Granted To:

Grant Date

Number Of
PG&E Corporation Common Shares ¹

Option Price Per Share

Social Security Number

PG&E Corporation (the "Corporation"), pursuant to action of the Nominating, Compensation, and Governance Committee of its Board of Directors ² , hereby grants to you, the Optionee, an option to purchase the above stated number of shares of Common Stock of the Corporation, at the Option Price stated above, subject to and in accordance with the Corporation's Stock Option Plan, as amended to date, and subject to and in accordance with the following terms and conditions:

This is a non-qualified (nonstatutory) stock option which shall expire at the close of business ten years and one day after the date of grant, after which time it shall cease to be exercisable.  This option is not an Incentive Stock Option within the meaning of the Internal Revenue Code of 1986.

This option shall terminate and cease to be exercisable prior to its expiration date on the date the Optionee's employment is terminated by reason of discharge for cause.  See Section 12 of the Plan for other instances in which this option may be terminated and cease to be exercisable prior to its expiration date.

This option is nontransferable except that it may pass to a successor in interest by the laws of descent and distribution or by the will of the Optionee.  During the lifetime of the Optionee, this option is exercisable only by the Optionee, except that in the event of the Optionee's incompetency, this option may be exercised by the Optionee's guardian or legal representative.

                                                                     
¹   Without dividend equivalents

² Capitalized words shall have the same meaning as defined in the PG&E Corporation Stock Option Plan unless otherwise defined herein.  In the event of any conflict or inconsistency between the provisions of this Agreement and the Plan document, the Plan document shall govern.

This option shall be exercisable during the employment of the Optionee and prior to its expiration or termination, whichever occurs first, as follows:

(i) up to one-fourth of the shares subject to the option may be purchased on and any time after January 3 of the first year following the year in which the options were granted; (ii) up to two-fourths of the shares subject to the option may be purchased on and any time after January 3 of the second year following the year in which the option was granted; (iii) up to three-fourths of the shares subject to the option may be purchased on and any time after January 3 of the third year following the year in which the option was granted; and (iv) up to 100 percent of the shares subject to the option may be purchased on and any time after January 3 of the fourth year following the year in which the options were granted.

See Section 12 of the Plan for other exercise rights and limitations after the Optionee's employment has been terminated.

This option does not confer upon the Optionee any right to continue as an employee of the Corporation, Pacific Gas and Electric Company, or any of the Corporation’s other subsidiaries, or interfere in any way with the right of any of those entities to terminate such employment at any time or to increase or decrease the Optionee's compensation from that in existence at the day of the grant.

Except as provided in Section 9 of the Plan (Dividend Equivalent Account), the Optionee shall have no rights as a shareholder with respect to any shares of Common Stock subject to this option prior to the date of exercise and payment of the full Option Price.

The Corporation may make such adjustments as it shall deem appropriate, to prevent dilution or enlargement of rights, in the price of the shares and the number allotted or subject to allotment if there are any changes in the Common Stock of the Corporation by reason of stock dividends, stock splits, reverse stock splits, recapitalization, mergers, or consolidations.  If such adjustments are made, the price of and number of shares included in this option which have not theretofore been purchased shall be adjusted consistent with any such change.

The LTIP and Other Agreements

This Agreement constitutes the entire understanding between you and PG&E Corporation regarding the Performance Shares, subject to the terms of the LTIP.  Any prior agreements, commitments or negotiations are superseded.  In the event of any conflict or inconsistency between the provisions of this Agreement and the LTIP, the LTIP shall govern.
     

Grant of Performance Shares

PG&E Corporation grants you the number of Performance Shares shown on the cover sheet of this Agreement.  The Performance Shares are subject to the terms and conditions of this Agreement and the LTIP.
     

