PG&E CORPORATION 2006 LONG-TERM INCENTIVE PLAN

This Agreement constitutes the entire understanding between you and PG&E Corporation regarding the Performance Shares, subject to the terms of the LTIP.  Any prior agreements, commitments or negotiations are superseded.  In the event of any conflict or inconsistency between the provisions of this Agreement and the LTIP, the LTIP shall govern. Capitalized terms that are not defined in this Agreement are defined in the LTIP.

For purposes of this Agreement, employment with PG&E Corporation shall mean employment with any member of the Participating Company Group.

PG&E Corporation grants you the number of Performance Shares shown on the cover sheet of this Agreement.  The Performance Shares are subject to the terms and conditions of this Agreement and the LTIP.

As long as you remain employed with PG&E Corporation, the Performance Shares will vest on the first business day of March (the “Vesting Date”) of the third year following the date of grant specified in the cover sheet.  Except as described below, all Performance Shares subject to this Agreement that have not vested shall be forfeited upon termination of your employment.

Upon the Vesting Date, PG&E Corporation’s total shareholder return (TSR) will be compared to the TSR of the twelve other companies in PG&E Corporation’s comparator group ¹ for the prior three calendar years (the “Performance Period”).  Subject to rounding considerations, there will be no payout for TSR below the 25 ^th percentile of the comparator group; TSR at the 25 ^th percentile will result in a 25% payout of Performance Shares; TSR at the 75 ^th percentile will result in a 100% payout of Performance Shares; and TSR in the top rank will result in a 200% payout of Performance Shares.  The following table sets forth the payout percentages for the various TSR rankings that could be achieved:

                                                    Number of Companies in

                                                      Total (Including PG&E)                           

                                                                     13                                                 

                                                       Performance                  Rounded

                                 Rank                Percentile                        Payout           

                                  1                        100%                             200%

                                  2                          92%                             170%

                                  3                          83%                             130%

                                  4                          75%                             100%

                                  5                          67%                             90%

                                  6                          58%                              75%

                                  7                          50%                              65%

                                  8                          42%                              50%

                                  9                          33%                              35%

                                10                          25%                              25%

                                11                          17%                                0%

                                12                            8%                                0%

                                13                            0%                                0%

The payment will equal the product of the number of vested Performance Shares, the applicable payout percentage, and the average closing price of a share of PG&E Corporation common stock for the last 30 calendar days of the year preceding the Vesting Date as reported on the New York Stock Exchange.  Payments, if any, will be made as soon as practicable after the Vesting Date following the date that the Compensation Committee of the PG&E Corporation Board of Directors certifies the TSR percentile rank over the Performance Period pursuant to Section 10.5(a) of the LTIP, but in any event within sixty (60) days of the Vesting Date.

Each time that PG&E Corporation declares a dividend on its shares of common stock, an amount equal to the dividend multiplied by the number of Performance Shares granted to you by this Agreement shall be accrued on your behalf.  If you receive a Performance Share payout in accordance with the preceding paragraph, at that same time you also shall receive a cash payment equal to the amount of any dividends accrued over the Performance Period multiplied by the same payout percentage used to determine the amount of the Performance Share payout.

If you terminate your employment with PG&E Corporation voluntarily before the Vesting Date, all of the Performance Shares shall be cancelled as of the date of such termination and any dividends accrued with respect to your Performance Shares shall be forfeited.

If your employment with PG&E Corporation is terminated by PG&E Corporation for cause before the Vesting Date, all of the Performance Shares shall be cancelled as of the date of such termination and any dividends accrued with respect to your Performance Shares shall be forfeited.  In general, termination for “cause” means termination of employment because of dishonesty, a criminal offense or violation of a work rule, and will be determined by and in the sole discretion of PG&E Corporation.

If your employment with PG&E Corporation is terminated by PG&E Corporation other than for cause before the Vesting Date, your unvested Performance Shares will vest proportionally based on the number of months during the Performance Period that you were employed (rounded down) divided by the number of months in the Performance Period (36 months).  All other outstanding Performance Shares (and any associated accrued dividends) shall automatically be cancelled upon such termination.  Your vested Performance Shares will be payable, if at all, as soon as practicable after the Vesting Date based on the same formula applied to active employees and in any event within sixty (60) days of the Vesting Date.  At that time you also shall receive a cash payment, if any, equal to the amount of dividends accrued over the Performance Period with respect to your vested Performance Shares multiplied by the same payout percentage used to determine the amount, if any, of the Performance Share payout.

If you retire before the Vesting Date, your outstanding Performance Shares will continue to vest as though your employment had continued and will be payable, if at all, as soon as practicable following the Vesting Date and in any event within sixty (60) days of the V