2003 SERVICING ORDER

CONCERNING

STATE OF CALIFORNIA
DEPARTMENT OF WATER RESOURCES

And

PACIFIC GAS AND ELECTRIC COMPANY

THIS ORDER HAS BEEN ISSUED BY THE CALIFORNIA PUBLIC UTILITIES COMMISSION ("COMMISSION") FOR USE BETWEEN THE STATE OF CALIFORNIA DEPARTMENT OF WATER RESOURCES ("DWR") AND PACIFIC GAS AND ELECTRIC COMPANY ("UTILITY").

Date of Commission Approval:

Effective Date:

2003 SERVICING ORDER

TABLE OF CONTENTS

Section Numbers Title Page

Section 1. Definitions. 2

Section 2. Energy Delivery, Surplus Energy Sales and Ownership. 8

Section 3. Billing Services. 11

Section 4. DWR Revenues; Remittance of DWR Revenues. 13

Section 5. Term and Termination; Events of Default. 16

Section 6. Confidentiality. 18

Section 7. Payment of Fees and Charges. 20

Section 8. Records; Audit Rights; Annual Certification. 22

Section 9. Reserved. 25

Section 10. Amendment Upon Changed Circumstances. 25

Section 11. Data Retention. 26

Section 12. Indemnity. 26

Section 13. Limitations on Liability. 27

Section 14. Miscellaneous. 27

ATTACHMENTS

Attachment Title

SA1 Service Attachment 1 - Consolidated Utility Billing Services

SA2 Service Attachment 2 - Wholesale Trading, Invoicing and Collection Services

A Representatives and Contacts

B Remittance Methodology

C Sample Daily and Monthly Reports

D [Reserved]

E Additional Provisions

F Calculation Methodology for Reduced Remittances Pursuant to 20/20 Program

G Fee Schedule

H [Not Applicable]

I Real-Time Energy And ISO Invoiced Charges

J Surplus Energy Sales Revenues Remittances

2003 SERVICING ORDER

THIS 2003 SERVICING ORDER ( "Servicing Order") concerns the State of California Department of Water Resources ("DWR"), separate and apart from its powers and responsibilities with respect to the State Water Resources Development System, and Pacific Gas and Electric Company, a California corporation ("Utility"). This Servicing Order amends and restates the Servicing Order approved by the Commission on May 16, 2002. DWR and Utility are sometimes collectively referred to as the "Parties" and individually referred to as a "Party."