Document:

<PAGE>

                                                                    EXHIBIT 10.2

                                PG&E CORPORATION
                      SUPPLEMENTAL RETIREMENT SAVINGS PLAN

     This is the controlling and definitive statement of the PG&E CORPORATION
("PG&E CORP") Supplemental Retirement Savings Plan (the "Plan").  Except as
provided herein, the Plan is effective as of January 1, 2000, with respect to
all individuals who were Eligible Employees as of such date.  The Plan takes the
place of and assumes existing benefits under the PG&E Corporation Deferred
Compensation Plan for Officers, the PG&E Corporation Supplemental Executive
Retirement Plan, the Savings Fund Plan Excess Benefit Arrangement of Pacific Gas
and Electric Company, and any other non-qualified defined contribution
retirement plan excess benefit plans, programs or practices maintained by any
Participating Subsidiary of PG&E CORP.  The Plan is effective January 1, 2000,
for Eligible Employees of Pacific Gas and Electric Company and for Grandfathered
Eligible Employees of PG&E CORP; it is effective January 1, 1999, for Eligible
Employees of PG&E Generating Company; and it is effective January 1, 1997, for
all other Eligible Employees of PG&E CORP.

1.   Purpose of the Plan
     -------------------

     The Plan is established and is maintained for the benefit of a select group
     of management and highly compensated employees of PG&E CORP and its
     Participating Subsidiaries in order to provide such employees with certain
     deferred compensation benefits.  The Plan is an unfunded deferred
     compensation plan that is intended to qualify for the exemptions provided
     in Sections 201, 301, and 401 of ERISA.

2.   Definitions
     -----------

     The following words and phrases shall have the following meanings unless a
     different meaning is plainly required by the context:

     (a)  "Basic Employer Contributions" shall mean the amounts credited to
           ----------------------------
          Eligible Employees' Accounts under the Plan by the Employers, in
          accordance with Section 3(c).

     (b)  "Board of Directors" shall mean the Board of Directors of PG&E CORP,
           ------------------
          as from time to time constituted.

     (c)  "Code" shall mean the Internal Revenue Code of 1986, as amended.
           ----
          Reference to a specific section of the Code shall include such
          section, any valid regulation promulgated thereunder, and any
          comparable provision of any future legislation amending,
          supplementing, or superseding such section.

     (d)  "Committee" shall mean the Nominating and Compensation Committee of
           ---------
          the Board, as it may be constituted from time to time.
<PAGE>

     (e)  "Eligible Employee" shall mean an Employee who:
           -----------------

          (1)  Is an officer of PG&E CORP or any Participating Subsidiary and
               who is in Officer Band 5 or above; or

          (2)  Is a key employee of PG&E CORP or any Participating Subsidiary
               and who is designated by the Plan Administrator as eligible to
               participate in the Plan.

     (f)  "Eligible Employee's Account" or "Account" shall mean as to any
           ---------------------------      -------
          Eligible Employee, the separate account maintained on the books of the
          Employer in accordance with Section 6(a) in order to reflect his or
          her interest under the Plan. Accounts shall be centrally administered
          by the Plan Administrator or its designee.

     (g)  "Employee" shall mean an individual who is treated in the records of
           --------
          an Employer as an employee of the Employer, who is not on an unpaid
          leave of absence, and/or who is not covered by a collective bargaining
          agreement; provided, however, such term shall not mean an individual
          who is a "leased employee" or who has entered into a written contract
          or agreement with an Employer which explicitly excludes such
          individual from participation in an Employer's benefit plans. The
          provisions of this definition shall govern, whether or not it is
          determined that an individual otherwise meets the definition of
          "common law" employee.

     (h)  "Employers" shall mean PG&E CORP and the Participating Subsidiaries
           ---------
          designated by the Employee Benefit Committee of PG&E CORP. An initial
          list of the Participating Subsidiaries is contained in Appendix A to
          this Plan.

     (i)  "ERISA" shall mean the Employee Retirement Income Security Act of
           -----
          1974, as amended. Reference to a specific section of ERISA shall
          include such section, any valid regulation promulgated thereunder, and
          any comparable provision of any future legislation amending,
          supplementing, or superseding such section.

     (j)  "Grandfathered" shall mean an individual who was an Employee of
           -------------
          Pacific Gas and Electric Company and who has become an Employee of
          PG&E CORP by reason of a transfer prior to January 1, 2000.

     (k)  "Investment Funds" shall mean (i) the PG&E CORP Phantom Stock Fund,
           ----------------
          (ii) the AA Utility Bond Fund, and (iii) the S&P 500 Index Fund. The
          Investment Funds shall be used for tracking phantom investment results
          under the Plan.

     (l)  "Matching Employer Contributions" shall mean the amounts credited to
           -------------------------------
          Eligible Employees' Accounts under the Plan by the Employers, in
          accordance with Section 3(b).

