[utillogo.gif]
Exhibit 10.21

 
Thomas B. King
Executive Vice President and
Chief Operating Officer
 
Mailing Address:
Mail Code B32
P. O. Box 770000
San Francisco, CA 94177-0001
   
November 21, 2005
           
Overnight Mail:
     
Pacific Gas and Electric Company
     
77 Beale Street, 32nd Floor
Mr. John S. Keenan
     
108 Braewynds Lane
   
415.973.7431
Holly Springs, NC  27540
   
Fax: 415.973.9485
       

Dear Jack:

On behalf of Pacific Gas and Electric Company, I am pleased to extend a revised
offer to you to join our organization as Senior Vice President, Generation and
Chief Nuclear Officer, reporting to me.

Your initial total compensation package will consist of the following:

1.  
An annual base salary of $350,000 ($29,166.67/month) subject to possible
increases through our annual salary review plan.

 
2.  
A one-time bonus of $200,000 payable within 60 days of your date of hire,
subject to normal tax withholdings.  Should you leave the company or should your
employment be terminated for cause within three years of your date of hire, a
prorated amount of this bonus must be refunded to the company.

 
3.  
A target incentive of $175,000 (50% of your base salary) in an annual short-term
incentive plan under which your actual incentive dollars may range from zero to
$350,000 based on performance relative to established goals.  If your date of
hire is in 2005, this incentive will be prorated for the number of months worked
from your date of hire and will be payable in 2006.

 
4.  
A one-time additional incentive tied to the improvement of the performance of
Diablo Canyon Power Plan (DCPP).  Specifically, 50 percent of your 2006 annual
short-term incentive plan award will be tracked in a phantom account contingent
upon INPO’s next rating of DCPP, which is scheduled to occur in the spring of
2007.  If the 2007 INPO rating is a 1, the amount tracked in the phantom account
will be paid to you.

 
5.  
Participation in the PG&E Corporation Long-Term Incentive Plan (LTIP) as a band
3  officer.  Grants under the LTIP are split equally between restricted stock
and performance shares, and are generally made annually on the first business
day of the year.  Your initial grant will be made on the first business day of
January 2006 and will have an estimated current value of $400,000.  This
estimated value is used only for the purpose of determining the number of shares
for your grant.  The ultimate value that you realize from this grant will depend
upon your employment status and the performance of PG&E Corporation common
stock.

 

 
 

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

 
Mr. Keenan
November 21, 2005
Page 2

6.  
A one-time supplement LTIP grant with an estimated current value of
$200,000.  This grant will be apportioned and made in the same manner as the
grant described in item 5.

 
7.  
Participation in the PG&E Corporation Supplemental Executive Retirement Plan
(SERP). The basic benefit payable from the SERP at retirement is a monthly
annuity equal to the product of 1.7% x [average of the three highest years’
combination of salary and annual incentive for the last ten years of service] x
years of credited service x 1/12 less any amounts paid or payable from the
Pacific Gas and Electric Company Retirement Plan  (RP).  During each of your
first seven complete years of employment, you will receive 1½ years of credited
service, resulting in a total of 10½ years of service at the end of seven years
of employment.  Thereafter, you will receive one year of credited service for
each additional year of employment.

 
8.  
Conditioned upon meeting plan requirements, you will also be eligible for
post-retirement life insurance and post-retirement medical benefits upon
retirement under the RP.

 
9.  
Participation in the PG&E Corporation Retirement Savings Plan (RSP), a 401(k)
savings plan.  You will be eligible to contribute as much as 20% of your salary
on either a pre-tax or after-tax basis.  After your first year of service, we
will match contributions you make up to 3% of your salary at 75 cents on each
dollar contributed.  After three years of service, we will match contributions
up to 6% of your salary at 75 cents on each dollar contributed.  All of the
above contributions are subject to the applicable legal limits.

