IV. CONCLUSION

We have reviewed each and every allegation of legal error raised in the rehearing applications, and are of the opinion that legal error has not been demonstrated. Therefore, we deny rehearing. However, in the interest of clarity, we modify and add findings of fact and conclusions of law.

Therefore, IT IS ORDERED that:

1. The following is added as Finding of Fact No. 23:

The Commission has made no final determination that any utility or holding company violated the first priority condition, or that any particular remedy should follow.

2. Conclusion of Law No. 5 is modified to read:

The "balanced capital structure" requirement is distinct from the first priority condition, which imposes a different requirement - namely that the holding company must infuse capital into the utility when needed to meet its obligation to serve.

3. The request by PG&E for official notice of its Exhibits E and F is granted. We notice the complete documents.

4. The request by PG&E Corp. for official notice of its Exhibit C is granted.

5. The rehearing of D.02-01-039 is denied in all other respects.

This order is effective today.

Dated July 17, 2002 at San Francisco, California.

LORETTA M. LYNCH

President

HENRY M. DUQUE

CARL W. WOOD

GEOFFREY F. BROWN

Commissioners

I abstain.

/s/ Michael R. Peevey

Commissioner