UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

SCHEDULE 14A

Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934 (Amendment No.          )

 

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March 30, 2011

To the Shareholders of PG&E Corporation and Pacific Gas and Electric Company:

You are cordially invited to attend the 2011 annual meetings of PG&E Corporation and Pacific Gas and Electric Company. The meetings will be held concurrently on Wednesday, May 11, 2011, at 10:00 a.m., at the San Ramon Valley Conference Center, 3301 Crow Canyon Road, San Ramon, California.

The following Joint Proxy Statement contains information about matters to be considered at both the PG&E Corporation and Pacific Gas and Electric Company annual meetings. At the annual meetings, PG&E Corporation and Pacific Gas and Electric Company shareholders will be asked to vote on the nominees for director and on the ratification of the appointment of the independent registered public accounting firm for 2011, and to provide an advisory vote on executive compensation. The Boards of Directors and management of PG&E Corporation and Pacific Gas and Electric Company recommend that you vote "FOR" each of these items. In addition, PG&E Corporation and Pacific Gas and Electric Company shareholders will be asked to provide an advisory vote on the frequency of the advisory vote on executive compensation for each company. The Boards of Directors and management of PG&E Corporation and Pacific Gas and Electric Company recommend that you vote "1 year" for this item.

PG&E Corporation shareholders also will be asked to vote on the proposals submitted by individual PG&E Corporation shareholders described in the Joint Proxy Statement. For the reasons stated in the Joint Proxy Statement, the PG&E Corporation Board of Directors and management recommend that PG&E Corporation shareholders vote "AGAINST" these proposals.

Your vote on these items at the annual meetings is important. For your convenience, we offer you the option of submitting your proxy and voting instructions over the Internet, by telephone, or by mail. Whether or not you plan to attend the annual meetings, please vote as soon as possible so that your shares can be represented at the annual meetings.

Sincerely,

Peter A. Darbee
Chairman of the Board, Chief Executive Officer,
and President of PG&E Corporation

Christopher P. Johns
President of
Pacific Gas and Electric Company

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Table of Contents

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Joint Notice of Annual Meetings of Shareholders
of PG&E Corporation and Pacific Gas and Electric Company

March 30, 2011

To the Shareholders of PG&E Corporation and Pacific Gas and Electric Company:

The annual meetings of shareholders of PG&E Corporation and Pacific Gas and Electric Company will be held concurrently on Wednesday, May 11, 2011, at 10:00 a.m., at the San Ramon Valley Conference Center, 3301 Crow Canyon Road, San Ramon, California, for the purpose of considering the following matters:

For PG&E Corporation and Pacific Gas and Electric Company shareholders:

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To elect the following 11 and 12 individuals, respectively, nominated by the applicable Board of Directors to each serve as director on each Board for the ensuing year:

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To ratify each Audit Committee's appointment of Deloitte & Touche LLP as the independent registered public accounting firm for 2011 for PG&E Corporation and Pacific Gas and Electric Company,

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To provide an advisory vote on executive compensation,

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To provide an advisory vote on the frequency of the advisory vote on executive compensation, and

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To transact any other business that may properly come before the meetings and any adjournments or postponements of the meetings. If such matters are raised by shareholders, those matters must be properly submitted consistent with the respective company's advance notice Bylaw requirements and other requirements relating to such matters.

For PG&E Corporation shareholders only:

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To act upon proposals submitted by PG&E Corporation shareholders and described on pages 72 through 75 of the Joint Proxy Statement.

This notice serves as the notice of annual meetings for those shareholders of PG&E Corporation or Pacific Gas and Electric Company who previously elected to receive their proxy materials in paper format. All other shareholders were sent an "Important Notice Regarding the Availability of Proxy Materials for the Shareholder Meeting to Be Held on May 11, 2011 and Notice of Annual Meeting of Shareholders" ("Notice of Annual Meeting and Internet Availability of Proxy Materials") for PG&E Corporation or Pacific Gas and Electric Company, as applicable.

The Boards of Directors have set the close of business on March 14, 2011 as the record date for determining which shareholders are entitled to receive notice of and to vote at the annual meetings.

By Order of the Boards of Directors of
PG&E Corporation and Pacific Gas and Electric Company,

Linda Y.H. Cheng
Vice President, Corporate Governance and Corporate Secretary of
PG&E Corporation and
Pacific Gas and Electric Company

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Table of Contents

PG&E Corporation and Pacific Gas and Electric Company

Joint Proxy Statement

Questions and Answers

How do I vote?

You can attend and vote at the annual meetings, or the proxyholders will vote your shares as you indicate on your proxy.

If your shares are not registered to you directly, but are held indirectly through a broker, bank, trustee, nominee, or other third party ("nominee"), follow the instructions provided by your nominee to vote your shares.

If your shares are registered to you directly, there are three ways to submit your proxy:

1.

Over the Internet.    You may submit your proxy over the Internet either (i) by following the instructions in the Notice or (ii) for shareholders who received the proxy materials by mail, by following the instructions on the proxy card.

2.

By telephone.    If you received your proxy materials by mail, you may submit your proxy by calling the toll-free number on the proxy card.

3.

By mail.    If you received your proxy materials by mail, you may submit your proxy by completing, signing, and dating the proxy card and mailing it in the postage-paid envelope provided.

If you submit your proxy over the Internet or by telephone, your vote must be received by 6:00 a.m.,

Eastern time, on Wednesday, May 11, 2011. These Internet and telephone voting procedures comply with California law. If you submit your proxy by mail, your vote must be received by 10:00 a.m., Pacific time, on Wednesday, May 11, 2011.

What am I voting on, and what are each Board's voting recommendations?

PG&E Corporation shareholders will be voting on the following items:

The Utility's shareholders will be voting on the following items:

What vote is required to approve each item?

A majority voting standard applies to the election of each director nominee and to the approval of each other item described in this Joint Proxy Statement. A director nominee will be elected, and a proposal will be approved, if a majority of the shares represented and voting approve that nominee's election or the proposal. Abstentions will not be considered in determining whether a majority of the shares represented and voting have elected a director nominee or approved a proposal. Similarly, any broker non-votes (see definition below under "What is a broker non-vote?") that occur with respect to a proposal will not be considered in determining whether a majority of the shares represented and voting have approved that proposal. As explained below, broker non-votes do not apply to the ratification of the appointment of the independent registered public accounting firm.

In addition, the shares voting affirmatively must equal at least a majority of the required quorum. This means that the shares voting affirmatively must be greater than 25 percent of the outstanding shares entitled to vote. For this purpose, abstentions could prevent the election of a director nominee or the approval of a proposal, and broker non-votes that occur with respect to a proposal could prevent the election of a nominee or the approval of a proposal if the number of shares voting affirmatively does not constitute a majority of the required quorum.

Where shareholders are being asked for an advisory vote, any approval of an item will be non-binding on the affected Company, but will be considered by that Company's directors.

Shareholders are not voting to approve the Boards' recommendation on Item 4, and shareholders' non-binding recommendation of a one-, two-, or three-year frequency will not require either company to adopt that frequency. However, if the shareholders of either company do not recommend the one-year frequency, the Board of the applicable company will examine the voting results and consider whether the company should change the frequency of its advisory vote on executive compensation.

What is a broker non-vote?

If you hold your shares indirectly through a broker, bank, trustee, nominee, or other third party, that party is the registered holder of your shares and submits the proxy to vote your shares. You are the beneficial owner of the shares, and typically you will be asked to provide your broker or other registered holder with instructions as to how you want your shares to be voted. Under the rules of the New York Stock Exchange ("NYSE"), if you fail to provide your broker with voting instructions, your broker can use its discretion to vote your shares on certain routine matters, like the ratification of the appointment of the independent registered public accounting firm. However, your broker may not use its discretion to vote your shares on certain other matters, like director elections, advisory votes on executive compensation, and shareholder proposals. When a broker votes your shares on routine matters but is unable to vote your shares on other matters because you have failed to provide instructions, a "broker non-vote" occurs with respect to these other matters.

What shares am I entitled to vote?

If you are a PG&E Corporation registered shareholder, you are entitled to vote all the shares of PG&E Corporation common stock in your account as of the close of business on March 14, 2011 (the "record date"), including shares in the PG&E Corporation Dividend Reinvestment and Stock Purchase Plan. If you are a Utility registered shareholder, you are entitled to vote all the shares of Utility preferred stock in your account as of the record date.

If you are a registered holder of both PG&E Corporation common stock and Utility preferred stock, you are entitled to vote, separately, on each company's proposals. If you receive more than one copy of the Notice or more than one proxy card for either company, it means that your shares are held in more than one account. You should vote the shares in all of your accounts.

How many copies of the Joint Notice, the Joint Proxy Statement, and the Annual Report will I receive?

If you are a registered holder of PG&E Corporation common stock and/or Utility preferred stock, you will receive one Notice for each account, unless you have requested paper copies of the proxy materials, in which case you will receive one Joint Notice, one Joint Proxy Statement, a proxy card or voting instruction card, and one Annual Report for each account.

If you are a beneficial owner of PG&E Corporation common stock and/or Utility preferred stock and you receive your proxy materials through Broadridge Investor Communication Solutions ("Broadridge"), and there are multiple beneficial owners at the same address, you may receive fewer Notices or fewer paper copies of the Joint Notice, the Joint Proxy Statement, and the Annual Report than the number of beneficial owners at that address. Securities and Exchange Commission ("SEC") rules permit Broadridge to deliver only one Joint Notice, one Joint Proxy Statement, and one Annual Report to multiple beneficial owners sharing an address, unless the applicable company receives contrary instructions from any beneficial owner at that same address.

If you receive your proxy materials through Broadridge and (1) you currently receive only one copy of the proxy materials at a shared address but you wish to receive an additional copy of the Joint Notice, this Joint Proxy Statement, and the Annual Report, or any future proxy materials, or (2) you share an address with other beneficial owners who also receive their separate proxy materials through Broadridge and you wish to request delivery of a single copy of the proxy materials to the shared address in the future, please contact the office of the Corporate Secretary of PG&E Corporation or Pacific Gas and Electric Company, as appropriate, at One Market, Spear Tower, Suite 2400, San Francisco, CA 94105, or call 1-415-267-7070.

Are proxy materials for the annual meetings available on-line?

Yes. You can go on-line at www.pgecorp.com/investors/financial_reports/ to access the Joint Notice, the Joint Proxy Statement, and the Annual Report.

You also can vote your proxy over the Internet, as noted on page 1 of this Joint Proxy Statement. Specific voting instructions also are included on the Notice and on the proxy card or voting instruction card.

What if I submit my proxy but I do not specify how I want my shares voted?

For PG&E Corporation shareholders, the PG&E Corporation proxyholders will vote your shares in accordance with the PG&E Corporation Board's recommendations, which are as follows: "For" each of the nominees for director, "For" Items 2 and 3, "1 year" for Item 4, and "Against" Items 5 and 6. For Utility shareholders, the Utility's proxyholders will vote your shares in accordance with the Utility Board's recommendations, which are as follows: "For" each of the nominees for director, "For" Items 2 and 3, and "1 year" for Item 4.

What if I do not submit my proxy?

Your shares will not be voted if you do not submit a proxy or vote at the annual meetings, unless your broker votes your shares in the broker's discretion, as discussed above under "What is a broker non-vote?".

Can I change my proxy vote?

If your shares are registered to you directly, you can change your proxy vote or revoke your proxy any time before it is exercised by doing one of the following before the applicable deadline: (1) returning a signed proxy card with a later date, (2) entering a new vote over the Internet or by telephone, (3) notifying the Corporate Secretary of PG&E Corporation or the Utility, as appropriate, in writing, or (4) submitting a written ballot at the annual meetings.

If your shares are not registered to you directly but are registered in the name of your broker, bank, trustee, nominee, or other third party, follow the instructions provided by your nominee to change your vote or revoke your proxy.

Is my vote confidential?

PG&E Corporation and the Utility each have adopted a confidential voting policy under which shareholder votes are revealed only to a non-employee proxy tabulator or an independent inspector of election, except (1) as necessary to meet legal requirements, (2) in a dispute regarding authenticity of proxies and ballots, (3) in the event of a proxy contest if the other party does not agree to comply with the confidential voting policy, and (4) where disclosure may be necessary for either company to assert or defend claims.

Who will count the votes?

Corporate Election Services will act as the proxy tabulators and the inspectors of election for the 2011 annual meetings. Corporate Election Services is

independent of PG&E Corporation and the Utility and the companies' respective directors, officers, and employees.

How many shares are entitled to vote at the annual meetings?

As of the record date, there were 396,788,565 shares of PG&E Corporation common stock, without par value, outstanding and entitled to vote. Each share is entitled to one vote.

As of the record date, there were 10,319,782 shares of Utility preferred stock, $25 par value, and 264,374,809 shares of Utility common stock, $5 par value, outstanding and entitled to vote. Each share is entitled to one vote.

A quorum is necessary to conduct business at each annual meeting. A majority of the shares entitled to vote at each meeting must be represented at the meeting in person or by proxy to constitute a quorum. Abstentions and broker non-votes will be considered in determining whether a quorum is present at each meeting.

May I attend the annual meetings?

All PG&E Corporation and Utility shareholders of record as of the record date may attend the annual meetings. You must have an admission ticket to attend the annual meetings. Also, shareholders will be asked to present valid photo identification, such as a driver's license or passport, before being admitted to the meetings.

If you are a registered shareholder, your Notice will be your admission ticket. Please bring the Notice to the annual meetings. If a broker, bank, trustee, nominee, or other third party holds your shares, please inform that party that you plan to attend the annual meetings and ask for a legal proxy. Bring the legal proxy to the shareholder registration area when you arrive at the meetings, and we will issue an admission ticket to you. If you cannot get a legal proxy in time, we will issue an admission ticket to you if you bring a copy of your brokerage or bank account statement showing that you owned PG&E Corporation or Utility stock as of the record date.

May I bring a guest to the annual meetings?

Each registered shareholder or beneficial owner may bring up to a total of three of the following individuals to the annual meetings: (1) a spouse or domestic partner, (2) legal proxies, (3) qualified representatives presenting the shareholder's proposal, or (4) financial or legal advisors.

Shareholders must provide advance written notice to the Corporate Secretary of PG&E Corporation or the Utility, as appropriate, if they intend to bring any legal proxy, qualified representative, or advisor to the annual meetings. The notice must include the name and address of the legal proxy, representative, or advisor, and must be received at the principal executive office of the applicable company by 5:00 p.m., Pacific time, on May 4, 2011, in order to allow enough time for the issuance of additional admission tickets. We recommend that shareholders send their notice using a delivery method that indicates when the notice was received at the principal executive office of the applicable company.

How will the annual meetings be conducted?

The Chairman of the Board ("Chairman") of PG&E Corporation will preside over the meetings and will make any and all determinations regarding the conduct of the meetings.

All items of business described in this Joint Proxy Statement will be deemed presented at the annual meetings.

For each shareholder proposal, a qualified representative will have an opportunity to discuss that item. Other shareholders will have an opportunity to ask questions and make comments regarding that proposal.

There will be a general question and answer period. Questions and comments should pertain to corporate performance, items for consideration at the annual meetings, or other matters of interest to shareholders generally. The meeting is not a forum to present general economic, political, or other views that are not directly related to the business of PG&E Corporation or the Utility.

Shareholders will be recognized on a rotating basis. If you wish to speak, please raise your hand and wait to be recognized. When you are called upon, please direct your questions and comments to the company officer chairing the meetings. Each person called upon during the meetings will have a maximum of three minutes on any one question or comment.

Can shareholders introduce other proposals (including director nominations) during the annual meetings?

The Bylaws of PG&E Corporation and the Utility each require advance written notice of the intention to introduce a shareholder proposal or bring other matters for action (including introducing nominees for director) at an annual meeting. The notice for

proposals and other matters to be considered by shareholders at the 2011 annual meetings must have been received at the principal executive office of the applicable company by February 14, 2011. The companies did not receive timely advance written notice of any shareholder matters that will be introduced at the annual meetings.

If you would like to introduce a shareholder proposal or other business during PG&E Corporation's or the Utility's 2012 annual meeting, each company's Bylaws require that your proper advance written notice of the matter be received at the principal executive office of the applicable company by 5:00 p.m., Pacific time, on February 13, 2012. However, if the 2012 annual meeting of either company is scheduled on a date that differs by more than 30 days from the anniversary date of the 2011 annual meetings, your notice will be timely if it is received no later than the tenth day after the date on which that company publicly discloses the date of its 2012 annual meeting. These deadlines also may change in response to changes in legal and regulatory requirements.

