and revenues, adjustments to cover costs associated with inflation and customer growth, and credit ratings safeguards, among other provisions.

Glynn said that this strong cash flow, which is cash after the company’s identified capital expenditure program, will be deployed first to increase Pacific Gas and Electric Company’s equity ratio to its 52 percent target, then to resume paying a common dividend, and to repurchase common shares.

He said that “reaching the 52 percent target will enable us to realize our aspiration to pay a common dividend in the first half of 2005 under our base plan to refinance a part of the regulatory asset.” The refinancing is projected to save customers up to $1 billion over the next eight years.

“We estimate that approximately $3.3 billion will be available for dividends and share repurchases in the 2005 through 2008 timeframe, with or without the refinancing,” said Glynn. “The refinancing is our base plan and would accelerate a portion of that cash into 2005, in which case over $1.5 billion would be available for equity distributions by the end of 2005.”

In addition to strong cash flow and aspirations for dividends and share repurchases, PG&E Corporation’s stable regulatory and financial environment creates opportunities for the company to increase its emphasis on fundamental operations and customer service.

“Throughout the energy crisis, we emphasized the importance of solid fundamental operations and customer service, and we have the intention to continue seeking to improve the operational and cost performance of our business so that customers receive and perceive those improvements,” said Glynn. He cited continuing advances in technology and process improvements that will offer the opportunity to provide employees with tools to better serve customers.

“We also expect to develop opportunities to expand our core utility infrastructure for the benefit of customers and shareholders,” Glynn said.

The company has projected average capital expenditures of $1.7 billion per year for 2004 through 2008. Additional investments may include building a portion of the new electric generation that the company estimates will be needed. Pacific Gas and Electric Company has proposed that it build 50 percent of the new generation required, while contracting for the other 50 percent.

“These investments could represent $600 million to $700 million of new rate base, above our previous estimates, by the year 2010,” said Glynn. “We would expect the cost of this new generation to be competitive with that of alternatives, and the returns to be attractive to our shareholders.”

He also said the company is seeking additional opportunities to make capital investments to deploy new technologies aimed at improving customer service and cost efficiency in all areas of the utility business, including transmission, distribution and customer service.

A webcast replay of Mr. Glynn’s presentation to investors and the accompanying slides are available on the PG&E Corporation web site, www.pgecorp.com.

The statements in this release and in Mr. Glynn’s presentation regarding management’s beliefs and expectations for increased financial performance, cash flows, shareholder value and future dividends are forward-looking statements that are subject to a number of risks and uncertainties. Actual results could differ materially depending on many factors, including:

• The timing and resolution of the petitions for review that were filed in the California Court of Appeal seeking review of the California Public Utilities Commission’s (CPUC) December 18, 2003 decision approving Pacific Gas and Electric Company’s Settlement Agreement and the CPUC's March 16, 2004 denial of applications for rehearing of the December 18, 2003 decision;
   
• The timing and resolution of the pending appeals of the bankruptcy court's order confirming the Utility’s Plan of Reorganization;  
• Whether the conditions to securitizing the $2.21 billion after-tax regulatory asset established under the Settlement Agreement are met, and if so, the timing and amount of the securitization;  
• Whether the CPUC approves the Utility's long-term electricity resource plan and adopts the Utility's related ratemaking proposals, whether the assumptions and forecasts underlying the long-term resource plan prove to be accurate, and what terms and conditions are included in the long-term resource commitments the Utility enters into in connection with its long-term resource plan;  
• Unanticipated changes in operating expenses or capital expenditures affecting 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 extent to which the Utility's residual net open position ( i.e., that portion of the Utility's electricity customers' demand not satisfied by electricity that the Utility generates or has under contract, or by electricity provided under the California Department of Water Resources electricity contracts allocated to the Utility's customers) increases or decreases;  
• The operation of the Utility's Diablo Canyon Nuclear Power Plant (Diablo Canyon) which exposes the Utility to potentially significant environmental and capital expenditure outlays and, to the extent the Utility is unable to increase its spent fuel storage capacity by 2007 or find an alternative depository, the risk that the Utility may be required to close Diablo Canyon and purchase electricity from more expensive sources;  
• The impact of current and future ratemaking actions of the CPUC, including the risk of material differences between forecasted costs used to determine rates and actual costs incurred;  
• The extent to which the CPUC or the Federal Energy Regulatory Commission delays or denies recovery of the Utility's 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 California investor-owned electric utilities;  
• The impact of future legislative or regulatory actions or policies;  
• Increased competition;  
• The outcome of pending litigation; and  
• Other factors discussed in PG&E Corporation's and Pacific Gas and Electric Company's SEC reports.