     (m)  "Participating Subsidiary" shall mean a United States-based subsidiary
           ------------------------
          of PG&E CORP, which has been designated by the Employee Benefit
          Committee of PG&E CORP as a Participating Subsidiary under this Plan.
          At such times and under such conditions as the Committee may direct,
          one or more other subsidiaries of PG&E CORP may become Participating

                                      -2-
<PAGE>

          Subsidiaries or a Participating Subsidiary may be withdrawn from the
          Plan. An initial list of the Participating Subsidiaries is contained
          in Appendix A to this Plan.

     (n)  "PG&E CORP" shall mean PG&E Corporation, a California corporation.
           ---------

     (o)  "Plan" shall mean the PG&E Corporation Supplemental Retirement Savings
           ----
          Plan, as set forth in this instrument and as heretofore and hereafter
          amended from time to time.

     (p)  "Plan Year" shall mean the calendar year.
           ---------

     (q)  "Retirement" or "Retire" shall mean an Eligible Employee's "separation
           ----------      ------
          from service" within the meaning of Section 401(k) of the Code,
          provided that the Eligible Employee is at least 55 years of age and
          has been employed by an Employer for at least five years.

     (r)  "RSP" shall mean, with respect to any Eligible Employee, the PG&E
           ---
          Corporation Retirement Savings Plan or any predecessor qualified
          retirement plan sponsored by PG&E CORP or any of its subsidiary
          companies.

     (s)  "Valuation Date" shall mean:
           --------------

          (1)  For purposes of valuing Plan assets and Eligible Employees'
               Accounts for periodic reports and statements, the date as of
               which such reports or statements are made; and

          (2)  For purposes of determining the amount of assets actually
               distributed to the Eligible Employee, his or her beneficiary, or
               an Alternate Payee (or available for withdrawal), a date that
               shall not be more than seven business days prior to the date the
               check is issued to the Eligible Employee.

          In any other case, the Valuation Date shall be the date designated by
          the Plan Administrator (in its discretion) or the date otherwise set
          forth in this Plan.  In all cases, the Plan Administrator (in its
          discretion) may change the Valuation Date, on a uniform and
          nondiscriminatory basis, as is necessary or appropriate.
          Notwithstanding the foregoing, the Valuation Date shall occur at least
          annually.

3.   Employer Contributions
     ----------------------

     (a)  Matching Employer Contributions.  Subject to the provisions of Section
          -------------------------------
          13, the Eligible Employee's Account shall be credited for each Plan
          Year with a Matching Employer Contribution, calculated in the manner
          provided in Sections 3(a) (1), (2), and (3) below:

                                      -3-
<PAGE>

          (1)  First, an amount shall be calculated equal to the maximum
               matching contribution that would be made under the terms of the
               RSP, taking into account for such Plan Year the amount of pre-tax
               deferrals and after-tax contributions the Eligible Employee
               elected under the RSP. For purposes of this calculation, any
               amounts deferred under Subsection 4(a) of this Plan shall be
               treated as pre-tax deferrals under the RSP.

          (2)  The calculation made in accordance with this Section 3(a) (1)
               above shall be made without regard to any limitation on such
               amounts under the RSP resulting from the application of any of
               the limitations under Code Sections 401(m), 401(a)(17), or 415.

          (3)  The Employer Matching Contribution to be credited to the Account
               of an Eligible Employee for any Plan Year shall equal the amount
               calculated in accordance with Sections 3(a) (1) and (2) above,
               reduced by the amount of matching contribution made to such
               Eligible Employee's account for such Plan Year under the RSP.

     (b)  Crediting of Matching Employer Contributions.  Matching Employer
          --------------------------------------------
          Contributions shall be calculated and credited to the Eligible
          Employee's Account as of the first business day of the calendar year
          following the Plan Year and shall be credited only if the Eligible
          Employee is an Employee on the last day of Plan Year for which the
          amounts are credited.

     (c)  Basic Employer Contributions.  Subject to the provisions of Section
          ----------------------------
          13, the Account of each Eligible Employee shall be credited for each
          Plan Year with a Basic Employer Contribution, calculated in the manner
          provided in Sections 3(c) (1), (2), and (3) below:

          (1)  First, an amount shall be calculated equal to the Basic Employer
               Contribution that would be made under the terms of the RSP,
               taking into account for such Plan Year the Eligible Employee's
               Covered Compensation under the RSP, before any deductions for
               compensation deferrals elected by such Eligible Employee under
               Subsection 4(a) of this Plan. For Eligible Employees as defined
               by Section 2(e)(1) of this Plan, compensation shall also reflect
               such Eligible Employee's Short Term Incentive Plan awards.

          (2)  The calculation made in accordance with this Section 3(c)(1)
               above shall be made without regard to any limitation on such
               amounts under the RSP resulting from the application of any of
               the limitations under Code Sections 401(a)(4), 401(a)(17), or
               415.

