<SUBMISSION>
<ACCESSION-NUMBER>0000950134-04-011989
<TYPE>424B3
<PUBLIC-DOCUMENT-COUNT>3
<FILING-DATE>20040811
<FILER>
<COMPANY-DATA>
<CONFORMED-NAME>PG&E CORP
<CIK>0001004980
<ASSIGNED-SIC>4931
<IRS-NUMBER>943234914
<STATE-OF-INCORPORATION>CA
<FISCAL-YEAR-END>1231
</COMPANY-DATA>
<FILING-VALUES>
<FORM-TYPE>424B3
<ACT>33
<FILE-NUMBER>333-117207
<FILM-NUMBER>04966423
</FILING-VALUES>
<BUSINESS-ADDRESS>
<STREET1>ONE MARKET SPEAR TOWER
<STREET2>SUITE 2400
<CITY>SAN FRANCISCO
<STATE>CA
<ZIP>94105
<PHONE>4152677000
</BUSINESS-ADDRESS>
<MAIL-ADDRESS>
<STREET1>ONE MARKET SPEAR TOWER
<STREET2>SUITE 2400
<CITY>SAN FRANCISCO
<STATE>CA
<ZIP>94105
</MAIL-ADDRESS>
<FORMER-COMPANY>
<FORMER-CONFORMED-NAME>PG&E PARENT CO INC
<DATE-CHANGED>19951214
</FORMER-COMPANY>
</FILER>
<DOCUMENT>
<TYPE>424B3
<SEQUENCE>1
<FILENAME>f00153b3e424b3.htm
<DESCRIPTION>FINAL PROSPECTUS - 424B3
<TEXT>
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<TITLE>e424b3</TITLE>
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<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">


<P align="right" style="font-size: 9pt"><B>Filed Pursuant to Rule
424(b)(3)<BR>Registration No. 333-117207</B>

<P align="left" style="font-size: 10pt"><B>PROSPECTUS</B>



<P align="center" style="font-size: 10pt"><B>1,204,878 Shares</B>



<P align="center" style="font-size: 10pt"><IMG src="f00153b3f0015301.gif" alt="(PG&#038;E CORPORATION LOGO)">



<P align="center" style="font-size: 10pt"><B>Common Stock</B>



<P align="center" style="font-size: 10pt"><B>__________________</B>



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;This prospectus is part of a registration statement that covers 1,204,878
shares of our common stock. These shares may be offered and sold from time to
time by certain of our shareholders, as identified under the section of this
prospectus titled &#147;Selling Shareholders.&#148; The selling shareholders may sell
the shares from time to time directly, or through underwriters, broker-dealers
or agents, in one or more transactions on any exchange on which our common
stock is listed, in the over-the-counter market, in one or more private
transactions or in a combination of these methods of sale. For additional
information on the methods of sale, you should refer to the section of this
prospectus titled &#147;Plan of Distribution.&#148;


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The selling shareholders will receive all of the net proceeds from the
sale of the shares and will pay all underwriting discounts or commissions or
agent&#146;s commissions and expenses of selling shareholders&#146; counsel, if any, in
excess of $50,000. We will pay all costs, expenses and fees in connection with
the registration of the shares, including up to $50,000 of the expense of
selling shareholders&#146; counsel, if any. We will not receive any of the proceeds
from the sale of shares.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our common stock is listed on the New York and Pacific stock exchanges
under the symbol &#147;PCG.&#148; On August&nbsp;10, 2004, the last reported sale price for
our common stock on the New York Stock Exchange was $29.42 per share.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;<B>Investing in our common stock involves certain risks. See &#147;Risk Factors&#148;
beginning on page 3.</B>


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;

<P align="center" style="font-size: 10pt"><B>__________________</B>

<P align="left" style="font-size: 10pt"><B>NONE OF THE SECURITIES AND EXCHANGE COMMISSION, ANY STATE SECURITIES COMMISSION
OR ANY OTHER REGULATORY BODY HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO
THE CONTRARY IS A CRIMINAL OFFENSE.</B>

<P align="center" style="font-size: 10pt"><B>__________________</B>

<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;

<P align="left" style="font-size: 10pt">August&nbsp;11, 2004



<P align="center" style="font-size: 10pt">&nbsp;
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">



<DIV align="left">
<!-- TOC -->
</DIV>
<DIV align="left">
<A name="tocpage"></A>
</DIV>

<P align="center" style="font-size: 10pt"><B>TABLE OF CONTENTS</B>


<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="80%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="92%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Page</B><HR size="1" noshade></TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><A href="#101">Special Note Regarding Forward-Looking Statements</A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center">iii</TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><A href="#102">Summary</A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>

    <TD align="right">1</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><A href="#103">Risk Factors</A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><A href="#104">Use of Proceeds</A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">10</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><A href="#105">Selling Shareholders</A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">11</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><A href="#106">Plan of Distribution</A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">13</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><A href="#107">Legal Matters</A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">14</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><A href="#108">Experts</A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">14</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><A href="#109">Where You Can Find More Information</A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">14</TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Body -->
</TABLE>
</DIV>


<DIV align="left">
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</DIV>

<P>
<HR noshade width="26%" align="center" size="1">
<P>




<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;This prospectus incorporates business and financial information about us
that is not included in or delivered with the prospectus. You should rely only
on the information contained or incorporated by reference in this prospectus.
We have not authorized any other person to provide you with different or
additional information. If anyone provides you with different or additional
information, you should not rely on it. You should assume that the information
contained in this prospectus is accurate as of the date on the front cover of
this prospectus and that any information incorporated by reference is accurate
only as of the date of the document incorporated by reference, regardless of
the time of its delivery. Our business, financial condition, results of
operations and prospects may have changed since then. This prospectus does not
constitute an offer to sell or a solicitation of an offer to buy any securities
offered hereby in any jurisdiction in which it is unlawful to make such offer
or solicitation.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The information incorporated by reference into this prospectus is
available without charge upon written or oral request to The Office of the
Corporate Secretary, PG&#038;E Corporation, One Market Street, Spear Tower, Suite
2400, San Francisco, California 94105, telephone number (415)&nbsp;267-7070.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;When used in this prospectus and unless otherwise specified, the term:


<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="5%" nowrap align="right">&#149;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>&#147;NEGT&#148; refers to our unconsolidated subsidiary National
Energy &#038; Gas Transmission, Inc., formerly known as PG&#038;E National
Energy Group, Inc.;</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="5%" nowrap align="right">&#149;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>&#147;Utility&#148; refers to our subsidiary Pacific Gas and
Electric Company; and</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="5%" nowrap align="right">&#149;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>&#147;we,&#148; &#147;our&#148; and &#147;us&#148; refer to PG&#038;E Corporation and its consolidated
subsidiaries.</TD>
</TR>

</TABLE>

<P align="center" style="font-size: 10pt">ii
</DIV>

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<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">


<P><TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">



</TABLE>

<DIV align="left">
<A name="101"></A>
</DIV>

<P align="center" style="font-size: 10pt"><B>SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS</B>



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;This prospectus and the documents incorporated herein by reference contain
various forward-looking statements. These forward-looking statements can be
identified by the use of words such as &#147;assume,&#148; &#147;expect,&#148; &#147;intend,&#148; &#147;plan,&#148;
&#147;project,&#148; &#147;believe,&#148; &#147;estimate,&#148; &#147;predict,&#148; &#147;anticipate,&#148; &#147;may,&#148; &#147;might,&#148;
&#147;will,&#148; &#147;should,&#148; &#147;would,&#148; &#147;could,&#148; &#147;goal,&#148; &#147;potential&#148; and similar
expressions. We have based these forward-looking statements on our current
expectations and projections about future events, our assumptions regarding
these events and our knowledge of facts at the time the statements were made.
These forward-looking statements are subject to various risks and uncertainties
that may be outside our control, and our actual results could differ materially
from our projected results. These risks and uncertainties include, among other
things:


<P align="left" style="font-size: 10pt"><B>Whether the Implementation of the Utility&#146;s Plan of Reorganization Is Disrupted</B>



<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="5%" nowrap align="right">&#149;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The timing and resolution of the petitions for review
that were filed in the California Court of Appeal for the first
Appellate District, or the California Court of Appeal, seeking
review of the December&nbsp;18, 2003 decision of the California Public
Utilities Commission, or the CPUC, approving the settlement
agreement the CPUC entered into with the Utility and us on
December&nbsp;19, 2003, or the settlement agreement, and the CPUC&#146;s
March&nbsp;16, 2004 denial of applications for rehearing of the
December&nbsp;18, 2003 decision; and</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="5%" nowrap align="right">&#149;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>the timing and resolution of the pending appeals of the
confirmation by the U.S. Bankruptcy Court for the Northern
District of California, or the bankruptcy court, of the Utility&#146;s
plan of reorganization that incorporates the settlement
agreement, or the Utility&#146;s plan of reorganization.</TD>
</TR>

