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: May 4, 2004

Commission
File
Number

Exact Name of
Registrant
as specified in
its charter

State or other
Jurisdiction of
Incorporation

IRS Employer
Identification
Number

_____________

_____________

_____________

_____________

1-12609

1-2348

PG&E Corporation

Pacific Gas and
Electric Company

California

California

94-3234914

94-0742640

Pacific Gas and Electric Company
77 Beale Street, P. O. Box 770000
San Francisco, California  94177

PG&E Corporation
One Market, Spear Tower, Suite 2400
San Francisco, California  94105

(Address of principal executive offices) (Zip Code)

Pacific Gas and Electric Company
(415) 973-7000

PG&E Corporation
(415) 267-7000

(Registrant's telephone number, including area code)

The information included in this Current Report on Form 8-K, including the press release attached hereto as an exhibit, is being furnished, not filed, pursuant to Item 12 of Form 8-K.

On May 4, 2004, PG&E Corporation issued the press release attached hereto as an exhibit announcing its financial results, and the financial results of its subsidiary, Pacific Gas and Electric Company, for the quarter ended March 31, 2004.

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

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:  CHRISTOPHER P. JOHNS

       Christopher P. Johns
       Senior Vice President and Controller

PACIFIC GAS AND ELECTRIC COMPANY

By:  DINYAR B. MISTRY

       Dinyar B. Mistry
       Vice President and Controller

Dated: May 4, 2004

FOR IMMEDIATE RELEASE

May 4, 2004

·

PG&E Corporation earned $7.21 per share in consolidated net income in the first quarter of 2004, compared with a loss of $0.93 per share in the same quarter of 2003. (All "per share" amounts in this release are presented on a diluted basis.)

·

The majority of reported consolidated net income -- $6.96 per share -- reflects one-time, non-cash entries resulting from the required accounting to recognize two regulatory assets added to Pacific Gas and Electric Company's balance sheet.

·

Consolidated earnings from operations for PG&E Corporation and Pacific Gas and Electric Company for the quarter were $0.41 per share, compared with $0.45 per share in the same quarter of 2003.

·

Pacific Gas and Electric Company's first quarter earnings from operations were $0.42 per share, compared with $0.45 per share for the same quarter of 2003.

·

The timing and resolution of the petitions for review that were filed in the California Court of Appeal seeking review of the CPUC's December 18, 2003 decision approving the Settlement Agreement and the CPUC's March 16, 2004 denial of applications for rehearing of its December 18, 2003 decision;

·

The timing and resolution of the pending appeals of the bankruptcy court's order confirming the 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, and the impact such securitization would have on the Utility's and PG&E Corporation's earnings;

·

Unanticipated changes in operating expenses or capital expenditures;

·

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, or DWR, electricity contracts allocated to the Utility's customers) increases or decreases;

·

The impact of pending litigation and rate cases, including the Utility's 2003 GRC and other regulatory proceedings;

·

The impact of future legislative or regulatory actions;

·

Increased competition; and

·

Other factors discussed in PG&E Corporation's and Pacific Gas and Electric Company's SEC reports.

PG&E CORPORATION

CONDENSED STATEMENT OF CONSOLIDATED INCOME

(Unaudited)

Three Months Ended
March 31,

(in millions, except per share amounts)

2004

2003

Operating Revenues

Electric

$

1,791 

$

1,305 

Natural gas

931 

828 

     Total operating revenues

2,722 

2,133 

Operating Expenses

Cost of electricity

561 

544 

Cost of natural gas

578 

471 

Operating expenses including depreciation, amortization and decommissioning

1,128 

1,021 

Recognition of regulatory assets

(4,900)

- 

Reorganization items

2 

35 

     Total operating expenses (gain)

(2,631)

2,071 

Operating Income

5,353 

62 

Interest expense, net and other

(244)

(235)

Income (Loss) Before Income Taxes

5,109 

(173)

Income tax provision (benefit)

2,076 

(90)

Income (Loss) from Continuing Operations

3,033 

(83)

Discontinued Operations of NEGT ^(a)

- 

(265)

Net Income (Loss) Before Cumulative Effect of Changes in Accounting Principles

3,033 

(348)

Cumulative effect of changes in accounting principles

- 

(6)

Net Income (Loss)

$

3,033 

$

(354)