Vesting of Performance Shares

As long as you remain employed with PG&E Corporation (or any of its subsidiaries), the Performance Shares will vest on the first business day of January (the “Vesting Date”) of the third year following the date of grant specified in the cover sheet.  Except as described below, all Performance Shares subject to this Agreement that have not vested shall be forfeited upon termination of your employment.
     

Payment of Performance Shares

Upon the Vesting Date, PG&E Corporation’s total shareholder return (TSR) will be compared to the TSR of the fifteen other companies in PG&E Corporation’s comparator group ¹ for the prior three calendar years (the “Performance Period”).  Subject to rounding considerations, there will be no payout for TSR below the 25 ^th percentile of the comparator group; TSR at the 25 ^th percentile will result in a 25% payout of Performance Shares; TSR at the 75 ^th percentile will result in a 100% payout of Performance Shares; and TSR at the 90 ^th percentile or greater will result in a 200% payout of Performance Shares.  The following table sets forth the payout percentages for the various TSR rankings that could be achieved:

        Number of Companies in
                                      Total (Including PG&E)                         
                                                  16                                            

                                                       Performance                  Rounded
                              Rank                Percentile                        Payout         

                                  1                        100%                             200%
                                  2                          93%                             200%
                                  3                          87%                             180%
                                  4                          80%                             135%
                                  5                          73%                             100%
                                  6                          67%                              90%
                                  7                          60%                              80%
                                  8                          53%                              70%
                                  9                          47%                              60%
                                10                          40%                              50%
                                11                          33%                              40%
                                12                          27%                              30%
                                13                          20%                                0%
                                14                          13%                                0%
                                15                            7%                                0%
                                16                            0%                                0%

The payment will equal the product of the number of vested Performance Shares, the applicable payout percentage, and the average closing price of a share of PG&E Corporation common stock for the last 30 calendar days of the year preceding the Vesting Date as reported on the New York Stock Exchange.  Payments will be made as soon as practicable following the Vesting Date.
     

Dividends

Each time that PG&E Corporation declares a dividend on its shares of common stock, an amount equal to the dividend multiplied by the number of Performance Shares granted to you by this Agreement shall be accrued on your behalf.  As soon as practicable following the end of the Performance Period, you shall receive a cash payment, if any, equal to the dividends accrued over the Performance Period multiplied by the same payout percentage used to determine the amount, if any, of the Performance Share payout as specified in the preceding paragraph.
     

Voluntary Termination

If you terminate your employment with PG&E Corporation (or any of its subsidiaries) voluntarily before the Vesting Date, all of the Performance Shares shall be cancelled as of the date of such termination and any dividends accrued with respect to your Performance Shares shall be forfeited.
     

Termination for Cause

If your employment with PG&E Corporation (or any of its subsidiaries) is terminated by PG&E Corporation or the subsidiary for cause before the Vesting Date, all of the Performance Shares shall be cancelled as of the date of such termination and any dividends accrued with respect to your Performance Shares shall be forfeited.  In general, termination for “cause” means termination of employment because of dishonesty, a criminal offense or violation of a work rule, and will be determined by and in the sole discretion of PG&E Corporation or the employing subsidiary.
     

Termination other than for Cause

If your employment with PG&E Corporation (or any of its subsidiaries) is terminated by PG&E Corporation or the subsidiary other than for cause before the Vesting Date, your unvested Performance Shares will vest proportionally based on the number of months during the Performance Period that you were employed  (rounded down) divided by the number of months in the Performance Period (36 months).  All other outstanding Performance Shares (and any associated accrued dividends) shall automatically be cancelled upon such termination.  Your vested Performance Shares will be payable, if at all, after the completion of the Performance Period based on the same formula applied to active employees.  You shall also receive a cash payment, if any, equal to the amount of dividends accrued over the Performance Period with respect to your vested Performance Shares multiplied by the same payout percentage used to determine the amount, if any, of the Performance Share payout.
     