          (3)  The Employer Contribution to be credited to the Account of an
               Eligible Employee for any Plan Year shall equal the amount
               calculated in accordance with Sections 3(c)(1) and (2) above,
               reduced by the amount of Basic Employer Contributions made to
               such Eligible Employee's account for such Plan Year under the
               RSP.

                                      -4-
<PAGE>

     (d)  Crediting of Basic Employer Contributions.  The Employer Contribution
          -----------------------------------------
          attributable to an Eligible Employee's Short Term Incentive Plan award
          shall be credited to an Eligible Employee's Account as of the first
          business day of the month following the date on which the Short Term
          Incentive Plan award is paid. All other Employer Contributions made in
          respect of an Eligible Employee shall be credited to the Eligible
          Employee's Account as of the first business day of the calendar year
          following the Plan Year and shall be credited only if the Eligible
          Employee is an Employee on the last day of the Plan Year for which the
          amounts are credited.

     (e)  FICA Taxes.  All amounts credited to an Eligible Employee's Account
          ----------
          under Section 3 shall be net of FICA taxes withheld on behalf of such
          Eligible Employee.

4.   Eligible Employee Deferrals
     ---------------------------

     (a)  Amount of Deferral.  An Eligible Employee may defer (i) 5 percent to
          ------------------
          50 percent of his or her annual salary; and (ii) all or part of his or
          her Short Term Incentive Plan awards, Long Term Incentive Plan awards
          (other than stock options), Perquisite Allowances, and any other
          special payments, awards, or bonuses as authorized by the Plan
          Administrator.

     (b)  Credits to Accounts.  Salary deferrals shall be credited to an
          -------------------
          Eligible Employee's Account as of each payroll period. All other
          deferrals attributable to allowances, awards, bonuses, and other
          payments shall be credited as of the date that they otherwise would
          have been paid.

     (c)  Deferral Election.  An Eligible Employee must file an election form
          -----------------
          with the Plan Administrator which indicates the percentage of salary
          and applicable pay periods, and the amount of any awards, allowances,
          payments, and bonuses to be deferred under the Plan. Notwithstanding
          the foregoing, upon first becoming an Eligible Employee, an election
          to defer shall be effective for the month following the filing of a
          Deferral Election Form, provided said Form is filed within 60 days
          following the date when the employee first becomes an Eligible
          Employee.

     (d)  Deferral of Special Incentive Stock Ownership Premiums.  All of an
          ------------------------------------------------------
          Eligible Employee's Special Incentive Stock Ownership Premiums are
          automatically deferred to the Plan immediately upon grant and
          converted into units in the PG&E CORP Phantom Stock Fund. The units
          attributable to Special Incentive Stock Ownership Premiums and any
          additional units resulting from the conversion of dividend equivalents
          thereon remain unvested until the earlier of the third anniversary of
          the date on which the Special Incentive Stock Ownership Premiums are
          credited to an Eligible Employee's account (provided the Eligible
          Employee continues to be employed on such date), death, disability, or
          retirement of the participant, or upon a Change in Control as defined
          in the PG&E Corporation Long-Term Incentive Program (LTIP). (The term
          "disability" shall, for purposes of the Plan, have the same meaning as
          in Section 22(e)(3) of the Internal Revenue Code.) Unvested units
          attributable to Special Incentive Stock Ownership Premiums and any
          additional units resulting from the conversion of dividend equivalents
          thereon shall be forfeited upon termination of the Eligible Employee's
          employment unless otherwise provided in the PG&E Corporation Officer
          Severance Policy, or if an Eligible Employee's stock ownership falls
          below the levels set forth in the Executive Stock Ownership Program.

                                      -5-
<PAGE>

5.   Investment Funds
     ----------------

     (a)  Although no assets will be segregated or otherwise set aside with
          respect to an Eligible Employee's Account, the amount that is
          ultimately payable to the Eligible Employee with respect to such
          Account shall be determined as if such Account had been invested in
          some or all of the Investment Funds. The Plan Administrator, in its
          sole discretion, shall adopt (and modify from time to time) such rules
          and procedures as it deems necessary or appropriate to implement the
          deemed investment of the Eligible Employees' Accounts. Such procedures
          generally shall provide that an Eligible Employee's Account shall be
          deemed to be invested among the three Investment Funds in the manner
          elected by the Eligible Employee in such percentages and manner as
          prescribed by the Plan Administrator. In the event no election has
          been made by the Eligible Employee, such Account will be deemed to be
          invested in the AA Utility Bond Fund. Eligible Employees shall be able
          to reallocate their Accounts between the Investment Funds and
          reallocate amounts newly credited to their Accounts at such time and
          in such manner as the Plan Administrator shall prescribe. Anything to
          the contrary herein notwithstanding, an Eligible Employee may not
          reallocate Account balances between Investment Funds if such
          reallocation would result in a non-exempt Discretionary Transaction as
          defined in Rule 16b-3 of the Securities Exchange Act of 1934, as
          amended, or any successor to Rule 16b-3, as in effect when the
          reallocation is requested.