</TABLE>


<P align="left" style="font-size: 10pt"><B>Operating Environment</B>



<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="5%" nowrap align="right">&#149;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Unanticipated changes in our or the Utility&#146;s operating expenses or capital expenditures;</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="5%" nowrap align="right">&#149;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>the level and volatility of wholesale electricity and
natural gas prices and supplies, the Utility&#146;s ability to manage
and respond to the levels and volatility successfully and the
extent to which the Utility is able to timely recover increased
costs related to this volatility;</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="5%" nowrap align="right">&#149;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>the extent to which the Utility&#146;s residual net open
position (<I>i.e.</I>, that portion of the Utility&#146;s electricity
customers&#146; demand not satisfied by electricity that the Utility
generates or has under contract, or by electricity provided under
the California Department of Water Resources, or DWR, power
purchase contracts allocated to the Utility&#146;s customers)
increases or decreases due to changes in customer and economic
growth rates, the periodic expiration or termination of the
Utility&#146;s or the DWR&#146;s power purchase contracts, the reallocation
of the DWR&#146;s power purchase contracts among the California
investor-owned electric utilities, whether various counterparties
are able to meet their obligations under their power purchase
contracts with the Utility or with the DWR, the retirement or
other closure of the Utility&#146;s electricity generation facilities,
the performance of the Utility&#146;s electricity generation
facilities, the extent to which the Utility purchases or builds
electricity generation facilities, and other factors;</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="5%" nowrap align="right">&#149;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>weather, storms, earthquakes, fires, floods, other
natural disasters, explosions, accidents, mechanical breakdowns
and other events or hazards that affect demand, result in power
outages, reduce generating output, or cause damage to the
Utility&#146;s assets or operations or those of third parties on which
the Utility relies;</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="5%" nowrap align="right">&#149;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>unanticipated population growth or decline, changes in
market demand, demographic patterns or general economic and
financial market conditions, including unanticipated changes in
interest or inflation rates, and the extent to which the Utility
is able to timely recover its costs in the face of such events;</TD>
</TR>

</TABLE>

<P align="center" style="font-size: 10pt">iii
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">


<P><TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">


<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="5%" nowrap align="right">&#149;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>the operation of the Utility&#146;s Diablo Canyon power
plant, which exposes it to potentially significant environmental
and capital expenditure outlays, and, to the extent the Utility
is unable to increase the Utility&#146;s spent fuel storage capacity
by 2007 or find an alternative depository, the risk that the
Utility may be required to close its Diablo Canyon power plant
and purchase electricity from more expensive sources;</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="5%" nowrap align="right">&#149;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>actions of credit rating agencies;</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="5%" nowrap align="right">&#149;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>significant changes in our or the Utility&#146;s
relationship with our or its employees, the availability of
qualified personnel and the potential adverse effects if labor
disputes were to occur; and</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="5%" nowrap align="right">&#149;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>acts of terrorism.</TD>
</TR>

</TABLE>


<P align="left" style="font-size: 10pt"><B>Legislative and Regulatory Environment and Pending Litigation</B>



<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="5%" nowrap align="right">&#149;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The impact of current and future ratemaking actions of
the CPUC, including the risk of material differences between
forecasted costs used to set rates and actual costs incurred;</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="5%" nowrap align="right">&#149;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>whether the conditions to securitizing the $2.2&nbsp;billion
after-tax regulatory asset established under the settlement
agreement are met and, if so, the timing and amount of the
securitization;</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="5%" nowrap align="right">&#149;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Whether the CPUC approves the Utility&#146;s long-term
electricity resource plan and adopts the Utility&#146;s related
ratemaking proposals, whether the assumptions and forecasts
underlying the long-term electricity resource plan prove to be
accurate, and the terms and conditions of the long-term
electricity resource commitments the Utility enters into in
connection with its long-term electricity resource plan;</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="5%" nowrap align="right">&#149;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>prevailing governmental policies and legislative or
regulatory actions generally, including those of the California
legislature, the U.S. Congress, the CPUC, the Federal Energy
Regulatory Commission, or the FERC, and the Nuclear Regulatory
Commission, or the NRC, with regard to the Utility&#146;s allowed
rates of return, industry and rate structure, recovery of
investments and costs, acquisitions and disposals of assets and
facilities, treatment of affiliate contracts and relationships,
and operation and construction of facilities;</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="5%" nowrap align="right">&#149;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>the extent to which the CPUC or the FERC delays or
denies recovery of the Utility&#146;s costs, including electricity
purchase costs, from customers due to a regulatory determination
that the costs were not reasonable or prudent or for other
reasons resulting in write-offs of regulatory balancing accounts;</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="5%" nowrap align="right">&#149;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>how the CPUC administers the capital structure,
stand-alone dividend and capital requirements conditions of the
CPUC&#146;s decisions permitting the establishment of holding
companies for the California investor-owned electric utilities;</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="5%" nowrap align="right">&#149;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>whether the Utility is in compliance with all
applicable rules, tariffs and orders relating to electricity and
natural gas utility operations, and the extent to which a finding
of non-compliance could result in customer refunds, penalties or
other non-recoverable expenses;</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="5%" nowrap align="right">&#149;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>whether the Utility is required to incur material costs
or capital expenditures or curtail or cease operations at
affected facilities to comply with existing and future
environmental laws, regulations and policies; and</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="5%" nowrap align="right">&#149;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>the outcome of pending litigation.</TD>
</TR>

</TABLE>

<P align="center" style="font-size: 10pt">iv
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">


<P><TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">



</TABLE>


<P align="left" style="font-size: 10pt"><B>Competition</B>



<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="5%" nowrap align="right">&#149;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Increased competition as a result of the takeover by
condemnation of the Utility&#146;s distribution assets, duplication of
the Utility&#146;s distribution assets or service by local public
utilities, self-generation by the Utility&#146;s customers and other
forms of competition that may result in stranded investment
capital, decreased customer growth, loss of customer load and
additional barriers to cost recovery; and</TD>
</TR>

</TABLE>


<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="5%" nowrap align="right">&#149;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>the extent to which the Utility&#146;s distribution
customers switch between purchasing electricity from the Utility
and purchasing electricity from alternate energy service
providers as direct access customers and the extent to which
cities, counties and others in the Utility&#146;s service territory
begin directly serving the Utility&#146;s customers or combine to form
community choice aggregators, without fair compensation.</TD>
</TR>

</TABLE>


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;For additional factors that could affect the validity of our
forward-looking statements, you should read the section of this prospectus
titled &#147;Risk Factors.&#148;


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;You should read this prospectus and the documents that we incorporate by
reference into this prospectus, the documents that we have filed as exhibits to
the registration statement of which this prospectus is a part and the documents
that we refer to under the section of this prospectus titled &#147;Where You Can
Find More Information&#148; completely and with the understanding that our actual
future results could be materially different from what we currently expect. We
qualify all our forward-looking statements by these cautionary statements.
These forward-looking statements speak only as of the date of this prospectus
or the date of the document incorporated by reference, as applicable. Except
as required by applicable laws or regulations, we do not undertake any
obligation to update or revise any forward-looking statement, whether as a
result of new information, future events or otherwise.


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<P align="center" style="font-size: 10pt"><B>SUMMARY</B>



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>This summary may not contain all of the information that may be important
to you in deciding whether to invest in our common stock. This summary should
be read in conjunction with, and is qualified in its entirety by, the more
detailed information and financial statements (including the accompanying
notes) included and incorporated by reference in this prospectus.</I>


<P align="center" style="font-size: 10pt"><B>Our Company</B>



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We are an energy-based holding company headquartered in San Francisco,
California that conducts its business principally through the Utility, a public
utility operating in northern and central California. The Utility engages
primarily in the businesses of electricity and natural gas distribution,
electricity generation, electricity transmission, and natural gas
transportation and storage.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our executive offices are located at One Market Street, Spear Tower, Suite
2400, San Francisco, California 94105, and our telephone number is (415)
267-7000.


<P align="left" style="font-size: 10pt"><B>The California Energy Crisis and the Utility&#146;s Chapter&nbsp;11 Proceeding</B>



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In 1998, the state of California implemented electricity industry
restructuring and established a framework allowing generators and other power
providers to charge market-based prices for electricity sold on the wholesale
market. The implementing legislation also established a retail electricity
rate freeze and a plan for recovering the Utility&#146;s generation-related costs
that were expected to be uneconomic under the new market framework. State
regulatory action further required the Utility to divest a majority of its
fossil fuel-fired generation facilities and made it economically unattractive
to retain its remaining generation facilities. The resulting sales of
generation facilities in turn made the Utility more dependent on the newly
deregulated wholesale electricity market.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Beginning in May&nbsp;2000, wholesale prices for electricity began to increase.
Since the Utility&#146;s retail electricity rates remained frozen, the Utility
financed the higher costs of wholesale electricity by issuing debt and drawing
on its credit facilities. The Utility&#146;s inability to recover its electricity
purchase costs from customers ultimately resulted in billions of dollars in
defaulted debt and unpaid bills and caused the Utility to file a voluntary
petition for relief under Chapter&nbsp;11 of the United States Bankruptcy Code, or
Chapter&nbsp;11, on April&nbsp;6, 2001. During its Chapter&nbsp;11 proceeding, the Utility
retained control of its assets and operated its business as a
debtor-in-possession while subject to the jurisdiction of the bankruptcy court.


