UNITED
STATESSECURITIES
AND EXCHANGE COMMISSION


Washington,
D.C. 20549





Form
10-K





(Mark
      One)R
            ANNUAL
      REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
      OF 1934FOR
      THE FISCAL YEAR ENDED DECEMBER 31, 2009OR£
            TRANSITION
      REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
      OF 1934FOR
      THE TRANSITION PERIOD FROM  TO




Commission
File Number
333-91093


CenterPoint
Energy Transition Bond Company, LLC


(Exact
name of registrant
as specified in its charter)





Delaware
            76-0624152(State
      or other jurisdiction of incorporation or organization)
            (I.R.S.
      Employer Identification Number)1111
      Louisiana, Suite 4667
              Houston,
      Texas 77002
            (713)
      207-8272(Address
      and zip code of principal executive offices)
            (Registrant’s
      telephone number, including area
code)


______________________________





Securities registered pursuant to
Section 12(b) of the Act:None





Securities registered pursuant to
Section 12(g) of the Act:  None





The
registrant meets the conditions set forth in General Instruction I(1)(a) and (b)
of Form 10-K and is therefore filing this Form 10-K with the reduced disclosure
format.





Indicate
by check mark if the registrant is a well-known seasoned issuer, as defined in
Rule 405 of the Securities Act. Yes £  No R





Indicate
by check mark if the registrant is not required to file reports pursuant to
Section 13 or Section 15(d) of the Act. Yes £  No R





Indicate
by check mark whether the registrant: (1) has filed all reports required to be
filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the
preceding 12 months (or for such shorter period that the registrant was required
to file such reports), and (2) has been subject to such filing requirements for
the past 90 days. Yes R  No £





Indicate
by check mark whether the registrant has submitted electronically and posted on
its corporate Web site, if any, every Interactive Data File required to be
submitted and posted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this
chapter) during the preceding 12 months (or for such shorter period that the
registrant was required to submit and post such files). Yes £  No £





Indicate
by check mark if disclosure of delinquent filers pursuant to Item 405 of
Regulation S-K is not contained herein and will not be contained, to the best of
the registrant’s knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. R





Indicate
by check mark whether the registrant is a large accelerated filer, an
accelerated filer, a non-accelerated filer, or a smaller reporting company. See
definitions of “large accelerated filer”, “accelerated filer” and “smaller
reporting company” in Rule 12b-2 of the Exchange Act. (Check
one):





Large accelerated filer o
            Accelerated
      filer o
            Non-accelerated
      filer þ
            Smaller
      reporting company o(Do
      not check if a smaller reporting company)





Indicate
by check mark whether the registrant is a shell company (as defined in Rule
12b-2 of the Exchange Act).Yes £  No R





The
aggregate market value of the member’s equity held by non-affiliates of the
registrant as of June 30, 2009:  None











CenterPoint
Energy Transition Bond Company, LLC





TABLE OF CONTENTS








PART
      IItem
      1.
            Business
            1Item
      1A.
            Risk Factors
            3Item
      1B.
            Unresolved Staff Comments
            14Item
      2.
            Properties
            14Item
      3.
            Legal Proceedings
            14Item
      4.
            Reserved
            14PART
      IIItem
      5.
            Market for Registrant’s Common Equity, Related Stockholder
      Matters and Issuer Purchases of Equity Securities
            15Item
      6.
            Selected Financial Data
            15Item
      7.
            Management's Narrative Analysis of Results of
      Operations
            15Item
      7A.
            Quantitative and Qualitative Disclosures About Market
      Risk
            16Item
      8.
            Financial Statements and Supplementary Data
            17Item
      9.
            Changes in and Disagreements with Accountants on Accounting
      and Financial Disclosure
            27Item
      9A(T).
            Controls and Procedures
            27Item
      9B.
            Other Information
            27PART
      IIIItem
      10.
            Directors, Executive Officers and Corporate
      Governance
            28Item
      11.
            Executive Compensation
            28Item
      12.
            Security Ownership of Certain Beneficial Owners and
      Management and Related Stockholder
              Matters
            28Item
      13.
            Certain Relationships and Related Transactions, and
      Director Independence
            28Item
      14.
            Principal Accounting Fees and Services
            28PART
      IVItem
      15.
            Exhibits and Financial Statement Schedules
            28







i
 Table of Contents


CAUTIONARY
STATEMENT REGARDING FORWARD-LOOKING INFORMATION





From time
to time we make statements concerning our expectations, beliefs, plans,
objectives, goals, strategies, future events or performance and underlying
assumptions and other statements that are not historical facts. These statements
are forward-looking statements within the meaning of the Private Securities
Litigation Reform Act of 1995. Actual results may differ materially from those
expressed or implied by these statements. In some cases, you can identify our
forward-looking statements by the words “anticipate,” “believe,” “continue,”
“could,” “estimate,” “expect,” “forecast,” “goal,” “intend,” “may,” “objective,”
“plan,” “potential,” “predict,” “projection,” “should,” “will” or other similar
words.




We have
based our forward-looking statements on our management’s beliefs and assumptions
based on information available to our management at the time the statements are
made. We caution you that assumptions, beliefs, expectations, intentions and
projections about future events may and often do vary materially from actual
results. Therefore, we cannot assure you that actual results will not differ
materially from those expressed or implied by our forward-looking
statements.




Some of
the factors that could cause actual results to differ from those expressed or
implied by our forward-looking statements are described under “Risk Factors” in
Item 1A of this report.




You
should not place undue reliance on forward-looking statements.  Each
forward-looking statement speaks only as of the date of the particular
statement.









ii
 Table of Contents


PART I







Item 1.        
Business





General





We are a
special purpose Delaware limited liability company whose sole member is
CenterPoint Energy Houston Electric, LLC (CenterPoint Houston).  We
were organized on November 10, 1999, and amended and restated our limited
liability company agreement and certificate of formation on October 24,
2001.  Our principal purposes are:





•
            purchasing
      and owning transition property, as described below, established by a
      financing order from the Public Utility Commission of Texas (Texas Utility
      Commission) and other transition bond
  collateral;





•
            registering
      and issuing the transition bonds;





•
            pledging
      our interest in transition property and other transition bond collateral
      to the trustee pursuant to the terms of the indenture governing the
      transition bonds in order to secure the transition
  bonds;





•
            making
      payments on the transition bonds;
and





•
            performing
      other activities that are necessary, suitable or convenient to accomplish
      these purposes.





Our
organizational documents require us to operate in a manner designed to avoid
consolidation with the bankruptcy estate of CenterPoint Houston in the event
CenterPoint Houston becomes subject to such a proceeding.





We have
no employees and have entered into a servicing agreement with CenterPoint
Houston, as servicer.  Pursuant to the servicing agreement, the
servicer will manage, service, administer and make collections in respect of the
transition property.  In addition, we have entered into an
administration agreement with CenterPoint Houston pursuant to which CenterPoint
Houston provides administrative services to us.





We
purchased the transition property described below and issued $748.9 million
of Series 2001-1 transition bonds (transition bonds) on October 24, 2001, with
expected principal repayments ranging from eleven months to twelve years and
final maturities of the four classes of transition bonds ranging from six years
to fourteen years.  The specific interest rate and maturity of each
class of transition bonds is disclosed in Note 4 of the notes to financial
statements included in Item 8 of this Form 10-K. The transition bonds were
issued pursuant to an indenture between us and Deutsche Bank Trust Company
Americas (formerly Bankers Trust Company), as trustee.





Transition
Property





The
transition property that we purchased from Reliant Energy, Incorporated (now
CenterPoint Houston) includes the irrevocable right to impose, collect and
receive, through the transition charges payable by retail electric customers
within CenterPoint Houston’s certificated service area as it existed on May 1,
1999, an amount sufficient to recover the qualified costs authorized in the
financing order of the Texas Utility Commission dated May 31, 2000 (financing
order) issued to Reliant Energy, Incorporated including the right to receive
transition charges in amounts and at times sufficient to pay principal and
interest and to make other deposits in connection with the transition
bonds.  All revenues and collections resulting from transition charges
are part of the transition property. CenterPoint Houston’s qualified costs
authorized in the financing order include:





•
            certain
      of CenterPoint Houston’s generation-related regulatory assets, as
      determined in the financing order;
and





•
            certain
      costs of issuing, supporting and servicing the transition
      bonds.





1
 Table of Contents





We
purchased the transition property from CenterPoint Houston with the proceeds
from the issuance of $748.9 million principal amount of transition
bonds.  Prior to January 2002, the servicer collected the transition
charges primarily from retail electric customers within CenterPoint Houston’s
service territory on the Company's behalf.  Beginning in January 2002,
and in limited circumstances earlier, retail electric customers in CenterPoint
Houston’s service territory began to purchase electricity and related services
from retail electric providers (REPs), rather than from electric
utilities.  Certain of these REPs were affiliates of CenterPoint
Houston through September 30, 2002.  Each REP includes the
transition charges in its bill to its retail electric customers but is not
required to show the transition charges as a separate line item or
footnote.  However, each REP is required to provide annual written
notice to its customers that transition charges have been included in the
customers’ bills.  The REPs are obligated to remit payments of
transition charges, less an allowance for charge-offs of delinquent customer
accounts, to the servicer, whether or not the transition charges are actually
collected from retail electric customers.  The servicer has only
limited rights to collect the transition charges directly from retail electric
customers if a REP does not remit such payments to the servicer, but has certain
rights against the REP.  Because the amount of transition charge
collections will largely depend on the amount of electricity consumed by
customers within CenterPoint Houston's service territory, the amount of
collections may vary substantially from year to year.





In all
material respects, each materially significant REP (i) has been billed in
accordance with the financing order, (ii) has made all payments in compliance
with the requirements outlined in the financing order and (iii) has satisfied
the creditworthiness requirements of the financing order.





Credit
enhancement for the transition bonds, which includes mandatory periodic review
and adjustment to the transition charges to be billed and collected from the
retail electric customers within CenterPoint Houston's service territory and the
allocation of those charges among the various classes of customers, is intended
to ensure that sufficient funds are available to make payments of principal and
interest on the transition bonds as scheduled.  The servicer is
required to make a filing with the Texas Utility Commission for an adjustment at
least annually to correct any significant undercollection or overcollection of
transition charges.  In addition, if after application of collections
in accordance with the indenture, the actual principal balance of transition
bonds outstanding at the next payment date will be more than 5% higher or lower
than the expected principal balance on the expected amortization schedule,
interim true-up adjustments may be made, but not more frequently than every six
months.  The amount of the adjustment will be determined by using a
formula established by the financing order. The adjustments will be made to
correct any undercollections or overcollections and are intended to provide that
the transition charges generate amounts sufficient to:





•
            make
      timely interest and principal payments on the transition
      bonds;





•
            pay
      fees and expenses of the trustee, our independent managers, the
      administrator and the servicer, and other fees, expenses, costs and
      charges;





•
            reconcile
      the REP payments, net of expected charge-offs for delinquent customer
      accounts; and





•
            fund
      the various subaccounts required by the transition bond indenture to their
      required levels.





CenterPoint
Houston is required to true-up transition charges annually on November 1 in
compliance with the financing order. CenterPoint Houston’s most recent true-up
filing to adjust transition charges was filed with the Texas Utility Commission
on August 3, 2009 and became effective November 1, 2009.  The adjusted
transition charges are designed to collect $110.5 million during the
twelve-month period ending October 31, 2010. Such adjusted transition charges
consider the impact of an estimated over-collection of $2.4 million for the
twelve-month period ended October 31, 2009.


2
 Table of Contents


Item 1A.      Risk
Factors





Material payment delays or a loss on
investments in the transition bonds may occur because the source of funds for
payment is limited.





The only
source of funds for payment of transition bonds are our assets, which consist of
the transition property securing the transition bonds, including:




•
            the
      rights under the financing order, including the statutory true-up
      mechanisms;




•
              the
      right to impose, collect and receive related transition
      charges;


•
            the
      funds on deposit in the accounts held by the
  trustee;





•
            our
      rights under various contracts; and





•
            any
      credit enhancement.





The
transition bonds are not a charge on the full faith and credit or taxing power
of the State of Texas or any governmental agency or instrumentality, nor are the
transition bonds insured or guaranteed by CenterPoint Houston, including in its
capacity as the servicer, or by its ultimate parent, CenterPoint Energy, Inc.,
any of its affiliates (other than us), the trustee or by any other person or
entity. Thus, holders of transition bonds (bondholders) must rely for payment of
transition bonds solely upon collections of the transition charges, funds on
deposit in the related accounts held by the trustee and the credit enhancement
described under “Business—Transition Property” in Item 1. Our organizational
documents restrict our right to acquire other assets unrelated to the
transactions described under “Business—General” in Item 1.




Risks
Associated with Potential Judicial, Legislative or Regulatory
Actions





We
are not obligated to indemnify bondholders for changes in law.