          (1)  AA Utility Bond Fund. On the first business day of each calendar
               quarter, interest shall be credited on the amounts invested in
               the AA Utility Bond Fund as of the last business day of the
               immediately preceding calendar quarter and prorated based on the
               number of days in the quarter that the balance was allocated to
               the AAA Utility Bond Fund. Such interest shall be at a rate equal
               to the AA Utility Bond Yield reported in Moody's Public Utility,
                                                        ----------------------
               published in the issue of Moody's Investors Service immediately
                                         -------------------------
               preceding the first day of the calendar quarter in which the
               interest is to be credited. Such interest shall become a part of
               the Eligible Employee's Account and shall be paid at the same
               time or times as the balance of the Eligible Employee's Account.
               Notwithstanding the above, if before the end of the quarter an
               Eligible Employee has requested that his or her Account balance
               be reallocated to another Investment Fund(s) or the Eligible
               Employee's Account balance has been paid to the Eligible Employee
               or to the Eligible Employee's beneficiary, prorated interest on
               the Eligible Employee's Account balance shall be calculated at a
               rate equal to the AA Utility Bond Yield reported in Moody's
                                                                   -------
               Public Utility, published in the issue of Moody's Investors
               --------------                            -----------------
               Service immediately preceding the date of such reallocation or
               -------
               payment and shall be credited to the Eligible Employee's Account
               in such other Investment Fund(s) on the date of reallocation or
               paid directly to the Eligible Employee or the Eligible Employee's
               beneficiary, whichever is applicable.

          (2)  PG&E CORP Phantom Stock Fund. Amounts credited to the PG&E CORP
               Phantom Stock Fund shall be converted into units (including
               fractions computed to three decimal places) each representing a
               share of PG&E CORP common stock. The value of a unit for purposes
               of determining the number of units to credit upon initial
               allocation or upon reallocation from another Investment Fund, and
               for determining the dollar value of the aggregate number of units
               to be reallocated from the PG&E CORP Phantom Stock Fund to
               another Investment Fund and for

                                      -6-
<PAGE>

               distributions from the Plan, shall be the average of the daily
               high and low price of a share of PG&E CORP common stock as traded
               on the New York Stock Exchange for the 30 trading days preceding
               the date that (i) amounts are credited to an Eligible Employee's
               Account in the PG&E CORP Phantom Stock Fund, or (ii) the Plan
               Administrator receives a reallocation request, in the case of
               reallocations. Thereafter, the value of a unit shall fluctuate in
               accordance with the closing price of PG&E CORP common stock on
               the New York Stock Exchange. Each time that PG&E CORP pays a
               dividend on its common stock, an amount equal to such dividend
               payable with respect to each share of PG&E CORP common stock,
               multiplied by the number of units credited to an Eligible
               Employee's Account, shall be credited to the Eligible Employee's
               Account and converted into additional units. The number of
               additional units shall be calculated by dividing the aggregate
               amount of credited dividends, i.e. the dividend multiplied by the
               number of units credited to the Eligible Employee's Account as of
               the dividend record date, by the closing price of a share of PG&E
               CORP common stock on the New York Stock Exchange on the dividend
               payment date. If, after the record date but before the dividend
               payment date, an Eligible Employee's balance in the PG&E CORP
               Phantom Stock Fund has been reallocated to another Investment
               Fund(s) or has been paid to the Eligible Employee or to the
               Eligible Employee's beneficiary, then an amount equal to the
               aggregated dividend shall be credited to the Eligible Employee's
               Account in such other Investment Fund(s) or paid directly to the
               Eligible Employee or the Eligible Employee's beneficiary,
               whichever is applicable.

          (3)  S&P 500 Index Fund. Amounts credited to the S&P 500 Index Fund
               shall be converted into units each representing a LCSF unit held
               in the RSP on the date of allocation. Thereafter, the value of a
               unit held in the S&P Index Fund shall be determined in the same
               manner as the value of a LCSF unit under Section 18 of the RSP.

6.   Accounting
     ----------

     (a)  Eligible Employees' Accounts.  At the direction of the Plan
          ----------------------------
          Administrator, there shall be established and maintained on the books
          of the Employer, a separate account for each Eligible Employee in
          order to reflect his or her interest under the Plan.

     (b)  Investment Earnings.  Each Eligible Employee's Account shall initially
          -------------------
          reflect the value of his or her Account's interest in each of the
          Investment Funds, deemed acquired with the amounts credited thereto.
          Each Eligible Employee's Account shall also be credited (or debited)
          as of the end of each day with the net appreciation (or depreciation),
          earnings and gains (or losses) with respect to the investments deemed
          made by his or her Account. Any such net earnings or gains deemed
          realized with respect to any investment of any Eligible Employee's
          Account shall be deemed reinvested in additional amounts of the same
          investment and credited to the Eligible Employee's Account.

