ex1021.htm


    

    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 11⁄2 years of credited service,
      resulting in a total of 101⁄2 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)