Washington, D.C.  20549



Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Date of Report: May 7, 2001

            Exact Name of
Commission  Registrant        State or other   IRS Employer
File        as specified      Jurisdiction of  Identification
Number      in its charter    Incorporation    Number
----------  --------------    ---------------  --------------

1-12609     PG&E Corporation  California       94-3234914

1-2348      Pacific Gas and   California       94-0742640
            Electric Company

Pacific Gas and Electric Company    PG&E Corporation
77 Beale Street, P.O. Box 770000    One Market, Spear Tower, Suite 2400
San Francisco, California  94177    San Francisco, California 94105

(Address of principal executive offices) (Zip Code)

Pacific Gas and Electric Company    PG&E Corporation
(415) 973-7000                      (415) 267-7000

    (Registrant's telephone number, including area code)

Item 5.  Other Events

A. Federal Lawsuit

As previously disclosed, Pacific Gas and Electric Company (Utility),
the California utility subsidiary of PG&E Corporation, filed a lawsuit
against the Commissioners of the California Public Utilities Commission
(CPUC), currently pending in the United States District Court for the
Central District of California, asking the court to declare that the
federally approved wholesale power costs the Utility has incurred to
serve its customers are recoverable in retail rates.

On May 2, 2001, the court dismissed the Utility's complaint without
prejudice to refile the lawsuit at a later time.  Although ruling in the
Utility's favor on five of the six grounds for dismissal, the court
found that the Utility's complaint was not ripe because some of the
CPUC's decisions that the Utility was challenging are non-final interim
orders that will only become final upon a grant or denial of rehearing.

    Finding in the Utility's favor, the court ruled that:

(i) The Utility's prior state court proceedings challenging the CPUC's
October 21, 1999 post-transition-period ratemaking decision on state law
grounds did not bar the Utility's federal claims, because the Utility
had properly reserved its federal claims in its petition to the
California Supreme Court, and because the Utility had not litigated the
federal claims in the state court.

(ii) Federal court jurisdiction over the Utility's preemption claim was

(iii) The court need not stay or dismiss the Utility's case in deference
to the ongoing CPUC proceedings.

(iv) The Johnson Act, which generally precludes federal courts from
enjoining state utilities commission rate orders, did not apply to the
Utility's action because the Utility had pleaded a claim that federal
law preempted state law, which does not fall under the terms of the

(v) The Utility's case need not be dismissed with prejudice based on the
CPUC's asserted sovereign immunity under the Eleventh Amendment to the
U.S. Constitution, because the Eleventh Amendment does not bar an
action, such as the Utility's, to enjoin state officers from violating
federal law.

B.  Pacific Gas and Electric Company Bankruptcy

As previously disclosed, on April 6, 2001, the Federal Energy
Regulatory Commission (FERC) issued a further order directing the
California Independent System Operator (ISO) to implement the FERC's
February 14, 2001 order, in which the FERC rejected the ISO's January 5,
2001 proposed tariff amendment concerning credit standards and ordered
that the ISO could only buy power on behalf of creditworthy entities.
The Utility has not been a creditworthy company under the ISO tariff
since January 4, 2001.  Despite the FERC orders, the ISO has continued
to bill the Utility for the ISO's wholesale power purchases.

On May 3, 2001, the Utility filed a complaint for injunctive and
declaratory relief in the U.S. Bankruptcy Court asking the court to
prohibit the ISO from charging the Utility for the ISO's wholesale power
purchases made in violation of bankruptcy law, the ISO's tariff, and the
FERC orders.  The Utility also seeks to have the court declare that any
action by the ISO to purchase wholesale power for or on behalf of the
Utility, to compel the Utility to accept and pay for such purchases, or
to accrue post-petition debt for such purchases (i.e., to accrue debts
after April 6, 2001, when the Utility filed its petition under Chapter
11 of the U.S. Bankruptcy Code), is automatically stayed by the
automatic stay provisions of the federal Bankruptcy Code.  In addition,
the complaint seeks a permanent injunction prohibiting the ISO from
taking such actions, unless and until the Utility is permitted to
recover the costs of such power purchases through retail electric rates.

Bankruptcy law imposes an automatic stay to prevent parties from
making certain claims or taking certain actions that would interfere
with the estate or property of a Chapter 11 debtor.  The Utility
believes the ISO is violating the automatic stay provision by purchasing
power at costs higher than provided for in existing retail rates, and
then billing the Utility for such costs.

In addition, continuing to charge the Utility for such purchases
is potentially reducing the value of the Utility's assets significantly,
depending on the average retail rate, the wholesale price the ISO has
paid for real-time power, and the amount of power purchased by the
California Department of Water Resources (DWR).  The Utility further
estimates that it also would incur costs associated with the DWR's pro
rata share of ancillary services and other costs associated with the
ISO's procurement of power from third parties unless the ISO were to
allocate these other costs to, and bill, the DWR.  At present, the
Utility does not believe that the ISO is allocating any of these costs
to the DWR, or billing the DWR for any such costs.

Among other allegations, the Utility's complaint alleges that
requiring the Utility to pay more than it can collect in its existing
generation-related rates would be improper under the federal Bankruptcy
Code because it is not in the best interest of the bankruptcy estate,
would be an unauthorized post-petition use of the Utility's property,
and if allowed to continue, would jeopardize the administration of the
bankruptcy estate and the Utility's ability to reorganize. The Utility
believes the ISO is violating its own tariff, as well as FERC orders and
federal bankruptcy law by continuing to purchase power on behalf of the


Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrants have duly caused this report to be signed on their behalf by
the undersigned thereunto duly authorized.

                              PG&E CORPORATION

                              By: CHRISTOPHER P. JOHNS
                                  CHRISTOPHER P. JOHNS
                                  Vice President and Controller

                              PACIFIC GAS AND ELECTRIC COMPANY

                              By: DINYAR B. MISTRY

                                  DINYAR B. MISTRY
    Vice President and Controller

Dated:  May 7, 2001