Assignment of Proceeding

John A. Bohn is the assigned Commissioner and Thomas R. Pulsifer is the assigned ALJ in this proceeding.

Findings of Fact

1. The Commission has adopted Affiliate Transactions Rules to serve as standards of conduct governing relationships between California natural gas or electric utilities and their affiliates.

2. Affiliate Transactions Rules have been found necessary because the development of competitive markets would be undermined if the utility were able to leverage its market power into the related markets in which their affiliates compete.

3. PG&E seeks authorization to allow PG&E Corporation's President and Chief Executive Officer to assume the duties of the President and CEO of PG&E Company as of September 1, 2008, such that he would simultaneously serve in both offices in a dual capacity.

4. Because the authorization sought by PG&E would be inconsistent with Rule V.E of the Commission's Affiliate Transactions Rules, Applicants are seeking a waiver of Rule V.E.

5. In order to provide time within which a Commission waiver could occur prior to the departure of the current PG&E President and CEO, currently scheduled to occur on August 31, 2008, PG&E sought an interim waiver of
Rule V.E by separate motion to remain effective until a Commission decision is issued on the merits of the underlying application.

6. PG&E currently has six Rule II.B affiliates, two of which are subsidiaries of PG&E, and four of which have no current operations since their entire business relates to the proposed Pacific Connector natural gas pipeline in Oregon. These affiliates generate no operating revenue; constitute less than 1% of PG&E Corporation's total assets, and less than one-hundredth of one percent of PG&E Corporation's physical assets.

7. Although the request for limited exemption of Rule V.E raises substantive issues that should be addressed in the next phase of this proceeding, a limited temporary waiver of Rule V.E, as long as it is made subject to the conditions set forth in the ordering paragraphs below, will not adversely impact ratepayers.

8. By granting the temporary waiver of Rule V.E subject to the conditions set forth in the ordering paragraphs below, Applicants will be able to appoint Peter Darbee to serve in the dual capacity of President and CEO of both PG&E Corporation, the holding company, and PG&E, the operating utility, for the duration of the limited waiver.

9. A President and CEO of PG&E who was merely an interim caretaker would not have lasting authority to enforce his decisions.

10. In order for a temporary waiver of Rule V.E to provide an interim remedy that does not pose an adverse risk to ratepayers, the conditions set forth in the ordering paragraph below are necessary. Without these conditions, the temporary waiver would not be appropriate.

11. Granting Applicants' motion for an interim waiver of Rule V.E will not establish a precedent that could be prejudicial to resolution of the underlying application.

12. Applicants have need for temporary waiver of Rule V.E to fill the position of President and CEO after the departure of Morrow on an interim basis at least until a further Commission decision is rendered on the underlying application.

Conclusions of Law

1. The Commission's Affiliate Transactions Rules are necessary to prevent the undermining of competitive markets which could be placed at risk if the utility were able to leverage its market power into the related markets in which their affiliates compete.

2. Applicants should be granted a temporary waiver of the Rule V.E based on conditions adopted below, to address the planned departure of the current PG&E Corporation President and CEO.

3. Granting the temporary waiver of Rule V.E, as authorized herein, is not to serve as a precedent in this or an other proceeding, shall not be used as evidence in deciding the next phase of this proceeding, shall not be referenced as support in this proceeding or any other proceeding, and shall not be used in any way to decide the substantive merits, applicability, or enforcement of the Commission's Affiliate Transaction Rules.

4. The Application for limited exemption of Rule V.E beyond the period of the temporary waiver raises a number of substantive concerns that require further deliberation in the next phase of this proceeding.

5. Applicants' motion for a temporary waiver of Rule V.E should be granted, and the merits of whether to grant a waiver of Rule V.E should be addressed in the next phase of this Application.

ORDER

IT IS ORDERED that:

1. The motion of Applicants for a temporary waiver of Rule V.E is hereby granted subject to the following conditions:

a. The temporary waiver does not constitute a precedent, and shall not be referenced as support in this proceeding or any other proceeding, relating in any way to the substantive merits, applicability, or enforcement of the Commission's Affiliate Transaction Rules.

b. The temporary waiver of Rule V.E shall be effective for a limited period not to exceed 120 days from the effective date of this decision, or upon the adoption of a final decision on this application, whichever occurs sooner.

c. Applicants shall affirmatively commit to have Peter Darbee function on a substantially full-time basis as the President and CEO of PG&E, with the responsibility to the utility and its operations as constituting his primary duty, while serving in a dual capacity.

d. PG&E's Rule II.B affiliates must not expand their existing activities or enter into new commitments throughout the duration of the temporary waiver, and no new holding company capital investment commitments shall be undertaken and no new holding company subsidiaries shall be formed during the waiver period.

2. This proceeding shall remain open for further consideration and disposition of the underlying proposal set forth in the Application for a waiver of Rule V.E.

This order is effective today.

Dated September 4, 2008, at San Francisco, California.

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