EXHIBIT 10.6


Description of Short-Term Incentive Plan for Officers of PG&E Corporation and
its subsidiaries, effective January 1, 1999.

                                Recommendation
                                --------------

It is recommended that the Nominating and Compensation Committee approve the
following methodology for establishing the scale for the corporate EPS
performance measure.

TARGET (1.0) payout will occur at budgeted financial performance of $2.15 per
share.  This is estimated to represent a 13% increase over 1998 EPS from
operations.

THRESHOLD (0.5) payout will occur at 1999 EPS from operations of 5% over actual
1998 EPS from operations(1).

MAXIMUM (2.0) payout will occur at 1999 EPS from operations of 17.5% over actual
1998 EPS from operations(1).

Each of these payout targets represents a significant stretch from 1998 and
prior years as illustrated in the table below.  Appendix B shows an example of
this scale based on a current forecast of 1998 EPS from operations performance.



          EPS Performance Level                       STIP Payout Level
          ---------------------                       -----------------
   1999                             1998
   ----                             ----
                                                
17.50 Above 1998 EPS       11.65% Above 1997 EPS      Maximum 2.00
13.16% Above 1998 EPS       7.51% Above 1997 EPS      Target 1.00
 5.00% Above 1998 EPS       0.00% Above 1997 EPS      Threshold 0.50


The 1998 EPS used to calculate the performance scale will be the EPS from
operations used to determine the 1998 STIP payout.  The 1999 EPS used to measure
the achievement of the 1999 STIP will be EPS from operations resulting from
implementing the 1999 business plan and budget.  As with past STIPs, unbudgeted
one-time charges for items such as changes in accounting methods, workforce
restructuring, and similar one-time occurrences will be excluded, and the
Committee will continue to retain full discretion to determine final awards to
officers.


(1)  This actual value will be presented to the Committee in January 1999 when
     actual 1998 EPS from operations are available. 

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                                  Background
                                  ----------

Short-Term Incentive Plan Structure
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At its meeting on October 21, 1998, the Nominating and Compensation Committee
reviewed and approved the 1999 Short-Term Incentive Plan (STIP) structure for
officers of the Corporation and each subsidiary.  The structure (see Appendix A)
established the weighting of corporate earnings per share (EPS), subsidiary EPS,
and other performance factors for officers.  The structure requires an
implementing methodology to link the EPS performance levels to threshold,
minimum, and maximum incentive payout levels, which is contained in this
document.

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