Neither
we nor CenterPoint Houston, nor any affiliate, successor or assignee, will
indemnify bondholders for any changes in the law, including any federal
preemption or repeal or amendment of the Public Utility Regulatory Act of Texas
(Public Utility Regulatory Act), that may affect the value of the transition
bonds. CenterPoint Houston agreed in the sale agreement to institute any legal
or administrative action or proceeding as may be reasonably necessary to block
or overturn any attempts to cause a repeal, modification or amendment to the
Public Utility Regulatory Act that would be materially adverse to us, the
trustee or bondholders. However, we cannot assure you that CenterPoint Houston
would be able to take this action or that any such action would be
successful.


Future
judicial action could reduce the value of the transition bonds.





The
transition property is the creation of the 1999 utility restructuring amendments
to the Public Utility Regulatory Act (Restructuring Act) and the financing
order. There is uncertainty associated with investing in bonds payable from an
asset that depends for its existence on legislation because there is limited
judicial or regulatory experience implementing and interpreting the legislation.
Because the transition property is a creation of the Restructuring Act, any
judicial determination affecting the validity of or interpreting the
Restructuring Act, the transition property or our ability to make payments on
the transition bonds might have an adverse effect on the transition bonds.A
federal or state court could be asked in the future to determine whether the
relevant provisions of the Public Utility Regulatory Act are unlawful or
invalid.  In June 2001, the Supreme Court of the State of Texas upheld
the constitutionality of certain securitization provisions of the Restructuring
Act. Notwithstanding that decision, a federal or state court could be asked in
the future to determine whether the relevant provisions of the Public Utility
Regulatory Act are unlawful or invalid.  If the Restructuring Act is
invalidated, the financing order authorizing us to issue the transition bonds
might also be invalidated.




Other
states have passed electric utility deregulation laws similar to the
Restructuring Act, and some of these laws have been challenged by judicial
actions. To date, none of these challenges has succeeded, but future
judicial





3
 Table of Contents
 
 challenges
might be made. An unfavorable decision regarding another state’s law would not
automatically invalidate the Restructuring Act or the financing order, but it
might provoke a challenge to the Restructuring Act, establish a legal precedent
for a successful challenge to the Restructuring Act or heighten awareness of the
political and other risks of the transition bonds, and in that way may limit the
liquidity and value of the transition bonds. Therefore, legal activity in other
states may indirectly affect the value of the transition
bonds.





The
federal government might preempt the Restructuring Act without full
compensation.





In the
past, bills have been introduced in Congress that would prohibit the recovery of
all or some types of stranded costs, but none of those bills was enacted.
Congress could, however, pass a law or adopt a rule or regulation negating the
existence of or reducing the value of the transition property.




If
federal legislation preempting the Restructuring Act or the financing order is
enacted, there is no assurance that the courts would consider it a “taking”
under the United States Constitution for which the government would be required
to pay just compensation or, if it is considered a “taking,” that any amount
provided as compensation would be sufficient to pay the full amount of principal
of and interest on the transition bonds or to pay these amounts on a timely
basis.




Future
state legislative action could reduce the value of the transition
bonds.





Despite
its pledge in the Restructuring Act not to take or permit certain actions that
would impair the value of the transition property or the transition charges, the
Texas legislature might attempt to repeal or amend the Restructuring Act in a
manner that limits or alters the transition property so as to reduce its value.
It might be possible for the Texas legislature to repeal or amend the
Restructuring Act notwithstanding the State’s pledge if the legislature acts in
order to serve a significant and legitimate public purpose. Any such action, as
well as the costly and time-consuming litigation that likely would ensue, might
adversely affect the price and liquidity, the dates of payment of interest and
principal and the weighted average lives of the transition bonds. Moreover, the
outcome of any litigation cannot be predicted. Accordingly, bondholders might
incur a loss on or delay in recovery of their investment in the transition
bonds.




If an
action of the Texas legislature adversely affecting the transition property or
the ability to collect transition charges were considered a “taking” under the
United States or Texas Constitutions, the State of Texas might be obligated to
pay compensation for the taking. However, even in that event, there is no
assurance that any amount provided as compensation would be sufficient for
bondholders to recover fully their investment in the transition bonds or to
offset interest lost pending such recovery.




Unlike
the citizens of some other states, the citizens of the State of Texas currently
do not have the constitutional right to adopt or revise state laws by initiative
or referendum. Thus, absent an amendment of the Texas Constitution, the Public
Utility Regulatory Act cannot be amended or repealed by direct action of the
electorate of the State of Texas.




The
enforcement of any rights against the State of Texas or the Texas Utility
Commission under the State’s pledge may be subject to the exercise of judicial
discretion in appropriate cases and to the limitations on legal remedies against
state and local governmental entities in Texas. These limitations might include,
for example, the necessity to exhaust administrative remedies prior to bringing
suit in a court, or limitations on type and locations of courts in which the
State of Texas or the Texas Utility Commission may be sued.




The
Texas Utility Commission might take actions that could reduce the value of the
transition bonds.





The
Restructuring Act provides that a financing order is irrevocable and that the
Texas Utility Commission may not directly or indirectly, by any subsequent
action, rescind or amend a financing order or reduce or impair the transition
charges authorized under a financing order, except for the true-up adjustments
to the transition charges. However, the Texas Utility Commission retains the
power to adopt, revise or rescind rules or regulations affecting CenterPoint
Houston. The Texas Utility Commission also retains the power to interpret the
financing order, and in that capacity might be called upon to rule on the
meanings of provisions of the order that might need further elaboration. Any new
or amended regulations or orders from the Texas Utility Commission might affect
the ability





4
 Table of Contents
 
 of the
servicer to collect the transition charges in full and on a timely basis, the
rating of the transition bonds or their price and, accordingly, the amortization
of the transition bonds and their weighted average lives.




The
servicer is required to file with the Texas Utility Commission, on our behalf,
certain adjustments of the transition charges. True-up adjustment procedures
have been challenged in the past and may be challenged in the future. Challenges
to or delays in the true-up process might adversely affect the market perception
and valuation of the transition bonds. Also, any litigation might materially
delay transition charge collections due to delayed implementation of true-up
adjustments and might result in missing payments or payment delays and
lengthened weighted average life of the transition bonds.




Servicing
Risks





Inaccurate
consumption forecasting or unanticipated delinquencies or charge-offs might
reduce scheduled payments on the transition bonds.





The
transition charges are generally assessed based on forecasted customer usage.
The amount and the timeliness of transition charge collections depend in part on
actual electricity usage and the amount of collections and write-offs for each
customer class. If the servicer inaccurately forecasts electricity consumption
or uses inaccurate customer delinquency or charge-off data when setting or
adjusting the transition charges, or if the effectiveness of the adjustments is
delayed for any reason, there could be a shortfall or material delay in
transition charge collections, which might result in missed or delayed payments
of principal and interest and lengthened weighted average life of the transition
bonds.




The
servicer has experienced difficulties from time to time in making accurate
forecasts of electricity consumption because of unexpected weather conditions.
Inaccurate forecasting of electricity consumption by the servicer might result
from, among other things, unanticipated weather or economic conditions,
resulting in less electricity consumption than forecast; general economic
conditions being worse than expected, causing retail electric customers to
migrate from CenterPoint Houston’s service territory or reduce their electricity
consumption; the occurrence of a natural disaster, such as a hurricane, or an
act of terrorism or other catastrophic event; unanticipated changes in the
market structure of the electric industry; customers consuming less electricity
than anticipated because of increased energy prices, unanticipated increases in
conservation efforts or unanticipated increases in electric usage efficiency; or
customers switching to alternative sources of energy, including self-generation
of electric power.




The
servicer’s use of inaccurate delinquency or charge-off rates might result also
from, among other things, unexpected deterioration of the economy or the
occurrence of a natural disaster, an act of terrorism or other catastrophic
event or the unanticipated declaration of a moratorium on terminating electric
service to customers in the event of extreme weather, either of which would
cause greater delinquencies or charge-offs than expected or force CenterPoint
Houston or REPs to grant additional payment relief to more customers, or any
other unanticipated change in law that makes it more difficult for CenterPoint
Houston or REPs to terminate service to non-paying customers or that requires
CenterPoint Houston or REPs to apply more lenient credit standards in accepting
retail electric customers.




We
depend on CenterPoint Houston or its successor or assignee, acting as servicer
of the transition property.





CenterPoint
Houston, as servicer, is responsible for, among other things, calculating,
billing and collecting the transition charges from REPs, submitting requests to
the Texas Utility Commission to adjust these charges, monitoring the collateral
for the transition bonds and taking certain actions in the event of non-payment
by a REP. The trustee’s receipt of collections in respect of the transition
charges, which are used to make payments on the transition bonds, depends in
part on the skill and diligence of the servicer in performing these functions.
The systems the State of Texas and the servicer have in place for transition
charge billings and collections might, in particular circumstances, cause the
servicer to experience difficulty in performing these functions in a timely and
completely accurate manner. CenterPoint Houston experienced some difficulties in
2002 in implementing and maintaining the systems and procedures required to
perform the duties required of it by the servicing agreement.  If the
servicer fails to make collections for any reason, then the servicer’s payments
to the trustee in respect of the





5
 Table of Contents
 
 transition
charges might be delayed or reduced. In that event, our payments on the
transition bonds might be delayed or reduced.




If
we need to replace CenterPoint Houston as the servicer, we may experience
difficulties finding and using a replacement servicer.





If
CenterPoint Houston ceases to service the transition property, it might be
difficult to find a successor servicer. Also, any successor servicer might have
less experience and ability than CenterPoint Houston and might experience
difficulties in collecting transition charges and determining appropriate
adjustments to the transition charges and billing and/or payment arrangements
may change, resulting in delays or disruptions in collections. A successor
servicer might charge fees that, while permitted under the financing order, are
substantially higher than the fees paid to CenterPoint Houston as servicer. In
the event of the commencement of a case by or against the servicer under the
United States Bankruptcy Code or similar laws, we and the trustee might be
prevented from effecting a transfer of servicing due to operation of the
bankruptcy code. Any of these factors and others might delay the timing of
payments and may reduce the value of the transition bonds.




It
might be difficult to collect transition charges from REPs.





As
required by the Restructuring Act, retail electric customers pay the transition
charges to REPs who supply them with electric power. The REPs are obligated to
remit payments of the transition charges, less a specified percentage allowance
for charge-offs of delinquent customer accounts, within 35 days of billing from
the servicer, even if they do not collect the transition charges from retail
electric customers. Because the REPs bill most retail electric customers for the
transition charges, we have to rely on a relatively small number of entities for
the collection of the bulk of the transition charges. As of December 31,
2009, CenterPoint Houston did business with approximately 80
REPs.  Subsidiaries of NRG Retail LLC that were formerly subsidiaries
of RRI Energy, Inc. (formerly known as Reliant Energy, Inc. and Reliant
Resources, Inc.) are together considered CenterPoint Houston’s largest customer,
accounting for approximately 41% of CenterPoint Houston’s outstanding
receivables from REPs as of December 31, 2009.  Additionally,
subsidiaries of TXU Energy Retail Company LLC accounted for approximately 13% of
CenterPoint Houston’s outstanding receivables from REPs as of December 31,
2009.




Failure
by the REPs to remit transition charges to the servicer might cause delays in
payments on the transition bonds and adversely affect the value of the
transition bonds. Adverse economic conditions or financial difficulties of one
or more REPs could impair the ability of these REPs to remit payments of the
transition charges or could cause them to delay such payments. The servicer does
not pay any shortfalls resulting from the failure of any REP to forward
transition charge collections.




Adjustments
to the transition charges and any credit support provided by a REP, while
available to compensate for a failure by a REP to pay the transition charges to
the servicer, might not be sufficient to protect the value of the transition
bonds.




The
Restructuring Act provides for one or more REPs in each area to be designated
the “provider of last resort” for that area or a specified customer class. The
provider of last resort is required to offer basic electric service to retail
electric customers in its designated area, regardless of the creditworthiness of
the customers. The provider of last resort might face greater difficulty in bill
collection than other REPs and therefore the servicer may face greater
difficulty in collecting transition charges from the provider of last
resort.




REPs may
issue a single bill to retail customers that include all charges related to the
purchase of electricity, without separately itemizing the transition charge
component of the bill. A REP’s use of a consolidated bill might increase the
risk that customers who have claims against the REP will attempt to offset those
claims against transition charges or increase the risk that, in the event of a
bankruptcy of a REP, a bankruptcy court would find that the REP has an interest
in the transition property and would make it more difficult to terminate the
services of a bankrupt REP or collect transition charges from its
customers.




6
 Table of Contents





Competitive
metering services might result in unexpected problems in receiving accurate
metering data.





