Exhibit 10.3

Non-Employee Director Stock Incentive Plan

RESOLUTION OF THE
BOARD OF DIRECTORS OF
PG&E CORPORATION

June 16, 2004

                        WHEREAS, the Nominating, Compensation, and Governance
Committee, with the advice of its independent compensation consultant which
undertook a survey of director compensation at companies which are comparable to
PG&E Corporation, has recommended to the Board of Directors an increase in the
portion of director compensation which is equity-based to more closely align the
directors’ interests with shareholder interests and to reflect changes in
director compensation levels at comparable companies; and

                        WHEREAS, based upon the advice of its independent
compensation consultant, the Nominating, Compensation, and Governance Committee
has recommended to the Board of Directors that the PG&E Corporation Non-Employee
Director Stock Incentive Plan (“Plan”) (a component of the PG&E Corporation
Long-Term Incentive Program) be amended to provide that each person who is a
non-employee director on the first business day of each calendar year during the
term of the Plan will continue to receive a number of shares of restricted
shares of PG&E Corporation common stock having a value equal to $30,000 divided
by the closing price of a share of PG&E Corporation common stock on the New York
Stock Exchange as of the first business day of the calendar year and, in
addition, will receive nonqualified stock options and/or shares of phantom stock
having a total value of $30,000 (in $5,000 increments), where (i) the value and
number of shares subject to the nonqualified stock options on the date of grant
will be determined in accordance with the Black-Scholes stock option valuation
method which will use the average November closing price of PG&E Corporation
stock as the value for PG&E Corporation stock, and (ii) the number of shares of
phantom stock will be equal to that portion of the $30,000 which the
non-employee director elects to receive in shares of phantom stock, divided by
the closing price of a share of PG&E Corporation common stock on the New York
Stock Exchange as of the first business day of  the calendar year, which phantom
stock shall only be paid in the form of shares of PG&E Corporation common stock
upon the non-employee director’s retirement (including mandatory retirement),
death, or disability;

                        NOW, THEREFORE, BE IT RESOLVED that the Board of
Directors hereby finds that it is in the best interests of PG&E Corporation and
its shareholders to amend the Plan substantially in the form presented at this
meeting; and

                        BE IT FURTHER RESOLVED that the amendment of the Plan is
hereby approved and adopted substantially in the form presented at this meeting,
and such amendment shall be effective on July 1, 2004.

--------------------------------------------------------------------------------

 

                        I, LINDA Y.H. CHENG, do hereby certify that I am
Corporate Secretary of PG&E CORPORATION, a corporation organized and existing
under the laws of the State of California; that the above and foregoing is a
full, true, and correct copy of a resolution which was duly adopted by the Board
of Directors of said corporation at a meeting of said Board which was duly and
regularly called and held at the office of said corporation on June 16, 2004;
and that this resolution has never been amended, revoked, or repealed, but is
still in full force and effect.

                        WITNESS my hand and the seal of said corporation
hereunto affixed this 29th day of July, 2004.

                                

LINDA Y.H. CHENG

                                                                    

_______________________________

Linda Y.H. Cheng

Corporate Secretary

PG&E CORPORATION

C  O  R  P  O  R  A  T  E

         S  E  A  L