If you would like to nominate an individual for director during the annual meeting, certain additional information must be provided in your advance written notice. For more information on the director nomination process, see pages 10 to 11 of this Joint Proxy Statement.

If you wish to submit advance notice of any business to be brought before the 2012 annual meetings, we recommend that you use a delivery method that indicates when the advance notice of other business was received at the principal executive office of the applicable company.

Is there a different due date that applies if I want my shareholder proposal to be included in the proxy statement for the 2012 annual meetings?

Yes. If you would like to submit a proposal to be included in the proxy statement for PG&E Corporation's or the Utility's 2012 annual meeting, that company's Corporate Secretary must receive your proposal after the date of the 2011 annual meetings, but by 5:00 p.m., Pacific time, on November 30, 2011.

If you wish to submit a shareholder proposal for inclusion in the 2012 proxy statement, we recommend

that you use a delivery method that indicates when your proposal was received at the principal executive office of the applicable company.

How much will this proxy solicitation cost?

PG&E Corporation and the Utility hired D.F. King & Co., Inc. to assist in the distribution of proxy materials and solicitation of votes. The estimated fee is $13,500 plus reasonable out-of-pocket expenses. In addition, PG&E Corporation and the Utility will reimburse brokerage houses and other custodians, nominees, and fiduciaries for reasonable out-of-pocket expenses for forwarding proxy and solicitation materials to shareholders. The solicitation of proxies also may be made in person, by telephone, or by electronic communications by the companies' respective directors, officers, and employees, who will not receive additional compensation for such solicitation activities.

How can I contact members of the Boards of Directors or officers?

Correspondence to the Board of PG&E Corporation or the Utility or to any individual director or group of directors (including the non-employee or independent directors as a group, or the lead director) or to PG&E Corporation or Utility officers should be sent to the principal executive office of the applicable company in care of the Corporate Secretary. Correspondence addressed to either company's Board as a body, or to all of the directors (or the independent directors) in their entirety, will be forwarded to the lead director. The Corporate Secretary will regularly provide each Board with a summary of communications from shareholders and other interested parties that the Corporate Secretary receives on behalf of that Board. A majority of the independent members of the Boards of PG&E Corporation and the Utility have approved this process for shareholders to send communications to the Boards.

The addresses of the principal executive offices are:

PG&E Corporation
One Market, Spear Tower, Suite 2400
San Francisco, CA 94105

Pacific Gas and Electric Company
77 Beale Street, 32nd Floor
San Francisco, CA 94105

PG&E Corporation and the Utility are committed to good corporate governance practices that provide a framework within which the Boards and management of PG&E Corporation and the Utility can pursue the companies' business objectives. The foundation for these practices is the independent nature of each Board and its fiduciary responsibility to the company's shareholders. These practices are reviewed against industry trends, as well as input from the companies' top institutional investors. The following section discusses the companies' key corporate governance practices, and focuses on:

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Corporate Governance Guidelines

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Board Leadership Structure

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Board Committee Duties and Composition

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Risk Management

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Director Nomination Process

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Compensation-Setting Process

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Board Oversight of Political Contributions

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Board Oversight of Management Succession

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Director and Officer Conduct and Conflicts of Interest

Corporate Governance Guidelines

Our corporate governance practices are documented in Corporate Governance Guidelines that are adopted by the Boards of PG&E Corporation and the Utility and that are updated from time to time as appropriate and as recommended by the Nominating and Governance Committee of the PG&E Corporation Board. Other corporate governance practices also may be found in the charters of the various committees of the PG&E Corporation and Utility Boards.

The PG&E Corporation Corporate Governance Guidelines are included as Appendix A to this Joint Proxy Statement. The Utility's Corporate Governance Guidelines are substantially similar to the PG&E Corporation Corporate Governance Guidelines and, therefore, are not included in this Joint Proxy Statement. The Corporate Governance Guidelines are also available on-line in the Corporate Governance section of PG&E Corporation's website (www.pgecorp.com/aboutus/) or the Utility's website (www.pge.com/about/).

Board Leadership Structure

Chairman of the Board

At both PG&E Corporation and the Utility, the Chairman of the Board is a member of the Board of Directors. As set forth in each company's Corporate Governance Guidelines, the primary duty of the Chairman is to preside over meetings of the Board, including special meetings. The Chairman also is consulted regarding nominees for the Board and the composition and chairmanship of Board committees. If the Chairman is not an independent director, then following each executive session meeting of the independent directors, the lead director, or his or her designee, has a discussion with the Chairman regarding the executive session meeting.

PG&E Corporation and the Utility each believe that it is in the best interest of the company and its shareholders to have a flexible rule regarding whether the offices of Chairman and Chief Executive Officer ("CEO") must be separate. When a vacancy occurs in the office of either the Chairman or the CEO, the applicable Board will consider the circumstances existing at that time and will determine whether the role of Chairman should be separate from that of CEO and, if the roles are separate, whether the Chairman should be elected from among the independent directors or from management. In addition, at least annually, each Board reviews the respective company's Board leadership structure to assess whether it is appropriate.

In the past, PG&E Corporation and the Utility each have had both combined and separate Chairman and CEO positions. In each case, the applicable Board was able to consider all eligible directors and not exclude any eligible candidate from consideration for the position of Chairman. More recently, when the positions have been combined, each company also has had a strong and independent lead director.

At PG&E Corporation, the Chairman is PG&E Corporation's CEO and President, Peter A. Darbee. Mr. Darbee has been an executive officer of PG&E Corporation since 1999, when he became the Corporation's Senior Vice President and Chief Financial Officer ("CFO"). He has served as the CEO and President of PG&E Corporation since January 2005 and as Chairman since January 2006. In addition, he was Chairman of the Utility from January 2006 to May 2007 and was President and CEO of the Utility from

September 2008 to July 2009. The PG&E Corporation Board believes that having Mr. Darbee serve concurrently as the company's Chairman and CEO is the appropriate Board leadership structure at this time because, among other things, his extensive business experience at, and knowledge of, both PG&E Corporation and its primary subsidiary, the Utility, allow him to serve as an effective link between the Board and management, and to raise key business issues and stakeholder interests to the Board's attention as the Board carries out its duties. Further, the presence of an independent lead director enhances the Board's authority to act independently from management, notwithstanding the fact that the Chairman also is an executive officer of the Corporation.

At the Utility, the positions of Chairman and principal executive officer have been separated. Under certain rules of the California Public Utilities Commission, the same individual may not serve as Chairman of both PG&E Corporation and the Utility. The Chairman of the Utility is C. Lee Cox, the independent lead director. Christopher P. Johns is President of the Utility, serving as the principal executive officer. He was elected as a director of the Utility in February 2010. Prior to becoming President of the Utility on August 1, 2009, Mr. Johns held various executive positions at PG&E Corporation and the Utility, including Senior Vice President, Chief Financial Officer, Treasurer, and Controller. The Utility Board believes that having Mr. Cox serve as the company's independent Chairman is the appropriate Board leadership structure at this time.

Independent Lead Director/Executive Session Meetings

PG&E Corporation and the Utility each have an independent lead director, who is elected from among the independent chairs of the key PG&E Corporation and Utility Board committees. The lead director must have at least one year of experience as a director of the respective company, serves a term of three years, and may be re-elected to consecutive terms. Specific duties for the lead director are substantially similar at both companies, and are set forth in the applicable Corporate Governance Guidelines.

Currently, C. Lee Cox serves as the independent lead director of both PG&E Corporation and the Utility. In this role, Mr. Cox schedules and presides over

executive session meetings at all meetings of the companies' Boards. Each such executive session meeting has an agenda that includes standing items for discussion by the independent directors without management present. These executive session meetings are used to, among other things, review the performance of the PG&E Corporation CEO, review executive development for management succession planning, discuss corporate governance issues, and provide feedback to the CEO. Mr. Cox also actively participates in the planning of the regular meetings of the Boards, including suggesting and reviewing agenda topics and otherwise acting as a bridge between management and the Boards.

Mr. Cox also receives written communications from each company's shareholders and other interested parties, and is available for consultation and direct communication with major shareholders.

Board Committee Duties and Composition

The principal standing committees of the PG&E Corporation Board are the Executive Committee, the Audit Committee, the Compensation Committee, the Finance Committee, the Nominating and Governance Committee, and the Public Policy Committee. The Utility Board has two principal standing committees: the Executive Committee and the Audit Committee.

For each of the Board committees listed above, the applicable company's Board has adopted a formal charter that sets forth the committee's duties and responsibilities. These committee charters are available on-line in the Corporate Governance section of PG&E Corporation's website (www.pgecorp.com/aboutus/) or the Utility's website (www.pge.com/about/), as applicable. The duties, responsibilities, and membership qualifications for each Committee are described below.

Executive Committees

The PG&E Corporation and Utility Boards each have an Executive Committee that may exercise any of the powers and perform any of the duties of the respective Board. This authority is subject to provisions of law and certain limits imposed by the PG&E Corporation Board or the Utility Board (as the case may be). The Executive Committees meet as needed.

Audit Committees

The PG&E Corporation and Utility Boards each have an Audit Committee that advises and assists the applicable Board with respect to, among other things:

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The integrity of the respective company's financial statements,

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Financial and accounting practices,

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Internal controls, and external and internal auditing programs,

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Selection and appointment of the respective company's independent registered public accounting firm, pre-approval of all audit and non-audit services provided by the independent registered public accounting firm, and evaluation of the independence, qualifications, and performance of the independent registered public accounting firm,

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Business ethics, and compliance with laws, regulations, and policies that may have a material impact on the consolidated financial statements of PG&E Corporation, the Utility, and their respective subsidiaries,

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Related party transactions, and

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Guidelines and policies for managing and assessing major risks, and review of processes used by other committees of the PG&E Corporation or Utility Board to monitor and control major financial risk exposures.

Compensation Committee

The Compensation Committee of PG&E Corporation advises and assists the Boards of PG&E Corporation and the Utility with respect to:

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Compensation of directors,

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Employment, compensation, and benefits policies and practices,

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Potential risks arising from compensation policies and practices,

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Development, selection, and compensation of policy-making officers, and

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Evaluation of management and long-range planning for officer development and succession.

Among other things, the Committee:

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Reviews and acts upon the compensation of officers of PG&E Corporation and its subsidiaries, although the Committee has delegated to the

PG&E Corporation CEO the authority to approve compensation for certain officers, and

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Recommends to the independent members of the applicable Board the compensation of the CEOs of PG&E Corporation and the Utility (or, if the office of Utility CEO is not filled, the President of the Utility).

Finance Committee

The Finance Committee of PG&E Corporation advises and assists the Boards of PG&E Corporation and the Utility with respect to the financial and capital investment policies and objectives of PG&E Corporation and its subsidiaries, including specific actions required to achieve those objectives. Among other things, the Committee reviews:

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Long-term financial and investment plans and strategies,

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Annual financial plans,

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Dividend policy,

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Short-term and long-term financing plans,

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Proposed capital projects,

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Proposed divestitures,

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Strategic plans and initiatives,

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Major commercial banking, investment banking, financial consulting, insurance, and other financial relationships, and

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Major financial risk exposures associated with (i) energy commodities and derivatives, (ii) risks identified through PG&E Corporation's enterprise risk management program, and (iii) merger and acquisition transactions considered by the Committee, as well as the overall steps that management has taken to monitor and control such exposures.

Each year, the Finance Committee also presents for the PG&E Corporation and Utility Boards' review and concurrence (1) a five-year outlook for PG&E Corporation and its subsidiaries that incorporates, among other things, key current and emerging issues, strategic initiatives, risk factors, and projected financial results, and (2) an annual financial performance plan for operating expense and capital spending budgets that reflect the first year of the approved five-year outlook. Members of the Board receive a monthly report that compares actual to budgeted financial performance and provides other information about financial performance.

Nominating and Governance Committee

The Nominating and Governance Committee of PG&E Corporation advises and assists the Boards of PG&E Corporation and the Utility with respect to:

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The selection of directors, including reviewing the appropriate skills and characteristics required of Board members, reviewing the qualifications of Board candidates, and recommending nominees for election to the Boards,

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The chairmanship and membership of Board committees, and the nomination of a lead director of each company's Board,

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Corporate governance matters, including the companies' governance principles and practices, and the review of shareholder proposals, and

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Evaluation of the Boards' performance and effectiveness.

Public Policy Committee

The Public Policy Committee of PG&E Corporation advises and assists the Boards of PG&E Corporation and the Utility with respect to public policy and corporate responsibility issues that could affect significantly the interests of the customers, shareholders, or employees of PG&E Corporation or its subsidiaries.

Among other things, the Public Policy Committee reviews the policies and practices of PG&E Corporation and its subsidiaries with respect to:

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Protection and improvement of the quality of the environment, and compliance with environmental and hazardous waste management standards and regulations,

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Charitable and community service organizations and activities,

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Political contributions,

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Diversity, inclusion, and workforce development,

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Development of diverse suppliers to PG&E Corporation, the Utility, and their respective subsidiaries, and

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Significant societal, governmental, and environmental trends and issues that may affect operations.

Committee Membership Requirements

Each of the key committees (other than the Executive Committees) must be composed entirely of

independent directors, as defined in the applicable company's Corporate Governance Guidelines. In addition, the Compensation Committee and the Nominating and Governance Committee must be composed entirely of independent directors, as defined in the Corporate Governance Guidelines and by the NYSE. Because PG&E Corporation holds approximately 96 percent of the voting power of the Utility, the Utility is a "controlled subsidiary" of PG&E Corporation and will not be subject to certain rules of NYSE Amex Equities ("Amex") that otherwise would require that all members of the Committee meet the Amex definition of "independent director" and would impose requirements on the Utility's director nomination and compensation setting processes.

Each member of the PG&E Corporation and Utility Audit Committees must be independent, as defined in the applicable company's Corporate Governance Guidelines, in SEC rules regarding audit committee independence, and in applicable stock exchange rules. Each member of the PG&E Corporation and Utility Audit Committees must be financially literate, as defined in applicable stock exchange rules. One member of each Audit Committee also must have accounting and related financial management expertise (which can be satisfied by the Committee's "audit committee financial expert"). If an Audit Committee member simultaneously serves on the audit committees of three or more public companies other than PG&E Corporation, the Utility, and their subsidiaries, that Committee member must inform the applicable company's Board. In order for that member to continue serving on the Audit Committee, the Board must affirmatively determine that the simultaneous service does not impair that committee member's ability to serve effectively on the Audit Committee.

Risk Management

Board-Level Oversight

As part of their oversight functions, the PG&E Corporation and Utility Boards generally oversee the companies' risk management policies and programs, and allocate certain specific oversight responsibilities to the Board committees, consistent with the substantive scope of each committee's charter. If a specific element of risk oversight is delegated to a Board committee, that committee provides a report of its activities to the applicable Board.

The allocation of Board-level risk oversight responsibility is based on legal requirements and internal governance standards. As discussed above in

the description of Board committees, some of the key areas in which risk management oversight has been allocated to Board committees include the following:

•

The Boards evaluate risks associated with major investments and strategic initiatives, with assistance from the PG&E Corporation Finance Committee.

•

The Boards oversee the implementation and effectiveness of the overall legal compliance and ethics programs, with assistance from the PG&E Corporation and Utility Audit Committees.

•

Each company's Audit Committee discusses the guidelines and policies that govern the processes by which major risks are assessed and managed, and considers risk issues associated with overall financial reporting and disclosure processes.

•

The PG&E Corporation Finance Committee reviews the strategies developed to manage the largest individual risks identified in management's enterprise risk management program (described below) and also discusses risk exposures related to energy procurement, including energy commodities and derivatives.

•

The PG&E Corporation Compensation Committee oversees potential risks arising from the companies' compensation policies and practices.

Other risk oversight responsibilities also have been allocated, consistent with each committee's substantive scope.

The allocation of Board-level risk oversight responsibility is reviewed periodically. The last assessment was conducted in November 2010 by the PG&E Corporation and Utility Audit Committees.