                                      -7-
<PAGE>

     (c)  Accounting Methods.  The accounting methods or formulae to be used
          ------------------
          under the Plan for the purpose of maintaining the Eligible Employees'
          Accounts shall be determined by the Plan Administrator. The accounting
          methods or formulae selected by the Plan Administrator may be revised
          from time to time but shall conform to the extent practicable with the
          accounting methods used under the Applicable Plan.

     (d)  Valuations and Reports.  The fair market value of each Eligible
          ----------------------
          Employee's Account shall be determined as of each Valuation Date. In
          making such determinations and in crediting net deemed earnings and
          gains (or losses) in the Investment Funds to the Eligible Employees'
          Accounts, the Plan Administrator (in its discretion) may employ such
          accounting methods as the Plan Administrator (in its discretion) may
          deem appropriate in order to fairly reflect the fair market values of
          the Investment Funds and each Eligible Employee's Account. For this
          purpose, the Plan Administrator may rely upon information provided by
          the Plan Administrator or other persons believed by the Plan
          Administrator to be competent.

     (e)  Statements of Eligible Employee's Accounts.  Each Eligible Employee
          ------------------------------------------
          shall be furnished with periodic statements of his or her interest in
          the Plan, at least annually.

7.   Distributions
     -------------

     (a)  Distribution of Account Balances.  Unless the Eligible Employee has
          --------------------------------
          elected otherwise under this Section 7, distribution of the balance
          credited to an Eligible Employee's Account shall be made in a single
          sum in the January of the year following Retirement or termination of
          service:

          (1)  In the case of an Alternate Payee (as defined in Section 9(a)),
               distribution shall be made as directed in a domestic relations
               order which the Plan Administrator determines is a QDRO (as
               defined in Section 9(a)), but only as to the portion of the
               Eligible Employee's Account which the QDRO states is payable to
               the Alternate Payee.

          (2)  Any provisions of the Plan notwithstanding distribution of
               account balances must commence no later than in the January
               following the year which the Eligible Employee reaches age 72.

     (b)  Installment Distributions.  In lieu of a single sum payment, an
          -------------------------
          Eligible Employee may elect in writing and file with the Plan
          Administrator an election that payment of amounts credited to the
          Eligible Employee's Account be made in a specified number of
          approximately equal annual installments (not in excess of 10).

     (c)  Early Distributions. By filing an election with the Plan
          -------------------
          Administrator, an Eligible Employee may elect to commence distribution
          at any time other than Retirement or termination or may alter a
          previously filed election, provided that:

                                      -8-
<PAGE>

          (1)  such election or alteration is made at least one year prior to
               the earliest date that (i) Retirement or termination of the
               Eligible Employee, or (ii) the date selected for distribution to
               begin under a previously filed election; and

          (2)  such election or alteration does not provide for the receipt of
               such amounts earlier than one year from the date of the election
               or alteration.

     (d)  Death Distributions.  If an Eligible Employee dies before the entire
          -------------------
          balance of his or her Account has been distributed (whether or not the
          Eligible Employee had previously terminated employment and whether or
          not installment payments had previously commenced), the remaining
          balance of the Eligible Employee's Account shall be distributed to the
          beneficiary designated or otherwise determined in accordance with
          Section 7(g), as soon as practicable after the date of death.

     (e)  Special Incentive Stock Ownership Premiums.  Distributions
          ------------------------------------------
          attributable to Special Incentive Stock Ownership Premiums shall only
          be made in January following the year in which an Eligible Employee
          terminates employment, Retires, or dies, and shall only be made in the
          form of one or more certificates for the number of vested Special
          Incentive Stock Ownership Premium units, rounded down to the nearest
          whole share.

     (f)  Effect of Change in Eligible Employee Status.  If an Eligible Employee
          --------------------------------------------
          ceases to be an Eligible Employee, the balance credited to his or her
          Account shall continue to be credited (or debited) with appreciation,
          depreciation, earnings, gains or losses under the terms of the Plan
          and shall be distributed to him or her at the time and in the manner
          set forth in this Section 7; provided, however, that if an Eligible
          Employee terminates employment with an Employer other than by reason
          of Retirement, the entire balance credited to his or her Account shall
          be distributed in a lump sum cash payment in January of the year
          following the year of termination of employment. Anything to the
          contrary notwithstanding, the Plan Administrator, in its sole
          discretion, may authorize an accelerated distribution of the balance
          credited to his or her Account in the form of a lump sum cash payment
          as of any earlier date.

     (g)  Payments to Incompetents.  If any individual to whom a benefit is
          ------------------------
          payable under the Plan is a minor or if the Plan Administrator
          determines that any individual to whom a benefit is payable under the
          Plan is incompetent to receive such payment or to give a valid release
          therefor, payment shall be made to the guardian, committee, or other
          representative of the estate of such individual which has been duly
          appointed by a court of competent jurisdiction. If no guardian,
          committee, or other representative has been appointed, payment may be
          made to any person as custodian for such individual under the
          California Uniform Transfers to Minors Act (or similar law of another
          state) or may be made to or applied to or for the benefit of the minor
          or incompetent, the incompetent's spouse, children or other
          dependents, the institution or persons maintaining the minor or
          incompetent, or any of them, in such proportions as the Plan
          Administrator from time to time shall determine; and the release of
          the person or institution receiving the payment shall be a valid and
          complete discharge of any liability of PG&E CORP with respect to any
          benefit so paid.