Weighted Average Common Shares Outstanding, Diluted

424 

382 

Earnings (Loss) Per Common Share, Basic

$

7.36 

$

(0.93)

Earnings (Loss) Per Common Share, Diluted

$

7.21 

$

(0.93)

Earnings (Loss)

Earnings (Loss) per Share (Diluted)

Three Months Ended
March 31,

Three Months Ended
March 31,

2004

2003

2004

2003

Pacific Gas and Electric Company and Holding Company

Pacific Gas and Electric Company

$

180 

$

171 

$

0.42 

$

0.45 

Holding Company

(5)

1 

(0.01)

- 

     Earnings from Operations

175 

172 

0.41 

0.45 

Headroom

- 

(181)

- 

(0.47)

Items Impacting Comparability ^(b)

2,858 

(84)

6.80 

(0.22)

     Reported Earnings

3,033 

(93) 

7.21 

(0.24)

NEGT ^(a)

- 

(261)

- 

(0.69)

PG&E Corporation Reported Earnings

$

3,033 

$

(354)

$

7.21 

$

(0.93)

In anticipation of NEGT's Chapter 11 filing, PG&E Corporation's representatives, who previously served on the NEGT Board of Directors, resigned on July 7, 2003 and were replaced with Board members who are not affiliated with PG&E Corporation. As a result, PG&E Corporation no longer retains significant influence over the ongoing operations of NEGT. On May 3, 2004, the bankruptcy court approved NEGT's plan of reorganization, which eliminates PG&E Corporation's equity interest. Effective July 8, 2003, PG&E Corporation no longer consolidates the earnings and losses of NEGT and has reflected its ownership interest in NEGT utilizing the cost method of accounting, under which PG&E Corporation's investment in NEGT is reflected as a single amount on the Consolidated Balance Sheets of PG&E Corporation at March 31, 2004 and December 31, 2003. In addition, the operations of NEGT prior to July 8, 2003, are reflected as discontinued operations in the Consolidated Financial Statements.

The effect of recognizing the impact of the Settlement Agreement was partially offset by the net effect of incremental interest costs of $52 million ($0.11 per share) from the increased amount and cost of debt resulting from the California energy crisis and the Utility's Chapter 11 filing; increased costs of $4 million ($0.01 per share) related to the Utility's and NEGT's Chapter 11 filings and generally consisting of external legal consulting fees, financial advisory fees and other related costs and payments; and $19 million related to the change in the market value of non-cumulative dividend participation rights included within the Holding Company's $280 million of 9.5% Convertible Subordinated Notes.

To enable accurate comparison to current period, certain previously disclosed items impacting comparability have been reclassed to the related operating entity in the prior period.

Reconciliation of Guidance for Earnings from Operations

Year Ended
December 31, 2004 ⁽¹⁾

Earnings from Operations EPS Guidance ⁽²⁾

$

2.00 

$

2.10 

Estimated Items Impacting Comparability

   Incremental interest expense

(0.21)

(0.14)

   Utility Chapter 11 related expenses

(0.02)

(0.01)

   Utility Chapter 11 Settlement Agreement assets and obligations ⁽³⁾

6.88 

6.92 

   2003 GRC settlement ⁽⁴⁾

0.28 

0.28 

   NEGT Chapter 11 related expenses

(0.05)

(0.03)

   Gain on disposition of NEGT⁽⁵⁾

0.88 

1.74 

Reported EPS Guidance ⁽²⁾

$

9.76 

$

10.86 

Estimates include a range of shares outstanding.

Excludes the results of NEGT.

Impact of recognizing $2.2 billion after-tax regulatory asset and a $700 million after-tax regulatory asset for the Utility's retained generation as provided for in the Utility's Plan of Reorganization. These regulatory assets are offset by $17 million related to obligations to invest in clean energy technology and donate land, included in the Settlement Agreement.

Impact of additional 2003 natural gas revenues to be recognized in 2004 upon implementation of 2003 General Rate Case, or GRC, proposed settlement agreement and recognition of a regulatory asset associated with the recovery of unfunded taxes.

Impact of recognizing the reversal of PG&E Corporation's investment in NEGT and related amounts in deferred income taxes and accumulated other comprehensive income as a result of the implementation of NEGT's plan of reorganization eliminating PG&E Corporation's equity interest.