Management has the day-to-day responsibility for assessing and managing PG&E Corporation's and the Utility's exposure to various risks. Management provides various reports to the Boards and their committees regarding different elements of corporate risk management programs and activities. Among other things, management's enterprise risk management program focuses on identifying and addressing the largest risks facing the enterprise. PG&E Corporation and the Utility also have a Chief Risk and Audit Officer who functionally reports to the PG&E Corporation and Utility Audit Committees.

Compensation Risk Analysis

During 2010, Frederic W. Cook & Co., Inc. ("FWC"), the PG&E Corporation Compensation Committee's

independent consultant, assisted the companies with a review of the design of PG&E Corporation's and the Utility's incentive plans relative to general compensation plan risk factors, and company-specific risk/business areas identified through the companies' enterprise risk management process. Among other things, this analysis examined the balance between fixed and variable pay, the mix of equity-based awards, the existence of caps on incentive compensation, the composition and balance of performance metrics and the various performance thresholds, and stock ownership requirements. The analysis also considered the existence of governance practices, auditing oversight, and counterbalancing policies such as the clawback policy authorizing recoupment of certain incentive-based compensation following a restatement of company financial statements.

FWC examined all incentive compensation plans for executives, and also evaluated the general incentive plans for employees, with respect to risks identified through management's enterprise risk management program. FWC concluded that the companies' incentive plans are reasonably well-aligned with compensation design principles, and that there are no significant risk areas from a compensation risk perspective.

Based on the companies' review of their compensation policies and practices, and the analysis provided by FWC, PG&E Corporation and the Utility concluded that the risks arising from the companies' overall compensation policies and practices are not reasonably likely to have a material adverse effect on either PG&E Corporation or the Utility.

Director Nomination Process

The Boards of PG&E Corporation and the Utility each select nominees for director based on recommendations received from the PG&E Corporation Nominating and Governance Committee. The Committee's recommendations are based upon a review of the qualifications of Board candidates and consultation with the Chairman of PG&E Corporation or the Utility, as applicable, and the PG&E Corporation CEO.

Sources of Nominees

The Committee accepts recommendations for director nominees from a variety of sources, including executive search firms, shareholders, management, and Board members. The Committee reviews all recommended candidates for nomination at the annual

meetings at the same time and uses the same review criteria for all candidates.

Shareholders may recommend a person for the Committee to consider as a nominee for director of PG&E Corporation or the Utility, as applicable, by writing to that company's Corporate Secretary. Each recommendation must include:

1.

A brief description of the candidate,

2.

The candidate's name, age, business address, and residence address,

3.

The candidate's principal occupation and the class and number of shares of the company's stock owned by the candidate, and

4.

Any other information that would be required under the rules of the SEC in a proxy statement listing the candidate as a nominee for director.

Recommended candidates may be required to provide additional information.

Director Qualifications

The Committee reviews Board candidates with a goal of creating for each company a balanced and multi-disciplinary Board composed of qualified, dedicated, ethical, and highly regarded individuals who have experience relevant to the company's operations, understand the complexities of the company's business environment, and possess capabilities to provide valuable insight and oversight.

In conducting this review, the Committee considers factors such as diversity, age, skills, and any other factors that it deems appropriate, and annually reviews and recommends to the Boards the appropriate skills and characteristics required of Board members, given the current composition and needs of each company's Board.

In addition to the skills and characteristics noted above, for 2011 the Committees also considered the extent to which the nominees (both individually and as a group) possessed the following: experience as a senior executive or as a director of a public company; corporate governance experience or expertise; business operations, marketing, or customer services experience; expertise in legal, public policy, government/regulatory issues, or environmental affairs; experience in the energy/utility industry or as a customer of the Utility; community affairs, media relations, or investor relations

experience; and general financial, accounting, information technology, strategic planning, and risk management skills and knowledge.

With respect to diversity, the Committee seeks a range of different backgrounds, perspectives, skills, and experiences. Although there is no set policy regarding diversity of nominees for director, the Committee and the Boards annually review the diversity of the director nominees and the extent to which diverse backgrounds, perspectives, skills, and experiences are represented by the members of the Boards.

Board and Director Independence

The Nominating and Governance Committee also considers board independence and other qualification requirements when reviewing candidates for director nominee.

The PG&E Corporation Corporate Governance Guidelines set forth a policy that at least 75 percent of the directors should be independent, as defined in the Guidelines and set forth on pages A-1 to A-7 of this Joint Proxy Statement. The NYSE rules also require that a majority of PG&E Corporation's directors be independent, as defined by the NYSE, and that independent directors meet regularly. The definition of "independence" in the PG&E Corporation Corporate Governance Guidelines is more stringent than, and satisfies, the NYSE definitions. PG&E Corporation's Corporate Governance Guidelines and independence definitions also are available on-line in the Corporate Governance section of PG&E Corporation's website (www.pgecorp.com/aboutus/).

The Utility's Corporate Governance Guidelines also set forth a policy that at least 75 percent of the directors should be independent, as defined in the Guidelines. The Amex rules also require that the Utility's independent directors meet regularly. The Utility Board is exempt from Amex rules requiring that at least a majority of the directors meet the stock exchange's definition of "independent director" because PG&E Corporation holds approximately 96 percent of the voting power of the Utility and the Utility is a "controlled subsidiary." The definition of "independence" in the Utility's Corporate Governance Guidelines is more stringent than, and satisfies, the Amex definitions. The Utility's Corporate Governance Guidelines and independence definitions also are available on-line in the Corporate Governance section of the Utility's website (www.pge.com/about/).

Board of Directors Retirement Policy

The Boards of PG&E Corporation and the Utility may not designate any person as a candidate for election or re-election as a director after such person has reached the age of 72. However, this policy may be waived if the Nominating and Governance Committee and the applicable company's Board determine that it is in the best interest of the company to re-nominate a director who is 72 years old or older.

Compensation-Setting Process

Details regarding the compensation-setting process can be found below, as well as in the Compensation Discussion and Analysis section of this Joint Proxy Statement.

Non-Employee Director Compensation

The Boards of PG&E Corporation and the Utility each establish the level of compensation for that company's non-employee directors, based on the recommendation of the PG&E Corporation Compensation Committee and taking into account the impact of compensation on director independence. Directors who also are current employees of either company receive no additional compensation for service as directors.

The Compensation Committee periodically reviews the amount and form of compensation paid to non-employee directors of PG&E Corporation and the Utility, taking into account the compensation paid to directors of other comparable U.S. companies. The Committee conducts its review with the assistance of its independent compensation consultant, FWC.

Executive Officer Compensation

Each year, the Compensation Committee (and with respect to the CEO of PG&E Corporation and the CEO or the President of the Utility, the independent members of the applicable Board, based on the Committee's recommendation) approves the amounts of total target compensation for executive officers, based on a review of comparative data as well as the PG&E Corporation CEO's recommendations (and with respect to the PG&E Corporation CEO, the independent compensation consultant's recommendations). The Committee uses comparative data throughout the year to set the total target compensation of new executive officers. The Committee also reviews other benefits provided to executive officers.

The PG&E Corporation Board has delegated to the Compensation Committee the authority to administer the PG&E Corporation 2006 Long-Term Incentive Plan ("LTIP"), under which equity-based awards are made. In addition, the PG&E Corporation Board has delegated to the PG&E Corporation CEO the authority to grant LTIP awards to certain eligible participants within the guidelines adopted by the Compensation Committee. The Compensation Committee may delegate its authority with respect to ministerial matters under the LTIP to the PG&E Corporation CEO or the PG&E Corporation Senior Vice President, Human Resources. The Compensation Committee also oversees other employee benefit plans.

The PG&E Corporation Board has delegated to the PG&E Corporation CEO the authority to approve compensation, within guidelines approved by the Compensation Committee, to lower-level officers and to non-officer employees. With respect to annual equity awards, such Committee-approved guidelines include the LTIP award value ranges for different categories of employees, as well as the terms and conditions of all LTIP awards to be made during the year. The guidelines also specify the grant date for annual LTIP awards. Actual awards are generally made within the range of target LTIP values previously approved by the Committee.

Compensation Consultant

For 2010, the Compensation Committee retained FWC as its independent compensation consultant to advise on compensation programs and practices, including 2010 pay levels for non-employee directors and for officers. Consistent with company policy, FWC does not provide services to management of PG&E Corporation, the Utility, or their affiliates, although FWC maintains a working relationship with management in order to fulfill FWC's primary role as advisor to the Compensation Committee. The policy regarding independence of the compensation consultant is discussed further on page 37 of this Joint Proxy Statement.

FWC's 2010 engagement as the Compensation Committee's independent consultant contemplated that FWC would, among other things, conduct executive compensation studies (including recommendations regarding peer group composition, plan design and benefit levels, specific compensation levels in light of pay for performance, executive benefits and perquisites, tally sheets and post-employment compensation and benefits, and equity dilution), report on emerging trends and best practices in the area of

executive compensation, report on non-employee director compensation, and provide review and guidance regarding disclosures of executive and non-employee director compensation.

Board Oversight of Political Contributions

The PG&E Corporation Public Policy Committee reviews PG&E Corporation's and the Utility's political contributions and recommends Board approval limits for political contributions from the companies to candidates, measures, initiatives, political action committees, and certain other organizations that may engage in activities involving elections. The Public Policy Committee also directs preparation of an annual report detailing political contributions made by the companies during the preceding year.

Board Oversight of Management Succession

At least annually, and often more frequently, the PG&E Corporation and Utility Boards each review the applicable company's plan for CEO succession, both in the ordinary course of business and in response to emergency situations. The Board also develops a profile of appropriate responsibilities, attributes, and requirements for the position of CEO, which reflects PG&E Corporation's and the Utility's business functions, vision, and strategy. Potential candidates for CEO may be identified internally within the companies in consultation with the PG&E Corporation Compensation Committee (which oversees the evaluation of management) and the CEO, as well as externally through various sources, including independent third-party consultants.

The succession planning process also addresses the continuing development of appropriate leadership skills for internal candidates for CEO, as well as candidates for other leadership positions within the company. The Compensation Committee also is responsible for reviewing the CEO's long-range plans for officer development and succession for PG&E Corporation and the Utility.

During 2010, the companies' CEO succession plan was discussed with the Compensation Committee and with the Boards at their meetings in September and December. An independent consulting firm, Korn/Ferry International, assisted the companies in the succession planning process.

Director and Officer Conduct and Conflicts of Interest

Codes of Conduct

PG&E Corporation's and the Utility's respective codes of conduct and ethics that apply to each company's directors and employees, including executive officers, are available on-line in the Corporate Governance section of PG&E Corporation's website (www.pgecorp.com/aboutus/) or the Utility's website (www.pge.com/about/).

Review, Approval, and Ratification of Related Party Transactions

At their December 20, 2006, February 20, 2008, and February 18, 2009 meetings, the Boards of PG&E Corporation and the Utility each adopted or amended the joint Related Party Transaction Policy ("Policy"). The Policy applies to transactions that would require disclosure under Item 404(a) of Regulation S-K under the Securities Exchange Act of 1934 ("Item 404(a)"), except that the Policy has a lower dollar threshold than Item 404(a).

Under the Policy, at the first meeting of each year, each company's Audit Committee must review, approve, and/or ratify related party transactions (other than the types of transactions that are excluded from disclosure under Item 404(a), as described below) with values exceeding $10,000 in which either company participates and in which any "Related Party" has a material direct or indirect interest. For these purposes, "Related Party" generally includes (1) any director, nominee for director, or executive officer, (2) holders of greater than 5 percent of that company's voting securities, and (3) those parties' immediate family members.

After the annual review and approval of related party transactions, if either company wishes to enter into a new related party transaction, then that transaction must be either pre-approved or ratified by the applicable Audit Committee. If a transaction is not ratified in accordance with the Policy, management shall make all reasonable efforts to cancel or annul that transaction.

Where it is not practical or desirable to wait until the next Audit Committee meeting to obtain Committee approval or ratification, the Chair of the Audit Committee may elect to approve a particular related party transaction and then report on such approval to the full Audit Committee at the Committee's next regularly scheduled meeting. If the Chair of the Audit

Committee has an interest in the proposed related party transaction, then that transaction may be reviewed and approved by another independent and disinterested member of the applicable Audit Committee, provided that such member reports such approval to the full Committee at the Committee's next regularly scheduled meeting.

As part of the Audit Committees' review of any related party transaction, the Committees consider whether the transaction is on terms comparable to those that could be obtained in arm's-length dealings with an unrelated third party. The Policy also requires that each Audit Committee disclose to the respective Board any material related party transactions.

However, as provided in Item 404(a), the following types of transactions are excluded:

•

Transactions where the rates or charges are determined by competitive bids,

•

Transactions for the rendering of services as a common or contract carrier, or public utility, at rates or charges fixed in conformity with law or governmental authority,

•

Transactions for services as a bank depository of funds, transfer agent, registrar, trustee under a trust indenture, or similar services,

•

Benefits received on a pro rata basis by holders of PG&E Corporation or Utility securities,

•

Transactions where the individual's interest arises solely (1) from such person's position as a director of another corporation or organization which is a party to the transaction, (2) from the direct or indirect ownership of such person and a specific group (consisting of directors, nominees for director, and executive officers of the corporation, or any member of their immediate families), in the aggregate, of less than a 10 percent equity interest in another person (other than a partnership) which is a party to the transaction, or (3) from both such position and ownership,

•

Transactions where the individual's interest arises solely from the holding of an equity interest

(including a limited partnership interest, but excluding a general partnership interest) or a creditor interest in another person that is party to the transaction with PG&E Corporation, the Utility, or any of their subsidiaries or affiliates, and the transaction is not material to such other person,

•

Transactions where the individual's interest arises only from such person's position as a limited partner in a partnership engaged in a transaction with PG&E Corporation or the Utility, in which the individual's interest (when aggregated with any other Related Parties) is less than 10 percent and the individual does not serve as a general partner of, nor hold another position in, the partnership,

•

An employment relationship or transaction involving an executive officer of the respective company (and any related compensation resulting solely from that relationship or transaction), if the compensation is reported pursuant to Regulation S-K, Item 402,

•

An employment relationship or transaction involving an executive officer of the respective company (and any related compensation resulting solely from that relationship or transaction), if the compensation would have been reported pursuant to Regulation S-K, Item 402 as compensation earned for services if that individual were a named executive officer, and such compensation had been approved or recommended to the Board by the PG&E Corporation Compensation Committee (or its predecessor, the PG&E Corporation Nominating, Compensation, and Governance Committee) (and the executive officer is not an immediate family member of another Related Party), or

•

Compensation provided to a director, provided that compensation is reported pursuant to Regulation S-K, Item 407.

For 2010, all related party transactions were approved by the applicable company's Audit Committee in accordance with this Policy.

Shareholders are being asked to elect 11 directors to serve on the Board of PG&E Corporation and 12 directors to serve on the Board of the Utility. The 11 nominees for director of PG&E Corporation also are nominees for director of the Utility.

All nominees are current directors who were elected by shareholders at the 2010 annual meetings.

If elected as director, all of the nominees have agreed to serve and will hold office until the next annual meetings or until their successors shall be elected and qualified, except in the case of death, resignation, or removal of a director.

If any of the nominees become unavailable at the time of the annual meetings to accept nomination or election as a director, the proxyholders named on the PG&E Corporation or Utility proxy card (as applicable) will vote for substitute nominees at their discretion.

The following pages provide information about the nominees for director, including principal occupations and directorships held during the past five years, certain other directorships, age, length of service as a director of PG&E Corporation and/or the Utility, and membership on Board committees. Information regarding attendance at Board and committee meetings and ownership of PG&E Corporation and Utility stock is provided in the section entitled "Information Regarding the Boards of Directors of PG&E Corporation and Pacific Gas and Electric Company," which can be found on pages 24 to 30 of this Joint Proxy Statement.

The Boards of Directors of PG&E Corporation and Pacific Gas and Electric Company Unanimously Recommend a Vote FOR Each of the Nominees for Director Presented in This Joint Proxy Statement.

Director Independence and Qualifications

As previously noted, the PG&E Corporation and Utility Corporate Governance Guidelines provide that each Board must have at least 75 percent independent directors (as defined in the Corporate Governance Guidelines, which are included as Appendix A to this Joint Proxy Statement), and that key Board committees must be comprised entirely of independent directors. Additional qualification requirements apply to members of the companies' Audit Committees. As described below, each company's Board and its committees satisfied these independence standards during 2010.

