Each of us is required to fully comply with all laws and regulations applicable to PG&E’s business activities. In addition, all disclosures, documents, or reports provided to any government agency or in any other public communication must be, to the extent possible, full, fair, timely, and understandable.

Violations of PG&E policies or legal and regulatory requirements must be reported promptly to your supervisor, another involved department, or the Compliance and Ethics Helpline.

Federal Securities Laws

As companies with publicly traded securities³, PG&E Corporation and Pacific Gas and Electric Company must each comply with federal laws and regulations that require the disclosure of certain information in periodic financial and other reports that are filed with the Securities and Exchange Commission (SEC). If you are asked to review a draft SEC report, you are expected to respond promptly to help ensure that the SEC reports are accurate and complete.

The securities laws also impose requirements regarding recordkeeping and the establishment, maintenance, and evaluation of “disclosure controls and procedures” as well as “internal control over financial reporting,” as those terms are defined in the Sarbanes-Oxley Act of 2002. These laws require the Chief Executive Officer and the Chief Financial Officer to certify, among other things, the accuracy and completeness of information in the SEC reports and the effectiveness of disclosure controls and procedures, and that they have disclosed any fraud that involves management or other employees who have a significant role in internal control over financial reporting.

PG&E Corporation’s and Pacific Gas and Electric Company’s internal controls over financial reporting are regularly tested, and if any deficiencies are identified, the controls are corrected and re-tested until they are effective. While the Chief Executive Officer and Chief Financial Officer are ultimately responsible for establishing and maintaining internal controls, the primary burden of complying with and testing controls falls on us. As such, you are expected to perform and test controls with due care.

If you have a concern about questionable accounting or auditing matters or internal controls (collectively, “accounting complaints”), contact the Compliance and Ethics Helpline at 1-888-231-2310. The PG&E Corporation Senior Vice President and General Counsel reviews all such accounting complaints. The Chairs of the Audit Committees of the Boards of Directors are informed of any significant and material accounting complaints.

³ PG&E Corporation’s common stock is listed on the New York Stock Exchange and the Pacific Exchange and Pacific Gas and Electric Company’s preferred stock is listed on the American Stock Exchange and the Pacific Exchange.

Insider Trading

Never make investment decisions regarding any equity or debt securities based on information obtained in the course of your employment if the information 1) has not been publicly disseminated and 2) could have a material effect on the value of the investment. Examples of such information include expansion plans, major management changes, dividend rates, earnings, mergers, and significant new contracts or projects. Using this information is against PG&E’s policy and may violate laws or regulations.

If you would like more information on insider trading, review PG&E’s compliance booklet, Insider Trading: An Overview of Laws and Corporate Policies. You can access it on the Compliance and Ethics Intranet site or request a copy by calling 1-415-973-8685.

Affiliate Rules

The California Public Utilities Commission (CPUC) and the Federal Energy Regulatory Commission (FERC) have implemented affiliate rules to ensure that resources and assets of the regulated members of the corporate family are not used to subsidize or give an unfair advantage to our other lines of business. Failure to comply fully with the rules can result in sanctions, fines, or other serious measures.

If you’re in a position that requires any interaction with other PG&E lines of business, current customers, or potential customers, you should be familiar with the affiliate rules. One source of information is the PG&E compliance booklet, Interactions in the Corporate Family: An Overview of Affiliate Rules. You can access it on the Compliance and Ethics Intranet site, or request a copy by calling 1-415-973-8685.

Refer specific questions about the rules to the Affiliate Rules Helpline at 1-415-972-7272.

Antitrust Laws

Antitrust laws were established to promote economic competition among businesses. Activities that limit competition, restrict trade, or otherwise dominate a market may violate federal or state antitrust laws. Such violations can expose PG&E and individual employees to criminal penalties, large fines, and civil lawsuits.

To avoid potential problems, follow these rules:

• Don’t fix prices or divide markets with competitors unless the agreement will be actively supervised and approved by the appropriate regulatory body.
  
  
• When attending meetings or social events with competitors or potential competitors, avoid discussing any of the following information if it’s not publicly available:
  • Prices, pricing policy, contract terms or conditions;
  • Costs, inventories, marketing and service plans, market surveys and studies;
  • Capacity plans and capabilities, territorial agreements; or
  • Any other proprietary or confidential information.
    
    
• Don’t suggest or imply to any vendor that it must purchase services from PG&E in order to sell products or services to PG&E.
  
  
• Be careful that any negative or critical comments you make about a competitor are accurate.
  
  
• Don’t use PG&E’s size to intimidate or threaten any individual or organization.