Under the
Restructuring Act, commercial and industrial retail customers that are required
by the Electric Reliability Council of Texas to have an interval data recorder
meter may choose to own the settlement and billing meters that are used to
measure electric energy delivered to their location or to have those meters
owned by a REP, the transmission and distribution utility or another person
authorized by the customer. As of December 31, 2009, CenterPoint Houston
continued to provide metering services related to the installation and removal
of meters, meter testing and calibration, data collection and data management.
Should the Texas Utility Commission allow third parties to perform those
metering services in CenterPoint Houston’s service territory, there might be
problems converting to the third party’s metering system, taking accurate meter
readings and collecting and processing accurate metering data. Inaccurate
metering data might lead to inaccuracies in the calculation and imposition of
transition charges and might give rise to disputes between the servicer and REPs
regarding payments and payment shortfalls resulting in missing or delayed
payments of principal and interest and lengthened weighted average life of the
transition bonds.




The
Advanced Metering System (AMS) being deployed throughout CenterPoint Houston’s
service territory may experience unexpected problems that delay timely receipt
of accurate metering data.





CenterPoint
Houston is deploying an AMS throughout its service territory with completion
expected by 2014.  The deployment consists, among other elements, of
replacing existing meters with new electronic meters that will record metering
data at 15-minute intervals and wirelessly communicate that information to
CenterPoint Houston over a bi-directional communications system being installed
for that purpose.  The AMS integrates equipment and computer software
from various vendors in order to eliminate the need for physical meter readings
to be taken at consumers’ premises, such as monthly readings for billing
purposes and special readings associated with a customer’s change in REPs or the
connection or disconnection of electric service.  Unanticipated
difficulties could be encountered during the installation and operation of the
AMS, including failures or inadequacy of equipment or software, difficulties in
integrating the various components of the AMS and cybersecurity issues, that
could result in delayed or inaccurate metering data that might lead to
inaccuracies in the calculation and imposition of transition
charges.




Changes
to billing and collection practices might reduce the value of the transition
bonds.





The
financing order specifies the methodology for determining the amount of the
transition charges we may impose. The servicer may not change this methodology
without approval from the Texas Utility Commission. However, the servicer may
set its own billing and collection arrangements with REPs and retail electric
customers, if any, from whom it collects transition charges directly, provided
that these arrangements comply with the Texas Utility Commission’s customer
safeguards. For example, to recover part of an outstanding bill, the servicer
may agree to extend a REP’s payment schedule or to write off the remaining
portion of the bill, including the transition charges. Also, the servicer may
change billing and collection practices, which might adversely impact the timing
and amount of retail electric customer payments and might reduce transition
charge collections, thereby limiting our ability to make scheduled payments on
the transition bonds. Separately, the Texas Utility Commission might require
changes to these practices. Any changes in billing and collection practices
regulations might make it more difficult for the servicer to collect the
transition charges and adversely affect the value of the transition
bonds.




Limits
on rights to terminate service might make it more difficult to collect the
transition charges.





Texas statutory requirements and the
rules and regulations of the Texas Utility Commission, which may change from
time to time, regulate and control the right to disconnect
service.  For example, REPs generally may not terminate service to a
customer (i) on a holiday or weekend day or the day immediately preceding a
holiday or weekend, (ii) during certain extreme weather conditions, (iii) if
such disconnection would cause a person to become seriously ill or more
seriously ill, (iv) if such customer is an energy assistance client under
certain circumstances or (v) if the customer is a master-metered apartment
complex unless certain notices are given.  To the extent these retail
electric customers do not pay for their electric service, REPs will not be able
to collect transition charges from these retail electric customers. Although
REPs have to pay the servicer the transition charges on behalf of those
customers (subject to any charge-off allowance and reconciliation rights),
required service to non-paying customers could affect the ability of REPs to
make such payment.




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Future
adjustments to transition charges by customer class might result in insufficient
collections.





The
customers who pay transition charges are divided into customer classes.
Transition charges are allocated among customer classes and assessed in
accordance with the formula required under the Restructuring Act and specified
in the financing order. A shortfall in collections of transition charges in one
customer class may be corrected by making adjustments to the transition charges
payable by that customer class and any other customer class. If enough customers
in a class fail to pay transition charges or cease to be customers, the servicer
might have to substantially increase the transition charges for the remaining
customers in that customer class and for other customer classes. This effect
might be more extreme in the case of the large industrial and the interruptible
customer classes, which consist of a small number of large customers. These
increases could lead to further failures by the remaining customers to pay
transition charges, thereby increasing the risk of a shortfall in funds to pay
debt service on the transition bonds.




Storm-Related
Risks




Storm
damage to the service territory could impair payment of the transition
bonds.




CenterPoint
Houston’s service territory was impacted by Hurricane Ike in September 2008,
disrupting CenterPoint Houston’s operations. Future storms could have similar
effects. Transmission, distribution and usage of electricity could be
interrupted temporarily, reducing the amount of transition charges
collected. There could be longer-lasting weather-related adverse effects on
residential and commercial development and economic activity in CenterPoint
Houston’s service territory, which could cause the per-kWh transition charge to
be greater than expected after adjustment pursuant to the true-up process.
Legislative action adverse to the bondholders might be taken in response, and
such legislation, if challenged as violative of the State of Texas’ pledge,
might be defended on the basis of public necessity.


Risks
Associated with the Unusual Nature of the Transition Property





We
will not receive transition charges in respect of electric service provided more
than 15 years from the date of issuance of the transition bonds.





CenterPoint
Houston will not be entitled to charge transition charges for electricity
delivered after the fifteenth anniversary of the issuance of the transition
bonds. If transition charges collected for electricity delivered through the
fifteenth anniversary of the transition bonds, or from any credit enhancement
funds, are not sufficient to repay the transition bonds in full, no other funds
will be available to pay the unpaid balance due on the transition
bonds.




Foreclosure
of the trustee’s lien on the transition property might not be practical, and
acceleration of the transition bonds before maturity might have little practical
effect.





Under the
Restructuring Act and the indenture, the trustee or the bondholders have the
right to foreclose or otherwise enforce the lien on the transition property
securing the transition bonds. However, in the event of foreclosure, there is
likely to be a limited market, if any, for the transition property. Therefore,
foreclosure might not be a realistic or practical remedy. Moreover, although
principal of the transition bonds will be due and payable upon acceleration of
the transition bonds before maturity, the transition charges likely would not be
accelerated and the nature of our business will result in principal of the
transition bonds being paid as funds become available. If there is an
acceleration of the transition bonds, all tranches of the transition bonds will
be paid pro rata; therefore, some tranches might be paid earlier than expected
and some tranches might be paid later than expected.




Risks
Associated with Potential Bankruptcy Proceedings of CenterPoint Houston or a
Successor Servicer





The
servicer will commingle the transition charges with other revenues it collects,
which might obstruct access to the transition charges in case of the servicer’s
bankruptcy and reduce the value of the transition bonds.





The
servicer is required to remit collections to the trustee within two business
days of receipt. The servicer does not segregate the transition charges from the
other funds it collects from retail electric customers or REPs or its general
funds. The transition charges are segregated only when the servicer pays them to
the trustee.




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Despite
this requirement, the servicer might fail to pay the full amount of the
transition charges to the trustee or might fail to do so on a timely basis. This
failure, whether voluntary or involuntary, might materially reduce the amount of
transition charge collections available to make payments on the transition
bonds.




The
Restructuring Act provides that our rights to the transition property are not
affected by the commingling of these funds with any other funds of the servicer.
In a bankruptcy of the servicer, however, a bankruptcy court might rule that
federal bankruptcy law does not recognize our right to collections of the
transition charges that are commingled with other funds of the servicer as of
the date of bankruptcy. If so, the collections of the transition charges held by
the servicer as of the date of bankruptcy would not be available to pay amounts
owing on the transition bonds. In this case, we would have only a general
unsecured claim against the servicer for those amounts. This decision could
cause material delays in payments of principal or interest, or losses, on the
transition bonds and could materially reduce the value of the transition bonds,
particularly if it occurred in the fifteenth year of the transition bonds after
the completion of which no transition charges can be charged.




The
bankruptcy of CenterPoint Houston, as seller of the transition property, might
result in losses or delays in payments on the transition bonds.





The
Restructuring Act and the financing order provide that as a matter of Texas
state law:




•
            the
      rights and interests of a selling utility under a financing order,
      including the right to impose, collect and receive transition charges, are
      contract rights of the seller;





•
            the
      seller may make a present transfer of its rights under a financing order,
      including the right to impose, collect and receive future transition
      charges that retail customers do not yet
owe;





•
            upon
      the transfer to us, the rights became transition property, and transition
      property constitutes a present property right, even though the imposition
      and collection of transition charges depend on further acts that have not
      yet occurred; and





•
            a
      transfer of the transition property from the seller, or its affiliate, to
      us that expressly states the transfer is a sale or other absolute transfer
      is a true sale of the transition property, not a pledge of the transition
      property to secure a financing by the
seller.





These
provisions are important to maintaining payments on the transition bonds in
accordance with their terms during any bankruptcy of CenterPoint
Houston.





A
bankruptcy court generally follows state property law on issues such as those
addressed by the state law provisions described above. However, a bankruptcy
court does not follow state law if it determines that the state law is contrary
to a paramount federal bankruptcy policy or interest. If a bankruptcy court in a
CenterPoint Houston bankruptcy refused to enforce one or more of the state
property law provisions described above, the effect of this decision on
beneficial owners of the transition bonds might be similar to the treatment they
would receive in a CenterPoint Houston bankruptcy if the transition bonds had
been issued directly by CenterPoint Houston. A decision by the bankruptcy court
that, despite our separateness from CenterPoint Houston, our assets and
liabilities and those of CenterPoint Houston should be consolidated would have a
similar effect on bondholders.




We have
taken steps together with CenterPoint Houston, as seller of the transition
property, to reduce the risk that in the event the seller or an affiliate of the
seller were to become the debtor in a bankruptcy case, a court would order that
our assets and liabilities be substantively consolidated with those of
CenterPoint Houston or an affiliate. Nonetheless, these steps might not be
completely effective, and thus if CenterPoint Houston or one of its affiliates
were to become a debtor in a bankruptcy case, a court might order that our
assets and liabilities be consolidated with those of CenterPoint Houston or such
affiliate. This might cause material delays in payment of, or losses on, the
transition bonds and might materially reduce the value of the transition bonds.
For example:




•
            without
      permission from the bankruptcy court, the trustee might be prevented from
      taking actions against CenterPoint Houston or recovering or using funds on
      behalf of bondholders or replacing CenterPoint Houston as the
      servicer;




9
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•
            the
      bankruptcy court might order the trustee to exchange the transition
      property for other property, of lower
value;





•
            tax
      or other government liens on CenterPoint Houston’s property might have
      priority over the trustee’s lien and might be paid from collected
      transition charges before payments on the transition
  bonds;





•
            the
      trustee’s lien might not be properly perfected in the collected transition
      property collections prior to or as of the date of CenterPoint Houston’s
      bankruptcy, with the result that the transition bonds would represent only
      general unsecured claims against CenterPoint
  Houston;





•
            the
      bankruptcy court might rule that neither our property interest nor the
      trustee’s lien extends to transition charges in respect of electricity
      consumed after the commencement of CenterPoint Houston’s bankruptcy case,
      with the result that the transition bonds would represent only general
      unsecured claims against CenterPoint
Houston;





•
            we
      and CenterPoint Houston might be relieved of any obligation to make any
      payments on the transition bonds during the pendency of the bankruptcy
      case and might be relieved of any obligation to pay interest accruing
      after the commencement of the bankruptcy
case;





•
            CenterPoint
      Houston might be able to alter the terms of the transition bonds as part
      of its plan of reorganization;





•
            the
      bankruptcy court might rule that the transition charges should be used to
      pay, or that we should be charged for, a portion of the cost of providing
      electric service; or





•
            the
      bankruptcy court might rule that the remedy provisions of the transition
      property sale agreement are unenforceable, leaving us with an unsecured
      claim for actual damages against CenterPoint Houston that may be difficult
      to prove or, if proven, to collect in
full.





Furthermore,
if CenterPoint Houston enters bankruptcy proceedings, it might be permitted to
stop acting as servicer and it may be difficult to find a third party to act as
servicer. The failure of the servicer to perform its duties or the inability to
find a successor servicer might cause payment delays or losses on the transition
bonds. Also, the mere fact of a servicer or seller bankruptcy proceeding might
have an adverse effect on the resale market for the transition bonds and on the
value of the transition bonds.




The
sale of the transition property might be construed as a financing and not a sale
in a case of CenterPoint Houston’s bankruptcy which might delay or limit
payments on the transition bonds.





