Exhibit 10.21

2010 OFFICER SHORT-TERM INCENTIVE PLAN

On February 16, 2010, the Compensation Committee of the PG&E Corporation Board
of Directors (“Committee”) approved the specific performance targets for each
component of the 2010 Short-Term Incentive Plan (“STIP”).  The Committee
previously approved the STIP structure and the weighting of each component in
December 2009.  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
2010 performance targets are met.  The Committee will continue to retain full
discretion as to the determination of final officer STIP payments.

The corporate financial performance target, with a weighting of 50%, 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 2010 performance targets for each of the five
other measures set forth in the table below.  The 2009 performance results for
each of these measures are included for comparative purposes.

2010 STIP Operational Performance Targets(1)

Measure
 
Relative Weight
 
2009 Results
 
2010 Target
Customer Satisfaction and Brand Health Index (Residential & Business)(2)
 
15.0%
 
76.8
 
77.7
Reliable Energy Delivery Index(3)
 
15.0%
 
1.775
 
1.00
Employee Survey (Premier) Index(4)
 
5%
 
66.70%
 
68.70%
Occupational Safety and Health Administration (OSHA) Recordable Injury Rate and
Motor Vehicle Incident (MVI) Rate(5)
 
10%
 
2.382
 
1.0
Environmental Leadership(6)
 
5%
 
N/A
 
1.0

1.
As explained above, 50% 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, TNS Custom Research, 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.

 
3.
The Reliable Energy Delivery Index is a composite index score that measures
leading indicators of electric and gas reliability performance, including
electric outage frequency and duration (System Average Interruption Frequency
Index (SAIFI), Customer Average Interruption Duration Index (CAIDI)) and
performance improvement in the resurvey of the Utility’s gas system.

 
4.
The Premier Survey is the primary tool used to measure employee engagement at
PG&E Corporation and the Utility.  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 and then dividing the total
sum by 40.

 
 
 
 

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5.
The Safety Index includes (1) Occupational Safety and Health Administration
(OSHA) Recordable Rate, and (2) Motor Vehicle Incident (MVI) Rate.  An “OSHA
Recordable”, with a 75% weighting, 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 PG&E
Corporation’s and the Utility’s OSHA Recordable rate from the prior year and is
used to monitor the effectiveness of the companies’ safety programs, which are
intended to significantly reduce the number and degree of employee injuries and
illnesses.  The MVI Rate, with a 25% weighting, is defined as the number of
chargeable motor vehicle incidents per 1 million miles driven.  A chargeable
incident is one where the Company driver could have prevented an incident, but
failed to take reasonable steps to do so.  For 2010, subject to the Committee’s
discretion, if there is an employee fatality that results from an accident while
such employee is acting in the course and scope of his or her employment, the
maximum 2010 STIP rating for the Safety performance measure shall be 1.0.  The
2009 result of 2.382 is for the OSHA Recordable Rate only.  The MVI Rate is new
for 2010.

 

 6.
Environmental compliance is measured by the (1) Notice of Violation (NOV) Rate,
and (2) the Utility’s operational footprint in reducing energy and water usage,
and increasing solid waste diversion.  Agency NOV rate is defined as the rate of
NOVs per 100 agency inspections.   Energy reduction is measured by the percent
reduction in millions of British Thermal Units for a subset of Utility
facilities. Water use reduction is measured by the percentage reduction in water
consumption, in gallons, for a subset of Utility facilities. Solid waste
diversion is measured by the percent reduction in solid waste disposal at a
subset of Utility facilities. Solid waste includes non-hazardous waste, such as
glass, paper, and certain metals. The focus of this measure is to divert solid
waste from landfills, primarily through increased recycling efforts.

 
Cash awards under the STIP may range from 40 percent to 100 percent of base
salary depending on officer level, with a maximum payout of 200 percent of the
officer’s targeted award, as determined by the Committee.

 
 

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