<P align="left" style="font-size: 10pt"><B>The CPUC Settlement Agreement</B>



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;On December&nbsp;18, 2003, the CPUC approved the settlement agreement that
provided the basis for the Utility&#146;s plan of reorganization. Two CPUC
commissioners, or the dissenting commissioners, voted not to approve the
settlement agreement. The settlement agreement was executed by the CPUC, the
Utility and us on December&nbsp;19, 2003.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The settlement agreement contains a statement of intent that it is in the
public interest to restore the Utility to financial health and to maintain and
improve its financial health in the future to ensure that it is able to provide
safe and reliable electricity and natural gas service to its customers at just
and reasonable rates. The settlement agreement generally ensures that the
Utility will have the opportunity to collect in rates reasonable costs of
providing utility service. The settlement agreement provides that the
Utility&#146;s authorized return on equity will be no less than 11.22% per year and,
except for 2004 and 2005, the Utility&#146;s authorized equity to capitalization
ratio will be no less than 52% until Moody&#146;s Investors Service, or Moody&#146;s, has
issued the Utility an issuer rating of not less than A3 or Standard &#038; Poor&#146;s
Ratings Services, or S&#038;P, has issued the Utility a long-term issuer credit
rating of not less than A &#151; . The settlement agreement also establishes a $2.2
billion after-tax regulatory asset (subject to certain reductions) and allows
for the recognition of an approximately $700&nbsp;million after-tax regulatory asset
related to generation assets. The settlement agreement and related decisions
by the CPUC provide that the Utility&#146;s revenue requirement will be collected
regardless of sales levels and that the Utility&#146;s rates will be timely adjusted
to accommodate changes in costs that it incurs.


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<P align="left" style="font-size: 10pt"><B>Confirmation and Implementation of the Plan of Reorganization</B>



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;On December&nbsp;22, 2003, the bankruptcy court confirmed the plan of
reorganization, fully incorporating the settlement agreement. On April&nbsp;12,
2004, the Utility&#146;s plan of reorganization became effective.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;On the effective date, the Utility paid approximately $8.394&nbsp;billion in
cash to holders of allowed claims and deposited approximately $1.843&nbsp;billion
into escrow accounts for the payment of disputed claims. The Utility also paid
approximately $83&nbsp;million in preferred stock dividends and made sinking fund
payments of approximately $10&nbsp;million that were in arrears. The proceeds of
the Utility&#146;s public offering of $6.7&nbsp;billion of first mortgage bonds provided
the majority of the funds for these payments, with $350&nbsp;million from an
accounts receivable financing facility, $799&nbsp;million from a term loan and
reimbursement agreements, and approximately $2.481&nbsp;billion from cash on hand
supplying the balance. In addition, the Utility reinstated approximately $814
million in debt consisting of pollution control bond-related obligations and
approximately $421&nbsp;million of its preferred stock.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Although the Utility&#146;s operations will no longer be subject to the
oversight of the bankruptcy court, the bankruptcy court will retain
jurisdiction to hear and determine disputes arising in connection with the
interpretation, implementation or enforcement of (i)&nbsp;the settlement agreement,
(ii)&nbsp;the Utility&#146;s plan of reorganization and (iii)&nbsp;the confirmation order.
The bankruptcy court also retains jurisdiction to resolve remaining disputed
claims.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In connection with its emergence from Chapter&nbsp;11, the Utility has received
an issuer credit rating of Baa3 from Moody&#146;s and a long-term issuer credit
rating of BBB &#151;  from S&#038;P.


<P align="left" style="font-size: 10pt"><B>Pending Proceedings</B>



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Appeals of the bankruptcy court&#146;s order confirming the Utility&#146;s plan of
reorganization were filed in the U.S. District Court for the Northern District
of California, or the District Court, by the dissenting commissioners and a
municipality. On July&nbsp;15, 2004, the District Court dismissed the appeals filed
by the dissenting commissioners. The dissenting commissioners have filed a
notice of appeal of the District Court&#146;s order with the U.S. Court of Appeals
for the Ninth Circuit, or the Ninth Circuit. The municipality&#146;s appeal remains
pending at the District Court. We and the Utility believe the appeals of the
confirmation order are without merit.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In addition, on April&nbsp;15, 2004, the City and County of San Francisco, or
CCSF, and Aglet Consumer Alliance, or Aglet, each filed a petition with the
California Court of Appeal seeking review of the CPUC&#146;s December&nbsp;18, 2003
decision approving the settlement agreement and the CPUC&#146;s March&nbsp;16, 2004
decision denying applications for rehearing of the December&nbsp;18, 2003 decision.
CCSF and Aglet allege that the settlement agreement violates California law,
among other claims. CCSF requests the appellate court to hear and review the
CPUC&#146;s decisions approving the settlement agreement and Aglet requests that the
CPUC&#146;s decisions be overturned. The Utility filed its answer in opposition to
the petitions for review on May&nbsp;19, 2004 but the California Court of Appeal has
not yet acted on the petitions. On August&nbsp;5, 2004, the California Court of
Appeal did grant the request of three California state senators for permission
to file an amicus brief in support of CCSF&#146;s and Aglet&#146;s petitions. We and the
Utility believe the petitions are without merit and should be denied.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Under applicable federal precedent, once the plan of reorganization has
been &#147;substantially consummated,&#148; any pending appeals of the confirmation order
should be dismissed. If, notwithstanding this federal precedent, the
bankruptcy court&#146;s confirmation order or the settlement agreement is
subsequently overturned or modified, our and the Utility&#146;s financial condition
and results of operations could be materially adversely affected.


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<P align="center" style="font-size: 10pt"><B>RISK FACTORS</B>



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>You should carefully consider the risks described below, as well as the
other information contained or incorporated by reference in this prospectus,
before you decide whether to buy our common stock. The risks and uncertainties
described below are not the only ones we may face. The following risks,
together with additional risks and uncertainties not currently known to us or
that we may currently deem immaterial, could impair our financial condition and
results of operations and may cause the market price of our common stock to
decline.</I>


<P align="left" style="font-size: 10pt"><B>Risks Related to PG&#038;E Corporation</B>



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><I>We could be required to contribute capital to the Utility or be denied
distributions from the Utility to the extent required by the CPUC&#146;s
determination of the Utility&#146;s financial condition.</I></B>


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In approving our formation as the holding company of the Utility, the CPUC
imposed certain conditions, including an obligation by our Board of Directors
to give &#147;first priority&#148; to the capital requirements of the Utility, as
determined to be necessary and prudent to meet the Utility&#146;s obligation to
serve and to operate in a prudent and efficient manner. The CPUC later issued
decisions in which it adopted an expansive interpretation of our obligations
under this condition, including the requirement that each of the holding
companies &#147;infuse the utility with all types of capital necessary for the
utility to fulfill its obligation to serve.&#148; We and the holding companies of
the other major California investor-owned electric utilities appealed these
decisions. On May&nbsp;21, 2004, the California Court of Appeal issued an opinion
finding that the CPUC has limited jurisdiction over the holding companies to
enforce the conditions imposed by the CPUC on their formations, but that the
CPUC&#146;s decision interpreting the capital requirements condition was not ripe
for review. We have appealed the decision of the California Court of Appeal
finding that the CPUC had limited jurisdiction to the California Supreme Court.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Pursuant to the terms of the settlement agreement, the CPUC agreed that,
once the CPUC approval of the settlement agreement is no longer subject to
appeal, it will release all claims against us and the Utility related to past
holding company actions during the California energy crisis. Nevertheless, as
now interpreted by the CPUC, whenever the Utility&#146;s financial health is
impaired in the future, we could be required to infuse the Utility with all
types of capital necessary to fulfill its obligation to serve or to operate in
a prudent and efficient manner. These obligations, if ultimately upheld by the
courts, could materially restrict our ability to meet our other obligations.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In addition, there is pending California legislation which, if adopted,
would expressly empower the CPUC to require us to infuse capital into the
Utility of &#147;any type and quantity&#148; deemed necessary by the CPUC. This and
other currently pending legislation, if adopted, would increase the CPUC&#146;s
control over us as a holding company of the Utility.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><I>Adverse resolution of pending litigation could have a material adverse
effect on our financial condition and results of operation.</I></B>


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We are involved in lawsuits filed by the California Attorney General, CCSF
and a private plaintiff against us alleging unfair or fraudulent business acts
or practices based on alleged violations of conditions established in the
CPUC&#146;s holding company decisions caused by our alleged failure to provide
adequate financial support to the Utility during the California energy crisis.
These lawsuits seek significant damages, penalties or equitable relief. On
October&nbsp;8, 2003, the District Court held that the claims for damages were
property of the Utility&#146;s bankruptcy estate, thus removing the damages claims
from the lawsuits. The Attorney General and CCSF have appealed that decision
to the Ninth Circuit where it is currently pending. We filed motions to
dismiss the appeals on the ground that the Ninth Circuit lacked jurisdiction to
hear them under certain provisions of the U.S. Bankruptcy Code. The Ninth
Circuit denied our motions in March&nbsp;2004 and consolidated the two appeals.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We believe that the plaintiffs&#146; allegations are without merit. However,
there can be no assurance that we will prevail in these lawsuits.