The
Restructuring Act provides that the characterization of a transfer of transition
property as a sale or other absolute transfer will not be affected or impaired
by treatment of the transfer as a financing for federal or state tax purposes or
financial reporting purposes. We and CenterPoint Houston treated the transaction
as a sale under applicable law, although for financial reporting and state
income and franchise tax purposes the transaction was intended to be treated as
a financing. In the event of a bankruptcy of CenterPoint Houston, a party in
interest in the bankruptcy might assert that the sale of the transition property
to us was a financing transaction and not a “sale or other absolute transfer”
and that the treatment of the transaction for financial reporting and tax
purposes as a financing and not a sale lends weight to that position. If a court
were to characterize the transaction as a financing, we expect that we would, on
behalf of ourselves and the trustee, be treated as a secured creditor of
CenterPoint Houston in the bankruptcy proceedings, although a court might
determine that we only have an unsecured claim against CenterPoint Houston. See
“—The servicer will commingle
the transition charges with other revenues it collects, which might obstruct
access to the transition charges in case of the servicer’s bankruptcy and reduce
the value of the transition bonds” above. Even if we had a security
interest in the transition property, we would not likely have access to the
related transition charge collections during the bankruptcy and would be subject
to the risks of a secured creditor in a bankruptcy case, including the possible
bankruptcy risks described in the immediately preceding risk factor. As a
result, repayment of the transition bonds might be significantly delayed and a
plan of





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 reorganization
in the bankruptcy might permanently modify the amount and timing of payments to
us of the related transition charge collections and therefore the amount and
timing of funds available to us to pay bondholders.




If
the servicer enters bankruptcy proceedings, the collections of the transition
charges held by the servicer as of the date of bankruptcy might constitute
preferences, which means these funds might be unavailable to pay amounts owing
on the transition bonds.





In the
event of a bankruptcy of the servicer, a party in interest might take the
position that the remittance of funds prior to bankruptcy of the servicer,
pursuant to the servicing agreement or intercreditor agreement, constitutes a
preference under bankruptcy law if the remittance of those funds was deemed to
be paid on account of a pre-existing debt. If a court were to hold that the
remittance of funds constitutes a preference, any such remittance within 90 days
of the filing of the bankruptcy petition could be avoidable, and the funds could
be required to be returned to the bankruptcy estate of the servicer. To the
extent that transition charges have been commingled with the general funds of
the servicer, the risk that a court would hold that a remittance of funds was a
preference would increase. Also, we or the servicer may be considered an
“insider” with any REP that is affiliated with us or the servicer. If the
servicer or we are considered to be an “insider” of the REP, any such remittance
made within one year of the filing of the bankruptcy petition could be avoidable
as well if the court were to hold that such remittance constitutes a preference.
In either case, we or the trustee would merely be an unsecured creditor of the
servicer.If any
funds were required to be returned to the bankruptcy estate of the servicer, we
would expect that the amount of any future transition charges would be increased
through the statutory true-up mechanism to recover such amount.




Claims
against CenterPoint Houston might be limited in the event of its
bankruptcy.





If
CenterPoint Houston were to become a debtor in a bankruptcy case, claims,
including indemnity claims, by us against it, as seller, under the transition
property sale agreement and the other documents executed in connection with the
transition property sale agreement would be unsecured claims and would be
disposed of in the bankruptcy case. In addition, the bankruptcy court might
estimate any contingent claims that we have against the seller and, if it
determines that the contingency giving rise to these claims is unlikely to
occur, estimate the claims at a lower amount. A party in interest in the
bankruptcy of the seller might challenge the enforceability of the indemnity
provisions in the transition property sale agreement. If a court were to hold
that the indemnity provisions were unenforceable, we would be left with a claim
for actual damages against the seller based on breach of contract principles,
which would be subject to estimation and/or calculation by the court. We cannot
give any assurance as to the result if any of the above-described actions or
claims were made. Furthermore, we cannot give any assurance as to what
percentage of their claims, if any, unsecured creditors would receive in any
bankruptcy proceeding involving the seller.




The
bankruptcy of CenterPoint Houston might limit the remedies available to the
trustee.





Upon an
event of default under the indenture, the Restructuring Act permits the trustee
to enforce the security interest in the transition property in accordance with
the terms of the indenture. In this capacity, the trustee is permitted to
request the Texas Utility Commission or a Travis County, Texas district court to
order the sequestration and payment to bondholders of all revenues arising with
respect to the transition property. There can be no assurance, however, that the
Texas Utility Commission or the Travis County, Texas district court would issue
this order after a CenterPoint Houston bankruptcy in light of the automatic stay
provisions of Section 362 of the United States Bankruptcy Code. In that event,
the trustee would be required to seek an order from the bankruptcy court lifting
the automatic stay to permit this action by the Texas court, and an order
requiring an accounting and segregation of the revenues arising from the
transition property. There can be no assurance that a court would grant either
order.




Risks
Associated with Potential Bankruptcy Proceedings or Defaults of
REPs





REPs
may commingle the transition charges with other revenues they collect. This may
cause losses on or reduce the value of the transition bonds in the event a REP
enters bankruptcy proceedings.





A REP is
not required to segregate from its general funds the transition charges it
collects but is required to remit to the servicer amounts billed to it for
transition charges, less an amount relating to expected customer
charge-





11
 Table of Contents
 
 offs,
within 35 days of the billing by the servicer. A REP nevertheless might fail to
remit the full amount of the transition charges owed to the servicer or might
fail to do so on a timely basis. This failure, whether voluntary or involuntary,
might materially reduce the amount of transition charge collections available on
the next payment date to make timely payments on the transition
bonds.




The
Restructuring Act provides that our rights to the transition property are not
affected by the commingling of these funds with other funds. In a bankruptcy of
a REP, however, a bankruptcy court might rule that federal bankruptcy law takes
precedence over the Restructuring Act and does not recognize our right to
receive the collected transition charges that are commingled with other funds of
a REP as of the date of bankruptcy. If so, the collections of the transition
charges held by a REP as of the date of bankruptcy would not be available to pay
amounts owing on the transition bonds. In this case, we would have only a
general unsecured claim against the REP for those amounts. This decision might
cause material delays in payments of principal or interest or losses on the
transition bonds and could materially reduce the value of the transition bonds,
particularly if it occurred in the fifteenth year of the transition bonds after
the completion of which no transition charges can be charged.




If
a REP enters bankruptcy proceedings, any cash deposit of the REP held by the
trustee might not be available to cover amounts owed by the REP.





If a REP
does not have the credit rating required by the financing order, it may
nevertheless qualify to act as a REP if, among other alternatives, it provides a
cash deposit equal to two months’ maximum expected transition charge
collections. That cash deposit will be held by the trustee under the indenture.
However, it is unclear whether the Restructuring Act creates a lien on the cash
deposit in favor of the trustee. If the REP becomes bankrupt, the trustee would
be stayed from applying that cash deposit to cover amounts owed by the REP, and
the trustee might be required to return that cash deposit to the REP’s
bankruptcy estate if the bankruptcy court determines there is no valid right of
set-off or recoupment. In that case, the issuer might only have an unsecured
claim for any amounts owed by the REP in the REP’s bankruptcy proceedings.
Several REPs with which CenterPoint Houston has done business have filed for
bankruptcy. CenterPoint Houston, as servicer of the transition bonds, was able
to recover the full amount or a substantial majority of the transition charges
from cash deposits or a combination of cash deposits and payments from these
REPs, but there is no assurance that CenterPoint Houston will be able to recover
such amounts from any bankrupt REPs in the future.




If
a REP enters bankruptcy proceedings, transition charge payments made by that REP
to the servicer might constitute preferences, and the servicer may be required
to return such funds to the bankruptcy estate of the REP.





In the
event of a bankruptcy of a REP, a party in interest might take the position that
the remittance of funds by the REP to the servicer, pursuant to the financing
order, prior to bankruptcy constitutes a preference under bankruptcy law if the
remittance of those funds was deemed to be paid on account of a pre-existing
debt. If a court were to hold that the remittance of funds constitutes
preferences, any remittance of such funds made within 90 days of the filing of
the bankruptcy petition might be avoidable, and the funds might be required to
be returned to the bankruptcy estate of the REP by us or the servicer. To the
extent that transition charges have been commingled with the general funds of
the REP, the risk that a court would hold that a remittance of funds was a
preference would increase. Also, we or the servicer might be considered an
“insider” with any REP that is affiliated with us or the servicer. If the
servicer or we are considered to be an “insider” of the REP, any such remittance
made within one year of the filing of the bankruptcy petition could be avoidable
as well if the court were to hold that such remittance constitutes a preference.
In either case, we or the servicer would merely be an unsecured creditor of the
REP.If any
funds were required to be returned to the bankruptcy estate of the REP, we would
expect that the amount of any future transition charges would be increased
through the statutory true-up mechanism to recover the amount
returned.




Furthermore,
the mere fact of a REP bankruptcy proceeding could have an adverse effect on the
resale market for the transition bonds and on the value of the transition
bonds.




12
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If
a REP defaults with respect to the payment of transition charges owed to the
servicer, any cash deposit or other collateral of the REP held by the trustee
might not cover amounts owed by the REP.




If a REP
does not have the ratings required by the financing order, the REP must provide
a cash deposit or other collateral which is reviewed as often as each quarter to
ensure that the amount of such collateral equals or exceeds two months’ maximum
collections.  If a REP defaults with respect to the payment of
transition charges, the amount of such collateral may be inadequate as a result
of factors that include (a) an increase in a REP’s number of customers or the
electric usage of its customers shortly before the default, (b) the length of
time between the initial payment default by a REP and the date all of such REP’s
retail electric customers are transferred to another REP, and (c) deficiencies
in the collateral documentation or a failure of a guarantor, letter of credit
provider or surety to honor a demand for payment.


Other
Risks Associated with an Investment in the Transition Bonds





We
may incur expenses in excess of caps on such expenses provided in the financing
order.





Under the
financing order, transition charges may not be imposed for certain of our
ongoing expenses to the extent they exceed caps provided in the financing order
for such amounts. In addition, our other assets, substantially all of which are
pledged to the trustee under the indenture, may not be used by the trustee to
pay such excess amounts. Examples of these caps include payment of specified
fees and expenses of the trustee and the servicer and other specified operating
expenses. We cannot be sure that we will not incur expenses for these purposes
in excess of the cap levels and, if this were to occur, we would not have funds
to make payments for these excess amounts. Creditors of ours which are owed
these amounts and not paid may obtain judgment liens against our assets or seek
to place us in bankruptcy.




CenterPoint
Houston’s indemnification obligations under the transition property sale and
servicing agreements are limited and might not be sufficient to protect the
value of the transition bonds.





CenterPoint
Houston is obligated under the transition property sale agreement to indemnify
us and the trustee, for itself and on behalf of the bondholders, only in
specified circumstances and will not be obligated to repurchase the transition
property in the event of a breach of any of its representations, warranties or
covenants regarding the transition property. Similarly, CenterPoint Houston is
obligated under the transition property servicing agreement to indemnify us, the
trustee, for itself and on behalf of the bondholders, and the Texas Utility
Commission only in specified circumstances.




Neither
the trustee nor the bondholders have the right to accelerate payments on the
transition bonds as a result of a breach under the transition property sale
agreement or the transition property servicing agreement, absent an event of
default under the indenture. Furthermore, CenterPoint Houston might not have
sufficient funds available to satisfy its indemnification obligations under
these agreements, and the amount of any indemnification paid by CenterPoint
Houston might not be sufficient for bondholders to recover all of their
investment in the transition bonds. In addition, if CenterPoint Houston becomes
obligated to indemnify bondholders, the ratings on the transition bonds will
likely be downgraded as a result of the circumstances causing the breach and the
fact that bondholders will be unsecured creditors of CenterPoint Houston with
respect to any of these indemnification amounts.




CenterPoint
Houston’s ratings might affect the market value of the transition bonds.The credit ratings of the
transition bonds are no indication of the expected rate of payment of principal
on the transition bonds.





A
downgrading of the credit ratings on the debt of CenterPoint Houston might have
an adverse effect on the market value of the transition bonds.Credit
ratings may change at any time.




The
transition bonds are rated by one or more established rating agencies. A rating
is not a recommendation to buy, sell or hold transition bonds. The ratings
merely analyze the probability that we will repay the total principal amount of
the transition bonds at the final maturity date (which is later than the
scheduled final payment date) and will make timely interest payments. The
ratings are not an indication that the rating agencies believe that principal
payments are likely to be paid on time according to the expected sinking fund
schedule.




13
 Table of Contents




Alternatives
to purchasing electricity through CenterPoint Houston’s distribution facilities
may be more widely utilized by retail electric customers in the
future.





Broader
use of distributed generation by retail electric customers may result from
customers’ changing perceptions of the merits of utilizing existing generation
technology or from technological developments resulting in smaller-scale, more
fuel efficient, more environmentally friendly and/or more cost effective
distributed generation. Electric customers within CenterPoint Houston’s service
territory whose load is served by an on-site power production facility with a
rated capacity of 10 megawatts or less are not required to pay transition
charges under the Restructuring Act except for transition charges associated
with services actually provided by the transmission and distribution utility.
Therefore, more widespread use of distributed generation might allow greater
numbers of retail customers to reduce or eliminate their payment of transition
charges causing transition charges to remaining customers to
increase.