The Boards of PG&E Corporation and the Utility each have affirmatively determined that the following directors are independent and were independent throughout 2010: David R. Andrews, Lewis Chew, C. Lee Cox, Maryellen C. Herringer, Roger H. Kimmel, Richard A. Meserve, Forrest E. Miller, Rosendo G. Parra, Barbara L. Rambo, and Barry Lawson Williams. The Boards have determined that each is independent because he or she:

•

Does not have any relationship with either PG&E Corporation or the Utility that would interfere with the exercise of independent judgment,

•

Is "independent" as defined by applicable NYSE and Amex rules, and

•

Satisfies each of the categorical standards adopted by the Boards for determining whether a specific relationship is "material" and a director is independent. These categorical standards are set forth in Appendix A on pages A-6 and A-7 of this Joint Proxy Statement.

In the process of determining each director's independence, the Boards considered transactions between PG&E Corporation or the Utility and their respective directors and their immediate family members, and certain entities with which the directors or their immediate family members were affiliated. Other than transactions with AT&T Inc. and Covington & Burling LLP, these transactions only involved the Utility's provision of utility services at rates or charges fixed in conformity with law or governmental authority, which the Boards determined were not material and did not affect the director's

independence. PG&E Corporation and the Utility received from AT&T Inc. (of which Mr. Miller serves as an executive officer) utility services at rates or charges fixed in conformity with law or governmental authority, and other telecommunications services and related equipment in the ordinary course of business, which the Boards determined were not material and did not affect Mr. Miller's independence. Within the past three years, PG&E Corporation and the Utility have received legal services from Covington & Burling LLP (to which Dr. Meserve is Senior Of Counsel), all of which were performed in the ordinary course of business. The annual dollar value of such services was less than the $10,000 per year disclosure threshold for review pursuant to the companies' Related Party Transaction Policy. The Boards have determined that these transactions were not material and did not affect Dr. Meserve's independence.

Director Attendance at Board and Committee Meetings During 2010

During 2010, there were 12 meetings of the PG&E Corporation Board and 29 meetings of the PG&E Corporation principal standing Board committees. Each incumbent PG&E Corporation director attended at least 85 percent of the total number of applicable Board and Board committee meetings held during the period of his or her service on the Board and Board committees during 2010.

During 2010, there were 11 meetings of the Utility Board and 12 meetings of the Utility principal standing Board committees. Each incumbent Utility director attended at least 90 percent of the total number of applicable Board and Board committee meetings held during the period of his or her service on the Board and Board committees during 2010.

Director Attendance at the 2010 Annual Meetings

Each member of the Board of PG&E Corporation or the Utility is expected to attend that company's annual meetings. All 11 incumbent directors attended PG&E Corporation's 2010 annual meeting and all 12 incumbent directors attended the Utility's 2010 annual meeting.

*

Committee Chair

(1)

Independent lead director of PG&E Corporation and the Utility and the non-executive Chairman of the Utility.

(2)

Audit committee financial expert, as defined by the SEC.

(3)

Member of the Utility's Executive Committee only.

Compensation of Non-Employee Directors

In September 2008, the PG&E Corporation Compensation Committee reaffirmed the following approach for determining compensation levels for non-employee directors of PG&E Corporation and the Utility:

•

Target total compensation (i.e., Board and committee retainers, meeting fees, chairperson retainers, and equity) should be competitive with the average of the comparator group used for analysis of executive pay,

•

Director compensation should be set for two-year periods, to achieve the preceding objective at the midpoint of each period,

•

Target total compensation for the companies' Audit Committees and their Chair should reflect a premium to account for their increased responsibility and accountability pursuant to stock exchange requirements and legislation, and

•

Target total compensation for the lead director should reflect the same premium as for the Chair of the Audit Committees.

The following section provides additional information regarding compensation paid to the non-employee directors of PG&E Corporation and the Utility during 2010.

Director Retainers and Fees

During 2010, each director who was not an officer or employee of PG&E Corporation or the Utility received a quarterly retainer of $13,750. The non-employee directors who chaired the Compensation Committee, the Finance Committee, the Nominating and Governance Committee, and the Public Policy Committee each received an additional quarterly retainer of $1,875. The non-employee director who chaired the Audit Committees received an additional

quarterly retainer of $12,500. In addition, the non-employee director who served as the lead director received an additional quarterly retainer of $12,500.

Non-employee directors also received a fee of $1,750 for each Board or Board committee meeting attended, except that members of the Audit Committees received a fee of $2,750 for each Audit Committee meeting attended.

Directors also receive a $1,750 per-meeting fee for attending shareholder meetings that are not held on the same day as a meeting of the respective company's Board.

Non-Employee Director Stock-Based Compensation

Under the PG&E Corporation 2006 Long-Term Incentive Plan ("LTIP"), each non-employee director of PG&E Corporation is entitled to receive annual awards of stock-based compensation.

Awards for 2010 were granted on March 10, 2010. Such grants had a total aggregate value of $90,000, composed of:

•

Restricted shares of PG&E Corporation common stock valued at $45,000 (based on the average closing price of PG&E Corporation common stock over the five trading days of March 4 through March 10, 2010), and

•

A combination, as elected by the director, of non-qualified stock options and RSUs (including dividend rights that are converted to additional credited RSUs) with a total value of $45,000, based on increments valued at $5,000 (or if no election is made, stock options and RSUs with a value of $22,500 each).

The per-option value is based on the Black-Scholes stock option valuation method, discounting the resulting value by 20 percent. The exercise price of stock options is the market value of PG&E Corporation common stock (i.e., the closing price) on the grant date. The value of each RSU is based on the average closing price of PG&E Corporation common stock over the five trading days of March 4 through March 10, 2010.

Stock options vest over a four-year period following the grant date, with one-third of the grant vesting on each of the second, third, and fourth anniversaries of grant, except that stock options will vest immediately upon mandatory retirement from the Board, or upon a director's termination due to death or disability. If a director ceases to be a member of the Board for any other reason, any unvested stock options will be forfeited.

Restricted stock awards vest over the five-year period following the grant date, except that restricted stock will vest immediately upon retirement from the Board after reaching the applicable director retirement threshold, or upon a director's termination due to death or disability. If a director ceases to be a member

of the Board for any other reason, any unvested shares of restricted stock will be forfeited.

RSUs granted to non-employee directors are payable only in the form of PG&E Corporation common stock following a director's retirement from the Board after five consecutive years of service or upon reaching mandatory retirement age, or upon a director's termination due to death or disability. If a director ceases to be a member of the Board for any other reason, all RSUs will be forfeited.

A non-employee director's equity-based awards also will vest or accelerate in full if there is a Change in Control, as defined in the LTIP. Restricted stock and stock options become payable upon vesting, and RSUs become payable in accordance with the normal settlement schedule.

Director Payments for Attending Meetings of Both PG&E Corporation and the Utility

Directors who serve on both the PG&E Corporation and Utility Boards and corresponding committees do not receive additional compensation for concurrent service on the Utility's Board or its committees. However, separate meeting fees are paid for each meeting of the Utility Board or a Utility Board committee that is not held concurrently or sequentially with a meeting of the PG&E Corporation Board or a corresponding PG&E Corporation Board committee. It is the usual practice of PG&E Corporation and the Utility that meetings of the companies' Boards and corresponding committees are held concurrently and, therefore, that a single meeting fee is paid to each director for each set of meetings.

Director's Ability to Defer Retainers and Fees

Under the PG&E Corporation 2005 Deferred Compensation Plan for Non-Employee Directors, directors of PG&E Corporation and the Utility may elect to defer all or part of their retainers and fees. Directors who participate in the Deferred Compensation Plan may elect either to (1) convert their deferred compensation into common stock equivalents, the value of which is tied to the market value of PG&E Corporation common stock, or (2) have their deferred compensation invested in the Utility Bond Fund (which is described in the narrative following the "Non-Qualified Deferred Compensation" table on page 63 of this Joint Proxy Statement.

Director Reimbursement for Travel and Other Expenses

Directors of PG&E Corporation and the Utility are reimbursed for reasonable expenses incurred in

connection with attending Board, Board committee, or shareholder meetings, or participating in other activities undertaken on behalf of PG&E Corporation or the Utility.

Director Retirement Benefits from PG&E Corporation or the Utility

The PG&E Corporation Retirement Plan for Non-Employee Directors was terminated effective January 1, 1998. Directors who had accrued benefits under the Plan were given a one-time option of either (1) receiving the benefit accrued through 1997, upon their retirement, or (2) converting the present value of their accrued benefit into a PG&E Corporation common stock equivalent investment held in the Deferred Compensation Plan for Non-Employee Directors. The payment of accrued retirement benefits, or distributions from the Deferred Compensation Plan relating to the conversion of retirement benefits, cannot be made until the later of age 65 or retirement from the Board.

Director Compensation for 2011

During 2010, the Compensation Committee conducted its biennial review of non-employee director compensation, with assistance from FWC, the Committee's independent compensation consultant. FWC conducted an independent analysis of PG&E Corporation's and the Utility's non-employee director compensation as compared to peer companies, with the objective of ensuring that non-employee director compensation is:

•

Market-competitive in terms of annual compensation value, and

•

Consistent with emerging best practices and trends.

Following this review, the Boards of Directors approved the following adjustments to non-employee director compensation, which became effective on January 1, 2011:

•

LTIP awards for non-employee directors will now consist only of RSUs that are granted upon election to the Board at each annual meeting and that vest in one year at the end of the director's elected term. RSUs also will vest upon the director's death, disability, or a change in control (although settlement may be delayed), and otherwise are forfeited if the director ceases to be a member of the Board during his or her elected one-year term.

•

Stock ownership guidelines for non-employee directors were increased to five times each

director's annual retainer, from four times the annual retainer. Holdings are valued as of the date of measurement, rather than the date of grant.

•

Quarterly retainers for the chairs of the PG&E Corporation Compensation, Finance, Nominating and Governance, and Public Policy Committees were increased from $1,875 to $2,500.

Legal Proceedings

A lawsuit was filed in San Mateo County Superior Court as a purported shareholder derivative lawsuit to seek recovery on behalf of PG&E Corporation and the Utility for alleged breaches of fiduciary duty by officers and directors, among other claims. The claims generally relate to the September 9, 2010 accident in San Bruno, California, involving the rupture of an underground 30-inch natural gas transmission pipeline owned and operated by the Utility.

Related Person Transactions

Brian K. Cherry is Vice President, Regulatory Relations of the Utility and is the spouse of Sara A. Cherry, Vice President, Finance and Chief Financial Officer of the Utility. During 2010, Mr. Cherry received compensation consisting of approximately $410,000 in salary and short-term incentive awards, as well as LTIP awards with an estimated grant date fair market value of approximately $210,000. Compensation provided to Mr. Cherry during 2011 is expected to be similar, except that Mr. Cherry, as a member of the officer team, will not receive a short-term incentive award during 2011 (for corporate performance during 2010).

During 2010, BlackRock, Inc. ("BlackRock") was beneficial owner of at least 5 percent of PG&E Corporation common stock. Affiliates of BlackRock provided asset management services to PG&E Corporation's and the Utility's employee benefit trusts and to the Utility's nuclear decommissioning trusts. In exchange for these services, BlackRock's affiliates earned approximately $3.9 million in fees during 2010. These services were initiated prior to BlackRock's becoming a 5 percent owner of PG&E Corporation common stock, and the services continue to be subject to terms comparable to those that could be obtained in arm's-length dealings with an unrelated third party. PG&E Corporation and the Utility expect that BlackRock and its affiliates will continue to provide similar services and products in the future, at similar levels, in the normal course of business operations.

Section 16(a) Beneficial Ownership Reporting Compliance

In accordance with Section 16(a) of the Securities Exchange Act of 1934 and SEC regulations, PG&E Corporation's and the Utility's directors and certain officers, as well as persons who own greater than 10 percent of PG&E Corporation's or the Utility's equity securities, must file reports of ownership and changes in ownership of such equity securities with the SEC and the principal national securities exchange on which those securities are registered, and must furnish PG&E Corporation or the Utility with copies of all such reports that they file.

Based solely on review of copies of such reports received or written representations from certain reporting persons, PG&E Corporation and the Utility believe that during 2010 all filing requirements applicable to their respective directors, officers, and 10 percent shareholders were satisfied. No information is reported for individuals during periods in which they were not directors, officers, or 10 percent shareholders of the respective company.

The Audit Committees of PG&E Corporation and the Utility each have selected and appointed Deloitte & Touche LLP ("Deloitte & Touche") as the independent registered public accounting firm for that company to audit the consolidated financial statements as of and for the year ended December 31, 2011, and to audit the effectiveness of internal control over financial reporting as of December 31, 2011. Deloitte & Touche is a major national accounting firm with substantial expertise in the energy and utility businesses. Deloitte & Touche has served as independent public accountants for PG&E Corporation and the Utility since 1999.

One or more representatives of Deloitte & Touche are expected to be present at the annual meetings. They will have the opportunity to make a statement if they

wish and are expected to be available to respond to questions from shareholders.

PG&E Corporation and the Utility are not required to submit these appointments to a vote of their shareholders. If the shareholders of either PG&E Corporation or the Utility do not ratify the appointment, the applicable Audit Committee will investigate the reasons for rejection by the shareholders and will reconsider the appointment.

The Boards of Directors of PG&E Corporation and Pacific Gas and Electric Company Unanimously Recommend a Vote FOR the Proposal to Ratify the Appointment of Deloitte & Touche.

Fees Paid to the Independent Registered Public Accounting Firm

The Audit Committees have reviewed the audit and non-audit fees that PG&E Corporation, the Utility, and their respective controlled subsidiaries have paid to the independent registered public accounting firm, in order to consider whether those fees are compatible with maintaining the firm's independence.

Table 1:    Fees Billed to PG&E Corporation
(Amounts include Fees Billed to Pacific Gas and Electric Company and its Subsidiaries shown in Table 2 below)

Table 2:    Fees Billed to Pacific Gas and Electric Company and its Subsidiaries
(Amounts are included in Fees Billed to PG&E Corporation shown in Table 1 above)

Audit Fees

Audit fees billed for 2010 and 2009 relate to services rendered by Deloitte & Touche in connection with reviews of Quarterly Reports on Form 10-Q, certain limited procedures on registration statements, the audits of the annual financial statements of PG&E Corporation and its subsidiaries and the Utility and its subsidiaries, and the audits of both PG&E Corporation's and the Utility's internal control over financial reporting, as required by Section 404 of the Sarbanes-Oxley Act.

Audit-Related Fees

Audit-related fees billed in 2010 and 2009 relate to services rendered by Deloitte & Touche to both PG&E Corporation and its subsidiaries and the Utility and its subsidiaries for nuclear decommissioning trust audits, consultations on financial accounting and reporting standards, and required agreed-upon procedure reports related to contractual obligations of the Utility and its subsidiaries. Audit-related fees billed in 2009 also relate to services for employee benefit plan audits.

Tax Fees

Tax fees billed in 2009 relate to services rendered by Deloitte & Touche to PG&E Corporation and its subsidiaries for tax advice provided with respect to routine tax compliance matters, general tax planning and advice, and tax controversy support. Tax fees billed in 2009 also relate to tax advice related to changes in tax accounting.

All Other Fees

Deloitte & Touche provided no services in this category to PG&E Corporation and its subsidiaries or to the Utility and its subsidiaries during 2010 and 2009.

Obtaining Services from the Independent Registered Public Accounting Firm

The following section describes policies and procedures regarding how PG&E Corporation, the Utility, and their consolidated affiliates may obtain services from Deloitte & Touche, including limitations on the types of services that the companies may obtain, and approval procedures relating to those services.

Services Provided by the Independent Registered Public Accounting Firm

In June 2002, PG&E Corporation adopted a policy providing that the company and its controlled subsidiaries only could enter into new engagements with Deloitte & Touche and its affiliate, Deloitte Consulting, for three types of services. The three permitted categories of services are:

•

Audit services,

•

Audit-related services, and

•

Tax services that Deloitte & Touche and its affiliates are allowed to provide to Deloitte & Touche's audit clients under the Sarbanes-Oxley Act.

PG&E Corporation and its subsidiaries traditionally have obtained these types of services from its independent registered public accounting firm.