Retirement

If you retire before the Vesting Date, your outstanding Performance Shares will continue to vest as though your employment had continued and will be payable, if at all, as soon as practicable following the Vesting Date.  You shall also receive a cash payment, if any, equal to the amount of dividends accrued over the Performance Period with respect to your Performance Shares multiplied by the same payout percentage used to determine the amount, if any, of the Performance Share payout.  You will be considered to have retired if you are age 55 or older on the date of termination and if you were employed by PG&E Corporation or any of its subsidiaries for at least five consecutive years ending on the date of termination of your employment.
     

Death/Disability

If your employment terminates due to your death or disability before the Vesting Date, all of your Performance Shares shall immediately vest and will be payable, if at all, as soon as practicable after the completion of the Performance Period based on the same formula applied to active employees.  You shall also receive a cash payment, if any, equal to the amount of dividends accrued over the Performance Period with respect to your Performance Shares multiplied by the same payout percentage used to determine the amount, if any, of the Performance Share payout.
     

Termination Due to Disposition of Subsidiary

If (1) your employment is terminated (other than for cause or your voluntary termination) by reason of a divestiture or change in control of a subsidiary of PG&E Corporation, which divestiture or change in control results in such subsidiary no longer qualifying as a subsidiary corporation under Section 424(f) of the Code or (2) if your employment is terminated (other than for cause or your voluntary termination) coincident with the sale of all or substantially all of the assets of a subsidiary of PG&E Corporation, all Performance Shares shall vest proportionally based on the number of months during the Performance Period that you were employed (rounded down) divided by the number of months in the Performance Period (36 months).  All other outstanding Performance Shares (and any associated accrued dividends) shall automatically be cancelled upon such termination.  Your vested Performance Shares will be payable, if at all, after the completion of the Performance Period based on the same formula applied to active employees.  You shall also receive a cash payment, if any, equal to the amount of dividends accrued over the Performance Period with respect to your vested Performance Shares multiplied by the same payout percentage used to determine the amount, if any, of the Performance Share payout. 
     

Withholding Taxes

PG&E Corporation will withhold amounts necessary to satisfy applicable taxes from the payment to be made with respect to your Performance Shares.  You will receive the remaining proceeds in cash. 
     

Change in Control

All of your outstanding Performance Shares shall automatically vest, and become nonforfeitable if there is a Change in Control of PG&E Corporation before the Vesting Date.  Such vested Performance Shares will become payable on the first business day of the year following the Change in Control.  The payment, if any, will be based on PG&E Corporation’s TSR for the period from the date of grant to the date of the Change in Control compared to the TSR of the other companies in PG&E Corporation’s comparator group ² for the same period.  There will be no payout for TSR below the 25 ^th percentile of the comparator group; TSR at the 25 ^th percentile will result in a 25% payout of Performance Shares; TSR at the 75 ^th percentile will result in a 100% payout of Performance Shares; and TSR at the 90 ^th percentile or greater will result in a 200% payout of Performance Shares.  The table above sets forth the payout percentages for the various TSR rankings that could be achieved.  The payment will be calculated by multiplying the number of vested Performance Shares by the payout percentage.  The resulting number of Performance Shares will be multiplied by the average closing price of a share of PG&E Corporation common stock for the last 30 calendar days preceding the Change in Control as reported on the New York Stock Exchange.  You shall also receive a cash payment, if any, equal to the amount of dividends accrued with respect to your Performance Shares to the first business day of the year following the Change in Control multiplied by the same payout percentage used to determine the amount, if any, of the Performance Share payout.
      

Leaves of Absence

For purposes of this Agreement, if you are on an approved leave of absence from PG&E Corporation (or any of its subsidiaries), or a recipient of PG&E Corporation (or any of its subsidiaries) sponsored disability benefits, you will continue to considered as employed.  If you do not return to active employment upon the expiration of your leave of absence or the expiration of your PG&E Corporation (or any of its subsidiaries) sponsored disability benefits, you will be considered to have voluntarily terminated your employment.  See above under “Voluntary Termination.”
    