Bondholders
might receive principal payments on the transition bonds later than
expected.





The
amount and the timeliness of collection of the transition charges, together with
the related transition charge adjustments, will generally determine whether
there is a delay in the scheduled repayments of transition bond principal. If
the servicer collects the transition charges at a slower rate than the rate
estimated when the schedule for the repayments of transition bond principal was
established and true-up adjustments to the transition charges are not timely and
accurate, bondholders might experience a delay in payments of principal and
interest and a decrease in the value of the transition bonds.




If
the investment of collected transition charges and other funds held by the
trustee in the collection account results in investment losses or the
investments become illiquid, bondholders may receive payment of principal and
interest on the transition bonds later than they expect.





Funds
held by the trustee in the Collection Account and cash collateral provided by
REPs will be invested in eligible investments. Eligible investments include
money market funds having a rating from Moody’s and Standard & Poor’s Rating
Services of “Aaa” and “AAA”, respectively. Although investments in these money
market funds have traditionally been viewed as highly liquid with a low
probability of principal loss, illiquidity and principal losses have been
experienced by investors in certain of these funds as a result of recent
disruptions in the financial markets. If investment losses or illiquidity is
experienced, bondholders might experience a delay in payments of principal and
interest and a decrease in the value of their investment in the transition
bonds.




Item 1B.      Unresolved Staff
Comments.





Not
applicable.





Item
2.         Properties





We have
no material physical properties.  Our primary asset is the transition
property described above in Item 1 “Business – Transition
Property.”





Item
3.         Legal
Proceedings





None.





Item
4.         Reserved




14
 Table of Contents





PART II





Item
5.         Market for
Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of
Equity Securities





Sale of Unregistered
Securities.  There is no established public trading market for
our equity securities.  All of our equity is owned by CenterPoint
Energy Houston Electric, LLC (CenterPoint Houston).  We were formed by
CenterPoint Houston in November 1999.  CenterPoint Houston’s
acquisition of our membership interests at our formation was exempt from
registration under Section 4(2) of the Securities Act of 1933, as amended,
because no public offering was involved.  We have made no other sales
of unregistered securities.





Restricted
Payments.  The indenture governing the transition bonds
prohibits us from making any distributions from the capital subaccount of the
trust established for the transition bonds to any owner of our beneficial
interests unless no default has occurred and is continuing thereunder and such
distributions would not cause the balance of such capital subaccount to decline
below 0.50% of the initial outstanding principal amount of the transition bonds.
We will not, except as contemplated by our organizational documents, make any
loan or advance credit to, or guarantee, endorse, or otherwise become
contingently liable in connection with the obligations, stocks or dividends of,
or own, purchase, repurchase or acquire (or agree contingently to do so) any
stock, obligations, assets or securities of, or any other interest in, or make
any capital contribution to, any other person.  We will not directly
or indirectly make payments to or distributions from the collection account
except in accordance with the transition bond indenture.  As of
December 31, 2009, we had not made any distributions to our sole member
other than interest earned on the capital subaccount paid in accordance with the
transition bond indenture.





Bondholders.  As of
December 31, 2009, the sole record holder of the transition bonds was Cede
& Co., as nominee of The Depository Trust Company.  The transition
bonds are not listed on any national securities exchange.





Item
6.         Selected Financial
Data





Omitted
pursuant to Instruction I of Form 10-K.





Item
7.         Management’s
Narrative Analysis of Results of Operations





The
following is an analysis of our consolidated results of operations in an
abbreviated format pursuant to Instruction I of Form 10-K.  This
analysis should be read in combination with our financial statements included in
Item 8 of this Form 10-K.





As
discussed above under “Business” in Item 1, we are a Delaware limited liability
company established in November 1999 for limited purposes.  On October
24, 2001 we issued $748.9 million aggregate principal amount of transition
bonds and used the net proceeds to purchase the transition property from Reliant
Energy, Incorporated (now CenterPoint Houston).  As we are restricted
by our organizational documents from engaging in activities other than those
described above under “Business” in Item 1, income statement effects are limited
primarily to revenue generated from the transition charges, interest expense on
the transition bonds, amortization of the transition property, debt issuance
expenses and the discount on the transition bonds, transition property servicing
and administration fees and incidental investment interest
income.  Net income is expected to be zero for each reporting
period.





For the
year ended December 31, 2009, revenue from transition charges was
$98.4 million and investment income was less than $0.1 million.
Amortization of transition property was $73.0 million.  Interest
expense of $23.2 million related to interest on the transition bonds and
amortization expense of $0.6 million related to amortization of debt
issuance expenses and the discount on the transition bonds. We recorded
administrative expenses of $1.6 million in 2009, which included
$0.1 million related to the annual bad debt true-up recorded in the third
quarter of 2009.





For the
year ended December 31, 2008, revenue from transition charges was
$98.5 million and investment income was $0.8 million. Amortization of
transition property was $70.0 million.  Interest expense of
$26.8 million related to interest on the transition bonds and amortization
expense of $0.7 million related to amortization of debt





15
 Table of Contents
 
 issuance
expenses and the discount on the transition bonds. We recorded administrative
expenses of $1.8 million in 2008, which included $0.2 million related to
the annual bad debt true-up recorded in the second quarter of
2008.





For the
year ended December 31, 2007, revenue from transition charges was
$89.2 million and investment income was $1.5 million. Amortization of
transition property was $59.4 million.  Interest expense of
$29.9 million related to interest on the transition bonds and amortization
expense of $0.9 million related to amortization of debt issuance expenses
and the discount on the transition bonds. We recorded administrative expenses of
$0.6 million in 2007, which included a $0.6 million reduction related to
the annual bad debt true-up recorded in the second quarter of 2007.





We use
collections of transition charges to make scheduled principal and interest
payments on the transition bonds.  Transition charges, together with
interest earned on collected transition charges, are expected to offset (1)
interest expense on the transition bonds, (2) the principal amount of the
transition bonds scheduled to be paid and (3) fees and expenses, including fees
charged by CenterPoint Houston for servicing the transition property and
providing administrative services to us and expenses related to such
administrative services.





The
transition charges are reviewed and adjusted at least annually by the Public
Utility Commission of Texas (Texas Utility Commission) to correct prospectively
any over-collections or under-collections that occurred during the preceding 12
months and to provide for the expected recovery of amounts sufficient to timely
provide all payment of debt service and other required amounts and charges in
connection with the transition bonds.





CenterPoint
Houston is required to true-up transition charges annually on November 1 in
compliance with the financing order. CenterPoint Houston’s most recent true-up
filing to adjust transition charges was filed with the Texas Utility Commission
on August 3, 2009 and became effective November 1, 2009.  The adjusted
transition charges are designed to collect $110.5 million during the
twelve-month period ending October 31, 2010. Such adjusted transition charges
consider the impact of an estimated over-collection of $2.4 million for the
twelve-month period ended October 31, 2009.





Holders
of transition bonds may experience payment delays or incur losses if our assets
are not sufficient to pay interest or the scheduled principal of the transition
bonds.  Funds for payments depend on the transition property and the
right to collect the transition charges over a period that Texas law limits to
15 years.  In addition, collections depend on the amount of
electricity consumed within CenterPoint Houston’s service territory and our
ability to collect transition charges from retail electric providers
(REPs).





In all
material respects, each materially significant REP (i) has been billed in
accordance with the financing order, (ii) has made all payments in compliance
with the requirements outlined in the financing order, and (iii) has satisfied
the creditworthiness requirements of the financing order.





Item 7A.     Quantitative and
Qualitative Disclosures About Market Risk





At
December 31, 2008 and 2009, we had outstanding fixed-rate debt aggregating
$449.3 million and $376.3 million in principal amount and having a
fair value of $457.2 million and $405.5 million, respectively. This
fixed-rate debt does not expose us to the risk of loss in earnings due to
changes in market interest rates.  However, the fair value of this
debt would increase by approximately $4.6 million if interest rates were to
decline by 10% from their levels at December 31, 2009.




16
 Table of Contents


Item
8.         Financial Statements
and Supplementary Data





REPORT
OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM





To the
Member of


CenterPoint
Energy Transition Bond Company, LLC


Houston,
Texas





We have
audited the accompanying balance sheets of CenterPoint Energy Transition Bond
Company, LLC (the “Company”, a special purpose Delaware limited liability
company whose sole member is CenterPoint Energy Houston Electric, LLC) as of
December 31, 2009 and 2008, and the related statements of income and
changes in member’s equity and cash flows for each of the three years in the
period ended December 31, 2009.  These financial statements are
the responsibility of the Company’s management.  Our responsibility is
to express an opinion on these financial statements based on our
audits.





We
conducted our audits in accordance with the standards of the Public Company
Accounting Oversight Board (United States).  Those standards require
that we plan and perform the audit to obtain reasonable assurance about whether
the financial statements are free of material misstatement. The Company is not
required to have, nor were we engaged to perform, an audit of its internal
control over financial reporting.  Our audits included consideration
of internal control over financial reporting as a basis for designing audit
procedures that are appropriate in the circumstances, but not for the purpose of
expressing an opinion on the effectiveness of the Company’s internal control
over financial reporting.  Accordingly, we express no such
opinion.  An audit also includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements, assessing
the accounting principles used and significant estimates made by management, as
well as evaluating the overall financial statement presentation.  We
believe that our audits provide a reasonable basis for our opinion.





In our
opinion, such financial statements present fairly, in all material respects, the
financial position of CenterPoint Energy Transition Bond Company, LLC as of
December 31, 2009 and 2008, and the results of its operations and its cash
flows for each of the three years in the period ended December 31, 2009, in
conformity with accounting principles generally accepted in the United States of
America.





/s/
DELOITTE & TOUCHE LLP





Houston,
Texas


March 30,
2010







17
 Table of Contents


MANAGEMENT’S
ANNUAL REPORT ON INTERNAL CONTROL


OVER
FINANCIAL REPORTING





Our
management is responsible for establishing and maintaining adequate internal
control over financial reporting. Internal control over financial reporting is
defined in Rule 13a-15(f) or 15d-15(f) promulgated under the Securities
Exchange Act of 1934 as a process designed by, or under the supervision of, the
company’s principal executive and principal financial officers and effected by
the company’s board of directors, management and other personnel, to provide
reasonable assurance regarding the reliability of financial reporting and the
preparation of financial statements for external purposes in accordance with
generally accepted accounting principles and includes those policies and
procedures that:





•
            Pertain
      to the maintenance of records that in reasonable detail accurately and
      fairly reflect the transactions and dispositions of the assets of the
      company;





•
            Provide
      reasonable assurance that transactions are recorded as necessary to permit
      preparation of financial statements in accordance with generally accepted
      accounting principles, and that receipts and expenditures of the company
      are being made only in accordance with authorizations of management and
      directors of the company; and





•
            Provide
      reasonable assurance regarding prevention or timely detection of
      unauthorized acquisition, use or disposition of the company’s assets that
      could have a material effect on the financial
  statements.





Management
has designed its internal control over financial reporting to provide reasonable
assurance regarding the reliability of financial reporting and the preparation
of financial statements in accordance with accounting principles generally
accepted in the United States of America. Management’s assessment included
review and testing of both the design effectiveness and operating effectiveness
of controls over all relevant assertions related to all significant accounts and
disclosures in the financial statements.





All
internal control systems, no matter how well designed, have inherent
limitations. Therefore, even those systems determined to be effective can
provide only reasonable assurance with respect to financial statement
preparation and presentation. Projections of any evaluation of effectiveness to
future periods are subject to the risk that controls may become inadequate
because of changes in conditions, or that the degree of compliance with the
policies or procedures may deteriorate.





Under the
supervision and with the participation of our management, including our
principal executive officer and principal financial officer, we conducted an
evaluation of the effectiveness of our internal control over financial reporting
based on the framework in Internal Control — Integrated Framework issued by
the Committee of Sponsoring Organizations of the Treadway Commission. Based on
our evaluation under the framework in Internal Control — Integrated
Framework, our management has concluded that our internal control over financial
reporting was effective as of December 31, 2009.





This
annual report does not include an attestation report of our registered public
accounting firm regarding internal control over financial
reporting.  Management’s report was not subject to attestation by our
registered public accounting firm pursuant to temporary rules of the Securities
and Exchange Commission that permit us to provide only management’s report in
this annual report.