Audit Committee Pre-Approval Policy for Services Provided by the Independent Registered Public Accounting Firm

The PG&E Corporation and Utility Audit Committees approve the selection of the independent registered public accounting firm for each fiscal year, and approve obtaining from the accounting firm a detailed list of (1) audit services, (2) audit-related services, and (3) tax services, all up to specified fee amounts.

(1)

"Audit services" generally include audit and review of annual and quarterly financial statements and services that only the independent registered public accounting firm reasonably can provide (e.g., comfort letters, statutory audits, attest services, consents, and assistance with and review of documents filed with the SEC).

(2)

"Audit-related services" generally include assurance and related services that traditionally are performed by the independent registered public accounting firm (e.g., agreed-upon procedure reports related to contractual obligations and attest services that are not required by statute or regulation).

(3)

"Tax services" generally include compliance, tax strategy, tax appeals, and specialized tax issues, all of which also must be permitted under the Sarbanes-Oxley Act.

In determining whether to pre-approve any services from the independent registered public accounting firm, the Audit Committees assess, among other things, the impact of that service on the accounting firm's independence.

Additional Services

After the initial annual pre-approval, the Audit Committees must pre-approve any proposed engagement of the independent registered public accounting firm for any audit, audit-related, and tax services that are not included on the list of pre-approved services, and must pre-approve any listed pre-approved services that would cause PG&E Corporation or the Utility to exceed the authorized fee amounts. Other services may be obtained from the independent registered public accounting firm only following review and approval by the applicable company's management and review and pre-approval by the applicable Audit Committee.

Delegation of Pre-Approval Authority

Each Audit Committee has delegated to the Committee Chair, or to any other independent Committee member if the Chair is not available, the authority to pre-approve audit and non-audit services by the company's independent registered public accounting firm. Any pre-approvals granted under this authority must be presented to the full Audit Committee at the next regularly scheduled Committee meeting.

Monitoring Pre-Approved Services

At each regular meeting of the Audit Committees, management provides a report on the nature of specific audit and non-audit services being performed by Deloitte & Touche for the company and its subsidiaries, the year-to-date fees paid for those services, and a comparison of year-to-date fees to the pre-approved amounts.

Pre-Approval of Services During 2010 and 2009

During 2010 and 2009, all services provided by Deloitte & Touche to PG&E Corporation, the Utility, and their controlled subsidiaries were approved under the applicable pre-approval procedures.

The Audit Committees ("Committees") of PG&E Corporation and Pacific Gas and Electric Company ("Utility") are comprised of independent directors and operate under written charters adopted by their respective Boards. The members of the Audit Committees of PG&E Corporation and the Utility are identical. At both PG&E Corporation and the Utility, management is responsible for internal controls and the integrity of the financial reporting process.

In this regard, management has assured the Committees that the consolidated financial statements of PG&E Corporation and the Utility were prepared in accordance with generally accepted accounting principles. In addition, the Committees reviewed and discussed these audited consolidated financial statements with management and the independent registered public accounting firm. The Committees also discussed with the independent registered public accounting firm matters that are required to be discussed by Statement on Auditing Standards No. 114 (the successor to Statement on Auditing Standards No. 61–"Communication with Audit Committees").

Deloitte & Touche LLP was the independent registered public accounting firm for PG&E Corporation and the Utility in 2010. Deloitte & Touche LLP provided to the Committees the written disclosures and the letter

required by applicable requirements of the Public Company Accounting Oversight Board regarding an independent registered public accounting firm's communications with an audit committee concerning independence, and the Committees discussed with Deloitte & Touche LLP that firm's independence.

Based on the Committees' review and discussions described above, the Committees recommended to the Boards that the audited consolidated financial statements for PG&E Corporation and the Utility be included in the PG&E Corporation and Pacific Gas and Electric Company Annual Report on Form 10-K for the year ended December 31, 2010 filed with the Securities and Exchange Commission.

March 30, 2011

Audit Committees of the Boards of Directors of PG&E Corporation and Pacific Gas and Electric Company

Barry Lawson Williams, Chair
David R. Andrews
Lewis Chew
Maryellen C. Herringer
Forrest E. Miller

PG&E Corporation and the Utility each believe that it is important to give shareholders the opportunity to provide input on executive compensation, and ask their respective shareholders to consider the following resolution:

RESOLVED that the compensation paid to the executive officers named in the Summary Compensation Table of this Joint Proxy Statement, as disclosed pursuant to Item 402 of Regulation S-K in this Joint Proxy Statement, including the Compensation Discussion and Analysis, and the compensation tables (and accompanying narrative discussion) is hereby APPROVED.

PG&E Corporation and the Utility each believe that its executive compensation policies and practices are effective in tying a significant portion of pay to performance, while providing competitive compensation that attracts and retains talented personnel, and aligning executive officers' interests with shareholder interests.

In establishing PG&E Corporation's officer compensation programs for 2010 (which also cover officers of the Utility), the PG&E Corporation Compensation Committee established three objectives. Each of these objectives, and how these objectives were met for 2010, is discussed in the Compensation Discussion and Analysis ("CD&A"), which can be found immediately following this Item No. 3. These objectives are summarized below.

•

A significant component of every officer's compensation should be tied directly to PG&E Corporation's financial performance.

With the exception of base salary, all elements of annual officer compensation are tied to corporate operational and/or financial performance and, therefore, provide a direct connection between compensation and performance in both the achievement of key operating results and long-term shareholder value. For Peter A. Darbee, the CEO of PG&E Corporation, approximately 85 percent of 2010 target compensation was performance-based. For the other named executive officers ("NEOs") listed in the Summary Compensation Table, more than two-thirds of 2010 target average compensation was performance-based.

•

Target cash compensation (base salary and target short-term incentive) should be competitive with the average target cash compensation for comparable officers in the Pay Comparator Group.

Target cash compensation for 2010 generally was within a range of 15 percent above to 15 percent

below the corresponding measure for the Pay Comparator Group of publicly traded gas and electric utilities. (Additional information regarding the Pay Comparator Group can be found in the CD&A on pages 39 to 40.)

•

Long-term compensation should be tied to PG&E Corporation's long-term performance for shareholders.

The 2010 LTIP awards were comprised equally of restricted stock units ("RSUs") and performance shares, except that Mr. Darbee received 40 percent RSUs and 60 percent performance shares. RSU awards vest over a four-year period, and their value is tied directly to the price of PG&E Corporation common stock. Performance shares vest, if at all, at the end of a three-year period, and their value is tied to the relative three-year performance of PG&E Corporation common stock as compared to the stock performance of companies in the Performance Comparator Group. (Additional information regarding the Performance Comparator Group can be found in the CD&A on pages 39 to 40.) Mr. Darbee's 2010 LTIP award contained a greater proportion of performance shares in order to tie more of his compensation directly to PG&E Corporation's long-term performance for shareholders.

Details regarding the companies' executive compensation programs, including the overall pay-for-performance policies and practices, are described more fully in the CD&A, the compensation tables, and the accompanying narrative, all of which can be found immediately following this Item No. 3.

This vote is non-binding and required by Section 14A of the Exchange Act. Each company currently plans to submit this vote to shareholders again in connection with next year's annual shareholder meeting (pending consideration of shareholders' non-binding recommendations with respect to the frequency of this advisory vote). If the shareholders of either company do not approve this proposal, the PG&E Corporation Compensation Committee and members of management will investigate the reasons for such rejection and will consider those reasons when developing future executive compensation programs, practices, and policies.

The Boards of Directors of PG&E Corporation and Pacific Gas and Electric Company Unanimously Recommend a Vote FOR This Proposal to Approve the Compensation of Each Company's Executive Officers Named in the Summary Compensation Table, as Described in this Joint Proxy Statement.

This section explains the compensation philosophy for PG&E Corporation and the Utility, and describes how compensation programs are designed and operate with respect to the named executive officers for whom compensation is disclosed in the tables following this CD&A.

Summary of 2010 Performance

Corporate Performance

PG&E Corporation's financial performance for 2010 reflects earnings per share from operations of $3.42,⁽¹⁾ as compared to $3.21 per share for 2009. This represents a 6.5 percent increase compared to 2009, and was in the lower half of the range with respect to the company's guidance on 2010 earnings per share of $3.35 to $3.50. The companies' financial and operational performance for 2010 resulted in a calculated payout level of 86.4 percent of target under the Short-Term Incentive Plan ("STIP"), which measures financial and operating performance on an annual basis.

As explained below (see the "2010 STIP Structure and Results" section of this CD&A), based on the recommendation of the PG&E Corporation CEO, the PG&E Corporation and Utility Boards and the PG&E Corporation Compensation Committee determined that no payouts under the STIP should be made to officers of PG&E Corporation or the Utility for 2010.

Payouts also were determined for the performance shares granted in 2008 under the PG&E Corporation 2006 Long-Term Incentive Plan ("LTIP"). Performance for these awards was determined by comparing PG&E Corporation's total shareholder return ("TSR") for the three years ending December 31, 2010 to that of its Performance Comparator Group of companies (see the section entitled "How Did the Committee Benchmark and Establish the 2010 Officer Compensation Program?" in this CD&A for a discussion of the Performance Comparator Group). PG&E Corporation had the highest three-year TSR of any of these companies.

   
   
   
    

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(1)

PG&E Corporation discloses historical financial results and bases guidance on "earnings from operations" in order to provide a measure that allows investors to compare the underlying financial performance of the business from one period to another, exclusive of items that management believes do not reflect the normal course of operations. Earnings from operations is

Corporate Governance and Compensation

For 2010, the PG&E Corporation Compensation Committee ("Committee") continued to review its compensation practices and policies in comparison to evolving best practices. Since the beginning of 2009, the Committee or the Boards (at the Committee's recommendation) have adopted a number of new programs, practices, and policies, including the following:

•

The Executive Incentive Compensation Recoupment Policy (or clawback policy),

•

The Statement of Policy with Respect to the Independence of the Compensation Consultant,

•

A policy against granting additional years of credited service under the PG&E Corporation Supplemental Executive Retirement Plan,

•

Elimination of excise tax gross-up payments to executives,

•

The Committee's use of tally sheets for named executive officers ("NEOs"),

•

Incentive plan risk assessment,

•

Increased stock ownership guidelines for the CEO of PG&E Corporation and certain other officers of PG&E Corporation and the Utility, and the adoption of a policy requiring retention of 50 percent of net earned equity awards until the guidelines are met,

•

Refinement of the benchmarking methodology for executive pay in several respects, including determining that the Philadelphia Utility Index should be the primary basis for selecting peer companies for pay comparisons ("Pay Comparator Group") and adopting criteria to be used for selecting the companies against which corporate performance is to be measured ("Performance Comparator Group"), and

•

Enhancement of the management development and succession planning process.

Each of these initiatives is discussed in more detail throughout this Joint Proxy Statement.

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not a substitute or alternative for income available for common shareholders presented in accordance with GAAP (see Exhibit A at the end of this CD&A for a reconciliation of results based on earnings from operations to results based on income available for common shareholders in accordance with GAAP).

Information in the CD&A

This CD&A discusses the compensation for 2010 that was awarded to, earned by, or paid to certain executive officers of PG&E Corporation and the Utility whose compensation is reported in the tables in this Joint Proxy Statement. Under the SEC's proxy rules, NEOs of PG&E Corporation and the Utility generally consist of the principal executive officer and the principal financial officer of each company and the next three highest paid executive officers of each company. For 2010, the following individuals were the NEOs of PG&E Corporation and the Utility:

•

Peter A. Darbee—Chairman, Chief Executive Officer, and President, PG&E Corporation (NEO of both PG&E Corporation and the Utility),

•

Christopher P. Johns—President, Pacific Gas and Electric Company (NEO of both PG&E Corporation and the Utility),

•

Kent M. Harvey—Senior Vice President and Chief Financial Officer, PG&E Corporation (NEO of PG&E Corporation only),

•

Hyun Park—Senior Vice President and General Counsel, PG&E Corporation (NEO of both PG&E Corporation and the Utility),

•

Rand L. Rosenberg—Senior Vice President, Corporate Strategy and Development, PG&E Corporation (NEO of PG&E Corporation only),

•

John S. Keenan—Senior Vice President and Chief Operating Officer, Pacific Gas and Electric Company (NEO of the Utility only),

•

Sara A. Cherry—As of March 1, 2010, Vice President, Finance and Chief Financial Officer, Pacific Gas and Electric Company (NEO of the Utility only) (prior to this appointment, Ms. Cherry was Senior Director, Internal Auditing of the Utility), and

•

Barbara L. Barcon—Through March 1, 2010 (when her employment with the Utility terminated), Ms. Barcon was Vice President, Finance and Chief Financial Officer, Pacific Gas and Electric Company (NEO of the Utility only).

This CD&A answers the following questions:

•

Who plays a role in establishing executive compensation?

•

How do shareholders provide input regarding the executive compensation program?

•

What factors guided the Committee's 2010 officer compensation program goals and objectives?

•

How did the Committee benchmark and establish the 2010 officer compensation program?

•

What are the components of the 2010 officer compensation program?

•

How is officer compensation aligned with the competitive market?

•

What are the other elements of executive compensation?

•

What compensation is payable upon termination and/or a change in control of PG&E Corporation?

•

Are there any material differences in compensation paid to the different NEOs?

Who Plays a Role in Establishing Executive Compensation?

The Committee, comprised entirely of independent directors, oversees and establishes officer compensation policies for PG&E Corporation. These policies also cover officers of the Utility and each company's subsidiaries. The Committee works with an independent executive compensation consultant, who provides advice regarding executive compensation programs and practices and recommends compensation alternatives that are consistent with PG&E Corporation's compensation philosophies.

During 2009, the Committee adopted a formal policy to maintain the compensation consultant's independence from management. In general, the policy states that the Committee's executive compensation consultant will be independent if (1) the consultant is retained by the Committee and reports solely to the Committee, and (2) the consultant and its affiliates do not perform any work for PG&E Corporation or its affiliates, except at the request of the Committee or its chair and in the capacity of the Committee's agent.

Consistent with this policy, in September 2009, the Committee selected Frederic W. Cook & Co., Inc. ("FWC") as its compensation consultant to advise on compensation programs and practices, including 2010 officer pay levels. FWC provides no other services to PG&E Corporation and its affiliates.

The CEO of PG&E Corporation generally attends a portion of each Committee meeting, but does not participate in the Committee's deliberations or decisions with respect to his pay. At the Committee's request, the CEO reviews with the Committee the performance of the other NEOs, but no other NEO has any input into executive compensation decisions. The CEO also recommends adjustments, if any, in base pay, the target annual incentive opportunity, and equity awards for the other NEOs. These recommendations

are given appropriate weight by the Committee in the compensation-setting process, given the CEO's direct knowledge of the performance and contributions of each of the NEOs. The Committee exercises its discretion to accept, reject, or modify the CEO's recommendations based on the Committee members' collective assessment of the NEOs' performance and pay position relative to market benchmarks provided by the Committee's independent compensation consultant, as well as PG&E Corporation's overall financial and operating performance.

Additional details regarding the processes for determining and setting executive compensation are set forth on pages 12 to 13 of this Joint Proxy Statement.

How Do Shareholders Provide Input Regarding the Executive Compensation Program?

PG&E Corporation and the Utility believe that it is important to provide shareholders with the means to provide input on PG&E Corporation's executive compensation programs and the clarity of the company's disclosures regarding such programs.

PG&E Corporation continues to build on its outreach efforts with its institutional investors to gain insight into their views on corporate governance matters and executive compensation policies and programs. In 2010, management contacted its largest institutional investors who, collectively, represent approximately 35 percent of outstanding shares. Input was requested with respect to current corporate governance trends, the frequency of advisory votes on executive compensation, the company's use of performance metrics and comparator groups, and other issues of interest to them.

Starting with their annual meetings in May 2010, PG&E Corporation and the Utility provide shareholders with the right to cast an advisory vote on the companies' NEO compensation, as well as their executive compensation policies and practices. In 2010, these policies and practices, as well as the companies' NEO compensation, were approved by 96.1 percent and 99.8 percent, respectively, of PG&E Corporation and Utility shares that voted on this proposal. The results of these shareholder votes were among the factors taken into consideration by the Committee in its review of executive compensation programs and practices.

In July 2010, Congress enacted the Dodd-Frank Wall Street Reform and Consumer Protection Act ("Act"), which mandates that, at least once every three calendar years, shareholders be provided a non-binding advisory vote to approve compensation paid to the NEOs, as disclosed in the proxy statement ("say-on-pay

vote"). As described more fully in Item No. 3 (on page 35 of this Joint Proxy Statement), PG&E Corporation and the Utility believe that their executive compensation programs are transparent, are appropriately market-based, and reflect PG&E Corporation's and the Utility's philosophy of pay for performance and strong shareholder alignment.

