• Consolidated net income reported under GAAP was $0.49 per share for the fourth quarter 2005 and $2.37 per share for the full year. (All “per share” amounts are presented on a diluted basis.)
  
  
• Earnings from operations were $0.49 per share for the fourth quarter and $2.34 per share for the full year.
  
  
• Guidance for 2006 earnings from operations is raised by $0.05 per share to a range of $2.40 to $2.50 per share.

(San Francisco) -- PG&E Corporation’s (NYSE: PCG) consolidated net income reported in accordance with generally accepted accounting principles (GAAP) was $180 million, or $0.49 per share, for the fourth quarter of 2005. In the same period last year, consolidated net income was $871 million, or $2.04 per share, which reflected a $1.60 per share one-time, non-cash gain associated with PG&E Corporation’s exit from its national energy business.

On a non-GAAP basis, PG&E Corporation’s earnings from operations for the fourth quarter were $179 million, or $0.49 per share, compared with $186 million, or $0.44 per share, in the same quarter of 2004. Earnings from operations exclude certain non-operating income and expenses reported in GAAP net income (see “Items Impacting Comparability” in the accompanying financial tables, which reconcile earnings from operations with consolidated net income in accordance with GAAP.)

PG&E Corporation’s earnings per share from operations for the fourth quarter of 2005 increased over the same period in 2004 reflecting the positive impacts of share repurchases, the current year portion of the gain associated with a California Public Utilities Commission decision related to shareholder incentives for successfully implementing conservation programs (Annual Earnings Assessment Proceedings or AEAP), and higher equity earnings on rate base among other items. These items were partially offset primarily by the loss of earnings associated with the settlement regulatory asset, which was refinanced and eliminated during 2005.

“We’ve executed our 2005 plan to completely restore PG&E’s financial health – restarting and increasing the dividend, repurchasing stock and announcing plans for utility infrastructure investments,” said Peter A. Darbee, Chairman, Chief Executive Officer and President of PG&E Corporation. “As we begin 2006, we’re focused on transforming our business so that we can provide our customers with faster, better and more cost-efficient services while delivering value to our shareholders.”

On a stand-alone basis, PG&E Corporation’s Pacific Gas and Electric Company subsidiary GAAP results were $183 million for the fourth quarter of 2005, compared with $243 million in the same quarter of 2004. The utility’s non-GAAP earnings from operations for the fourth quarter of 2005 were $181 million, compared with $191 million in the same quarter of 2004.

FULL-YEAR 2005 RESULTS

For the full year 2005, PG&E Corporation’s reported GAAP results were $917 million, or $2.37 per share. Total consolidated net income in 2004 was $4.5 billion, or $10.57 per share, of which $8.52 per share reflected two one-time, non-cash items relating to Pacific Gas and Electric Company’s Chapter 11 resolution and PG&E Corporation’s exit from its national energy business.

On a non-GAAP basis, PG&E Corporation’s earnings from operations were $906 million or $2.34 per share in 2005, compared with $901 million, or $2.12 per share in 2004.

The increase in earnings per share from operations for 2005 compared with 2004 reflected the positive impacts of share repurchases, higher equity earnings on rate base, higher gas transmission revenues, and electric transmission contract settlements among other items. These other items were partially offset primarily by the loss of earnings associated with the settlement regulatory asset and increased environmental remediation costs.

Items not included in earnings from operations totaled $0.03 per share, primarily reflecting the costs of the recently announced settlement to resolve most of the chromium litigation against the utility, a gain from tax adjustments related to PG&E Corporation’s national energy business, and the prior year’s portion of the gains associated with the AEAP settlement.

On a stand-alone basis in 2005, Pacific Gas and Electric Company’s GAAP results were $918 million, compared to $3.96 billion for 2004. The utility’s non-GAAP earnings from operations for 2005 were $919 million, compared to $931 million, for 2004.

2006 EARNINGS GUIDANCE

PG&E Corporation is raising its previously issued guidance for 2006 earnings from operations by $0.05 per share to the range of $2.40 to $2.50 per share. Guidance assumes that the utility earns its higher authorized return on equity of 11.35 percent on anticipated rate base for 2006, decreased for the impact of the equity carrying cost credit associated with the Rate Reduction Bonds and Energy Recovery Bonds, and the interest expense of PG&E Corporation debt.

This guidance is in line with PG&E Corporation’s recently announced target average annual growth rate of approximately 7.5 percent for earnings per share from operations for the period 2006-2010. This reflects the positive impact of share repurchases and the substantial annual capital investment forecast for the utility.

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.

MARCH 1 ANALYST MEETING

PG&E Corporation will discuss its business and strategic focus, capital spending plans, and multi-year financial outlook during its upcoming Analyst Meeting on Wednesday, March 1, 2006 in New York City. The meeting for members of the financial community will be available to the public via webcast beginning at 8:30 a.m. EST at http://www.pge-corp.com/investors/investor_info/presentations/index.shtml. Because the meeting so closely follows today’s earnings announcement, PG&E Corporation will not hold its regular quarterly conference call for analysts.

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).

This press release contains forward-looking statements regarding management’s guidance for PG&E Corporation’s 2006 earnings per share from operations and targeted average annual growth rate for earnings per share from operations over the 2006-2010 period. These statements are based on current expectations and various assumptions which management believes are reasonable, including that substantial capital investments are made in Pacific Gas and Electric Company’s (Utility) business over the 2006-2010 period and that share repurchases are made. 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:

• Unanticipated changes in operating expenses or capital expenditures, which may affect the Utility’s ability to earn its authorized rate of return;
• How the Utility manages its responsibility to procure electric capacity and energy for its customers;
• The adequacy and price of natural gas supplies, the ability of the Utility to manage and respond to the volatility of the natural gas market for its customers;
• The operation of the Utility’s Diablo Canyon nuclear power plant, which could cause the Utility to incur potentially significant environmental costs and capital expenditures, and the extent to which the Utility is able to timely increase its spent nuclear fuel storage capacity at Diablo Canyon by 2007;
• Whether the Utility is able to recognize the anticipated cost benefits and savings to result from its efforts to improve customer service through implementation of specific initiatives to streamline business processes and deploy new technology;
• The outcome of proceedings pending at the Federal Energy Regulatory Commission (FERC) and the California Public Utilities Commission (CPUC), including the CPUC’s pending investigation into the Utility’s billing and collection practices;
• 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, and the outcome of the CPUC's new rulemaking proceeding concerning the relationship between the California investor-owned energy utilities and their holding companies and non-regulated affiliates;
• The impact of the recently adopted Energy Policy Act of 2005 and future legislative or regulatory actions or policies affecting the energy industry;
• 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 municipalization and other forms of bypass in the Utility’s service territory; and
• Other factors discussed in PG&E Corporation's SEC reports.