PG&E Corporation reserves the right to determine which leaves of absence will be considered as continuing employment and when your employment terminates for all purposes under this Agreement.
     

No Retention Rights

This Agreement is not an employment agreement and does not give you the right to be retained by PG&E Corporation (or its subsidiaries).  Except as otherwise provided in an applicable employment agreement, the Company (or any of its subsidiaries) reserves the right to terminate your employment at any time and for any reason.
     

Applicable Law

This Agreement will be interpreted and enforced under the laws of the State of California.

The LTIP and Other Agreements

This Agreement constitutes the entire understanding between you and PG&E Corporation regarding the Restricted Stock, subject to the terms of the LTIP.  Any prior agreements, commitments or negotiations are superseded.  In the event of any conflict or inconsistency between the provisions of this Agreement and the LTIP, the LTIP shall govern.
     

Grant of Restricted Stock

PG&E Corporation grants you the number of shares of Restricted Stock shown on the cover sheet of this Agreement.  The shares of Restricted Stock are subject to the terms and conditions of this Agreement and the LTIP.
     

Lapse of Restrictions

As long as you remain employed with PG&E Corporation (or any of its subsidiaries), the restrictions will lapse as to 25 percent of the total number of shares of Restricted Stock originally subject to this Agreement, as shown above on the cover sheet, on the first business day of January of each of the first, second, third and fourth years following the Date of Award (each such day an “Annual Lapse Date”).  Except as described below, all shares of Restricted Stock subject to this Agreement as to which the restrictions have not lapsed shall be forfeited upon termination of your employment.
      

Voluntary Termination

In the event that you terminate your employment with PG&E Corporation voluntarily, you will automatically forfeit to PG&E Corporation all of the shares of Restricted Stock as to which the restrictions have not lapsed subject to this Agreement as of the date of such Termination.
      

Termination for Cause

If your employment with PG&E Corporation (or any of its subsidiaries) is terminated by PG&E Corporation or the subsidiary for cause, you will automatically forfeit to PG&E Corporation all shares of Restricted Stock as to which the restrictions have not lapsed subject to this Agreement as of the date of such termination.  In general, termination for “cause” means termination of employment because of dishonesty, a criminal offense or violation of a work rule, and will be determined by and in the sole discretion of PG&E Corporation or the employing subsidiary.
     

Termination other than for Cause

If your employment with PG&E Corporation (or any of its subsidiaries) is terminated by PG&E Corporation or the subsidiary other than for cause before the restrictions on your Restricted Stock lapse, and you are an officer in Bands 1-5, the restrictions on your outstanding shares of Restricted Stock that would have lapsed during the period of the “Severance Multiple” under the applicable severance policy shall continue to lapse pursuant to the regular lapse schedule (or sooner, in the event of a Change in Control during such period). In the event of your involuntary termination other than for cause, if you are not an officer in Bands 1-5, the restrictions on your outstanding shares of Restricted Stock that would have lapsed within 12 months following such termination will continue to lapse pursuant to the regular lapse schedule (or sooner, in the event of a Change in Control during such period).  All other outstanding shares of Restricted Stock shall automatically be forfeited to PG&E Corporation upon such termination.
     

Retirement

In the event of your Retirement, the restrictions on your outstanding shares of Restricted Stock will continue to lapse as though your employment had continued subject to your continued compliance with certain post-employment restrictions.  You will be considered to have retired if you are age 55 or older on the date of termination and if you were employed by PG&E Corporation or any of its subsidiaries for at least five consecutive years ending on the date of termination of your employment.
     

Death/Disability

If your employment terminates due to your death or disability, the restrictions on all of your shares of Restricted Stock shall lapse on the next Annual Lapse Date.  In the event of a Change in Control of PG&E Corporation after such termination and before such next Annual Lapse Date, the restrictions as to all shares of Restricted Stock shall immediately lapse as described below under “Change in Control.”
     