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<P align="left" style="font-size: 10pt"><B>Risks Related to the Utility</B>



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><I>If either or both of the CPUC&#146;s approval of the settlement agreement and
the bankruptcy court&#146;s confirmation of the Utility&#146;s plan of reorganization are
overturned or modified on appeal, our and the Utility&#146;s financial condition and
results of operations could be materially adversely affected.</I></B>


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;On December&nbsp;18, 2003, the CPUC approved the settlement agreement and, on
December&nbsp;22, 2003, the bankruptcy court confirmed the Utility&#146;s plan of
reorganization, which fully incorporates the settlement agreement as a material
and integral part of the plan. On March&nbsp;16, 2004, the CPUC denied applications
that had been filed by several parties seeking rehearing of the CPUC&#146;s decision
approving the settlement agreement. On April&nbsp;15, 2004, two of these parties,
CCSF and Aglet, filed petitions for review of the CPUC&#146;s decisions with the
California Court of Appeal. On August&nbsp;5, 2004, the California Court of Appeal
granted a request by three California state senators for permission to file a
brief in support of CCSF&#146;s and Aglet&#146;s petitions. Further, the dissenting
commissioners and a municipality filed appeals of the bankruptcy court&#146;s
confirmation order in the District Court.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;On April&nbsp;12, 2004, the Utility&#146;s plan of reorganization became effective.
Although the District Court dismissed the dissenting commissioners&#146; appeal of
the confirmation order, the dissenting commissioners have appealed the denial
to the Ninth Circuit. The municipality&#146;s appeal remains pending at the
District Court. If the bankruptcy court&#146;s confirmation of the Utility&#146;s plan
of reorganization or the settlement agreement is overturned or modified on
appeal, our and the Utility&#146;s financial condition and results of operations,
and the Utility&#146;s ability to pay dividends or otherwise make distributions to
us, could be materially adversely affected.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><I>Our and the Utility&#146;s financial viability depends upon the Utility&#146;s
ability to recover its costs in a timely manner from the Utility&#146;s customers
through regulated rates and otherwise execute its business strategy.</I></B>


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Utility is a regulated entity subject to CPUC jurisdiction in almost
all aspects of its business, including the rates, terms and conditions of its
services, procurement of electricity and natural gas for its customers,
issuance of securities, dispositions of utility assets and facilities and
aspects of the siting and operation of its electricity and natural gas
distribution systems. Executing the Utility&#146;s business strategy depends on
periodic CPUC approvals of these and related matters. The Utility&#146;s ongoing
financial viability depends on its ability to recover from its customers in a
timely manner the Utility&#146;s costs, including the costs of electricity and
natural gas purchased by it for its customers, in the Utility&#146;s CPUC-approved
rates and its ability to pass through to its customers in rates the Utility&#146;s
FERC-authorized revenue requirements. The Utility&#146;s financial viability also
depends on its ability to recover in rates an adequate return on its capital
structure, including long-term debt and equity. During the California energy
crisis, the high price the Utility had to pay for electricity on the wholesale
market, coupled with its inability to fully recover its costs in retail rates,
caused the Utility&#146;s costs to significantly exceed its revenues and ultimately
caused the Utility to file a petition under Chapter&nbsp;11. Even though the
settlement agreement and current regulatory mechanisms contemplate that the
CPUC will give the Utility the opportunity to recover its reasonable and
prudent future costs in its rates, there can be no assurance that the CPUC will
find that all of the Utility&#146;s costs are reasonable and prudent or will not
otherwise take or fail to take actions to the Utility&#146;s detriment. In
addition, there can be no assurance that the bankruptcy court or other courts
will implement and enforce the terms of the settlement agreement and the
Utility&#146;s plan of reorganization in a manner that would produce the economic
results that we and the Utility intend or anticipate. Further, there can be no
assurance that FERC-authorized tariffs will be adequate to cover the related
costs. If the Utility is unable to recover any material amount of its costs
through its rates in a timely manner, our and the Utility&#146;s financial condition
and results of operations would be materially adversely affected.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><I>The Utility may be unable to purchase electricity in the wholesale market
or to increase its generating capacity in a manner that the CPUC will find
reasonable or in amounts sufficient to satisfy the Utility&#146;s residual net open
position.</I></B>


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Utility&#146;s residual net open position is expected to grow over time for
a number of reasons, including:


<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="5%" nowrap align="right">&#149;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>periodic expirations of the Utility&#146;s existing
electricity purchase contracts;</TD>
</TR>

</TABLE>

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<P><TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">


<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="5%" nowrap align="right">&#149;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>periodic expirations or other terminations of the DWR
contracts allocated to the Utility&#146;s customers;</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="5%" nowrap align="right">&#149;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>increases in the Utility&#146;s customers&#146; electricity
demands due to customer and economic growth or other factors; and</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="5%" nowrap align="right">&#149;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>retirement or closure of the Utility&#146;s electricity
generation facilities.</TD>
</TR>

</TABLE>

<P align="left" style="font-size: 10pt">In addition, unexpected outages at the Utility&#146;s Diablo Canyon power plant or
any of its other significant generation facilities, or a failure to perform by
any of the counterparties to the Utility&#146;s electricity purchase contracts or
the DWR contracts allocated to the Utility&#146;s customers, would immediately
increase the Utility&#146;s residual net open position.



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Utility&#146;s proposed long-term electricity resource plan reflects the
CPUC&#146;s January&nbsp;2004 interim decision to require the California investor-owned
electric utilities to achieve, no later than January&nbsp;1, 2008, an electricity
planning reserve margin of 15-17% in excess of peak capacity electricity
requirements and to have a diverse portfolio of electricity sources. These
requirements may increase the Utility&#146;s residual net open position. Specific
procedures contained in the decision relating to development and execution of
the Utility&#146;s procurement plans also may cause its cost of electricity to
increase. The CPUC also continued its target of a 5% limitation on the
reliance by the California investor-owned electric utilities on the spot market
to meet their energy needs. The California Governor has requested that the
CPUC accelerate the phase-in of the planning reserve requirement to 2006. An
accelerated phase-in of the requirement will increase the amount of the
electricity commitments the Utility would be required to make.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;As existing electricity purchase contracts expire, sources of electricity
otherwise become unavailable or demand increases, the Utility will purchase
electricity in the wholesale market. These purchases will be made under
contracts priced at the time of execution or, if made in the spot market, at
the then-current market price of wholesale electricity. There can be no
assurance that sufficient replacement electricity will be available at prices
and on terms that the CPUC will find reasonable, or at all. The Utility&#146;s
financial condition and results of operations would be materially adversely
affected if it is unable to purchase electricity in the wholesale market at
prices or on terms the CPUC finds reasonable or in quantities sufficient to
satisfy the Utility&#146;s residual net open position.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Alternatively, the CPUC may require the Utility, or the Utility may elect,
to satisfy all or a part of its residual net open position by developing or
acquiring additional generation facilities. This could result in significant
additional capital expenditures or other costs and may require the Utility to
issue additional debt, which it may not be able to issue on reasonable terms,
or at all. In addition, if the Utility is not able to recover a material part
of the cost of developing or acquiring additional generation facilities in the
Utility&#146;s rates in a timely manner, our and the Utility&#146;s financial condition
and results of operations would be materially adversely affected.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><I>The Utility&#146;s financial condition and results of operations could be
materially adversely affected if it is unable to successfully manage the risks
inherent in operating the Utility&#146;s facilities.</I></B>


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Utility owns and operates extensive electricity and natural gas
facilities that are interconnected to the U.S. western electricity grid and
numerous interstate and continental natural gas pipelines. The operation of
the Utility&#146;s facilities and the facilities of third parties on which it relies
involves numerous risks, including:


<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="5%" nowrap align="right">&#149;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>operating limitations that may be imposed by
environmental or other regulatory requirements;</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="5%" nowrap align="right">&#149;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>imposition of operational performance standards by
agencies with regulatory oversight of the Utility&#146;s facilities;</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="5%" nowrap align="right">&#149;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>environmental and personal injury liabilities;</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="5%" nowrap align="right">&#149;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>fuel interruptions;</TD>
</TR>

</TABLE>

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<P><TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">


<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="5%" nowrap align="right">&#149;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>blackouts;</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="5%" nowrap align="right">&#149;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>labor disputes;</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="5%" nowrap align="right">&#149;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>weather, storms, earthquakes, fires, floods or other natural disasters; and</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="5%" nowrap align="right">&#149;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>explosions, accidents, mechanical breakdowns and other
events or hazards that affect demand, result in power outages,
reduce generating output or cause damage to the Utility&#146;s assets
or operations or those of third parties on which it relies.</TD>
</TR>

</TABLE>


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The occurrence of any of these events could result in lower revenues or
increased expenses, or both, that may not be fully recovered through insurance,
rates or other means in a timely manner or at all.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><I>Electricity and natural gas markets are highly volatile and insufficient
regulatory responsiveness to that volatility could cause events similar to
those that led to the filing of the Utility&#146;s Chapter&nbsp;11 petition to occur.</I></B>


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In the recent past, the commodity markets for electricity and natural gas
have been highly volatile and subject to substantial price fluctuations. A
variety of factors may contribute to commodity market volatility, including:


<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="5%" nowrap align="right">&#149;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>weather;</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="5%" nowrap align="right">&#149;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>supply and demand;</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="5%" nowrap align="right">&#149;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>the availability of competitively priced alternative energy sources;</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="5%" nowrap align="right">&#149;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>the level of production of natural gas;</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="5%" nowrap align="right">&#149;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>the price of other fuels that are used to produce electricity, including crude oil and coal;</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="5%" nowrap align="right">&#149;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>the transparency, efficiency, integrity and liquidity
of regional energy markets affecting California;</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="5%" nowrap align="right">&#149;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>electricity transmission or natural gas transportation capacity constraints;</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="5%" nowrap align="right">&#149;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>federal, state and local energy and environmental regulation and legislation; and</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="5%" nowrap align="right">&#149;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>natural disasters, war, terrorism and other catastrophic events.</TD>
</TR>

</TABLE>

<P align="left" style="font-size: 10pt">These factors are largely outside the Utility&#146;s control. If wholesale
electricity or natural gas prices increase significantly, public pressure or
other regulatory or governmental influences or other factors could constrain
the willingness or ability of the CPUC to authorize timely recovery of the
Utility&#146;s costs. Moreover, the volatility of commodity markets could cause the
Utility to apply more frequently to the CPUC for authority to timely recover
its costs in rates. If the Utility is unable to recover any material amount of
its costs in its rates in a timely manner, our and the Utility&#146;s financial
condition and results of operations would be materially adversely affected.



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><I>The Utility&#146;s operations are subject to extensive environmental laws, and
changes in, or liabilities under, these laws could adversely affect its
financial condition and results of operations.</I></B>


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Utility&#146;s operations are subject to extensive federal, state and local
environmental laws. Complying with these environmental laws has in the past
required significant expenditures for environmental compliance, monitoring and
pollution control equipment, as well as for related fees and permits.
Moreover, compliance in the future may require significant expenditures
relating to electric and magnetic fields. The Utility also is subject to
significant liabilities related to the investigation and remediation of
environmental contamination at the Utility&#146;s


<P align="center" style="font-size: 10pt">6
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<DIV style="font-family: 'Times New Roman',Times,serif">
<P align="left" style="font-size: 10pt">current and former facilities, as well as at third-party owned sites. Due
to the potential for imposition of stricter standards and greater regulation in
the future and the possibility that other potentially responsible parties may
not be financially able to contribute to cleanup costs, conditions may change
or additional contamination may be discovered, the Utility&#146;s environmental
compliance and remediation costs could increase, and the timing of its capital
expenditures in the future may accelerate. If the Utility is unable to recover
the costs of complying with environmental laws in its rates in a timely manner,
the Utility&#146;s financial condition and results of operations could be materially
adversely affected. In addition, in the event the Utility must pay materially
more than the amount that it currently has reserved on its balance sheet to
satisfy its environmental remediation obligations and the Utility is unable to
recover these costs from insurance or through rates in a timely manner, our and
the Utility&#146;s financial condition and results of operations would be materially
adversely affected.



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><I>The Utility faces the risk of unrecoverable costs if its customers obtain
distribution and transportation services from other providers as a result of
municipalization or other forms of competition.</I></B>


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Utility&#146;s customers could bypass its distribution and transportation
system by obtaining service from other sources. Forms of bypass of the
Utility&#146;s electricity distribution system include the construction of duplicate
distribution facilities to serve specific existing or new customers, the
municipalization of the Utility&#146;s distribution facilities by local governments
or districts, self-generation by the Utility&#146;s customers and other forms of
competition. Bypass of the Utility&#146;s system may result in stranded investment
capital, loss of customer growth or additional barriers to cost recovery. The
Utility&#146;s natural gas transportation facilities also are at risk of being
bypassed by interstate pipeline companies that construct facilities in the
Utility&#146;s markets or by customers who build pipeline connections that bypass
the Utility&#146;s natural gas transportation and distribution system. As customers
and local public officials explore their energy options in light of the recent
California energy crisis, these bypass risks may be increasing and may increase
further if the Utility&#146;s rates exceed the cost of other available alternatives.
In addition, technological changes could result in the development of
economically attractive alternatives to purchasing electricity through the
Utility&#146;s distribution facilities. Neither we nor the Utility can currently
predict the impact of these actions and developments on the Utility&#146;s business,
although one possible outcome is a decline in the demand for the services that
the Utility provides, which would result in a corresponding decline in the
Utility&#146;s revenues and our consolidated revenues.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;If the number of the Utility&#146;s customers declines due to bypass,
technological changes or other forms of competition, and the Utility&#146;s rates
are not adjusted in a timely manner to allow it to fully recover its investment
in electricity and natural gas facilities and electricity procurement costs,
our and the Utility&#146;s financial condition and results of operations could be
materially adversely affected.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><I>The Utility faces the risk of unrecoverable costs resulting from changes
in the number of customers in its service territory for whom the Utility
purchases electricity.</I></B>


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;As part of California&#146;s electricity industry restructuring, the Utility&#146;s
customers were given the choice of either continuing to receive electricity
procurement, transmission and distribution services, or bundled service, from
the Utility or purchasing electricity from alternate energy service providers
and to thus become direct access customers. The CPUC suspended the right of
end-user customers to become direct access customers on September&nbsp;20, 2001,
although customers that were then direct access customers have been allowed to
remain on direct access. Separately, the CPUC has instituted a rulemaking
implementing California&#146;s Assembly Bill 117, which permits California cities
and counties to purchase and sell electricity for their residents once they
have registered as community choice aggregators. The Utility would continue to
provide distribution, metering and billing services to the community choice
aggregators&#146; customers. Once registration has occurred, each community choice
aggregator would purchase electricity for all of its residents who do not
affirmatively elect to continue to receive electricity from the Utility.
However, the Utility would remain those customers&#146; electricity provider of last
resort. If the Utility loses a material number of customers as a result of
cities and counties electing to become community choice aggregators or the CPUC
once again allowing customers to migrate to direct access, the Utility&#146;s
electricity purchase contracts could obligate it to purchase more electricity
than the Utility&#146;s remaining customers require, the excess of which the Utility
would have to sell, possibly at a loss. Further, if the Utility must provide
electricity to customers discontinuing direct access or electing to leave a
community choice aggregator, the Utility may be required to make unanticipated
purchases of additional electricity at higher prices. If the Utility has
excess electricity or it must make unplanned purchases of electricity as a
result of changes in the number of community


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<DIV style="font-family: 'Times New Roman',Times,serif">
<P align="left" style="font-size: 10pt">choice aggregators&#146; customers
or direct access customers and the CPUC fails to adjust the Utility&#146;s
rates to reflect the impact of these actions, our and the Utility&#146;s financial
condition and results of operations could be materially adversely affected.



