CONFIDENTIAL SETTLEMENT MATERIAL
PER CPUC RULE 51

ALL PARTIES:

In light of the ongoing energy crisis affecting both gas and electric
operations in California, PG&E has decided to cancel the Gas Accord II
informational workshop previously scheduled for this Wednesday, February 7.


We are sorry for this late notice of cancellation, but we hope you will
understand that everyone involved is dealing with a difficult and fluid
situation.

As you know, we originally had concluded, based on feedback from many
parties, that it would be beneficial to hold an informational workshop here
in early February, in order to explain more fully the comprehensive
Settlement Offer PG&E circulated to all "Rule 51 Parties" in December 2000.

Unfortunately, however, the crisis situation has overtaken us, and so we are
canceling the February 7 informational workshop.

PG&E also will not be holding the previously-planned series of negotiation
sessions, the first of which was scheduled to occur on February 21-22.

Instead, PG&E will focus its efforts on resolving the crisis issues, and
working towards a formal Gas Accord II Application with the California
Public Utilities Commission, hopefully by June 1 of this year.

We are keenly aware that the current energy crisis necessarily requires
priority attention.  By the same token, we also are aware that it will be
incumbent upon PG&E to file some form of Gas Accord II proposal with the
Commission in the near future, so that the Commission has the time and the
opportunity to consider fully all of the many issues that will arise upon
expiration of the current Gas Accord at the end of 2002.

PG&E continues to encourage individual Parties to stay in touch with PG&E in
the weeks and months ahead.  We hope to be able to respond to any questions
you might have regarding the December 2000 comprehensive Settlement
Proposal, and we also would welcome your continued feedback on issues of
concern to you.

Please feel free to e-mail or call us, or your other PG&E contacts, if you
have questions or concerns

Frank Lindh    Ray Williams
frl3@pge.com   rdw0@pge.com
(415) 973-2776   (415) 973-3634