 
10.  
Participation in the PG&E Corporation Supplemental Retirement Savings Plan
(SRSP), a non-qualified, deferred compensation plan.  You may elect to defer
payment of some of your compensation on a pre-tax basis.  We will provide you
with the full matching contributions that cannot be provided through the RSP,
due to legal limitations imposed on highly compensated employees.

 
11.  
As a result of your officer level (officer band 3), you will become an eligible
participant under the Executive Stock Ownership Program effective January 1,
2007.  As an ancillary benefit to that program, you will also be eligible to
receive financial counseling from The AYCO Company at a subsidized rate to
assist you in your understanding of our compensation and benefits programs and
how those programs can help you to achieve financial security.  For this feature
of the program, you will be eligible as of January 1, 2006.

 
12.  
Participation in a cafeteria-style benefits program that permits you to select
coverage tailored to your personal needs and circumstances.  The benefits you
elect will be effective the first of the month following the date of your hire.

 
13.  
An annual vacation allotment of four weeks, subject to future increases based on
length of service.  If your date of hire is in 2005, the vacation allotment will
be prorated based on your date of hire.  In addition, Pacific Gas and Electric
Company recognizes 10 paid company holidays annually and provides 3 floating
holidays immediately upon hire and at the beginning of each year.

 
14.  
An annual perquisite allowance of $20,000 to be used in lieu of individual
authorizations for cars and memberships in clubs and civic organizations.  If
your date of hire is in 2005, you will receive half of this amount ($10,000) for
2005.

 

 
 

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

 
Mr. Keenan
November 21, 2005
Page 3

15.  
Participation in the Employee Discount program after six months of continuous
service following your date of hire.  The program offers participant’s a 25%
discount on electricity and gas rates for their primary residence.  In order to
receive this benefits, you must (a) live within Pacific Gas and Electric
Company’s service territory and (b) have the service in your name at your
primary residence.

 
16.  
A comprehensive executive relocation assistance package, including: (1) the
reimbursement of closing costs on the sale of your current residence, contingent
upon using a PG&E-designated relocation company and purchasing a new residence,
(2) the move of your household goods, including 60 days of storage and the
movement of the goods out of storage, and (3) a lump sum payment of $10,000
payable within 60 days of your date of employment.  In addition, the package
will include financial assistance in the form of a monthly mortgage subsidy of
$3,000 (interest only) for a period of 60 months.  This subsidy is contingent
upon the following: (1) your purchase of a principal residence (within 50 miles
of your work location) within one year of your date of hire, (2) your satisfying
typical mortgage qualification criteria, and (3) use of a company-designated
lender.  Should you have any questions regarding the relocation package, please
contact Denise Nicco, Director of Relocation at (415) 817-8230.

 
As we have discussed, this offer is contingent upon your passing a comprehensive
background verification including a credit check and security clearance
assessment, and a standard drug analysis test.  We will also need to verify your
eligibility to work in the United States based on applicable immigration
laws.  In addition, your election as an officer of Pacific Gas and Electric
Company is subject to approval by the Board of Directors of Pacific Gas and
Electric Company and elements of your compensation are subject to approval by
the Nominating, Compensation, and Governance Committee of the Board of Directors
of PG&E Corporation.
 
Peter Darbee and I look forward to your joining our team and believe you will
make a strong contribution to the achievement of the mission and goals of
Pacific Gas and Electric Company and PG&E Corporation.  I would appreciate
receiving your written acceptance of this offer as soon as possible.  Please
call me at any time if you have any questions.
 
Sincerely,
 
THOMAS B. KING

 
THOMAS B. KING
Executive Vice President and Chief Operating Officer

Attachment

This is to confirm my acceptance of Pacific Gas and Electric Company’s offer as
the Senior Vice President, Generation and Chief Nuclear Officer as outlined
above.

                                                      JOHN S.
KEENAN                   11/28/05             
(Signature and Date)

 
 

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