Termination Due to Disposition of Subsidiary

If (1) your employment is terminated (other than for cause or your voluntary termination) by reason of a divestiture or change in control of a subsidiary of PG&E Corporation, which divestiture or change in control results in such subsidiary no longer qualifying as a subsidiary corporation under Section 424(f) of the Code or (2) if your employment is terminated (other than for cause or your voluntary termination) coincident with the sale of all or substantially all of the assets of a subsidiary of PG&E Corporation, the restrictions on all shares of Restricted Stock shall lapse on the next Annual Lapse Date.  In the event of a Change in Control of PG&E Corporation after such Termination and before such next Annual Lapse Date, the restrictions as to all shares of Restricted Stock shall immediately lapse as described below under “Change in Control.”
     

Escrow

The certificates for the Restricted Stock shall be deposited in escrow with the Corporate Secretary of PG&E Corporation to be held in accordance with the provisions of this paragraph.  Each deposited certificate shall be accompanied by any assignment documents PG&E Corporation may require you to execute.  The deposited certificates shall remain in escrow until such time as the certificates are to be released or otherwise surrendered for cancellation as discussed below.  Upon delivery of the certificates to PG&E Corporation, you shall be issued an instrument of deposit acknowledging the number of shares of Restricted Stock delivered in escrow to the Corporate Secretary of PG&E Corporation.
     
All dividends, if any, on the Restricted Stock shall be held in escrow and subject to the same restrictions as the shares to which they relate.
     

Release of Shares and Withholding Taxes

The shares of Restricted Stock held in escrow hereunder shall be subject to the following terms and conditions relating to their release from escrow or their surrender to PG&E Corporation:

• When the restrictions as to your shares of Restricted Stock lapse as described above, the certificates for such shares shall be released from escrow and delivered to you, at your request within thirty (30) days of the applicable Annual Lapse Date.

• Upon your Termination, any shares of Restricted Stock as to which the restrictions have not lapsed shall be forfeited and automatically surrendered to PG&E Corporation as provided herein.

Note that you must make arrangements acceptable to PG&E Corporation to satisfy withholding or other taxes that may be due before your shares will be released to you.  If you so elect, PG&E Corporation will assist you in selling your shares through a broker so that you can use the sales proceeds to satisfy applicable taxes.  You will receive the remaining proceeds in cash.  However, if you wish to receive the stock certificates in lieu of selling your shares, you will need to make arrangements to pay the applicable taxes either by check or through payroll deduction.  PG&E Corporation will notify you about how to instruct PG&E Corporation to sell your shares when the restrictions lapse or make other arrangements.
     

Change in Control

The restrictions on all of your outstanding shares of Restricted Stock shall automatically lapse and become nonforfeitable in the event there is a Change in Control of PG&E Corporation.
     

Code Section 83(b) Election

Under Section 83(a) of the Internal Revenue Code of 1986, as amended (the “Code”), the Fair Market Value of the Restricted Stock on the date any forfeiture restrictions applicable to such Restricted Stock lapse will be reportable as ordinary income at that time.  For this purpose, “forfeiture restrictions” include surrender to PG&E Corporation of Restricted Stock as described above.  You may elect to be taxed at the time the Restricted Stock is awarded to you, rather than when the restrictions lapse by filing an election under Section 83(b) of the Code with the Internal Revenue Service within thirty (30) days after the Date of Award.  Failure to make this filing within the thirty (30) day period will result in the recognition of ordinary income by you (in the event the Fair Market Value of the Restricted Stock increases after the date of purchase) as the forfeiture restrictions lapse.  YOU ACKNOWLEDGE THAT IT IS YOUR SOLE RESPONSIBILITY, AND NOT PG&E CORPORATION’S, TO FILE A TIMELY ELECTION UNDER CODE SECTION 83(b).  YOU ARE RELYING SOLELY ON YOUR OWN ADVISORS WITH RESPECT TO THE DECISION AS TO WHETHER OR NOT TO FILE A CODE SECTION 83(b) ELECTION.
     