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><I>The operation and decommissioning of the Utility&#146;s nuclear power plants
expose it to potentially significant liabilities and capital expenditures.</I></B>


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The operation and decommissioning of the Utility&#146;s nuclear power plants
expose it to potentially significant liabilities and capital expenditures,
including those arising from the storage, handling and disposal of radioactive
materials and uncertainties related to the regulatory, technological and
financial aspects of decommissioning nuclear plants at the end of their
licensed lives. The Utility maintains decommissioning trusts and external
insurance coverage to reduce the Utility&#146;s financial exposure to these risks.
However, the costs or damages the Utility may incur in connection with the
operation and decommissioning of nuclear power plants could exceed the amount
of the Utility&#146;s insurance coverage and other amounts set aside for these
potential liabilities. In addition, as an operator of two operating nuclear
reactor units, the Utility may be required under federal law to pay up to
$201.2&nbsp;million of liabilities arising out of each nuclear incident occurring
not only at the Utility&#146;s Diablo Canyon power plant but at any other nuclear
power plant in the United States. If the Utility cannot recover any material
amount of these excess costs or damages in the Utility&#146;s rates in a timely
manner, our and the Utility&#146;s financial condition and results of operations
would be materially adversely affected.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In addition, the NRC has broad authority under federal law to impose
licensing and safety-related requirements upon owners and operators of nuclear
power plants. In the event of non-compliance, the NRC has the authority to
impose fines or to force a shutdown of the nuclear plant, or both, depending
upon the NRC&#146;s assessment of the severity of the situation. Safety
requirements promulgated by the NRC have, in the past, necessitated substantial
capital expenditures at the Utility&#146;s Diablo Canyon power plant and additional
significant capital expenditures could be required in the future.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><I>If the Utility fails to increase the spent fuel storage capacity at the
Utility&#146;s Diablo Canyon power plant by the spring of 2007 and there are no
other available spent fuel storage or disposal alternatives, the Utility would
be forced to close this plant and would therefore be required to purchase
electricity from more expensive sources.</I></B>


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Under the terms of the NRC operating licenses for the Utility&#146;s Diablo
Canyon power plant, there must be sufficient storage capacity for the
radioactive spent fuel produced by this plant. Under current operating
procedures, the Utility believes that its Diablo Canyon power plant&#146;s existing
spent fuel pools have sufficient capacity to enable it to operate until the
spring of 2007. Although the Utility is taking actions to increase the Diablo
Canyon power plant&#146;s spent fuel storage capacity and exploring other
alternatives, there can be no assurance that the Utility can obtain the
necessary regulatory approvals to expand spent fuel capacity or that other
alternatives will be available or implemented in time to avoid a disruption in
production or shutdown of one or both units at this plant. As the proposed
permanent spent fuel depository at Yucca Mountain, Nevada will not be available
by 2007, there will not be any available third-party spent fuel storage
facilities. If there is a disruption in production or shutdown of one or both
units at this plant, the Utility will need to purchase electricity from more
expensive sources.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><I>Acts of terrorism could materially adversely affect our and the Utility&#146;s
financial condition and results of operations.</I></B>


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Utility&#146;s facilities, including its operating and retired nuclear
facilities and the facilities of third parties on which we rely, could be
targets of terrorist activities. A terrorist attack on these facilities could
result in a full or partial disruption of the Utility&#146;s ability to generate,
transmit, transport or distribute electricity or natural gas or cause
environmental repercussions. Any operational disruption or environmental
repercussions could result in a significant decrease in the Utility&#146;s revenues
or significant reconstruction or remediation costs, which could materially
adversely affect our and the Utility&#146;s financial condition and results of
operations.


<P align="center" style="font-size: 10pt">8
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<DIV style="font-family: 'Times New Roman',Times,serif">

<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><I>Adverse judgments or settlements in the chromium litigation cases could
materially adversely affect our and the Utility&#146;s financial condition and
results of operations.</I></B>


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Utility is a named defendant in 14 civil actions currently pending in
California courts relating to alleged chromium contamination. The chromium
litigation complaints allege personal injuries, wrongful death and loss of
consortium and seek unspecified compensatory and punitive damages based on
claims arising from alleged exposure to chromium contamination in the vicinity
of three of the Utility&#146;s natural gas compressor stations. If the Utility pays
a material amount in excess of the amount that it currently has reserved on its
balance sheet to satisfy chromium-related liabilities and costs, our and the
Utility&#146;s financial condition and results of operations could be materially
adversely affected.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><I>Changes in, or liabilities under, the Utility&#146;s permits, authorizations or
licenses could adversely affect our and the Utility&#146;s financial condition and
results of operations.</I></B>


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Utility&#146;s operations are subject to a number of governmental permits,
authorizations and licenses. These permits, authorizations and licenses may be
revoked or modified by the agencies that granted them if facts develop that
differ significantly from the facts assumed when they were issued. In
addition, discharge permits and other approvals and licenses are often granted
for a term that is less than the expected life of the associated facility.
Licenses and permits may require periodic renewal, which may result in
additional requirements being imposed by the granting agency. For example, the
Utility currently has seven facilities undergoing FERC license renewal. In
connection with a license renewal, the FERC may impose new license conditions
that could, among other things, require increased expenditures or result in
reduced electricity output and/or capacity at the facility. If the Utility is
unable to obtain, renew or comply with these governmental permits,
authorizations or licenses, or the Utility is unable to recover any increased
costs of complying with additional license requirements or any other associated
costs in its rates in a timely manner, our and the Utility&#146;s financial
condition and results of operations could be materially adversely affected.


<P align="left" style="font-size: 10pt"><B>Risks Related to NEGT</B>



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><I>If NEGT and its creditors prevail on their claim that we are required to
compensate NEGT under an alleged tax-sharing agreement, we could be subject to
substantial damages.</I></B>


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;NEGT and its creditors have filed a complaint against us asserting, among
other claims, that NEGT is entitled to be compensated under an alleged
tax-sharing agreement for any tax savings achieved by us as a result of
incorporating losses, deductions and tax credits related to NEGT or its
subsidiaries in our 2002 consolidated federal income tax return. In May&nbsp;2003,
the Internal Revenue Service returned $533&nbsp;million in estimated federal income
taxes that we overpaid in 2002. NEGT and its creditors have asserted that they
have a direct interest in certain tax savings achieved by us and are entitled
to be paid at least $414&nbsp;million of these funds. In addition, the complaint
seeks punitive damages for an alleged breach of fiduciary duty by us and two of
our officers who previously served on NEGT&#146;s board of directors, as well as
punitive damages against us under an alleged claim of deceit.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We anticipate continuing to incorporate losses, deductions and certain tax
credits related to NEGT or its subsidiaries in our consolidated federal tax
return in accordance with and as required by the Internal Revenue Code of 1986,
as amended, until these subsidiaries are no longer consolidated with us for
federal income tax purposes. NEGT and its creditors similarly assert that NEGT
is entitled to be compensated for any tax savings resulting from inclusion of
these losses and deductions in our federal tax return and also seek injunctive
relief prohibiting us from taking certain tax positions in the future. While
we believe we do not have any obligation to pay NEGT or any NEGT subsidiary any
amount related to the realization of tax savings, we cannot assure you that
NEGT and its creditors will not be successful in pursuing these claims. Until
the dispute is resolved, we are treating $361.5&nbsp;million as restricted cash.


<P align="center" style="font-size: 10pt">9
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<DIV style="font-family: 'Times New Roman',Times,serif">

<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><I>We will lose the ability to offset tax gains by us or our other
subsidiaries with tax losses sustained by NEGT if NEGT&#146;s confirmed plan of
reorganization is implemented.</I></B>


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;On May&nbsp;3, 2004, the U.S. Bankruptcy Court for the District of Maryland,
Greenbelt Division, confirmed NEGT&#146;s plan of reorganization. If NEGT&#146;s
confirmed plan of reorganization is implemented, our equity ownership will be
eliminated, NEGT will become deconsolidated from us for tax purposes, and we
will lose the ability to offset tax gains by us or our other subsidiaries with
tax losses sustained by NEGT after deconsolidation. The implementation of
NEGT&#146;s plan of reorganization is anticipated to occur by the end of 2004.

<DIV align="left">
<A name="104"></A>
</DIV>

<P align="center" style="font-size: 10pt"><B>USE OF PROCEEDS</B>



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The proceeds from the sale of the common stock offered by this prospectus
are solely for the account of the selling shareholders. We will not receive
any proceeds from the sale of these shares of common stock.


<P align="center" style="font-size: 10pt">10
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<DIV style="font-family: 'Times New Roman',Times,serif">
<DIV align="left">
<A name="105"></A>
</DIV>

<P align="center" style="font-size: 10pt"><B>SELLING SHAREHOLDERS</B>



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The following table sets forth certain information with respect to the
selling shareholders. The table assumes that the selling shareholders sell all
of the shares offered by this prospectus. We are unable to determine the exact
number of shares, if any, that actually will be sold.



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;No selling shareholder has had any material relationship with us or any of
our predecessors or affiliates within the past three years, except for LB I
Group Inc. and Goldman, Sachs &#038; Co., affiliates of which were lenders to us
under former credit agreements. Affiliates of LB I Group Inc. also acted as
administrative agent, lead arranger and book manager in connection with such
credit agreements and provided other investment banking services to us. In
addition, affiliates of LB I Group Inc. also have provided our affiliates with
commercial banking and investment banking services. LB I Group Inc. and such
affiliates have received, and may receive in the future, customary compensation
from us and our affiliates for such services.

