Unassociated Document


    Exhibit
      10.1

    


    June
      20,
      2006

    


    


    


    


    Mr.
      William Morrow

    Homat
      Viscount #2801

    1-11-40
      Akasaka, Minato-ku

    Tokyo
      107-0052 Japan

    


    Dear
      Bill:

    


    On
      behalf
      of Pacific Gas and Electric Company, I am pleased to extend an offer to you
      to
      join our organization as President and Chief Operating Officer, reporting to
      me.

    


    Your
      initial total compensation package will consist of the following:

    


    	1.  	
            An
              annual base salary of $575,000 ($47,916.67/month) subject to possible
              increases through our annual salary review
              plan.

          


    


    	2.  	
            A
              one-time bonus of $100,000 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 $373,750 (65% of your base salary) in an annual
              short-term incentive plan under which your actual incentive dollars
              may
              range from zero to $747,500 based on performance relative to established
              goals. This incentive will be prorated for the number of months worked
              from your date of hire and will be payable in 2007.
              

          


    


    	4.  	
            Participation
              in the PG&E Corporation Long-Term Incentive Plan (LTIP) as a band 2
              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 your date
              of
              hire and will have an estimated current value of $1,000,000. 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.

          


     

    	5.  	
            A
              one-time supplement LTIP grant with an estimated current value of
              $500,000. This grant will be apportioned and made in the same manner
              as
              the grant described in item 4.

          


    



    Mr.
      Morrow

    June
      20,
      2006

    Page
      2

    


    


     

    	6.  	
            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).
              

          


     

    	7.  	
            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.

          


     

    	8.  	
            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.

          


     

    	9.  	
            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.
              

          


     

    	10.  	
            As
              a result of your officer level (officer band 2), 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 your date of hire. 

          


     

    	11.  	
            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.
              

          


     

    	12.  	
            An
              annual vacation allotment of four weeks, subject to future increases
              based
              on length of service. Your initial 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.

          


     

    	13.  	
            An
              annual perquisite allowance of $25,000 to be used in lieu of individual
              authorizations for cars and memberships in clubs and civic organizations.
              If your date of hire is after June 30, 2006, you will receive half
              of this
              amount ($12,500) for 2006.

          


     

    	14.  	
            Participation
              in the Employee Discount program after six months of continuous service
              following your date of hire. The program offers participants a 25%
              discount on electricity and gas rates for their primary residence.
              In
              order to receive this benefit, 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.

          



    
      
         

      

      
         

        
          

        

      

      
         

      

    


    


    Mr.
      Morrow

    June
      20,
      2006

    Page
      3

    


    


    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 and to also confirm a start date and public
      announcement of August 1, 2006 as soon as possible. It is our understanding
      that
      by June 28, 2006, and after your election by the Board of Directors to the
      position of President and Chief Operating Officer of Pacific Gas and Electric
      Company, that you will formally submit a letter to your current employer
      informing them that there is no acceptable position within Votaphone and
      invoking the severance provisions of your current executive officer
      contract.

    


    Please
      call me at any time if you have questions.

    


    Sincerely,

    


    


    /s/
      Thomas B. King

    


    THOMAS
      B.
      KING

    President
      and Chief Executive Officer

    


    Attachment

    


    This
      is
      to confirm my acceptance of Pacific Gas and Electric Company’s offer as the
      President and Chief Operating Officer as outlined above.

    


    


    
      	
              /s/    William
                Morrow                          June
                20, 2006

            
	
              (Signature
                and Date)