Leaves of Absence

For purposes of this Agreement, if you are on an approved leave of absence from PG&E Corporation (or any of its subsidiaries), or a recipient of Company sponsored disability benefits, you will continue to be considered as employed.  If you do not return to active employment upon the expiration of your leave of absence or the expiration of your PG&E Corporation sponsored disability benefits, you will be considered to have voluntarily terminated your employment. See above under “Voluntary Termination.”
    
PG&E Corporation reserves the right to determine which leaves of absence will be considered as continuing employment and when your employment terminates for all purposes under this Agreement.
     

Voting and Other Rights

Subject to the terms of this Agreement, you shall have all the rights and privileges of a shareholder of PG&E Corporation while the Restricted Stock is held in escrow, including the right to vote.  As described above, all dividends, if any, on the Restricted Stock shall be held in escrow and subject to the same restrictions as the shares to which they relate.
     

Restrictions on
Issuance

PG&E Corporation will not issue any Restricted Stock if the issuance of such Restricted Stock at that time would violate any law or regulation.
     

Restrictions on Resale and Hedge Transactions

By signing this Agreement, you agree not to sell any Restricted Stock before the restrictions lapse or sell any shares acquired under this award at a time when applicable laws, regulations or Company or underwriter trading policies prohibit sale.  In particular, in connection with any underwritten public offering by PG&E Corporation of its equity securities pursuant to an effective registration statement filed under the Securities Act of 1933, you shall not sell, make any short sale of, loan, hypothecate, pledge, grant any option for the purchase of, or otherwise dispose or transfer for value or agree to engage in any of the foregoing transactions with respect to any shares acquired under this award without the prior written consent of PG&E Corporation or its underwriters, for such period of time after the effective date of such registration statement as may be requested by PG&E Corporation or the underwriters.

If the sale of shares acquired under this award is not registered under the Securities Act of 1933, but an exemption is available which requires an investment or other representation and warranty, you shall represent and agree that the Shares being acquired are being acquired for investment, and not with a view to the sale or distribution thereof, and shall make such other representations and warranties as are deemed necessary or appropriate by PG&E Corporation and its counsel.

By your acceptance of the award, you agree that while the Restricted Stock is subject to restrictions, you will not enter into a corresponding hedging transaction relating to PG&E Corporation’s stock nor engage in any short sale of PG&E Corporation’s stock.  This prohibition shall not apply to transactions effected through PG&E Corporation’s benefit plans that provide an opportunity to invest in Company stock or which provide compensation based on the price of Company stock.  
     

No Retention Rights

This Agreement is not an employment agreement and does not give you the right to be retained by PG&E Corporation (or its subsidiaries).  Except as otherwise provided in an applicable employment agreement, the Company (or any of its subsidiaries) reserves the right to terminate your employment at any time and for any reason.
     

Legends

All certificates representing the Restricted Stock issued under this award shall, where applicable, have endorsed thereon the following legends:

“THE SHARES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO CERTAIN RESTRICTIONS ON TRANSFER SET FORTH IN AN AGREEMENT BETWEEN PG&E CORPORATION AND THE REGISTERED HOLDER, OR HIS OR HER PREDECESSOR IN INTEREST.  A COPY OF SUCH AGREEMENT IS ON FILE AT THE PRINCIPAL OFFICE OF PG&E CORPORATION AND WILL BE FURNISHED UPON WRITTEN REQUEST TO THE CORPORATE SECRETARY OF PG&E CORPORATION BY THE HOLDER OF RECORD OF THE SHARES REPRESENTED BY THIS CERTIFICATE.”
     

Applicable Law

This Agreement will be interpreted and enforced under the laws of the State of California.