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="85%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="44%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="7%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="7%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="7%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="7%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="7"><B>&nbsp;</B></TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Shares</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="7"><B>Shares Beneficially Owned</B></TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Shares Beneficially</B><BR><B>Owned Prior to the</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Offered by</B><BR><B>this</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="7"><B>After the Offering</B><HR size="1" noshade></TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD nowrap align="center"><B>Selling Shareholder</B><HR size="1" noshade></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Offering</B><HR size="1" noshade></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Prospectus</B><HR size="1" noshade></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Number</B><HR size="1" noshade></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Percent<SUP>(1)</SUP></B><HR size="1" noshade></TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px">Alpha U.S. Subfund II, LLC</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">834</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">834</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">*</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px">B III-A Capital Partners, L.P.</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">11,123</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">11,123</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">*</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="background: #eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px">DB Structured Products, Inc.</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,132</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,132</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">*</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px">D. E. Shaw Laminar Portfolios,
L.L.C.</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">18,537</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">18,537</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">*</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="background: #eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px">D. K. Acquisition Partners, L.P.</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">850,256</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">370,748</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">479,508</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">*</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px">Fir Tree Recovery Master Fund,
L.P.</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,533,516</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">21,133</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,512,383</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">*</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="background: #eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px">Fir Tree Value Partners LDC</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,376,315</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">34,480</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,341,835</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">*</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px">Franklin Mutual Beacon Fund</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">555</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">555</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">*</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="background: #eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px">GKW Unified Holdings, LLC</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,781</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,781</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">*</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px">GMAM Investment Funds Trust II</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">25,952</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">25,952</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">*</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="background: #eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px">GoldenTree High Yield Master
Fund, LTD.</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">23,728</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">23,728</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">*</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px">Goldman, Sachs &#038; Co.</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">2,031,116</TD>
    <TD nowrap><SUP>(2)</SUP></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">74,123</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">1,956,993</TD>
    <TD nowrap><SUP>(2)</SUP></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">*</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="background: #eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px">H/Z Acquisition Partners LLC</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">110,969</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">17,946</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">93,023</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">*</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px">LB I Group Inc.</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">525,977</TD>
    <TD nowrap><SUP>(3)</SUP></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">70,443</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">455,534</TD>
    <TD nowrap><SUP>(3)</SUP></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">*</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="background: #eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px">Libertyview Funds, L.P.</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3,707</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3,707</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">*</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px">Mutual Beacon Fund</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">15,566</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">15,566</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">*</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="background: #eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px">Mutual Beacon Fund (Canada)</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">222</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">222</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">*</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px">Mutual Discovery Fund</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">12,231</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">12,231</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">*</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="background: #eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px">Mutual Discovery Securities Fund</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">667</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">667</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">*</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px">Mutual European Fund</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,965</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,965</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">*</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="background: #eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px">Mutual Qualified Fund</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">12,971</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">12,971</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">*</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px">Mutual Shares Fund</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">27,426</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">27,426</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">*</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="background: #eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px">Mutual Shares Securities Fund</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,519</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,519</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">*</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px">OZF Credit Opportunities Master
Fund, Ltd.</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">354,685</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">7,878</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">346,807</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">*</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="background: #eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px">OZF Credit Opportunities Master
Fund II, Ltd.</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">534,331</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">11,041</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">523,290</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">*</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px">OZ Master Fund, Ltd.</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">5,108,746</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">36,693</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">5,072,053</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">1.2</TD>
    <TD nowrap>%</TD>
</TR>

<TR valign="bottom" style="background: #eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px">Redwood Master Fund Ltd.</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">725,719</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">14,830</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">710,889</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">*</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px">Reliance Standard Life
Insurance Co.</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,946</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,946</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">*</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="background: #eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px">Safety National Casualty
Corporation</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,946</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,946</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">*</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px">Satellite Senior Income Fund LLC</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">74,150</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">74,150</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">*</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="background: #eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px">Seneca Capital L.P.</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">7,415</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">7,415</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">*</TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Body -->
</TABLE>
</DIV>



<P align="center" style="font-size: 10pt">11
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="85%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="44%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="7%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="7%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="7%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="7%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="7"><B>&nbsp;</B></TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Shares</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="7"><B>Shares Beneficially Owned</B></TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Shares Beneficially</B><BR><B>Owned Prior to the</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Offered by</B><BR><B>this</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="7"><B>After the Offering</B><HR size="1" noshade></TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD nowrap align="center"><B>Selling Shareholder</B><HR size="1" noshade></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Offering</B><HR size="1" noshade></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Prospectus</B><HR size="1" noshade></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Number</B><HR size="1" noshade></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Percent<SUP>(1)</SUP></B><HR size="1" noshade></TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px">SOF Investments, L.P.</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">11,122</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">11,122</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">*</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="background: #eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px">SPCP Group, LLC</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">55,612</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">55,612</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">*</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px">Stonehill Institutional
Partners, L.P.</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">11,864</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">11,864</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">*</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="background: #eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px">Stonehill Offshore Partners
Limited</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">17,796</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">17,796</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">*</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px">The President and Fellows of
Harvard College</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">516,230</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">14,830</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">501,400</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">*</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="background: #eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px">Windmill Master Fund, L.P.</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,778,716</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">111,816</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,666,900</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">*</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px">Wingate Capital Ltd.</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">74,150</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">74,150</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><HR size="1" noshade></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="background: #eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,204,878</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><HR size="4" noshade></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Body -->
</TABLE>
</DIV>




<P>
<HR size="1" width="18%" align="left" noshade>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">


<TR valign="top">
    <TD width="1%" nowrap align="right">*</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="96%">Less than 1%</TD>
</TR>

<TR><TD>&nbsp;</TD></TR>

<TR valign="top">
    <TD width="1%" nowrap align="right">(1)</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="96%">Based on 424,600,154 shares outstanding on June&nbsp;30, 2004.</TD>
</TR>

<TR><TD>&nbsp;</TD></TR>

<TR valign="top">
    <TD width="1%" nowrap align="right">(2)</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="96%">As of June&nbsp;9, 2004. Includes 1,244,267 shares held on a principal basis
by Goldman, Sachs &#038; Co. or affiliated broker-dealers, 2,726 shares held by
managed accounts and 710,000 shares held as currently exercisable call
options by Goldman, Sachs &#038; Co. or affiliated broker-dealers.</TD>
</TR>

<TR><TD>&nbsp;</TD></TR>

<TR valign="top">
    <TD width="1%" nowrap align="right">(3)</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="96%">LB I Group Inc. is an indirect wholly owned subsidiary of Lehman Brothers
Holdings, Inc. The shares indicated do not include any shares held by
Lehman Brothers Holdings, Inc. or any of its broker-dealer affiliates on
behalf of customers.</TD>
</TR>

</TABLE>




<P align="center" style="font-size: 10pt">12
</DIV>

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<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">


<P><TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">



</TABLE>

<DIV align="left">
<A name="106"></A>
</DIV>

<P align="center" style="font-size: 10pt"><B>PLAN OF DISTRIBUTION</B>



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The selling shareholders (including any pledgee or donee of a selling
shareholder) may sell the shares of common stock from time to time. The
selling shareholders will act independently of us in making decisions regarding
the timing, manner and size of each sale. The selling shareholder may make
these sales directly or through underwriters, broker-dealers or agents. The
shares may be sold in one or more transactions at fixed prices, at prevailing
market prices at the time of sale, at varying prices determined at the time of
sale, or at negotiated prices. The sales may be effected in transactions
(which may involve crosses or block transactions):


<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="5%" nowrap align="right">&#149;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>on any national securities exchange or quotation
service on which the shares may be listed or quoted at the time
of sale;</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="5%" nowrap align="right">&#149;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>in the over-the-counter market;</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="5%" nowrap align="right">&#149;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>otherwise than on such exchanges or services or in the
over-the-counter market, including private transactions;</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="5%" nowrap align="right">&#149;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>through the writing of options, whether such options
are listed on an options exchange or otherwise;</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="5%" nowrap align="right">&#149;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>constituting ordinary brokerage transactions;</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="5%" nowrap align="right">&#149;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>involving purchases by brokers, dealers or underwriters
as principal and resale by these purchasers for their own
accounts pursuant to this prospectus;</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="5%" nowrap align="right">&#149;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>&#147;at the market,&#148; to or through market makers, or into
an existing market for our common stock;</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="5%" nowrap align="right">&#149;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>in other ways not involving market makers or
established trading markets, including direct sales to purchasers
or sales effected through agents;</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="5%" nowrap align="right">&#149;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>involving swaps or other derivatives (whether exchange-listed or otherwise); or</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="5%" nowrap align="right">&#149;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>to cover short sales.</TD>
</TR>