In addition, the Act requires that, at least once every six calendar years, shareholders be given a non-binding advisory vote on the frequency that they will be given the say-on-pay vote. Accordingly, shareholders also are being presented this year with an opportunity to indicate their preference with respect to the frequency of the say-on-pay vote: annual, biannual, or triennial (see Item No. 4 on page 71 of this Joint Proxy Statement). Consistent with their prior decision to provide shareholders with an annual advisory vote on NEO compensation, as well as executive compensation policies and practices, the Boards recommend that shareholders be given an annual opportunity to cast an advisory non-binding say-on-pay vote.

What Factors Guided the Committee's 2010 Officer Compensation Program Goals and Objectives?

The Committee established its officer compensation program for 2010 to meet three primary goals:

•

To emphasize long-term incentives to further align shareholders' and officers' interests, and focus employees on enhancing total return for shareholders.

•

To attract, retain, and motivate employees with the necessary mix of skills and experience for the development and successful operation of PG&E Corporation's businesses.

•

To manage the delivery of compensation in a cost-efficient and transparent manner.

To meet these goals, the Committee determined that:

•

A significant component of every officer's compensation should be tied directly to PG&E Corporation's financial performance.

•

Target cash compensation (base salary and target short-term incentive) should be competitive with the average target cash compensation for comparable officers in the Pay Comparator Group (discussed more fully below).

•

Long-term compensation should be tied to PG&E Corporation's long-term performance for shareholders.

PG&E Corporation's compensation policies and practices described below and elsewhere in this Joint Proxy Statement are designed to meet these goals and objectives. These goals and objectives remain unchanged from 2009.

How Did the Committee Benchmark and Establish the 2010 Officer Compensation Program?

In 2010, the Committee used a primary Pay Comparator Group of publicly traded gas and electric utilities to evaluate market practice and assess PG&E Corporation's and the Utility's competitive pay position. In addition, the Committee used a secondary general industry comparator group of companies having a revenue and market capitalization scope similar to that of PG&E Corporation. All elements of total direct pay (base pay and short- and long-term incentive targets) were compared individually and in the aggregate to the primary Pay Comparator Group in the case of all officers. Comparisons also were made to the secondary general industry comparator group for officers whose job scope and skills are easily transferable to other industries, such as officers responsible for corporate support functions.

The Committee annually reviews and approves the Pay Comparator Group. For 2010, this group consisted of all companies listed in the Standard & Poor's Multi-Utilities Index and Electrics Index, and the Dow Jones Utility Index, providing objective criteria for determining the Pay Comparator Group. A total of 30 companies were included in the Pay Comparator Group:

        AES Corporation
        Allegheny Energy
        Ameren Corporation
        American Electric Power
        CenterPoint Energy, Inc.
        CMS Energy
        Consolidated Edison
        DTE Energy
        Dominion Resources, Inc.
        Duke Energy
        Edison International
        Entergy Corporation
        Exelon Corporation
        FPL Group
        First Energy
        Integrys Energy Group, Inc.
        NiSource, Inc.
        Northeast Utilities (added in 2010)
        PPL Corporation
        Pepco Holdings, Inc.
        Pinnacle West Capital
        Progress Energy, Inc.
        Public Service Enterprise Group

        SCANA Corporation (added in 2010)
        Sempra Energy
        Southern Company
        TECO Energy
        Williams Companies
        Wisconsin Energy Corporation (added in 2010)
        Xcel Energy, Inc.

For 2010, the secondary general industry comparator group was based on a proprietary executive compensation database provided by Hewitt Associates, LLC, the Committee's former independent compensation consultant. The group included 76 companies with annual revenues between $8 billion and $20 billion (with median revenues of $12.9 billion and median market capitalization of $10.5 billion). A list of these 76 companies is included in Appendix B to this Joint Proxy Statement.

Each year, PG&E Corporation also identifies a Performance Comparator Group that is used for evaluating the company's relative TSR performance in connection with the LTIP. The Performance Comparator Group is not used separately to benchmark officer compensation. For 2010, the Performance Comparator Group was a subset of the Pay Comparator Group and consisted of the following 12 companies with operating characteristics and business models comparable to PG&E Corporation (which were the same companies used in 2009):

Ameren Corporation
American Electric Power
CenterPoint Energy, Inc.
Consolidated Edison
Entergy Corporation
FPL Group
NiSource, Inc.
Pinnacle West Capital
Progress Energy, Inc.
Southern Company
TECO Energy
Xcel Energy, Inc.

The composition of PG&E Corporation's Pay and Performance Comparator Groups did not change significantly between 2005 and 2010. In 2009, the Committee asked its new compensation consultant, FWC, to review the composition of these two groups. Based on FWC's recommendations, the Committee determined at its September 2010 meeting to modify the composition of the Pay Comparator Group and the Performance Comparator Group starting in 2011.

With respect to the Pay Comparator Group, which is used to benchmark pay levels, PG&E Corporation's goal is to select a group of companies for which PG&E

Corporation is close to the 50th percentile (median) with respect to key size metrics. PG&E Corporation is currently positioned at or above the 75th percentile of the 2010 Pay Comparator Group, as measured by revenues, market capitalization, and operating income. By comparison, PG&E Corporation is positioned closer to the 50th percentile of the Philadelphia Utility Index with respect to these key size metrics. The Philadelphia Utility Index, which is administered by NASDAQ, consists of a group of 20 companies (including PG&E Corporation) that are selected by NASDAQ on the basis of having a primary business in the electric utility sector and meeting minimum market capitalization criteria. Based on these considerations, the Committee determined that the companies listed on the Philadelphia Utility Index should be used as the Pay Comparator Group starting in 2011.

In determining the composition of the Performance Comparator Group for 2011, the Committee considered using all the companies in the Philadelphia Utility Index. This approach would have had the desirable result of using the same companies for both pay and performance purposes. However, many of the companies in the Philadelphia Utility Index are significantly less regulated than PG&E Corporation's business (i.e., a higher percentage of their revenues are derived from sources that are not subject to regulation). Those less regulated companies have business models that are more influenced by shifting commodity prices. This results in performance factors influencing those companies' TSR that may not be comparable to the factors influencing PG&E Corporation's TSR. Accordingly, the Committee determined that the Philadelphia Utility Index in total was not an appropriate group of companies for performance comparison purposes. Instead, the Committee decided that the Performance Comparator Group will include companies (1) that are categorized consistently by the investment community as "regulated," as opposed to "less regulated," based on analysis of revenue sources (i.e., the companies have business models similar to PG&E Corporation), and (2) that have a market capitalization of at least $4 billion. The Committee first selected companies listed on the Philadelphia Utility Index that meet these criteria, and then selected additional companies that also meet these criteria.

The Committee does not adhere strictly to formulas or survey data to determine the actual mix and amounts of compensation elements. The Committee considers various additional factors, including each NEO's scope of responsibility and organizational impact, experience, and performance, as well as PG&E Corporation's overall financial and operating results. This flexibility is important in supporting the overall

pay-for-performance philosophy and in meeting the Committee's objectives of attracting, retaining, and motivating a talented executive leadership team.

In reviewing and establishing compensation for NEOs, the Committee reviewed tally sheets prepared by FWC.

The Committee appropriately weighs the tax deductibility limitations imposed by Section 162(m) of the U.S. Internal Revenue Code. The Committee in its discretion may award forms of compensation that are not deductible under Section 162(m) when it determines that such awards best carry out the goals and objectives of its officer compensation programs.

What Are the Components of the 2010 Officer Compensation Program?

Total annual compensation each year includes (1) base salary, (2) the annual cash incentive under the STIP, and (3) the value of equity awards granted under the LTIP. The following charts illustrate the percentage of target 2010 compensation allocated to base salary, short-term incentives, and long-term incentives for the PG&E Corporation CEO and for the other NEOs on average. (Short-term incentives are shown at target payout levels, and long-term equity incentives are shown at 100 percent payout.)

2010 PG&E Corporation CEO Target Compensation

Average 2010 Target Compensation for Other NEOs

The Committee believes that these proportions of base salary relative to target short-term and long-term incentives provide the right mix to attract, retain, and motivate officers with the necessary skills and experience for the development and successful operation of PG&E Corporation's businesses. They also

provide a direct connection between compensation and performance in both the achievement of key operating results and long-term shareholder value, as more fully described below.

As indicated by the charts above, a greater portion of the PG&E Corporation CEO's compensation is tied to the long-term performance of the company, which the Committee believes is appropriate given the CEO's role.

How Is Officer Compensation Aligned with the Competitive Market?

During the last quarter of fiscal year 2009, the Committee reviewed a market analysis conducted by FWC of each NEO's compensation level for 2009 in order to determine whether to adjust any NEO's pay for 2010. In February 2010, the Committee (and the independent members of the PG&E Corporation and Utility Boards in the case of Mr. Darbee and Mr. Johns, respectively) approved the base salaries, target short-term incentive opportunities, and long-term incentives for NEOs effective March 1, 2010.

In setting 2010 compensation levels, base pay and short-term incentive targets were aligned with the market average. In connection with the changes to the 2011 Pay Comparator Group described above under the section entitled "How Did the Committee Benchmark and Establish the 2010 Compensation Program?," the Committee also approved a change in its targeted market position for 2011 base pay and short-term incentive targets to the 50th percentile (median) compensation levels of the new Pay Comparator Group (consisting of the companies listed on the Philadelphia Utility Index), rather than the market average. This change was recommended by FWC and reflects the prevalent market practice.

The target LTIP award values are designed to (1) provide LTIP payouts that are commensurate with PG&E Corporation's TSR performance as compared to the Performance Comparator Group of companies, and (2) deliver long-term incentive compensation at approximately the 75th percentile level of the Pay Comparator Group only upon achievement of 75th percentile TSR performance as compared to the Performance Comparator Group. To the extent that the company's TSR performance is at the 50th percentile level of the Performance Comparator Group, LTIP payouts would be realized at approximately the 50th percentile level of the Pay Comparator Group. Actual LTIP amounts realized by NEOs depend on company performance, as measured by stock price and relative TSR performance as compared to the Performance Comparator Group. (TSR performance is

discussed further under the "Long-Term Incentives" section on pages 46 to 48 of this Joint Proxy Statement.)

Base Salary

For NEO compensation, the base salary component falls within a range of 15 percent to 42 percent of target total compensation, depending on officer level. This is consistent with the Committee's objective of tying a significant component of every NEO's compensation directly to PG&E Corporation's performance for shareholders through short-term and long-term incentives.

For 2010, the Committee approved a base salary increase budget of 3 percent. Base pay increases to NEOs equaled approximately 3.2 percent. The comparative data indicated that the companies in the Pay Comparator Group expected to provide officers a 2.9 percent average salary increase in 2010.

In the case of NEOs, base pay at PG&E Corporation and the Utility is generally within a range of between 15 percent above and 15 percent below (the "15 percent band") the average pay of the appropriate benchmark position in the Pay Comparator Group at the time of benchmarking. The Committee believes that this level of comparability to the market is appropriate and consistent with the pay philosophy of aligning compensation with market average, while taking into consideration other factors relative to establishing individual pay levels.

Upon Sara A. Cherry's election and promotion on March 1, 2010 to the position of Vice President, Finance and Chief Financial Officer of the Utility, the Committee determined that her base pay should be adjusted to reflect the significant increase to the size and scope of her new responsibilities. Ms. Cherry's base pay was increased from $198,550 to $275,000 and included both a merit and promotional increase. Prior to that time, Ms. Cherry was in the position of Senior Director, Internal Auditing of the Utility.

Short-Term Incentives

NEOs and other eligible employees may earn annual performance-based cash incentive compensation under the STIP.

STIP payments are calculated by multiplying an individual's target STIP award (measured as a percentage of base salary that varies by officer level, or the "participation rate") by the overall STIP performance score. The STIP performance score is the overall score for performance on each of the STIP measures, and can range from zero if minimum

performance goals are not met to 2.0 if maximum performance goals (for both financial and operational measures) are met.

For 2010, the Committee approved NEO participation rates that ranged from 45 percent of base salary to 100 percent of base salary (the 100 percent participation rate applies only to the CEO of PG&E Corporation). This range is within the 15 percent band of the Pay Comparator Group's average annual incentive participation rates. NEO participation rates generally remained the same as for 2009, except in the case of the position of Senior Vice President and Chief Financial Officer of PG&E Corporation, for whom the Committee determined that the participation rate should be raised from 65 percent to 70 percent of base salary. In addition, when Ms. Cherry was promoted to the position of Vice President, Finance and Chief Financial Officer of the Utility, her participation rate was increased from 30 percent to 45 percent (the rate applicable to the previous Vice President, Finance and Chief Financial Officer of the Utility).

Determination That No STIP Payouts Would Be Made to Officers of PG&E Corporation and the Utility for 2010

The STIP measures the success of PG&E Corporation and the Utility overall for the calendar year. Notwithstanding the specific results under the 2010 STIP performance measures (which are discussed below), the CEO of PG&E Corporation and other senior management of PG&E Corporation and the Utility concluded that, in light of the totality of events and the challenges that the companies faced in 2010, none of the officers of either company should receive a payout under the 2010 STIP. This recommendation was made to the PG&E Corporation and Utility Boards and the Compensation Committee at their respective February 2011 meetings. Consistent with the exercise of their discretion to determine final STIP awards and payments, the Boards and the Committee concurred with this recommendation, and no 2010 STIP payouts were made to any of the officers of the two companies.

2010 STIP Structure and Results

In 2009, the Committee established 2010 STIP financial and operational performance goals at minimum (or "threshold"), target, and maximum levels, and determined the relative weightings of each component (the "STIP Structure"). The Committee designed the 2010 STIP Structure to align officer compensation with the goals of delivering financial results for the benefit

of shareholders and delivering safe, reliable, and exceptional service to Utility customers.

Under the 2010 STIP Structure, 50 percent of the overall STIP performance score is based on corporate financial performance, as measured by earnings from operations, which is PG&E Corporation's basis for reporting and providing guidance to the financial community. Meeting the earnings from operations target continues to be the primary element of the STIP Structure. For 2010, the Committee weighted the earnings from operations measure at 50 percent, the same weighting assigned in 2009. PG&E Corporation believes that using earnings from operations as the STIP metric gives executives line of sight to key financial drivers in the business.

The Committee adopted threshold, target, and maximum STIP financial performance goals that correspond to STIP financial performance scores ranging from 0.5 to 2.0. The threshold goal is met if earnings from operations are at least 95 percent of budgeted earnings from operations, resulting in a minimum STIP financial performance score of 0.5. The target goal is met if earnings from operations are equal to budgeted earnings from operations, resulting in a target STIP financial performance score of 1.0. The maximum goal is met if earnings from operations equal or exceed 105 percent of budgeted earnings from operations, resulting in a maximum STIP financial performance score of 2.0. To meet the maximum goal, 2010 earnings from operations must be 14.9 percent greater than the 2009 earnings from operations results.

Based on 2010 earnings from operations of $1,330.5 million, the Committee determined that the 2010 STIP corporate financial performance score was 0.944, which, with a 50 percent weighting, contributed 0.472 to the total 2010 STIP score. The financial performance score was slightly below target due to a variety of factors, including higher emergency response costs for storms and the costs associated with the Utility's SmartMeter^TM program. (Earnings from operations is not calculated in accordance with generally accepted accounting principles ("GAAP"). For a reconciliation of earnings from operations to GAAP financial results, see Exhibit A to this CD&A on page 52.)

The remaining 50 percent of the overall 2010 STIP score is based on PG&E Corporation's performance against key operational objectives aligned with the delivery of safe, reliable, and exceptional service to customers.

2010 STIP—Operational Performance Measures

These five measures have the following definitions:

•

Customer Satisfaction and Brand Health Survey Index (CSBHI) (15 percent weighting). The Customer Satisfaction and Brand Health Index measures Utility customer perceptions of the Utility's performance in delivering services, such as reliability, pricing of services, customer service experience, and favorability toward the Pacific Gas and Electric Company brand. These scores are derived from the results of surveys conducted by an independent third party. For 2010, the company scored lower in most categories of the survey than in 2009. The 2010 CSBHI score was 74.6, which is 3.10 points below the 2010 target and falls below the threshold performance level required for a payout on this measure. The resulting score on the CSBHI was 0.000.