/s/  GARY
      L. WHITLOCKPresident/s/  MARC
      KILBRIDEVice
      President and Treasurer




March 30,
2010





18
 Table of Contents


CENTERPOINT ENERGY TRANSITION BOND COMPANY, LLC





STATEMENTS
OF INCOME


AND
CHANGES IN MEMBER'S EQUITY








Year
      Ended December 31,2007
            
            
            2008
            
            
            2009(in
      thousands)Revenues:Transition
      charge revenue
            
            $
            89,244
            
            
            $
            98,549
            
            
            $
            98,417Investment
      income
            
            
            1,537
            
            
            
            815
            
            
            
            49Total
      operating revenues
            
            
            90,781
            
            
            
            99,364
            
            
            
            98,466Expenses:Interest
      expense
            
            
            29,911
            
            
            
            26,810
            
            
            
            23,236Amortization
      of transition property
            
            
            59,429
            
            
            
            70,026
            
            
            
            72,998Amortization
      of transition bond discount and issuance costs
            
            
            887
            
            
            
            740
            
            
            
            604Administrative
      and general expenses
            
            
            554
            
            
            
            1,788
            
            
            
            1,628Total
      operating expenses
            
            
            90,781
            
            
            
            99,364
            
            
            
            98,466Net
      Income
            
            
            —
            
            
            
            —
            
            
            
            —Member's
      Equity at Beginning of the Year
            
            
            3,745
            
            
            
            3,745
            
            
            
            3,745Contributed
      Capital
            
            
            —
            
            
            
            —
            
            
            
            —Member's
      Equity at the End of the Year
            
            $
            3,745
            
            
            $
            3,745
            
            
            $
            3,745





See Notes
to Financial Statements


19
 Table of Contents


CENTERPOINT ENERGY TRANSITION BOND COMPANY,
LLC





BALANCE
SHEETS








December
      31,2008
            
            
            2009(in
      thousands)ASSETSCurrent
      Assets:Cash
      and cash equivalents
            
            $
            34,176
            
            
            $
            33,834Restricted
      funds
            
            
            17,255
            
            
            
            7,680Transition
      charge receivable
            
            
            11,359
            
            
            
            11,239Current
      Assets
            
            
            62,790
            
            
            
            52,753Intangible
      transition property
            
            
            409,523
            
            
            
            336,525Unamortized
      debt issuance costs
            
            
            1,673
            
            
            
            1,095Total
      Assets
            
            $
            473,986
            
            
            $
            390,373LIABILITIES
      AND MEMBER'S EQUITYCurrent
      Liabilities:Current
      portion of long-term debt
            
            $
            73,017
            
            
            $
            80,507Accrued
      interest
            
            
            7,361
            
            
            
            6,238Customer
      deposits
            
            
            13,430
            
            
            
            3,934Fees
      payable to servicer
            
            
            187
            
            
            
            184Current
      Liabilities
            
            
            93,995
            
            
            
            90,863Long-term
      debt:Transition
      bonds, net of unamortized discount of less than
      $0.1 million
            
            
            376,246
            
            
            
            295,765Total
      Liabilities
            
            
            470,241
            
            
            
            386,628Member's
      Equity:Contributed
      capital
            
            
            3,745
            
            
            
            3,745Retained
      earnings
            
            
            —
            
            
            
            —Total
      Member's Equity
            
            
            3,745
            
            
            
            3,745Total
      Liabilities and Member's Equity
            
            $
            473,986
            
            
            $
            390,373





See Notes
to Financial Statements


20
 Table of Contents


CENTERPOINT ENERGY TRANSITION BOND COMPANY, LLC





STATEMENTS
OF CASH FLOWS








Year
      Ended December 31,2007
            
            
            2008
            
            
            2009(in
      thousands)Cash
      Flows from Operating Activities:Net
      income
            
            $
            —
            
            
            $
            —
            
            
            $
            —Adjustment
      for non-cash items:Amortization
      of transition bond discount and issuance costs
            
            
            887
            
            
            
            740
            
            
            
            604Amortization
      of transition property
            
            
            59,429
            
            
            
            70,026
            
            
            
            72,998Changes
      in other assets and liabilities:Transition
      charge receivable
            
            
            (1,223
            )
            
            
            (520
            )
            
            
            120Accrued
      interest
            
            
            (841
            )
            
            
            (996
            )
            
            
            (1,123
            )Customer
      deposits
            
            
            (203
            )
            
            
            2,051
            
            
            
            (9,496
            )Fees
      payable to servicer
            
            
            (4
            )
            
            
            15
            
            
            
            (3
            )Net
      cash provided by operating activities
            
            
            58,045
            
            
            
            71,316
            
            
            
            63,100Cash
      Flows from Investing Activities:Restricted
      funds
            
            
            205
            
            
            
            (2,068
            )
            
            
            9,575Net
      cash provided by (used in) investing activities
            
            
            205
            
            
            
            (2,068
            )
            
            
            9,575Cash
      Flows from Financing Activities:Payments
      of long-term debt
            
            
            (59,912
            )
            
            
            (65,529
            )
            
            
            (73,017
            )Net
      cash used in financing activities
            
            
            (59,912
            )
            
            
            (65,529
            )
            
            
            (73,017
            )Net
      Increase (Decrease) in Cash and Cash Equivalents
            
            
            (1,662
            )
            
            
            3,719
            
            
            
            (342
            )Cash
      and Cash Equivalents, Beginning of Year
            
            
            32,119
            
            
            
            30,457
            
            
            
            34,176Cash
      and Cash Equivalents, End of Year
            
            $
            30,457
            
            
            $
            34,176
            
            
            $
            33,834Supplemental
      Disclosure of Cash Flow Information:
              
              Cash
      Payments:
              Interest
            
            $
            30,752
            
            
            $
            27,806
            
            
            $
            24,359





See Notes
to Financial Statements


21
 Table of Contents


CENTERPOINT ENERGY TRANSITION BOND COMPANY, LLC





NOTES
TO FINANCIAL STATEMENTS








(1)
            Background
      and Basis of Presentation





CenterPoint
Energy Transition Bond Company, LLC (the Company) is a special purpose Delaware
limited liability company whose sole member is CenterPoint Energy Houston
Electric, LLC (CenterPoint Houston, an indirect wholly owned subsidiary of
CenterPoint Energy, Inc.). The Company has no commercial operations and was
formed for the principal purpose of purchasing and owning transition property,
issuing transition bonds and performing activities incidental thereto.
CenterPoint Houston is a regulated utility engaged in the transmission and
distribution of electric energy in a 5,000 square mile area located along the
Texas Gulf Coast, including the city of Houston.





The Texas
Electric Choice Plan (Texas electric restructuring law), which became effective
in September 1999, substantially amended the regulatory structure governing
electric utilities in order to allow retail competition for electric customers
beginning in January 2002.  The Texas electric restructuring law
required the Public Utility Commission of Texas (Texas Utility Commission) to
conduct a “true-up” proceeding to determine CenterPoint Houston’s stranded costs
and certain other costs resulting from the transition to a competitive retail
electric market and to provide for recovery of certain of those costs through
irrevocable non-bypassable transition charges assessed on all retail electric
customers within a utility’s geographical certificated service area as it
existed on May 1, 1999.  The Texas electric restructuring law
authorizes the Texas Utility Commission to issue financing orders approving the
issuance of transition bonds to recover generation-related regulatory assets and
stranded costs.  The Texas electric restructuring law and the
financing order permit an electric utility to transfer its rights and interests
in the financing order, including the right to collect transition charges
pursuant to the Texas electric restructuring law, to a special purpose entity
formed by the electric utility to issue debt securities secured by the right to
receive revenues arising from the transition charges. The electric utility’s
right to receive the transition charges and its other rights and interests under
the financing order constitute “transition property.” The Texas Utility
Commission issued a financing order to Reliant Energy, Incorporated (now
CenterPoint Houston) on May 31, 2000 (financing order) that authorized
CenterPoint Houston to cause the Company to issue transition bonds in an
aggregate principal amount not to exceed $740 million plus up-front
qualified costs not to exceed $10.7 million in the aggregate.





The
Company was organized on November 10, 1999 under the laws of the State of
Delaware for the sole purpose of acquiring and holding the transition property
to be acquired from CenterPoint Houston.  The Company had no
operations until October 24, 2001.





On
October 24, 2001, the Company issued $748.9 million of transition bonds and
used the net proceeds to purchase the transition property from CenterPoint
Houston and pay expenses of issuance. For additional information relating to the
transition bonds, see Note 4.





The
Company is restricted by its organizational documents from engaging in any
activity not directly related to the specific purposes for which the Company was
created.  The Company is a separate and distinct legal entity from
CenterPoint Houston, and the Company’s organizational documents require it to
operate in a manner designed to avoid consolidation with the bankruptcy estate
of CenterPoint Houston in the event CenterPoint Houston becomes subject to such
a proceeding.  CenterPoint Houston is not the owner of the transition
property described herein, and the assets of the Company are not available to
pay creditors of CenterPoint Houston or any of its affiliates.





(2)
            Significant
      Accounting Policies





Use of
Estimates.The
preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting
period.  Actual results could differ from those
estimates.




22
 Table of Contents


Regulation and
Regulatory Assets and Liabilities.The Company’s business
meets the criteria of accounting guidance for the effects of certain types of
regulation.  This accounting standard recognizes the cost-based
rate-making process which may result in differences in the application of
generally accepted accounting principles between regulated and non-regulated
businesses. The Company’s purpose is to purchase the transition property, issue
one or more series of transition bonds secured by the transition property and
perform any activity incidental thereto.  The transition charges are
designed to provide the necessary revenues to timely provide payment of
principal and interest on the transition bonds. Continued applicability of this
accounting guidance requires that rates be designed to recover specific costs of
providing regulated services and products, and that it be reasonable to assume
that the transition charges are set at levels that will recover an entity’s
costs and can be charged to and collected from customers. The Company believes
it satisfies such requirements, and applies the provisions of this
guidance.





Cash and Cash
Equivalents/Restricted Funds.  For purposes of
the Balance Sheet and Statement of Cash Flows, the Company considers investments
purchased with a maturity of three months or less to be the equivalent of
cash.  The trustee under the indenture pursuant to which the
transition bonds were issued has established, as provided in the indenture, the
following subaccounts for the Company’s cash balances related to its transition
bonds:





•
            The
      General Subaccountis comprised of
      collections of transition charges and interest earned from short-term
      investments. These amounts accumulate in the General Subaccount until they
      are transferred from the General Subaccount on each transition bond
      payment date.  The General Subaccount had a balance of
      $31.0 million and $32.3 million at December 31, 2008 and
      2009, respectively.





•
            The
      Reserve Subaccountis maintained for
      the purpose of holding any transition charges and investment earnings
      (other than investment earnings on amounts in the Capital Subaccount) not
      otherwise used on the payment dates of the transition bonds for payment of
      principal, interest, fees or expenses, or for funding the Capital
      Subaccount or the Overcollateralization Subaccount.  The Reserve
      Subaccount had a balance of $1.0 million and $-0- at
      December 31, 2008 and 2009,
respectively.





•
            The
      Overcollateralization Subaccount has a target funding level of
      approximately $3.7 million (0.5% of the initial principal amount of
      the transition bonds), and funding is scheduled to occur ratably over the
      life of the transition bonds.  The trustee may draw from this
      subaccount if the General Subaccount and Reserve Subaccount are not
      sufficient on any payment date to make scheduled payments on the
      transition bonds and payments of certain fees and expenses.  The
      Overcollateralization Subaccount had a balance of $2.2 million at
      December 31, 2008 with a scheduled level of
      $2.2 million.  The Overcollateralization Subaccount had a
      balance of $1.6 million at December 31, 2009 with a scheduled
      level of $2.5 million. The shortfall in the balance occurred because
      collected transition charges were insufficient to make the scheduled
      September 2009 debt service payment primarily as a result of the September
      2008 electricity outages following Hurricane
  Ike.





•
            The
      Capital Subaccount received a deposit of approximately $3.7 million
      (0.5% of the initial principal amount of the transition bonds) on the date
      of issuance of the transition bonds. CenterPoint Houston contributed this
      amount to the Company. If amounts available in the General, Reserve and
      Overcollateralization Subaccounts are not sufficient on any payment date
      to make scheduled payments on the transition bonds and payments of certain
      fees and expenses, the trustee will draw on amounts in the Capital
      Subaccount. As of December 31, 2008 and 2009, the Capital Subaccount
      had a balance of $3.8 million and $3.7 million, respectively,
      and is classified as Restricted Funds in the Balance
    Sheets.





As of
December 31, 2008 and 2009, cash deposits provided by retail electric
providers (REPs) totaled $13.4 million and $3.9 million, respectively,
and are classified as Restricted Funds in the Balance Sheets.  The
decrease in cash deposits is principally attributable to the substitution by
REPs of letters of credit for cash deposits in 2009.





Debt Issuance
Costs.The costs associated with the issuance of the
transition bonds are capitalized and are being amortized over the life of the
transition bonds utilizing the effective interest method.