</TABLE>


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The selling shareholders may enter into hedging transactions with
broker-dealers that may in turn engage in short sales of the shares and deliver
the shares to close out such short positions or loan or pledge the shares to
broker-dealers that in turn may sell the shares. The selling shareholders have
advised us that they will not use an underwritten offering to dispose of the
shares without our prior agreement.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Broker-dealers or agents may receive compensation in the form of
commissions, discounts or concessions from selling shareholders.
Broker-dealers or agents may also receive compensation from the purchasers of
the shares for whom they act as agents or to whom they sell as principal, or
both. Compensation as to a particular broker-dealer might be in excess of
customary commissions and will be in amounts to be negotiated in connection
with the sale. Broker-dealers or agents and any other participating
broker-dealers or the selling shareholders may be deemed to be &#147;underwriters&#148;
within the meaning of section 2(a)(11) of the Securities Act of 1933, amended,
or the Securities Act, in connection with sales of the shares. Accordingly,
any such commission, discount or concession received by them and any profit on
the resale of the shares purchased by them may be deemed to be underwriting
discounts or concessions under the Securities Act.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Because selling shareholders may be deemed &#147;underwriters&#148; within the
meaning of section 2(a)(11) of the Securities Act, the selling shareholders
will be subject to the prospectus delivery requirements of the Securities Act.
In addition, the anti-manipulation rules of Regulation&nbsp;M under the Securities
Exchange Act of 1934, as amended, may apply to sales of our common stock and
activities of the selling shareholders.


<P align="center" style="font-size: 10pt">13
</DIV>

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<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">

<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Any shares covered by this prospectus which qualify for sale pursuant to
Rule&nbsp;144 under the Securities Act may be sold under Rule&nbsp;144 rather than
pursuant to this prospectus.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We will pay all costs, expenses and fees in connection with the
registration of the shares, including up to $50,000 of the expense of selling
shareholders&#146; counsel, if any. The selling shareholders will pay underwriting
discounts or commissions or agent&#146;s commissions attributable to the sale of the
shares and the expenses of selling shareholders&#146; counsel, if any, in excess of
$50,000. We have agreed to indemnify the selling shareholders against certain
liabilities in connection with their offering of the shares, including
liabilities arising under the Securities Act.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;There can be no assurance that the selling shareholders will sell any or
all of the shares of our common stock offered by them pursuant to this
prospectus. Our obligation to maintain the effectiveness of the registration
statement of which this prospectus is a part terminates on October&nbsp;18, 2004, at
which time any offering pursuant to this prospectus should cease.

<DIV align="left">
<A name="107"></A>
</DIV>

<P align="center" style="font-size: 10pt"><B>LEGAL MATTERS</B>



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The validity of the common stock has been passed on for us by Gary P.
Encinas, Chief Counsel, Corporate, for PG&#038;E Corporation. Mr.&nbsp;Encinas and other
members of the PG&#038;E Corporation Law Department who will participate in
consideration of legal matters related to the common stock, together with
members of their respective families, own in the aggregate approximately 22,213
shares of our common stock and options to purchase an additional 131,409
shares.

<DIV align="left">
<A name="108"></A>
</DIV>

<P align="center" style="font-size: 10pt"><B>EXPERTS</B>



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The consolidated financial statements and related consolidated financial
statement schedules of PG&#038;E Corporation and subsidiaries incorporated by
reference in this prospectus have been audited by Deloitte &#038; Touche LLP, an
independent registered public accounting firm, as stated in their reports which
are incorporated herein (which reports express an unqualified opinion and
include explanatory paragraphs relating to (i)&nbsp;PG&#038;E Corporation and Pacific Gas
and Electric Company&#146;s adoption of new accounting standards in 2003 to account
for asset retirement obligations and financial instruments with characteristics
of both liabilities and equity, (ii)&nbsp;PG&#038;E Corporation&#146;s change in 2003 in the
method of reporting hedge transactions, (iii)&nbsp;PG&#038;E Corporation&#146;s adoption of
new accounting standards in 2002 relating to accounting for goodwill and
intangible assets, impairment of long-lived assets, discontinued operations,
gains and losses on debt extinguishment, and certain derivative contracts, (iv)
PG&#038;E Corporation&#146;s and Pacific Gas and Electric Company&#146;s adoption of new
accounting standards in 2001 related to derivatives and certain interpretations
of the Derivatives Implementation Group of the Financial Accounting Standards
Board, (v)&nbsp;PG&#038;E Corporation&#146;s adoption of new accounting standards in 2004
related to earnings per share, (vi)&nbsp;the revisions of revenues and expenses of
discontinued operations for the years ended December&nbsp;31, 2002 and 2001, and
(vii)&nbsp;the ability of PG&#038;E Corporation and Pacific Gas and Electric Company to
continue as going concerns), and have been so incorporated in reliance upon the
reports of such firm given upon their authority as experts in accounting and
auditing.

<DIV align="left">
<A name="109"></A>
</DIV>

<P align="center" style="font-size: 10pt"><B>WHERE YOU CAN FIND MORE INFORMATION</B>



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We and the Utility each file annual, quarterly and current reports,
information statements and other information with the Securities and Exchange
Commission, or the SEC, under File No.&nbsp;001-12609 and File No.&nbsp;001-02348,
respectively. These SEC filings are available to the public over the Internet
at the SEC&#146;s website at http://www.sec.gov. You may also read and copy any of
these SEC filings at the SEC&#146;s public reference room at 450 Fifth Street, N.W.,
Room&nbsp;1200, Washington, D.C. 20549. Please call the SEC at 1-800-SEC-0330 for
further information on its public reference room.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We have &#147;incorporated by reference&#148; into this prospectus certain
information that we file with the SEC. This means that we can disclose
important business, financial and other information in this prospectus by
referring you to the documents containing this information. All information
incorporated by reference is deemed to be part of this prospectus except to the
extent that the information is updated or superseded by the information
contained in this prospectus or any information filed with the SEC. Any
information that we subsequently file with the SEC that


<P align="center" style="font-size: 10pt">14
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">
<P align="left" style="font-size: 10pt">is incorporated by reference, as described below, will automatically
update and supersede any previous information that is part of this prospectus.



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We incorporate by reference the documents listed below and any future
filings (other than information furnished, and not filed, pursuant to Items 9
or 12 in any Form 8-K filing or any future item that permits us to furnish,
rather than file, information) we make with the SEC under Section&nbsp;13(a), 13(c),
14 or 15(d) of the Exchange Act until the termination of the offering:


<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" nowrap align="right">&#149;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>our and the Utility&#146;s Annual Report on Form 10-K for
the year ended December&nbsp;31, 2003;</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" nowrap align="right">&#149;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>our and the Utility&#146;s Quarterly Report on Form 10-Q for
the quarters ended March&nbsp;31, 2004 and June&nbsp;30, 2004;</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" nowrap align="right">&#149;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>the description of our common stock contained in our
Registration Statement on Form 8-B, including any subsequent
amendment or report filed for the purpose of updating such
information; and</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" nowrap align="right">&#149;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>our and the Utility&#146;s Current Reports on Form 8-K filed
on January&nbsp;22, 2004, February&nbsp;3, 2004, February&nbsp;19, 2004, March
2, 2004, March&nbsp;10, 2004, March&nbsp;12, 2004, March&nbsp;16, 2004, March
18, 2004, March&nbsp;23, 2004, March&nbsp;26, 2004, March&nbsp;31, 2004, April
7, 2004, April&nbsp;12, 2004, April&nbsp;12, 2004, April&nbsp;19, 2004, April
27, 2004, May&nbsp;4, 2004, May&nbsp;13, 2004 (as amended by our and the
Utility&#146;s Current Report on Form 8-K/A filed on May&nbsp;14, 2004),
May&nbsp;14, 2004, May&nbsp;25, 2004, May&nbsp;28, 2004, June&nbsp;18, 2004
(including specifically Exhibit&nbsp;99.1, which supersedes the
information contained in Exhibit&nbsp;13 to our and the Utility&#146;s
Annual Report on Form 10-K for the year ended December&nbsp;31, 2003
and Exhibit&nbsp;99.1 to our and the Utility&#146;s Current Report on Form
8-K filed on March&nbsp;2, 2004), July&nbsp;1, 2004, July&nbsp;14, 2004 and July
16, 2004.</TD>
</TR>

</TABLE>


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;You may request a copy of these filings at no cost by writing or
contacting us at the following address:


<P align="center" style="font-size: 10pt">The Office of the Corporate Secretary<BR>
PG&#038;E Corporation<BR>
One Market Street, Spear Tower<BR>
Suite&nbsp;2400<BR>
San Francisco, CA 94105<BR>
Telephone: 415-267-7070<BR>
Facsimile: 415-267-7268




<P align="center" style="font-size: 10pt">15
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">




<P align="center" style="font-size: 10pt"><IMG src="f00153b3f0015302.gif" alt="(PG&#038;E CORPORATION LOGO)">





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