•

Reliable Energy Delivery Index (REDI) (15 percent weighting). The Reliable Energy Delivery Index measures electric and gas reliability performance. The index is composed of the following three subcomponents:

•

System Average Interruption Frequency Index ("SAIFI")—35 percent weighting. This index measures the average frequency of utility electric service outages. The Utility's 2010 performance on the SAIFI metric was the best on record since 1988, but was below the 2010 target by 3.9 percent. The score on this subcomponent was 0.627.

•

Customer Average Interruption Duration Index ("CAIDI")—35 percent weighting. This index

measures the average duration of utility electric service outages. The Utility's 2010 performance on CAIDI was the best performance of the past 10 years, but was below the target by 3.5 percent. The score on this subcomponent was 0.663.

•

Gas System Leak Resurvey—30 percent weighting. This metric measures progress against milestones on the Utility's accelerated and routine leak survey work scheduled during 2010. The Utility's 2010 performance on this measure was above target.

To achieve base level performance, the Utility was required to complete at least 98 percent of the surveys planned in 2010. The Utility completed 104.53 percent of the 2010 planned surveys, resulting in a 1.0 score on this baseline metric.

In addition, there also were survey quality and efficiency components that could result in overall metric performance between 1.0 and 2.0 (assuming that baseline survey requirements were met). With respect to survey quality, the Utility reduced the number of failed leak survey assessments (i.e., assessments in which a Utility employee fails to locate a gas leak) in 2010 (a 1.87 percent failure rate, which exceeded the stretch target of 2.8 percent). Performance on this metric resulted in a score of 0.500, which was added to the 1.0 score on the baseline metric.

Survey efficiency, measured by the average services surveyed per hour, was slightly above the minimum threshold (7.044 compared to 7.040), resulting in a score of 0.001, which also was added to the baseline metric score.

The combined score for the baseline metric plus the two additional components (quality and efficiency) was 1.501.

For 2010, PG&E Corporation's result on the Reliable Energy Delivery Index (REDI) was 0.902. The below-target score was due to the performance on the two electricity subcomponents (SAIFI and CAIDI), despite strong performance on the Gas System Leak Resurvey subcomponent.

•

Safety Index (10 percent weighting). The Safety Index is composed of the following two subcomponents:

•

Occupational Safety and Health Administration ("OSHA") Recordable Rate—

75 percent weighting. The OSHA Recordable Rate is based on the number of OSHA recordable injuries, illnesses, or exposures that (1) result in medical treatment beyond first aid or result in work restrictions, death, or loss of consciousness, and (2) occur in the current year. PG&E Corporation and the Utility use this metric to monitor the effectiveness of their safety programs, which are intended to significantly reduce the number and degree of employee injuries and illnesses. For 2010, the companies achieved their best OSHA Recordable Rate since they began tracking this measure in 1990. The companies incurred 363 OSHA Recordable incidents in 2010. The 2010 year-end rate of 1.839 was 9 percent better than the 2010 target of 2.025. The score on this subcomponent was 1.779.

•

Motor Vehicle Incident ("MVI") Rate—25 percent weighting. The MVI rate represents the number of motor vehicle incidents per 1 million miles driven, where the company driver could have prevented an accident but failed to do so ("chargeable motor vehicle incidents"). For 2010, the companies achieved an MVI rate of 2.39. The companies incurred 294 chargeable motor vehicle incidents in 2010. This was 1 percent higher than the 2010 target of 2.37. The score on this subcomponent was 0.915.

In addition, the STIP provided that, if the companies experienced any employee fatality during the year, the overall 2010 STIP score for the Safety Index would be capped at a maximum score of 1.00. During 2010, the Utility experienced two employee fatalities. As a result, the resulting score on Safety Index was 1.000. To reinforce the companies' commitment to public and employee safety, a change to the STIP safety measure was adopted for 2011. This change in described below on pages 45 to 46.

•

Employee Engagement Premier Survey Results Index (EI) (5 percent weighting). The Premier Survey measures employee engagement at PG&E Corporation and the Utility. The Premier Survey is designed to measure favorable responses on key drivers of employee engagement (energized employees) and organizational health, and is conducted by an independent third party. Engaged employees are those who understand the organization's vision, feel a sense of ownership for the company's success, and actively contribute to improve performance at the companies. For 2010, the EI percent favorable score from the Premier

Survey was 69.30. This score exceeded the target of 68.70. The 2010 EI score is the companies' highest to date. As a result, the score on EI was 1.300.

•

Environmental Leadership Index (ELI) (5 percent weighting). This was a new performance measure for 2010. The ELI is a measurement of PG&E Corporation's and the Utility's environmental compliance and operational footprint, which supports the companies' strategic goals for environmental leadership. The ELI is a composite score of the following two equally weighted subcomponents:

•

Environmental Compliance—50 percent weighting. This subcomponent is measured by the Notice of Violation ("NOV") rate, defined as the rate of NOVs per 100 agency inspections. For 2010, the Utility achieved a NOV rate of 1.10 with a total of 9 NOVs, representing a 71 percent annual improvement in the NOV rate and a 57 percent annual improvement in the number of NOVs. In 2010, the Utility heightened the awareness of environmental compliance in work activities at facilities and during construction. The score on this subcomponent was 2.000.

•

Operational Footprint—50 percent weighting. This subcomponent measures the percent reduction of energy and water use, and waste disposal, at the Utility's facilities, using three equally weighted metrics:

•

Energy Use Reduction, measured by percent reduction in British thermal units at Utility facilities managed by the Corporate Real Estate Department. For 2010, the Utility achieved a 4.3 percent reduction in energy usage. This was achieved through reductions in lighting and heating, ventilating, and air conditioning ("HVAC") usage in both office and field locations. The score on this subcomponent was 1.150.

•

Water Use Reduction, measured by the percentage reduction in water consumption, in gallons, at a target subset of Utility facilities managed by the Corporate Real Estate Department. For 2010, the Utility achieved a 7.1 percent reduction in water usage. This was achieved through facility work (installing low-flush toilets, upgrading HVAC systems, and incorporating other water-saving devices), by utilizing drought

resistant landscaping, and by reducing irrigation inefficiency. The score on this subcomponent was 2.000.

•

Solid Waste Reduction, measured by the percentage reduction in solid waste disposal at Utility facilities managed by the Corporate Real Estate Department. In 2010, the Utility achieved a 7.8 percent reduction in the amount of waste sent to landfill. This was achieved through employee education and increased awareness to encourage employees to dispose of waste properly. The score on this subcomponent was 1.900.

The overall resulting score on the ELI was 1.842.

The combined 2010 operational performance results yielded a combined 2010 STIP operational performance score of 0.392. This score was combined with the corporate financial performance score of 0.472 to yield an overall 2010 STIP score of 0.864.

2011 STIP Structure

At its February 15, 2011 meeting, the Committee approved the structure and measures for the 2011 STIP, and their relative weightings. The Boards and the Committee will retain complete discretion to determine and pay all STIP awards to officers and non-officer employees.

For 2011, the corporate financial performance goal for the STIP will be PG&E Corporation's earnings from operations and will comprise 50 percent of the overall STIP score.

The Committee has adopted threshold, target, and maximum STIP financial performance goals that correspond to STIP financial performance scores ranging from 0.5 to 2.0. The threshold goal is met if earnings from operations are at least 95 percent of budgeted earnings from operations, resulting in a minimum STIP financial performance score of 0.5. The target goal is met if earnings from operations are equal to budgeted earnings from operations, resulting in a target STIP financial performance score of 1.0. The maximum goal is met is earnings from operations equal or exceed 105 percent of budgeted earnings from operations, resulting in a maximum STIP financial performance score of 2.0. The Committee believes that this presents a significant challenge to management and, if achieved, would justify a maximum STIP financial performance score of 2.0.

For 2011, STIP operational performance measures include the same goals and weightings as in 2010.

However, the Reliable Energy Delivery Index and the Safety Index have been combined into a single measure of Operational Excellence. The Safety Index is now called Safety Performance under this new measure. The target operational performance goals for the 2011 STIP are set forth in the table below.

2011 STIP — Operational Performance Goals

The following summarizes the changes to the STIP operational performance measures for 2011:

•

Operational Excellence Index (OEI). This is a new measure that combines the two previously separate measures of the Reliable Energy Delivery Index and the Safety Index. This measure is comprised of the following three subcomponents:

•

Electric Reliable Energy Delivery (40 percent) measures the Utility's reliable energy delivery with respect to electricity and is comprised of:

•

System Average Interruption Frequency Index ("SAIFI"), which measures the average frequency of outages, and

•

Customer Average Interruption Duration Index ("CAIDI"), which measures the average duration of outages.

•

Gas Reliable Energy Delivery (20 percent) measures the Utility's reliable energy delivery with respect to gas and is comprised of:

•

Gas Transmission and Distribution Leak Survey Quality, which measures the quality of gas transmission and distribution system leak survey work scheduled during 2011, and

•

Gas Emergency Response Time, which measures the percentage of time that a Gas Service Representative is on site within one hour of a gas-related call requiring an immediate response.

•

Safety Performance (40 percent) reinforces PG&E Corporation's and the Utility's

commitment to public and employee safety. This is the former Safety Index measure and contains the same two metrics.

For 2011, to continue to address safety comprehensively, the Committee will consider the companies' overall safety performance from both quantitative as well as qualitative perspectives. In determining the companies' overall safety performance, the Committee will consider the overall impact that the companies' business has on employee and public safety. The Committee retains complete discretion to adjust the safety portion of the measure downward to zero based on the companies' overall 2011 safety performance.

•

Employee Engagement Index. This index will now be calculated by using 8, rather than 40, questions from the Premier Survey. The Committee determined that using this more limited group of questions from the survey would lead to an improved ability to measure outcomes because these questions (1) are consistent with best practice measurement in terms of both their substance and the number of questions, and (2) can be benchmarked against other Fortune 500 companies.

•

Environmental Leadership Index. This index is modified for 2011 by measuring the number of NOVs resulting from agency inspections, rather than the rate of violations, consistent with the companies' vision of zero violations. In addition, the number of sites that will be measured for energy use reduction, water use reduction, and administrative waste reduction has been significantly expanded from the number of sites measured in 2010.

Long-Term Incentives

For 2010 compensation, the Committee approved LTIP guidelines that include the range of target LTIP award values based on officer level, the terms and conditions of all LTIP awards, and the grant date for annual LTIP awards. Actual awards (both annual and mid-year) are made within the range of target LTIP values previously approved by the Committee and are granted consistent with the PG&E Corporation Equity Grant Date Policy, which was first adopted in June 2007 and was last amended in December 2009 (see "Equity Grant Dates" below).

The 2010 target LTIP award values for the NEOs were the same values used in 2009 and ranged from $300,000 to $5,300,000 (the upper end applicable only to Mr. Darbee), with the exception of a new LTIP value range established for the position of President of

Pacific Gas and Electric Company, based on competitive market data and internal equity considerations. The 2010 annual LTIP awards granted to the NEOs, with the exception of Mr. Darbee, were comprised of 50 percent restricted stock units ("RSUs") and 50 percent performance shares. The independent members of the PG&E Corporation Board determined that a higher percentage of Mr. Darbee's long-term incentives should be tied directly to PG&E Corporation's long-term performance for shareholders. Therefore, they approved an LTIP award comprised of approximately 40 percent RSUs and 60 percent performance shares. Prior to 2009, Mr. Darbee's annual LTIP award was comprised of 50 percent RSUs and 50 percent performance shares.

The Committee believes that the allocation of RSUs and performance shares for NEOs balances the interests of shareholders and officers by linking the value of long-term compensation to stock price appreciation and relative TSR. Details regarding RSUs and performance share grants are provided below.

Restricted stock units. RSUs are hypothetical shares of stock that are settled in an equal number of shares of PG&E Corporation common stock. RSUs align officers' interests with those of shareholders (i.e., stock price appreciation and dividends). RSUs also serve as a retention mechanism, because an RSU award fully vests generally only if the officer remains employed over the vesting period. The number of RSUs granted to each NEO in 2010 was determined by dividing one-half of that NEO's target LTIP award value (40 percent in the case of Mr. Darbee) by the average daily closing price of a share of PG&E Corporation common stock from March 4, 2010 through March 10, 2010 (or the closing price on the grant date for non-annual grants), as reported on the New York Stock Exchange. RSUs granted in 2010 are shown in the "Grants of Plan-Based Awards in 2010" table on page 57 of this Joint Proxy Statement. RSUs vest in 20 percent increments on the first, second, and third anniversaries of the date of grant. The remaining 40 percent vests on the fourth anniversary of the date of grant.

Performance shares. Performance shares are hypothetical shares of PG&E Corporation common stock that are tied directly to PG&E Corporation's performance for shareholders. The number of performance shares granted in 2010 to each NEO was determined by dividing one-half of that NEO's actual LTIP award value (60 percent in the case of Mr. Darbee) by the average daily closing price of a share of PG&E Corporation common stock from March 4, 2010 through March 10, 2010. Performance shares granted in 2010 are shown in the "Grants of Plan-Based Awards in 2010" table on page 57.

Performance shares granted in 2010 will vest, if at all, on March 1, 2013 following completion of the three-year performance period starting January 1, 2010 and ending December 31, 2012. The payout value of any vested performance share will be based on PG&E Corporation's TSR relative to the Performance Comparator Group for the period. The payment for performance shares will be in the form of stock and will be calculated by multiplying (1) the number of vested performance shares by (2) a payout factor based on PG&E Corporation's relative TSR performance compared to the Performance Comparator Group. Prior performance share awards were settled in cash. The change from cash settlement to stock settlement facilitates greater stock ownership at both the officer and non-officer levels. This change also will cause the performance shares to be treated as equity awards (rather than liability awards) for accounting purposes.

As shown in the LTIP Performance Share Payout Scale below, there will be no payout if PG&E Corporation's TSR falls below the 25th percentile of the Performance Comparator Group; there will be a 25 percent payout if PG&E Corporation's TSR is at the 25th percentile; there will be a 100 percent payout if PG&E Corporation's TSR is at the 75th percentile; and there will be a 200 percent payout if PG&E Corporation's TSR ranks first in the Performance Comparator Group.

LTIP Performance Share Payout Scale
Number of Companies in Total
(Including PG&E Corporation) = 13

In 2010, PG&E Corporation marked the end of the three-year performance cycle for annual performance

share awards that were granted in 2008 under the LTIP. For the three years ending December 31, 2010, PG&E Corporation's TSR, as measured by stock price appreciation and dividends, ranked first among the 13 companies in the Performance Comparator Group. This ranking represents performance at the 100th percentile, resulting in a payout of 200 percent of the original target performance share award. PG&E Corporation's TSR performance for the three-year period was 25.53 percent, which was better than the median of 12.85 percent among the Performance Comparator Group companies and the negative 8.52 percent return of the S&P 500 for the same period.

The vesting terms of the restricted stock granted under the LTIP in 2008 provided for vesting in 20 percent increments in March of the first, second, and third years following the date of grant, with the remaining 40 percent vesting in March of the fifth year. However, the vesting terms further provided that if the TSR of PG&E Corporation was at or above the 75th percentile of the Performance Comparator Group at the end of 2010, the remaining 40 percent would vest in March of the third year, following the performance period that began January 1, 2008 and ended December 31, 2010. Based on PG&E Corporation's top percentile performance, vesting of the last 40 percent of the restricted stock was accelerated to March 2011.

Long-Term Incentives Granted in 2011

In February 2011, the Committee (and the independent members of the PG&E Corporation and Utility Boards in the case of Mr. Darbee and Mr. Johns, respectively) approved LTIP awards for 2011, which were granted in March 2011. The design of the 2011 LTIP program generally parallels that of the 2010 program (50/50 weighting of performance shares and RSUs, except for the CEO of PG&E Corporation, whose grant was weighted 60/40). A more complete discussion of the 2011 LTIP awards will be contained in the 2012 Joint Proxy Statement.

Executive Stock Ownership Guidelines

The executive stock ownership program is designed to encourage senior executive officers to achieve and maintain a minimum investment in PG&E Corporation common stock at levels set by the Committee, and further aligns executive interests with those of PG&E Corporation's shareholders. Executive stock ownership guidelines have been adopted by most of the companies in the Pay Comparator Group, and they are increasingly viewed as an important element of a company's governance policies.

