Exhibit 10.19 

2008 OFFICER SHORT-TERM INCENTIVE PLAN
 
On February 20, 2008, the Compensation Committee of the PG&E Corporation Board
of Directors (“Committee”) approved the specific performance targets for each
component of the 2008 Short-Term Incentive Plan (“STIP”).  The Committee
previously approved the STIP structure and the weighting of each component in
December 2007.  Officers of PG&E Corporation and the Utility are eligible to
receive cash incentives under the STIP based on the extent to which the adopted
2008 performance targets are met.  The Committee will continue to retain full
discretion as to the determination of final officer STIP payments.

The 2008 STIP structure for officers focuses the annual incentive opportunity on
returns to shareholders by emphasizing financial objectives such as earnings
from operations.  The structure also recognizes the equal importance of
improving reliability and customer satisfaction, and employee safety and
engagement.  Corporate financial performance, as measured by corporate earnings
from operations, will account for 40% of the incentive, 20% of the incentive
will be based on the Utility’s success in improving reliability, 20% of the
incentive will be based on the Utility’s success in improving customer
satisfaction, 10% will be based on the results of an employee opinion survey,
and the remaining 10% will be based on achieving safety standards.  For 2008,
the Committee has adopted a mechanism stating that if corporate financial
performance does not exceed 98% of the budgeted earnings from operations, the
aggregate operational metric contribution to the 2008 STIP pool will be capped
at 100% of the operational component target award, or 60% of the total target
STIP award pool.

The corporate financial performance measure is based on PG&E Corporation’s
budgeted earnings from operations that were previously approved by the Board of
Directors, consistent with the basis for reporting and guidance to the financial
community.  As with previous earnings performance scales, unbudgeted items
impacting comparability such as changes in accounting methods, workforce
restructuring, and one-time occurrences will be excluded.  The Committee also
approved the 2008 performance targets for each of the four other measures set
forth in the table below.  The 2007 performance results for each of these
measures are included for comparative purposes.

2008 STIP Operational Performance Targets(1)

Measure
 
Relative Weight
 
2007 Results
 
2008 Target
Customer Satisfaction and Brand Health Index (Residential & Business)(2)
 
20%
 
76.00
 
77.00
Reliable Energy Delivery Index(3)
 
20%
 
1.17
 
1.0
Employee Survey (Premier) Index(4)
 
10%
 
64.3%
 
66.0%
Occupational Safety and Health Administration (OSHA) Recordable Injury Rate(5)
 
10%
 
4.097
 
3.483

 
 

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1.
As explained above, 40% of the STIP award will be based on achievement of
corporate earnings from operations targets.

 
2.
The Customer Satisfaction and Brand Health Index is the result of a quarterly
survey performed by an independent research firm, Research International, and is
a combination of a customer satisfaction score, which has a 75% weighting, as
well as a brand favorability score (measuring the relative strength of the PG&E
brand against a select group of companies), which has a 25% weighting.  The
customer satisfaction score will measure overall satisfaction with the Utility’s
operational performance in delivering its services.  The brand favorability
score will measure residential, small business and medium business customer
perceptions.  This index replaces the index used in the 2006 and 2007 STIP
structures based on residential and business customer satisfaction indices as
reported the J.D. Power Residential Customer Satisfaction Survey and the J.D.
Power Business Customer Satisfaction Survey.

 
3.
The Reliable Energy Delivery Index is a composite index score that measures key
drivers of reliability, including outage frequency and duration (System Average
Interruption Frequency Index (SAIFI), Customer Average Interruption Duration
Index (CAIDI)), Execution of Electric-Based Work Units, and Gas Transmission and
Distribution Integrity.  This index replaces the Business Transformation Index
used in the 2007 STIP structure.

 
4.
The Premier Survey is the primary tool used to measure employee engagement at
PG&E Corporation and the Utility.  The employee index is designed around 15 key
drivers of employee engagement and organizational health.  The average overall
employee survey index score provides a comprehensive metric that is derived by
adding the percent of favorable responses from all 40 core survey items (all of
which fall into one of 15 broader topical areas), and then dividing the total
sum by 40.

 
5.
An “OSHA Recordable” is an occupational (job-related) injury or illness that
requires medical treatment beyond first aid, or results in work restrictions,
death or loss of consciousness. The “OSHA Recordable Rate” is the number of OSHA
Recordables for every 200,000 hours worked, or for approximately 100
employees.  This metric measures the percentage reduction in the Corporation’s
OSHA Recordable rate from the prior year and is used to monitor the
effectiveness of the Corporation’s safety programs, which are intended to
significantly reduce the number and degree of employee injuries and illnesses.

 
Cash awards under the STIP may range from 30 percent to 100 percent of base
salary depending on officer level, with a maximum payout of 200 percent of base
salary, as determined by the Committee.

 
 

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