                                      -9-
<PAGE>

     (h)  Beneficiary Designations.  Each Eligible Employee may designate, in a
          ------------------------
          signed writing delivered to the Plan Administrator, on such form as it
          may prescribe, one or more beneficiaries to receive any distribution
          which may become payable under the Plan as the result of the Eligible
          Employee's death. An Eligible Employee may designate different
          beneficiaries at any time by delivering a new designation in like
          manner. Any designation shall become effective only upon its receipt
          by the Plan Administrator, and the last effective designation received
          by the Plan Administrator shall supersede all prior designations. If
          an Eligible Employee dies without having designated a beneficiary or
          if no beneficiary survives the Eligible Employee, the Eligible
          Employee's Account shall be payable to the beneficiary or
          beneficiaries designated or otherwise determined under the RSP.

     (i)  Undistributable Accounts.  Each Eligible Employee and (in the event of
          ------------------------
          death) his or her beneficiary shall keep the Plan Administrator
          advised of his or her current address. If the Plan Administrator is
          unable to locate the Eligible Employee or beneficiary to whom an
          Eligible Employee's Account is payable under this Section 7, the
          Eligible Employee's Account shall be frozen as of the date on which
          distribution would have been completed in accordance with this Section
          7, and no further appreciation, depreciation, earnings, gains or
          losses shall be credited (or debited) thereto. PG&E CORP shall have
          the right to assign or transfer the liability for payment of any
          undistributable Account to the Eligible Employee's former Employer (or
          any successor thereto).

     (j)  Plan Administrator Discretion.  Within the specific time periods
          -----------------------------
          described in this Section 7, the Plan Administrator shall have sole
          discretion to determine the specific timing of the payment of any
          Account balance under the Plan.

8.   Distribution Due to Unforeseeable Emergency
     -------------------------------------------

     A participant may request a distribution due to an unforseeable emergency
     by submitting a written request to the Plan Administrator.  The Plan
     Administrator shall have the authority to require such evidence as it deems
     necessary to determine if a distribution is warranted.  If an application
     for a hardship distribution due to an unforeseeable emergency is approved,
     the distribution shall be payable in a method determined by the Plan
     Administrator as soon as possible after approval of such distribution.  A
     participant who has commenced receiving installment payments under the Plan
     may request acceleration of such payments in the event of an unforeseeable
     emergency.  The Administrator may permit accelerated payments to the extent
     such accelerated payment does not exceed the amount necessary to meet the
     emergency.

9.   Domestic Relations Orders
     -------------------------

     (a)  Qualified Domestic Relations Orders.  The Plan Administrator shall
          -----------------------------------
          establish written procedures for determining whether a domestic
          relations order purporting to dispose of any portion of an Eligible
          Employee's Account is a qualified domestic relations order (within the
          meaning of Section 414(p) of the Code) (a "QDRO").
                                                     ----

                                      -10-
<PAGE>

          (1)  No Payment Unless a QDRO. No payment shall be made to any person
               designated in a domestic relations order (an "Alternate Payee")
                                                             ---------------
               until the Plan Administrator (or a court of competent
               jurisdiction reversing an initial adverse determination by the
               Plan Administrator) determines that the order is a QDRO. Payment
               shall be made to each Alternate Payee as specified in the QDRO.

          (2)  Time of Payment.  Payment may be made to an Alternate Payee in
               the form of a lump sum, at the time specified in the QDRO, but no
               earlier than as soon as practicable following the date the QDRO
               determination is made.

          (3)  Hold Procedures.  Notwithstanding any contrary Plan provision,
               prior to the receipt of a domestic relations order, the Plan
               Administrator may, in its sole discretion, place a hold upon all
               or a portion of an Eligible Employee's Account for a reasonable
               period of time (as determined by the Plan Administrator) if the
               Plan Administrator receives notice that (a) a domestic relations
               order is being sought by the Eligible Employee, his or her
               spouse, former spouse, child or other dependent, and (b) the
               Eligible Employee's Account is a source of the payment under such
               domestic relations order. For purposes of this Section 9(a)(3), a
               "hold" means that no withdrawals, distributions, or investment
                ----
               transfers may be made with respect to an Eligible Employee's
               Account. If the Plan Administrator places a hold upon an Eligible
               Employee's Account pursuant to this Section 9(a)(3), it shall
               inform the Eligible Employee of such fact.

10.  Vesting
     -------

     Except as provided in Section 4(d), an Eligible Employee's interest in his
     or her Account at all times shall be 100 percent vested and nonforfeitable.