23
 Table of Contents





Transition
Charges.Beginning on October 25, 2001 and pursuant to the
financing order, CenterPoint Houston, as servicer, implemented the
non-bypassable transition charge on behalf of the Company.  The
Company records revenue for transition charges under the accrual
method.  These revenues are generally recognized upon delivery of
services by CenterPoint Houston to REPs.





The
following table shows the aggregate amount of transition charges remitted by
CenterPoint Houston to the trustee during each month from the date of issuance
of the transition bonds through December 31, 2009 (in
thousands):





2001
            
            
            2002
            
            
            2003
            
            
            2004
            
            
            2005
            
            
            2006
            
            
            2007
            
            
            2008
            
            
            2009January
            
            $
            —
            
            
            $
            4,584
            
            
            $
            4,902
            
            
            $
            4,652
            
            
            $
            6,159
            
            
            $
            5,729
            
            
            $
            6,665
            
            
            $
            7,616
            
            
            $
            6,625February
            
            
            —
            
            
            
            3,997
            
            
            
            4,693
            
            
            
            4,554
            
            
            
            7,804
            
            
            
            5,082
            
            
            
            5,970
            
            
            
            7,053
            
            
            
            7,229March
            
            
            —
            
            
            
            4,297
            
            
            
            4,698
            
            
            
            5,798
            
            
            
            8,136
            
            
            
            5,916
            
            
            
            7,003
            
            
            
            7,141
            
            
            
            7,040April
            
            
            —
            
            
            
            5,144
            
            
            
            4,986
            
            
            
            4,808
            
            
            
            6,582
            
            
            
            5,799
            
            
            
            6,349
            
            
            
            7,061
            
            
            
            6,855May
            
            
            —
            
            
            
            3,678
            
            
            
            4,236
            
            
            
            3,754
            
            
            
            7,028
            
            
            
            5,176
            
            
            
            6,414
            
            
            
            7,464
            
            
            
            6,434June
            
            
            —
            
            
            
            5,805
            
            
            
            5,378
            
            
            
            6,258
            
            
            
            7,952
            
            
            
            7,398
            
            
            
            7,019
            
            
            
            7,128
            
            
            
            7,490July
            
            
            —
            
            
            
            5,892
            
            
            
            6,195
            
            
            
            6,039
            
            
            
            8,481
            
            
            
            7,792
            
            
            
            7,572
            
            
            
            9,444
            
            
            
            9,533August
            
            
            —
            
            
            
            7,091
            
            
            
            5,948
            
            
            
            6,668
            
            
            
            10,429
            
            
            
            8,785
            
            
            
            9,092
            
            
            
            9,314
            
            
            
            9,350September
            
            
            —
            
            
            
            7,195
            
            
            
            6,359
            
            
            
            7,217
            
            
            
            10,164
            
            
            
            7,942
            
            
            
            7,919
            
            
            
            9,719
            
            
            
            10,647October
            
            
            2
            
            
            
            8,799
            
            
            
            6,403
            
            
            
            6,137
            
            
            
            9,619
            
            
            
            7,423
            
            
            
            9,391
            
            
            
            9,301
            
            
            
            9,683November
            
            
            414
            
            
            
            6,119
            
            
            
            4,667
            
            
            
            7,055
            
            
            
            9,788
            
            
            
            7,253
            
            
            
            7,866
            
            
            
            5,857
            
            
            
            7,765December
            
            
            1,937
            
            
            
            5,390
            
            
            
            5,516
            
            
            
            6,528
            
            
            
            7,273
            
            
            
            6,073
            
            
            
            6,801
            
            
            
            9,721
            
            
            
            8,834





Amortization.  The
transition property was recorded at acquired cost and is being amortized over 12
years, the expected life of the transition bonds, based on estimated revenue
from transition charges, interest accruals and other expenses. The financing
order authorizing the imposition of the transition charges and the issuance of
the transition bonds limits the terms of the transition bonds to no greater than
15 years.  In accordance with accounting guidance for regulated
operations, amortization is adjusted for over/under collection of transition
charges. The transition charges are reviewed and adjusted at least annually by
the Texas Utility Commission to correct any overcollections or undercollections
during the preceding 12 months and to provide for the expected recovery of
amounts sufficient to timely provide all payment of debt service and other
required amounts and charges in connection with the transition
bonds.





Income
Taxes.The Company is
organized as a single member limited liability company and is not subject to
United States federal income tax as an entity separate from CenterPoint
Energy.  Pursuant to Texas Public Utility Regulatory Act Section
39.311, the Company’s activities involving the transfer and ownership of
transition property and the receipt of transition charges are exempt from state
and local income, sales, franchise, gross receipts, and other taxes or similar
charges.





New Accounting
Pronouncements.Effective June 30, 2009, the Company adopted
new accounting guidance on interim disclosures about fair value of financial
instruments which expands the fair value disclosures required for all financial
instruments to interim periods. This new guidance also requires entities to
disclose in interim periods the methods and significant assumptions used to
estimate the fair value of financial instruments. The Company’s adoption of this
new guidance did not have a material impact on its financial position, results
of operations or cash flows.





Effective
June 30, 2009, the Company adopted new accounting guidance on subsequent events
that establishes general standards of accounting for and disclosure of events
that occur after the balance sheet date but before financial statements are
issued or are available to be issued. The Company’s adoption of this new
guidance did not have a material impact on its financial position, results of
operations or cash flows.





Effective
July 1, 2009, the Company adopted new accounting guidance on the Financial
Accounting Standards Board (FASB) Accounting Standards Codification
(Codification) and the hierarchy of generally accepted accounting
principles.  This new accounting guidance establishes the Codification
as the source of authoritative U.S. generally accepted accounting principles
recognized by the FASB to be applied by nongovernmental entities. 
Rules and interpretive releases of the Securities and Exchange Commission
(SEC) under authority of federal securities laws are also sources of
authoritative U.S. generally accepted accounting principles for SEC
registrants. The Company’s adoption of this new guidance did not have any
impact on its financial position, results of operations or cash
flows.




24
 Table of Contents


(3)
            Fair
      Value Measurement





Effective
January 1, 2008, the Company adopted new accounting guidance on fair value
measurements which requires additional disclosures about the Company's financial
assets and liabilities that are measured at fair value. Effective
January 1, 2009, the Company adopted this new guidance for nonfinancial
assets and liabilities, which adoption had no impact on the Company's financial
position, results of operations or cash flows.  Beginning in January
2008, assets and liabilities recorded at fair value in the Balance Sheets are
categorized based upon the level of judgment associated with the inputs used to
measure their value. Hierarchical levels, as defined in this guidance and
directly related to the amount of subjectivity associated with the inputs to
fair valuations of these assets and liabilities, are as follows:





Level 1:
Inputs are unadjusted quoted prices in active markets for identical assets or
liabilities at the measurement date. The types of assets carried at Level 1
fair value are investments listed in active markets.  At
December 31, 2009, the Company held Level 1 investments of
$6.3 million, which are primarily money market funds.





Level
2:  Inputs, other than quoted prices included in Level 1, are observable
for the asset or liability, either directly or indirectly. Level 2 inputs
include quoted prices for similar instruments in active markets, and inputs
other than quoted prices that are observable for the asset or
liability. The Company had no Level 2 assets and liabilities at
December 31, 2009.





Level 3:
Inputs are unobservable for the asset or liability, and include situations where
there is little, if any, market activity for the asset or liability. These
inputs reflect management’s best estimate of the assumptions market participants
would use in determining fair value. The Company had no Level 3 assets and
liabilities at December 31, 2009.





(4)
            Long-Term
      Debt





Principal
and interest payments on the transition bonds are due semi-annually on March 15
and September 15 of each year and are paid from funds deposited with the trustee
by CenterPoint Houston as servicer of the transition property.





The
transition bonds are secured primarily by the transition property, which
includes the irrevocable right to recover, through non-bypassable transition
charges payable by certain retail electric customers, the qualified costs of
CenterPoint Houston authorized by the financing order.  The holders of
the transition bonds have no recourse to any assets or revenues of CenterPoint
Houston, and the creditors of CenterPoint Houston have no recourse to any assets
or revenues (including, without limitation, the transition charges) of the
Company.  CenterPoint Houston has no payment obligations with respect
to the transition bonds except to remit collections of transition charges as set
forth in a servicing agreement between CenterPoint Houston and the Company and
in an intercreditor agreement among CenterPoint Houston, the Company and other
parties.





The
source of repayment for the transition bonds is the transition
charges.  The servicer collects this non-bypassable charge from REPs
in CenterPoint Houston's service territory.  The servicer deposits
transition charge collections into the Company’s General Subaccount maintained
by the trustee.





Scheduled
final payment dates, final maturity dates and interest rates for the transition
bonds at December 31, 2009, are as follows:





Class
            
            Scheduled
      Final
              Payment
      Date
            
            Final
      Maturity Date
            
            Interest
              Rate
            
            
            Amount
              (in millions)A-4
            
            September
      15, 2013
            
            September
      15, 2015
            
            
            5.63
            %
            
            $
            376.3Less:
      Current Maturities (scheduled payments)
            
            
            
            (80.5
            )Less:
      Unamortized Discount
            
            
            
            (0.1
            )Total
      Long-Term Debt, net
            
            
            $
            295.7




25
 Table of Contents





The
following table shows scheduled and actual principal payments on the transition
bonds from the issuance date through December 31, 2009 (in
thousands):





Class
      A-1
            
            
            Class
      A-2
            
            
            Class
      A-3
            
            
            Class
      A-4Scheduled
            
            
            Actual
            
            
            Scheduled
            
            
            Actual
            
            
            Scheduled
            
            
            Actual
            
            
            Scheduled
            
            
            ActualMarch
      15, 2002
            
            $
            —
            
            
            $
            —
            
            
            $
            —
            
            
            $
            —
            
            
            $
            —
            
            
            $
            —
            
            
            $
            —
            
            
            $
            —September
      15, 2002
            
            
            13,106
            
            
            
            13,106
            
            
            
            —
            
            
            
            —
            
            
            
            —
            
            
            
            —
            
            
            
            —
            
            
            
            —March
      15, 2003
            
            
            6,366
            
            
            
            6,366
            
            
            
            —
            
            
            
            —
            
            
            
            —
            
            
            
            —
            
            
            
            —
            
            
            
            —September
      15, 2003
            
            
            12,357
            
            
            
            12,357
            
            
            
            —
            
            
            
            —
            
            
            
            —
            
            
            
            —
            
            
            
            —
            
            
            
            —March
      15, 2004
            
            
            14,004
            
            
            
            14,004
            
            
            
            —
            
            
            
            —
            
            
            
            —
            
            
            
            —
            
            
            
            —
            
            
            
            —September
      15, 2004
            
            
            27,185
            
            
            
            27,185
            
            
            
            —
            
            
            
            —
            
            
            
            —
            
            
            
            —
            
            
            
            —
            
            
            
            —March
      15, 2005
            
            
            15,914
            
            
            
            15,914
            
            
            
            —
            
            
            
            —
            
            
            
            —
            
            
            
            —
            
            
            
            —
            
            
            
            —September
      15, 2005
            
            
            26,068
            
            
            
            26,068
            
            
            
            4,824
            
            
            
            4,824
            
            
            
            —
            
            
            
            —
            
            
            
            —
            
            
            
            —March
      15, 2006
            
            
            —
            
            
            
            —
            
            
            
            18,460
            
            
            
            18,460
            
            
            
            —
            
            
            
            —
            
            
            
            —
            
            
            
            —September
      15, 2006
            
            
            —
            
            
            
            —
            
            
            
            35,835
            
            
            
            35,835
            
            
            
            —
            
            
            
            —
            
            
            
            —
            
            
            
            —March
      15, 2007
            
            
            —
            
            
            
            —
            
            
            
            20,370
            
            
            
            20,370
            
            
            
            —
            
            
            
            —
            
            
            
            —
            
            
            
            —September
      15, 2007
            
            
            —
            
            
            
            —
            
            
            
            38,512
            
            
            
            38,512
            
            
            
            1,030
            
            
            
            1,030
            
            
            
            —
            
            
            
            —March
      15, 2008
            
            
            —
            
            
            
            —
            
            
            
            —
            
            
            
            —
            
            
            
            22,280
            
            
            
            22,280
            
            
            
            —
            
            
            
            —September
      15, 2008
            
            
            —
            
            
            
            —
            
            
            
            —
            
            
            
            —
            
            
            
            43,249
            
            
            
            43,249
            
            
            
            —
            
            
            
            —March
      15, 2009
            
            
            —
            
            
            
            —
            
            
            
            —
            
            
            
            —
            
            
            
            24,826
            
            
            
            24,826
            
            
            
            —
            
            
            
            —September
      15, 2009
            
            
            —
            
            
            
            —
            
            
            
            —
            
            
            
            —
            
            
            
            38,615
            
            
            
            38,615
            
            
            
            9,576
            
            
            
            9,576





Scheduled
principal payments through 2013 for the transition bonds outstanding at
December 31, 2009 are as follows: 2010 – $80.5 million, 2011 –
$88.0 million, 2012 – $99.2 million and 2013 –
$108.6 million.


