(New York, NY) – Speaking to investors in New York today, PG&E Corporation Senior Vice President and Chief Financial Officer Peter Darbee underscored the company’s multi-year outlook for strong earnings and cash flows, its focus on returning value to shareholders through common stock dividends and stock repurchases, and its intent to improve operational efficiency and customer service.

“We’ve begun a period in which investors can see several years of stable financial performance ahead, along with the aspiration and the ability to reinitiate a common stock dividend and execute substantial share repurchases,” Darbee told attendees at the Lehman Brothers CEO Energy/Power Conference.

PG&E Corporation has estimated that approximately $3.3 billion will be available in the period 2005 through 2008 to pay dividends, buy back shares, and invest in additional utility infrastructure needs above the levels already contemplated. As previously disclosed, assuming the utility refinances part of its balance sheet as planned in January 2005 and the settlement with the company’s National Energy & Gas Transmission, Inc. (NEGT) subsidiary is implemented, investors could expect approximately $1.55 billion to be available for dividends and share purchases by the end of next year. The anticipated refinancing also is expected to result in up to $1 billion of customer savings over nine years. Darbee also reaffirmed 2005 earnings guidance, recently increased to reflect the proposed settlement with NEGT, and said the company is on track to achieve its 2004 earnings guidance.

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, Darbee said. The various agreements provide for stable base rates and revenues, adjustments to cover costs associated with inflation and customer growth, credit ratings safeguards, and the opportunity to earn a minimum authorized rate of return on its rate base, among other provisions.

“By reaching agreements that resolve uncertainties and give investors a clear view of future earnings and cash flow potential, we’ve put PG&E Corporation in a uniquely strong position within the industry and relative to past periods,” said Darbee.

“The success in working constructively with regulators and other stakeholders to reach agreements on critical issues reflects a substantially improved regulatory climate in California,” Darbee said. He added that he sees the trend toward stronger working relationships continuing, citing a recent all-party settlement on rates for gas transmission and storage. The settlement followed a similar all-party settlement earlier this year in which customer groups, regulators, environmental groups and others agreed to new rates for electric generation, and electric and gas distribution. In parallel with the new rate agreements, customers’ electric rates were reduced earlier this year by approximately $800 million for 2004.

Darbee said the company intends to use the current period of financial and regulatory stability to direct additional resources and attention to improving efficiency and customer service in the company’s core utility business.

He also said the company will evaluate opportunities for investments in the utility that would grow the rate base on which the utility is authorized to earn a return. (Rate base is estimated at approximately $17 billion for 2004; it would be reduced to approximately $15 billion in 2005 if the utility refinances part of its balance sheet as planned.)

A webcast replay of Mr. Darbee’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. Darbee’s presentation regarding management’s beliefs and expectations for increased financial performance, 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.