PG&E has developed a booklet and training program on antitrust compliance, which are accessible on the Compliance and Ethics Intranet site. The booklet is called Rules for Fair and Legal Competition: An Overview of Antitrust Laws, and may be requested by calling 1-415-973-8685.

For more specific questions or concerns, ask your supervisor, local compliance representative, or Law Department.

Environmental Laws and Regulations

PG&E is a recognized environmental leader and is committed to conducting its business in an environmentally sensitive manner. This commitment is consistent with our Core Values and makes good business sense. Make sure that the decisions you make on behalf of PG&E reflect this commitment.

If you would like more information on environmental compliance, review the PG&E compliance booklet, Protecting the Environment: An Overview of Environmental Laws. You can request a copy of the booklet by calling 1-415-973-8685 or access it on the Compliance and Ethics Intranet site. For specific environmental questions or concerns, ask your supervisor, local environmental specialist, or the Law Department.

Political Laws

Government officials shape the legal and regulatory environment in which PG&E operates. If you interact with government officials or candidates for public office, or if you provide gifts or contributions to such individuals, you must understand the laws that control the corporation’s participation in the political process. You should obtain a copy of the compliance booklet, Working with Government Officials: Compliance with Political Laws, which covers limitations on gifts, the approval process for contributions, regulatory reporting requirements, and other important information. You can request a copy by calling 1-415-973-8685 or access it on the Compliance and Ethics Intranet site.

The Governmental Relations Department, the Charitable Contributions Department, and the Law Department coordinate all contributions and gifts made to government officials on behalf of PG&E. Don’t make commitments for contributions or provide gifts without consulting them (contributions, 1-415-973-2177 and gifts, 1-415-973-1456).

Remember, giving out squeeze lights or hard hats, allowing public officials to use a PG&E meeting room, or hanging a banner with a bucket truck can constitute making a gift.

Copyright Laws

Copyrighted works include, but aren’t limited to, newsletters, magazine articles, newspapers, books, videotapes, drawings, musical recordings, and software. Copyright law protects such works even if they do not include a copyright notice. If you would like to copy material for distribution at work, make sure you have permission from the copyright holder before making copies.

Before you reproduce a newspaper or magazine article for distribution within PG&E, check the Copyright Quick Reference List, which includes about 150 publications from which we may make copies. The Quick Reference List is available on PG&E’s Compliance and Ethics Intranet site, and also is posted next to most copy machines. You also may check the Copyright Clearance Center at www.copyright.com or call the publisher to get needed approvals.

Computer software is covered by licensing agreements that typically prohibit unauthorized use or copying. Never make unauthorized copies of software that is licensed to PG&E. Also, never load unlicensed software onto PG&E computer equipment or download unauthorized software from the Internet. You may, however, install personal software on your company-assigned computer if two conditions are met: 1) you must hold a software license that permits such an installation, and 2) you must have the approval of your supervisor and the local computer system administrator.

If you would like more information on copyright compliance, review the PG&E compliance booklet, Copying Publications and Software: Compliance With Copyright Laws. You can access it on the Compliance and Ethics Intranet site, or request a copy by calling 1-415-973-8685.

Foreign Corrupt Practices Act

United States companies and their agents doing business outside the United States must comply with the provisions of the Foreign Corrupt Practices Act (FCPA). The FCPA prohibits giving or offering anything of value to a foreign official to induce the recipient to misuse his or her official position to obtain or retain business or secure some improper advantage. “Anything of value” is defined broadly, and includes gifts, money and services. The prohibition extends to the official’s friends and family members, and includes political parties, party officials, and candidates for political office.

The FCPA also requires accurate records of foreign transactions and reasonable accounting controls so FCPA issues can’t be disguised or hidden.

Therefore, contact the Law Department before providing any gift, money, or service to a foreign official. Also, keep in mind that simple business courtesies such as meals, entertainment, or travel, may be illegal under the FCPA or the laws of the host country. When doing business in a foreign country or with a representative of a foreign country, always maintain detailed records of transactions involving PG&E.

For more information, review PG&E’s FCPA compliance booklet, Conducting Business Outside the USA: Compliance With Foreign Business Laws. You can access it on the Compliance and Ethics Intranet site, or request a copy by calling 1-415-973-8685.

Facilities Management

Operate all company facilities in full compliance with applicable codes, regulations, and laws. If you have a concern or suspect a violation, immediately discuss it with your supervisor or facility management representative.

Government Contracts

Government contracts may have special provisions and reporting requirements. Be aware of those special provisions and immediately contact the Law Department if any questions arise. Fraudulent or dishonest acts in fulfilling a government contract can trigger severe penalties, including fines and jail time, under the False Claims Act.