(5)
              Significant
      Agreements and Related Party
Transactions


Under a
sale agreement between the Company and CenterPoint Houston dated October 24,
2001, CenterPoint Houston sold the transition property to the Company. Pursuant
to a servicing agreement entered into between the Company and CenterPoint
Houston concurrently with the issuance of the transition bonds, CenterPoint
Houston is the servicer of the transition property. As the servicer, CenterPoint
Houston manages and administers the transition property of the Company and
collects the transition charges on behalf of the Company.  The Company
pays a fixed annual servicing fee to CenterPoint Houston for these services.
Pursuant to an administration agreement entered into between the Company and
CenterPoint Houston, CenterPoint Houston also provides administrative services
to the Company. The Company pays CenterPoint Houston a fixed fee for performing
these services, plus all reimbursable expenses. The Company recorded
administrative and servicing fees of $0.5 million in each of the years
2007, 2008 and 2009.





The
Company paid investment earnings from the Capital Subaccount to CenterPoint
Houston of $0.2 million, $0.1 million and $0.1 million for the years ended
December 31, 2007, 2008 and 2009, respectively.





The
Company also entered into an intercreditor agreement with CenterPoint Houston
and other parties related to the servicing of the transition
bonds.  In addition, CenterPoint Houston has agreed to indemnify the
trustee under the transition bond indenture on the Company’s behalf to the
extent such indemnification is not recoverable from the Company as a fixed
expense.





In order
to obtain the desired ratings on the transition bonds, CenterPoint Houston
deposited $3 million in a specified reserve account for the benefit of
Deutsche Bank Trust Company Americas (formerly Bankers Trust Company), as
trustee, as cash collateral for an indemnification obligation of CenterPoint
Houston arising in connection with the issuance of the transition
bonds.  All funds remaining in the specified reserve account less any
amounts then due and owing to Deutsche Bank Trust Company Americas will be
released to CenterPoint Houston upon final payment of the transition
bonds.





26
 Table of Contents





A
significant portion of the transition charges are collected by subsidiaries of
NRG Retail LLC that were formerly subsidiaries of RRI Energy, Inc.
(formerly known as Reliant Energy, Inc. and Reliant Resources, Inc.) and by
subsidiaries of TXU Energy Retail Company LLC (TXU Energy). During
2007, 2008 and 2009, revenues derived from transition charges to REPs that are
currently subsidiaries of NRG Retail LLC accounted for 45%, 43% and 39%,
respectively, of total transition charge revenues. During 2007, 2008 and 2009,
revenues derived from transition charges to REPs that are subsidiaries of TXU
Energy accounted for 9%, 11% and 12%, respectively, of total transition charge
revenues.Subsidiaries of NRG Retail LLC had approximately
$8.9 million of cash on deposit with the trustee at December 31, 2008 and
letters of credit aggregating $10 million on deposit with the trustee at
December 31, 2009.  Subsidiaries of TXU Energy had letters of
credit aggregating $2.2 million and $2.5 million at December 31, 2008 and 2009,
respectively, on deposit with the trustee. As with any REP that may default in
its payment obligations in respect of transition charges, the servicer is
expected to direct the trustee to seek recourse against such cash deposits or
alternate form of credit support as a remedy for any payment default that may
occur.





(6)
            Estimated
      Fair Value of Financial Instruments





The fair
values of cash and cash equivalents are estimated to be equivalent to carrying
amounts and have been excluded from the table below.  The fair value
of each debt instrument is determined by multiplying the principal amount of
each debt instrument by the market price.





December 31,
      2008
            
            
            December 31,
      2009Carrying
              Amount
            
            
            Fair
              Value
            
            
            Carrying
              Amount
            
            
            Fair
              Value(In
      millions)Financial
      liabilities:Long-term
      debt
            
            $
            449
            
            
            $
            457
            
            
            $
            376
            
            
            $
            405





Item 9.         
Changes in and Disagreements with Accountants on Accounting and Financial
Disclosure





None.





Item 9A(T). Controls and Procedures





In
accordance with Exchange Act Rules 13a-15 and 15d-15, we carried out an
evaluation, under the supervision and with the participation of management,
including our principal executive officer and principal financial officer, of
the effectiveness of our disclosure controls and procedures as of the end of the
period covered by this report. Based on that evaluation, our principal executive
officer and principal financial officer concluded that our disclosure controls
and procedures were effective as of December 31, 2009 to provide assurance
that information required to be disclosed in our reports filed or submitted
under the Exchange Act is recorded, processed, summarized and reported within
the time periods specified in the Securities and Exchange Commission’s rules and
forms and such information is accumulated and communicated to our management,
including our principal executive officer and principal financial officer, as
appropriate to allow timely decisions regarding disclosure.





There has
been no change in our internal controls over financial reporting that occurred
during the three months ended December 31, 2009 that has materially
affected, or is reasonably likely to materially affect, our internal controls
over financial reporting.





Management’s
Annual Report on Internal Control over Financial Reporting





See
report set forth above in Item 8, “Financial Statements and Supplementary
Data.”





Item 9B.      Other
Information





None.





27
 Table of Contents





PART III





Item
10.       Directors, Executive Officers and
Corporate Governance





Omitted
pursuant to Instruction I of Form 10-K.





Item
11.       Executive Compensation





Omitted
pursuant to Instruction I of Form 10-K.




Item
12.       Security
Ownership of Certain Beneficial Owners and Management and Related Stockholder
Matters


Omitted
pursuant to Instruction I of Form 10-K.





Item
13.       Certain Relationships and Related
Transactions, and Director Independence





Omitted
pursuant to Instruction I of Form 10-K.





Item
14.       Principal Accounting Fees and
Services





Year
      Ended December 31,2008
            
            
            2009Audit
      fees
            
            $
            36,500
            
            
            $
            36,155Audit-related
      fees(1)
            
            
            27,000
            
            
            
            72,000Total
      audit and audit-related fees
            
            
            63,500
            
            
            
            108,155Tax
      fees
            
            
            —
            
            
            
            —All
      other fees
            
            
            —
            
            
            
            —Total
      fees
            
            $
            63,500
            
            
            $
            108,155


______________


(1)
            Agreed
      upon procedures related to the
indenture.





PART IV





Item
15.       Exhibits and Financial Statement
Schedules





The
following documents are filed as part of this report:





1.
            Financial
      Statements.


Report of
Independent Registered Public Accounting Firm


Statements of Income and Changes in Member’s
Equity


Balance Sheets


Statements of Cash Flows


Notes to Financial Statements





2.
            Financial
      Statement Schedules.


None.


3.
              Exhibits.


See the Index to Exhibits which appears following the signature page to this
report.




28
 Table of Contents





SIGNATURES







Pursuant
to the requirements of Section 13 or 15(d) of the Securities Exchange Act of
1934, the registrant has duly caused this report to be signed on its behalf by
the undersigned, thereunto duly authorized, in the City of Houston, the State of
Texas, on the 30th day of March, 2010.





CENTERPOINT
      ENERGY TRANSITION BOND COMPANY, LLC(Registrant)By:
      /s/ Marc KilbrideMarc
      KilbrideManager





Pursuant
to the requirements of the Securities Exchange Act of 1934, this report has been
signed below by the following persons on behalf of the registrant and in the
capacities indicated on March 30, 2010.





Signature
            
            Title/s/
      Gary L. Whitlock
            
            President
      and Manager(Gary
      L. Whitlock)
            
            (Principal
      Executive Officer)/s/
      Marc Kilbride
            
            Vice
      President, Treasurer and Manager(Marc
      Kilbride)
            
            (Principal
      Financial Officer)/s/
      Walter L. Fitzgerald
            
            Senior
      Vice President, Chief Accounting Officer
              and
      Manager(Walter
      L. Fitzgerald)
            
            (Principal
      Accounting Officer)/s/
      Bernard J. Angelo
            
            Manager(Bernard
      J. Angelo)/s/
      Timothy O’Connor
            
            Manager(Timothy
      O’Connor)/s/
      Marc Kilbride
            
            Vice
      President and Treasurer of
              CenterPoint
      Energy Houston Electric, LLC(Marc
      Kilbride)
            
            (Senior
      Officer in Charge of Servicing
Function)







29
 Table of Contents


CENTERPOINT
ENERGY TRANSITION BOND COMPANY, LLC





EXHIBITS
TO THE ANNUAL REPORT ON FORM 10-K


For
Fiscal Year Ended December 31, 2009





INDEX
TO EXHIBITS





Exhibits
not incorporated by reference to a prior filing are designated by a cross (+);
all exhibits not so designated are incorporated herein by reference to a prior
filing as indicated.





Exhibit
              Number
            
            Description
            
            Report
      or
              Registration
      Statement
            
            SEC
      File or
              Registration
      Number
            
            Exhibit
              References3.1
            
            Amended
      and Restated Certificate of Formation of Reliant Energy Transition Bond
      Company LLC
            
            Current
      Report on Form 8-K filed with the SEC on October 23, 2001
            
            333-91093
            
            4.73.2
            
            Amended
      and Restated Limited Liability Company Agreement
            
            Current
      Report on Form 8-K filed with the SEC on October 23, 2001
            
            333-91093
            
            4.34.1
            
            Indenture
            
            Current
      Report on Form 8-K filed with the SEC on October 23, 2001
            
            333-91093
            
            4.44.2
            
            Supplemental
      Indenture
            
            Current
      Report on Form 8-K filed with the SEC on October 23, 2001
            
            333-91093
            
            4.54.3
            
            Transition
      Bonds (included in Exhibit 4.1)
            
            Current
      Report on Form 8-K filed with the SEC on October 23, 2001
            
            333-91093
            
            4.610.1
            
            Sale
      Agreement
            
            Current
      Report on Form 8-K filed with the SEC on October 23, 2001
            
            333-91093
            
            10.110.2
            
            Servicing
      Agreement
            
            Current
      Report on Form 8-K filed with the SEC on October 23, 2001
            
            333-91093
            
            10.210.3
            
            Administration
      Agreement
            
            Current
      Report on Form 8-K filed with the SEC on October 23, 2001
            
            333-91093
            
            10.310.4
            
            Intercreditor
      Agreement
            
            Current
      Report on Form 8-K filed with the SEC on October 23, 2001
            
            333-91093
            
            10.410.5
            
            Semiannual
      Servicer’s Certificate, dated as of March 12, 2009, as to the transition
      bond balances, the balances of the collection account and its
      sub-accounts, and setting forth transfers and payments to be made on the
      March 16, 2009 payment date
            
            Form
      10-Q for the quarterly period ended March 31, 2009
            
            333-91093
            
            10.1




30
 Table of Contents




Exhibit
                Number
              
              Description
              
              Report
      or
                Registration
      Statement
              
              SEC
      File or
                Registration
      Number
              
              Exhibit
                References


10.6
              
              Semiannual
      Servicer’s Certificate, dated as of September 11, 2009, as to the
      transition bond balances, the balances of the collection account and its
      sub-accounts, and setting forth transfers and payments to be made on the
      September 15, 2009 payment  date
              
              Form
      10-Q for the quarterly period ended September 30, 2009
              
              333-91093
              
              10.1+10.7
              
              Semiannual Servicer’s Certificate, dated as of March
      11, 2010, as to the transition bond balances, the balances of the
      collection account and its sub-accounts, and setting forth transfers and
      payments to be made on the March 15, 2010
      payment  date+31.1
              
              Section 302 Certification of Gary L.
      Whitlock+31.2
              
              Section 302 Certification of Marc
      Kilbride+31.3
              
              Certification Pursuant to Rule 13a-14(d)/15d-14(d) of
      Marc Kilbride+31.4
              
              Servicer Annual Statement of
    Compliance+32.1
              
              Section 906 Certification of Gary L.
      Whitlock+32.2
              
              Section 906 Certification of Marc
      Kilbride99.1
              
              Financing
      Order
              
              Amendment
      No. 3 to the Company's Registration Statement on Form S-3 filed with the
      SEC on September 7, 2001
              
              333-91093
              
              99.199.2
              
              Internal
      Revenue Service Private Letter Ruling relating to the transition
      bonds
              
              Amendment
      No. 2 to the Company's Registration Statement on Form S-3 filed with the
      SEC on August 30, 2001
              
              333-91093
              
              99.299.3
              
              State
      of Texas Comptroller of Public Accounts rulings relating to the transition
      bonds
              
              Amendment
      No. 2 to the Company's Registration Statement on Form S-3 filed with the
      SEC on August 30, 2001
              
              333-91093
              
              99.3+99.4
              
              Annual Independent Accountant’s Attestation with
      Management’s Assertion Attached (Servicer)




31