In September 2010, the Committee amended the executive stock ownership program to increase the

alignment between executives and shareholders and to further incorporate best practices. Prior to the amendment, the stock ownership target for the PG&E Corporation CEO was three times base salary, and the target for certain other executives was two times base salary. As amended, the guidelines for the PG&E Corporation CEO and for certain other executives are now six times and three times base salary, respectively.

Prior to the amendment, officers were encouraged to meet their stock ownership target within five years after becoming subject to the executive stock ownership program. Restricted stock and unvested RSUs were counted in determining compliance with the guidelines. If at the end of five years, an executive officer failed to meet or maintain the target stock ownership level, then a portion of that officer's future cash-based awards (such as a STIP payment) could be deferred as phantom stock units and credited to the officer's account under the 2005 PG&E Corporation Supplemental Retirement Savings Plan ("SRSP") until the stock ownership target was met.

The amendment replaced this five-year time frame with a required retention ratio. Until an executive meets the applicable stock ownership guideline, he or she must retain 50 percent of the net shares realized from option exercise or from the vesting of restricted stock or stock units (including performance shares), after accounting for tax withholding. For the purpose of calculating compliance with the guidelines, restricted stock and unvested stock units are not taken into account, except in the case of restricted stock and RSUs when a participant is retirement-eligible (defined as age 55 with five consecutive years of service). (LTIP awards continue to vest after retirement for retirement-eligible employees.)

Finally, consistent with the transition to a program based on a required retention ratio, the Committee eliminated the use of Special Incentive Stock Ownership Premiums ("SISOPs") for new officers and, effective January 1, 2013, eliminated SISOPs for current participants in the executive stock ownership program. SISOPs are stock units awarded under the LTIP and are credited to the officer's deferred compensation account in the SRSP. SISOPs were designed to provide incentives to eligible officers to achieve minimum stock ownership targets prior to the end of the five-year period. SISOPs are awarded to eligible officers if they achieve and maintain pre-established stock ownership levels prior to the end of the third year following the year in which an officer first became an eligible executive. For additional details regarding SISOPs, please see the narrative accompanying the "Grants of Plan-Based Awards in 2010" table on page 58.

Mr. Darbee meets and exceeds the new stock ownership target for the PG&E Corporation CEO. The other executives subject to the executive stock ownership program will meet their respective targets by the applicable measurement date or have agreed to retain 50 percent of their net shares until the target is met.

Equity Grant Dates

The PG&E Corporation Equity Grant Date Policy generally provides that annual LTIP awards are granted when the market price of PG&E Corporation common stock reflects the disclosure of all material information. Under this policy, the grant date for non-annual equity awards to employees (such as for newly hired or newly promoted officers) shall be the later of (1) the date that the non-annual award is approved by the independent members of the PG&E Corporation or Utility Board, the Committee, or the PG&E Corporation CEO, as applicable, (2) the date that the LTIP award recipient becomes an employee, if applicable, or (3) the date otherwise specified by the applicable Board, the Committee, or the PG&E Corporation CEO.

In addition, if the grant date of any LTIP award would occur during a trading blackout period, as defined under the PG&E Corporation Insider Trading Policy, then the actual grant date will be the first business day after the trading blackout period ends.

Consistent with the Equity Grant Date Policy, annual equity awards for 2010 were granted on March 10, 2010 in order to follow PG&E Corporation's investor conference relating to PG&E Corporation performance and to enable the market price of PG&E Corporation common stock to reflect the disclosure of all material information, including the information presented at the investor conference.

Executive Incentive Compensation Recoupment (Clawback) Policy

At their February 17, 2010 meeting, the Boards adopted a formal policy authorizing recoupment of certain incentive compensation if either PG&E Corporation or the Utility restates its financial statements that are filed with the SEC, with respect to any fiscal year within the three-year period preceding the filing of the restatement (a "Restatement Year"). In case of such a restatement, the Committee (or with respect to the CEO, the full Board of the applicable company) may, in good-faith exercise of its reasonable discretion and to the extent permitted by law, seek to recoup long-term and short-term incentive compensation previously paid with respect to each Restatement Year to any individual who was a Section 16 Officer of that company during that Restatement Year. (A Section 16

Officer includes an "officer" of either PG&E Corporation or the Utility who is subject to the reporting and short swing profit liability provisions of Section 16 of the Securities Exchange Act of 1934, as amended.) Compensation may be recouped to the extent that such compensation would have been lower when computed using the restated financial statements, and the Committee and the Boards have discretion to recoup such compensation on a tax-neutral basis. The policy applies only to compensation paid after the effective date of the policy, February 17, 2010.

What Are the Other Elements of Executive Compensation?

Perquisites and Related Compensation

In general, the NEOs receive a limited range of perquisite benefits, typically encompassing a partial subsidy for financial planning services from a third-party financial advisory firm, partial reimbursement of certain health club fees, parking reimbursement, and executive health services. Mr. Darbee and Mr. Johns also receive car transportation services. The magnitude of these perquisites, including the lump-sum payment described in the following paragraph, is comparable to that provided to executive officers of companies in the Pay Comparator Group, and the value of these services is taxable to the recipient.

The Committee (and the independent members of the PG&E Corporation and Utility Boards in the case of Mr. Darbee and Mr. Johns, respectively) also approved a 2010 lump-sum annual stipend amount for each executive officer (consistent with 2009), which ranged from $15,000 to $35,000 (the upper end applicable only to the CEO of PG&E Corporation). This stipend is provided in lieu of providing the NEO with additional benefits. The NEOs have discretion to use this stipend as they see fit. This stipend is consistent with amounts paid historically.

Tax Gross-Up Payments

Effective April 1, 2009, PG&E Corporation and the Utility ceased utilizing tax gross-ups except in two situations: (1) severance in connection with a change in control, and (2) certain types of payments made in connection with benefit programs offered to all employees (e.g., relocation programs). During 2010, no NEOs received a tax gross-up payment.

Prior to the amendment described below, the PG&E Corporation Officer Severance Policy provided that eligible executive officers would be reimbursed for excise taxes triggered by severance payments made in connection with a change in control. These provisions of the Officer Severance Policy had not been amended

since they were first adopted in 1999, and no new individual became a beneficiary of the excise tax gross-up provisions of the Officer Severance Policy in 2010.

At its February 15, 2011 meeting, the Committee eliminated excise tax gross-ups on change-in-control severance benefits. In the event of a change in control, the eligible executive officer will be responsible for paying any excise tax, or the officer's aggregate change-in-control benefits will be reduced to a level that does not trigger the excise tax, but only if doing so would be more beneficial to the officer on an after-tax basis. This amendment will not increase the aggregate value of an officer's severance benefits under a change in control. The amendment is effective immediately for officers who become eligible for change-in-control severance benefits after February 15, 2011. For existing eligible executive officers, the terms of the Officer Severance Policy provide that three years' notice is required before eliminating the tax gross-up. Therefore, elimination of the tax gross-up for existing eligible executive officers will occur in March 2014.

Prohibitions Against Hedging or Pledging Company Stock Holdings

PG&E Corporation and the Utility have each adopted several limitations with respect to the holding of PG&E Corporation or Utility traded securities (together, "company stock") by officers. These limitations are designed to avoid any inadvertent violation of the insider trading laws and also increase the alignment between executive and shareholder interests. Officers may not engage in short sales of company stock or transactions in publicly traded options (such as puts, calls, and other derivative securities). They also may not engage in any hedging or monetization transactions that limit or eliminate the officer's ability to profit from an increase in the value of company stock. Officers generally are prohibited from holding company stock in a margin account or pledging it as collateral for a loan.

Post-Service Benefits

Retirement/Pension

NEOs are eligible to receive retirement benefits under the Utility's tax-qualified defined benefit plan (pension plan), which also provides benefits to other eligible employees of PG&E Corporation and the Utility. NEOs also are eligible to receive benefits under the PG&E Corporation Supplemental Executive Retirement Plan ("SERP"), which is a non-tax-qualified defined benefit pension plan that provides officers and key employees of PG&E Corporation and its subsidiaries, including the

Utility, with a pension benefit. These plans are described in the section entitled "Pension Benefits—2010" on pages 61 to 62 of this Joint Proxy Statement.

With respect to the SERP, the Committee adopted in February 2010 a policy against crediting additional years of service for participants under this plan.

NEOs and other officers and employees also are eligible to participate in the PG&E Corporation Retirement Savings Plan ("RSP"), a tax-qualified 401(k) plan. PG&E Corporation provides a maximum matching contribution of 75 cents for each dollar contributed, up to 6 percent of base salary. To the extent that matching contributions cannot be made to an NEO's RSP account because the Internal Revenue Code limits would be exceeded, PG&E Corporation contributes the excess amount to the NEO's account in the PG&E Corporation Supplemental Retirement Savings Plan ("SRSP"), a non-qualified deferred compensation plan.

The majority of companies in the Pay Comparator Group provide tax-qualified defined benefit plans (e.g., pensions or similar plans), other tax-qualified defined contribution plans (i.e., 401(k) plans), and non-tax-qualified retirement plans. The Committee believes that these defined benefit and defined contribution plans offer significant recruiting and retention incentives. Upon retirement, NEOs also may be eligible for post-retirement health, welfare, and similar benefits, pursuant to plans that generally provide benefits to all employees. Additional details regarding the retirement programs and post-retirement benefits, and the value of pension benefits accumulated as of December 31, 2010 for the executive officers named in the Summary Compensation Table are reported below in the table entitled "Pension Benefits—2010" on pages 61 to 62 of this Joint Proxy Statement and in the section entitled "Potential Payments—Resignation/Retirement" on page 66 of this Joint Proxy Statement.

What Compensation Is Payable Upon Termination and/or a Change in Control of PG&E Corporation?

Termination Generally Absent a Change in Control

General Severance Benefits—The PG&E Corporation Officer Severance Policy provides certain officers of PG&E Corporation and the Utility, including the NEOs, with severance benefits if their employment is terminated without cause. The purpose of the severance policy is to (1) attract and retain senior management by providing severance benefits that are part of a competitive total compensation package, (2) provide consistent treatment for all terminated

officers, and (3) by conditioning payments upon a general release of claims, minimize potential litigation costs in connection with terminations of employment. These severance benefits are described below under the section entitled "Potential Payments—Termination Without Cause" on page 67 of this Joint Proxy Statement.

Ms. Barcon's termination on March 1, 2010 was considered a termination without cause under the Officer Severance Policy, and she received the benefits described in the preceding paragraph plus an additional amount of prorated salary to reflect the fact that her termination occurred less than 30 days after notification from the Utility. Further details regarding payments to Ms. Barcon may be found in the Summary Compensation Table on pages 54 to 56 of this Joint Proxy Statement.

LTIP Awards—The treatment of 2010 LTIP awards upon severance is set forth in the award recipients' individual LTIP award agreements. In general, if an NEO is terminated without cause:

•

Any unvested RSUs or restricted stock that would have vested within 18 or 24 months following separation (depending on the NEO's officer level) will continue to vest and will be settled pursuant to the normal vesting schedule in the award agreement, and

•

Any unvested performance shares will vest proportionately based on the number of months during the applicable performance period in which the NEO was employed, divided by 36 (the number of months in the performance period), and will be paid, if at all, pursuant to the normal payment schedule, multiplied by the performance payout percentage applicable to that grant.

If an NEO resigns or is terminated for cause (i.e., for dishonesty, a criminal offense, or violation of a work rule), the NEO forfeits any unvested restricted stock, RSUs, and performance shares, and would not receive any associated dividends.

Termination in Connection with a Change in Control

The PG&E Corporation Board has determined that the provision of change-in-control benefits is a key part of PG&E Corporation's officer compensation program. In a hostile takeover or other change in control situation, it is important for management to remain focused on maximizing shareholder value and aligning management's interests with shareholders' interest, and not to be distracted by concerns about job security. The benefit levels provided to the covered officers, including the NEOs, under different termination

circumstances reflect competitive market practices among the Pay Comparator Group that the Committee benchmarks.

Golden Parachute Restriction Policy—The Golden Parachute Restriction Policy requires shareholder approval of certain executive severance payments provided in connection with a change in control of PG&E Corporation, to the extent that those payments exceed 2.99 times the sum of a covered officer's base salary and target STIP award, as defined in the Golden Parachute Restriction Policy. This policy is discussed further under the section entitled "Potential Payments—Change in Control" on pages 67 to 70 of this Joint Proxy Statement.

Officer Severance Policy—The PG&E Corporation Officer Severance Policy provides certain NEOs with compensation if (1) there is a Change in Control of PG&E Corporation (as defined in the Policy), and (2) that NEO is terminated without cause or terminates for good reason in connection with the Change in Control or Potential Change in Control (as defined in the Policy) of PG&E Corporation. The Policy applies to officers of PG&E Corporation with the title of Senior Vice President or higher, and the principal executive officers of the Utility and any other participating subsidiary. Specific benefits are described in the section entitled "Potential Payments—Change in Control" on pages 67 to 70 of this Joint Proxy Statement.

LTIP Awards—Upon a Change in Control of PG&E Corporation, the vesting schedule for LTIP awards may be accelerated if (1) the successor company fails to continue previously granted awards in a manner that preserves the value of those awards, or (2) the award recipient is terminated in connection with a Change in Control during a specified period of time before or after the Change in Control. This practice aligns PG&E Corporation with market trends and (1) better balances the interests of award recipients and shareholders, (2) provides security for award recipients in a time of uncertainty, and (3) preserves the incentive for award recipients to stay with PG&E Corporation even following a transaction.

Details regarding the specific termination provisions are discussed in the section entitled "Potential Payments—Change in Control" on pages 67 to 70 of this Joint Proxy Statement.

Are There Material Differences in Compensation Paid to the Different NEOs?

There is no material difference in compensation policy among the NEOs. The compensation philosophy and

policies discussed throughout this CD&A apply equally to all executive officers. There are no differences in the types of compensation nor the methodology used to establish compensation levels among the NEOs. The differences that exist in the amounts of compensation generally relate to each NEO's position and the pay differences determined from the benchmarking study conducted for the Committee by its independent consultant.

For example, when determining total target compensation for the PG&E Corporation CEO, the Committee first uses competitive market data to assess appropriate levels of base pay and total annual cash compensation, focusing on how the CEO's base pay and total cash compensation compare to the market average. Next, to determine the appropriate amount of long-term incentive opportunities, the Committee considers the annual LTIP value range, which is established based on competitive market data and is comprised of a minimum, target, and maximum LTIP value. The Committee then evaluates the CEO's leadership, accomplishments, and personal development, as well as PG&E Corporation's performance results, to arrive at final total compensation recommendations for the independent members of the Board to review and approve. The Committee also considers whether the CEO has achieved his annual objectives that are reviewed and approved by the Committee at the beginning of each year. These objectives closely track short-term and long-term financial and operational goals for PG&E Corporation that have previously been reviewed and approved by the Board. The CEO's individual objectives may relate to corporate financial performance and shareholder returns, operational performance, investment in utility infrastructure, corporate culture, and effective communications with key stakeholders.

Conclusion

The Committee believes that the amount and design of executive compensation provided in 2010 to the NEOs of PG&E Corporation and the Utility are consistent with the Committee's compensation objectives and policies to (1) provide long-term incentives to align shareholders' and officers' interests and enhance total return for shareholders, (2) attract, retain, and motivate employees with the necessary mix of skills and experience for the development and successful operation of PG&E Corporation's businesses, and (3) compensate NEOs in a competitive, cost-efficient, and transparent manner.

The Compensation Committee of PG&E Corporation is comprised of independent directors and operates under a written charter adopted by the PG&E Corporation Board. The Compensation Committee is responsible for overseeing and establishing officer compensation policies for PG&E Corporation, the Utility, and their subsidiaries.

The Compensation Committee has reviewed and discussed the section of this Joint Proxy Statement entitled "Compensation Discussion and Analysis" with management. Based on its review and discussion with

management, the Compensation Committee has recommended to the Boards of PG&E Corporation and the Utility that the "Compensation Discussion and Analysis" section be included in this Joint Proxy Statement.

March 30, 2011

C. Lee Cox, Chair
Forrest E. Miller
Barbara L. Rambo
Barry Lawson Williams