SEVERANCE AGREEMENT AND RELEASE
This Severance Agreement and Release (this "Agreement") is made and entered into by and between
Gordon R. Smith and Pacific Gas and Electric Company (the "Company") (collectively the "Parties") and sets
forth the terms and conditions of Mr. Smith's separation from employment with the Company. The "Effective
Date" of this Agreement is defined in paragraph 17(a).
1. Resignation. Effective the close of business on December 31, 2005, Mr. Smith will resign
from his positions as President and Chief Executive Officer of the Company and as an officer and/or director of
any and all subsidiary, parent, and affiliate companies of the Company and the Company's parent, and from
employment with the Company (for purposes of this Agreement, the "Date of Resignation"). Mr. Smith shall have
until October 12, 2005, to accept this Agreement by submitting a signed copy to the Company. Regardless of
whether Mr. Smith accepts this Agreement, on his Date of Resignation, he will be paid all salary or wages and
vacation accrued, unpaid and owed to him as of that date, he will remain entitled to any other benefits to which he
is otherwise entitled under the provisions of the Company's plans and programs, and he will receive notice of the
right to continue his existing health-insurance coverage pursuant to COBRA.
The benefits set forth in paragraph 2 below are conditioned upon Mr. Smith's acceptance of this Agreement.
2. Severance benefits. Even though Mr. Smith is not otherwise entitled to them, in
consideration of his acceptance of this Agreement, the Company will provide to Mr. Smith the following
a. Severance payment. Under the terms of the PG&E Corporation Officer Severance Policy,
Mr. Smith's severance payment amount is Two Million Eight Hundred Thirty-Five Thousand Dollars
($2,835,000). Within five business days after the Date of Resignation, but conditione