PACIFIC GAS & ELECTRIC CO
LETTER RE: RETENTION AWARD - D. D. RICHARD
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<TYPE>EX-10.10.6
<SEQUENCE>17
<FILENAME>dex10106.txt
<DESCRIPTION>LETTER RE: RETENTION AWARD - D. D. RICHARD
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                                                                 EXHIBIT 10.10.6

January 22, 2001

Mr. Daniel D. Richard Jr.
SVP - Public Affairs
PG&E Corporation
One Market, Spear Tower, Suite 2400
San Francisco, CA  94105

Dear Dan:

You are an essential member of our senior executive team and I view your
contribution as vital to getting the Corporation through its current challenges,
achieving the Corporation's objectives, and providing strong returns to
shareholders.

The Board of Directors recently approved a Senior Executive Retention program
which includes you.  Under this program, you will receive a grant of phantom
PG&E Corporation restricted stock units granted under the PG&E Corporation Long-
Term Incentive Plan.  The amount of your grant is $1,250,000 and it translates
into 128,205 units calculated at the closing price of PG&E Corporation common
stock on January 22, 2001, of $9.75 per share.  An extremely small number of
individuals are included in this arrangement.  For this reason, it is absolutely
necessary for you to restrict any conversation on this subject to me or Brent
Stanley.

Your grant of phantom PG&E Corporation restricted stock units is effective
January 22, 2001, and will vest on December 31, 2004, subject to either one of
the following conditions:

  -  50 percent will automatically vest on December 31, 2004. The remaining 50
     percent will vest on December 31, 2004 only if the Corporation's
     performance, as measured by relative Total Shareholder Return (TSR) on a
     cumulative basis over four years, is at or above the 55th percentile of its
     comparator group; or

  -  if, at the end of the third year of the grant, December 31, 2003, the
     Corporation's performance as measured by relative TSR on a cumulative
     basis, is at or above the 75th percentile of its comparator group, the
     entire grant will vest.

You may elect to defer your actual award payments under the PG&E Corporation
Supplemental Retirement Savings Plan prior to the award cliff-vesting.  Such
deferrals will be made in PG&E Corporation phantom stock units on the first
business day of January of the year following vesting.  Awards not deferred will
be paid either entirely in PG&E Corporation stock or half in PG&E Corporation
stock and half in cash in January of the year following vesting.

Dan, I look forward to your continued strong contributions to PG&E Corporation's
success.

Sincerely,

ROBERT D. GLYNN, JR.
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