11.  Administration of the Plan
     --------------------------

     (a)  Plan Administrator.  The Employee Benefit Committee of PG&E CORP is
          ------------------
          hereby designated as the administrator of the Plan (within the meaning
          of Section 3(16)(A) of ERISA). The Plan Administrator delegates to the
          Senior Human Resource Officer for PG&E CORP, or his or her designee,
          the authority to carry out all duties and responsibilities of the Plan
          Administrator under the Plan. The Plan Administrator shall have the
          authority to control and manage the operation and administration of
          the Plan.

     (b)  Powers of Plan Administrator.  The Plan Administrator shall have all
          ----------------------------
          discretion and powers necessary to supervise the administration of the
          Plan and to control its operation in accordance with its terms,
          including, but not by way of limitation, the power to interpret the
          provisions of the Plan and to determine, in its sole discretion, any
          question arising under, or in connection with the administration or
          operation of, the Plan.

                                      -11-
<PAGE>

     (c)  Decisions of Plan Administrator.  All decisions of the Plan
          -------------------------------
          Administrator and any action taken by it in respect of the Plan and
          within the powers granted to it under the Plan shall be conclusive and
          binding on all persons and shall be given the maximum deference
          permitted by law.

12.  Funding
     -------

     All amounts credited to an Eligible Employee's Account under the Plan shall
     continue for all purposes to be a part of the general assets of PG&E CORP.
     The interest of the Eligible Employee in his or her Account, including his
     or her right to distribution thereof, shall be an unsecured claim against
     the general assets of PG&E CORP.  While PG&E CORP may choose to invest a
     portion of its general assets in investments identical or similar to those
     selected by Eligible Employees for purposes of determining the amounts to
     be credited (or debited) to their Accounts, nothing contained in the Plan
     shall give any Eligible Employee or beneficiary any interest in or claim
     against any specific assets of PG&E CORP.

13.  Modification or Termination of Plan
     -----------------------------------

     (a)  Employers' Obligations Limited.  The Plan is voluntary on the part of
          ------------------------------
          the Employers, and the Employers do not guarantee to continue the
          Plan. PG&E CORP at any time may, by appropriate amendment of the Plan,
          suspend Matching Employer Contributions and/or Basic Employer
          Contributions or may discontinue Matching Employer Contributions
          and/or Basic Employer Contributions, with or without cause.

     (b)  Right to Amend or Terminate.  The Board of Directors, acting through
          ---------------------------
          its Nominating and Compensation Committee, reserves the right to
          alter, amend, or terminate the Plan, or any part thereof, in such
          manner as it may determine, for any reason whatsoever.

          (1)  Limitations.  Any alteration, amendment, or termination shall
               take effect upon the date indicated in the document embodying
               such alteration, amendment, or termination, provided that no such
               alteration or amendment shall divest any portion of an Account
               that is then vested under the Plan.

     (c)  Effect of Termination.  If the Plan is terminated, the balances
          ---------------------
          credited to the Accounts of the Eligible Employees affected by such
          termination shall be distributed to them at the time and in the manner
          set forth in Section 7; provided, however, that the Plan
          Administrator, in its sole discretion, may authorize accelerated
          distribution of Eligible Employees' Accounts as of any earlier date.

14.  General Provisions
     ------------------

     (a)  Inalienability.  Except to the extent otherwise directed by a domestic
          --------------
          relations order which the Plan Administrator determines is a QDRO (as
          defined in Section 9(a) or mandated by applicable law, in no event may
          either an Eligible Employee, a former Eligible Employee or his or her
          spouse, beneficiary or estate sell, transfer, anticipate, assign,
          hypothecate, or otherwise dispose of any right or interest under the
          Plan; and such rights and interests shall not at any time be subject
          to the claims of creditors nor be liable to attachment, execution, or
          other legal process.

                                      -12-
<PAGE>

     (b)  Rights and Duties.  Neither the Employers nor the Plan Administrator
          -----------------
          shall be subject to any liability or duty under the Plan except as
          expressly provided in the Plan, or for any action taken, omitted, or
          suffered in good faith.

     (c)  No Enlargement of Employment Rights.  Neither the establishment or
          -----------------------------------
          maintenance of the Plan, the making of any Matching Employer
          Contributions, nor any action of any Employer or Plan Administrator,
          shall be held or construed to confer upon any individual any right to
          be continued as an Employee nor, upon dismissal, any right or interest
          in any specific assets of the Employers other than as provided in the
          Plan. Each Employer expressly reserves the right to discharge any
          Employee at any time, with or without cause or advance notice.

     (d)  Apportionment of Costs and Duties.  All acts required of the Employers
          ---------------------------------
          under the Plan may be performed by PG&E CORP for itself and its
          Participating Subsidiaries, and the costs of the Plan may be equitably
          apportioned by the Plan Administrator among PG&E CORP and the other
          Employers. Whenever an Employer is permitted or required under the
          terms of the Plan to do or perform any act, matter or thing, it shall
          be done and performed by any officer or employee of the Employer who
          is thereunto duly authorized by the board of directors of the
          Employer.

     (e)  Applicable Law.  The provisions of the Plan shall be construed,
          --------------
          administered, and enforced in accordance with the laws of the State of
          California and, to the extent applicable, ERISA.

     (f)  Severability.  If any provision of the Plan is held invalid or
          ------------
          unenforceable, its invalidity or unenforceability shall not affect any
          other provisions of the Plan, and the Plan shall be construed and
          enforced as if such provision had not been included.

     (g)  Captions.  The captions contained in and the table of contents
          --------
          prefixed to the Plan are inserted only as a matter of convenience and
          for reference and in no way define, limit, enlarge, or describe the
          scope or intent of the Plan nor in any way shall affect the
          construction of any provision of the Plan.

                                   Execution
                                   ---------

     IN WITNESS WHEREOF, PG&E CORP, by its duly authorized officer, has executed
this Plan on the date indicated below.

                              PG&E CORPORATION

Dated:  _______________       By: ________________________________________

                              Title: _____________________________________

                                      -13-
<PAGE>

                                   APPENDIX A

                           PARTICIPATING SUBSIDIARIES

      Participating Subsidiaries as of January 1, 1997
      ------------------------------------------------

         - PG&E Gas Transmission Corporation
         - PG&E Gas Transmission, Texas Corporation
         - PG&E Gas Transmission TECO, Inc.
         - PG&E Energy Trading-Gas Corporation
         - PG&E Energy Services Corporation
         - And the U.S. subsidiaries of each of the above-named corporations.

      Additional Participating Subsidiaries as of January 1, 1998
      -----------------------------------------------------------

         - PG&E Corporation
         - Pacific Gas and Electric Company
         - PG&E Generating Company
         - PG&E Corporation Support Services, Inc.
         - And the U.S. subsidiaries of each of the above-named corporations.

                                      -14-<PAGE>

                                                                    EXHIBIT 10.7

                                 CONFIDENTIAL

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

                            2000 OFFICER SHORT-TERM
                           INCENTIVE PLAN FINANCIAL
                              PERFORMANCE MEASURE

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

                          NOMINATING AND COMPENSATION
                      COMMITTEE OF THE BOARD OF DIRECTORS

                                 MARCH 2, 2000

                                                    [LOGO of PG&E Corporation]
<PAGE>

2000 OFFICER STIP FINANCIAL PERFORMANCE MEASURE
--------------------------------------------------------------------------------

                                  BACKGROUND

SHORT-TERM INCENTIVE PLAN STRUCTURE
-----------------------------------

-   At its meeting on September 15, 1999, the Nominating and Compensation
    Committee reviewed and approved the 2000 Short-Term Incentive Plan (STIP)
    structure for officers of the Corporation and each subsidiary. The structure
    established the weighting of corporate earnings per share (EPS), subsidiary
    EPS, and other performance factors for officers. The structure requires and
    implementing methodology to link the EPS performance levels to threshold,
    minimum, and maximum incentive payout levels, which is contained in this
    document.

<PAGE>

2000 0FFICER STIP FINANCIAL PERFORMANCE MEASURE
--------------------------------------------------------------------------------

                   2000 SHORT-TERM INCENTIVE PLAN STRUCTURE

<TABLE>
<CAPTION>

     OFFICER GROUP                 AWARD COMPONENT                WEIGHT              PERFORMANCE MEASURE
     -------------                 ---------------                ------              -------------------
<S>                        <C>                                   <C>              <C>
PGE&E Corporation           Corporate Financial Performance        100%           Corporate EPS from operations

President & CEO, PG&E       Corporate Financial Performance         25%           Corporate EPS from operations
National Energy Group       Subsidiary Performance                  75%           Average STIP rating of respective
President & CEO,                                                                   subsidiary(ies)
Pacific Gas and Electric
Company
------------------------------------------------------------------------------------------------------------------------------------
Pacific Gas and Electric    Subsidiary Financial Performance        75%           Subsidiary contribution to corporate EPS
Company                                                                           from operations
                            Subsidiary Operational                  25%           Financial, operating, and service
                            Performance                                           measures determined by subsidiary
                                                                                  CEO
------------------------------------------------------------------------------------------------------------------------------------
PG&E Gas Transmission       PG&E National Energy Group           50 - 100%        National Energy Group contribution to
PG&E Energy Trading         Financial Performance                                 corporate EPS from operations
PG&E Energy Service
PG&E Generating             Corporate Financial Performance       0 - 25%         Corporate EPS from operations

                            Subsidiary Operational/Financial      0 - 50%         Financial, operating, and service
                            Performance                                           measures determined by President &
                                                                                  CEO, PG&E National Energy Group
</TABLE>

                                       1

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00002-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00002-of-00352.parquet"}]]