<PAGE>

================================================================================

                                  UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                    FORM 10-K

(MARK ONE)

[X]  ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
     ACT OF 1934

                  FOR THE FISCAL YEAR ENDED DECEMBER 31, 2005

                                       OR

[ ]  TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
     EXCHANGE ACT OF 1934

         FOR 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)

<TABLE>
<S>                                              <C>
             DELAWARE                                       76-0624152
  (State or other jurisdiction of                (I.R.S. Employer Identification
  incorporation or organization)                             Number)
</TABLE>

<TABLE>
<S>                                              <C>
    1111 LOUISIANA, SUITE 4667                            (713) 207-8272
       HOUSTON, TEXAS 77002                      (Registrant's telephone number,
(Address and zip code of principal                     Including area code)
        executive offices)
</TABLE>

        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 [X]

     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 [X]

     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 [X] 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. [X]

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

Large accelerated filer [ ]   Accelerated filer [ ]   Non-accelerated filer [X]

     Indicate by check mark whether the registrant is a shell company (as
defined by Rule 12b-2 of the Act). Yes [ ] No [X]

     The aggregate market value of the member's equity held by non-affiliates of
the registrant as of June 30, 2005: None

================================================================================

<PAGE>

                 CENTERPOINT ENERGY TRANSITION BOND COMPANY, LLC

                                TABLE OF CONTENTS

<TABLE>
<S>                                                                           <C>
                                     PART I

Item 1.  Business..........................................................    1
Item 1A. Risk Factors......................................................    2
Item 1B. Unresolved Staff Comments.........................................   13
Item 2.  Properties........................................................   13
Item 3.  Legal Proceedings.................................................   14
Item 4.  Submission of Matters to a Vote of Security Holders...............   14

                                     PART II

Item 5.  Market for Registrant's Common Equity, Related Stockholder
         Matters and Issuer Purchases of Equity Securities.................   14
Item 6.  Selected Financial Data...........................................   14
Item 7.  Management's Narrative Analysis of Results of Operations..........   15
Item 7A. Quantitative and Qualitative Disclosures About Market Risk........   16
Item 8.  Financial Statements and Supplementary Data.......................   17
Item 9.  Changes in and Disagreements with Accountants on Accounting
         and Financial Disclosure..........................................   26
Item 9A. Controls and Procedures...........................................   26
Item 9B. Other Information.................................................   26

                                    PART III

Item 10. Directors and Executive Officers of the Registrant................   26
Item 11. Executive Compensation............................................   26
Item 12. Security Ownership of Certain Beneficial Owners and Management
         and Related Stockholder Matters...................................   26
Item 13. Certain Relationships and Related Transactions....................   26
Item 14. Principal Accountant Fees and Services............................   26

                                     PART IV

Item 15. Exhibits and Financial Statement Schedules........................   27
</TABLE>

                                        i
<PAGE>

           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.

     The following list identifies some of the factors that could cause actual
results to differ from those expressed or implied by our forward-looking
statements:

     -    state and federal legislative and regulatory actions or developments,
          including deregulation, re-regulation, changes in or application of
          laws or regulations applicable to other aspects of our business;

     -    changes in market demand and demographic patterns;

     -    weather variations and other natural phenomena affecting retail
          electric customer energy usage;

     -    the operating performance of CenterPoint Energy Houston Electric,
          LLC's (CenterPoint Houston) facilities and third-party suppliers of
          electric energy in CenterPoint Houston's service territory;

     -    the accuracy of the servicer's forecast of electrical consumption or
          the payment of transition charges;

     -    non-payment of transition charges by retail electric providers;

     -    the reliability of the systems, procedures and other infrastructure
          necessary to operate the retail electric business in CenterPoint
          Houston's service territory, including the systems owned and operated
          by the independent system operator in the Electric Reliability Council
          of Texas, Inc.; and

     -    other factors we discuss in this Form 10-K and our other Securities
          and Exchange Commission filings.

     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

<PAGE>

                                     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 the transition property, as described below, established by
          a financing order from the Public Utility Commission of Texas (Texas
          Utility Commission);

     -    issuing, supporting and servicing the transition bonds secured by
          transition property; and

     -    engaging in only those other activities incidental thereto and
          necessary, suitable or convenient thereto.

     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 (in this capacity, the servicer). Pursuant to the servicing
agreement, the servicer is responsible for servicing, managing, and receiving
transition charges from retail electric customers or retail electric providers.
In addition, we have entered into an administration agreement with CenterPoint
Houston pursuant to which CenterPoint Houston performs administrative and
operational duties for 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 3 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 (now CenterPoint Energy),
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.

     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


                                        1

<PAGE>

service territory began to purchase electricity and related services from retail
electric providers, rather than from electric utilities. Certain of these retail
electric providers were affiliates of CenterPoint Houston through September 30,
2002. Each retail electric provider 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. Each retail electric provider,
however, is required to provide annual written notice to its customers that
transition charges have been included in their bills. The retail electric
providers 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 retail electric
provider does not remit such payments to the servicer, but has certain rights
against the retail electric provider. 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 retail electric
provider (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 retail electric provider 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 1st in compliance with the financing order. CenterPoint Houston's most
recent true-up filing to adjust transition charges was approved by the Texas
Utility Commission and became effective November 1, 2005. The adjusted
transition charges are designed to collect $77.6 million during the twelve-month
period ending October 31, 2006. This amount reflects a reduction of $10.6
million due to an over-recovery during the twelve-month period ended October 31,
2005. This over-recovery results from growth in billings in the residential and
small commercial sectors which exceeded the previous forecasts for the
twelve-month period ended October 31, 2005, as well as, additional revenue due
to weather that was warmer than normal. The $10.6 million over-recovery reduces
the revenues that are otherwise required by 12% for the twelve-month collection
period ending October 31, 2006.

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 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

   -    the credit enhancement.

                                       2

<PAGE>

     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

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 of Texas (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.


     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
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.

                                       3
<PAGE>

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 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 rate of transition charge collections depends 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, 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 or an act of
terrorism or other catastrophic event; changes in the market structure of the
electric industry; customers consuming less electricity because of increased
energy prices, increased conservation efforts; 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 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 retail electric
providers to grant additional payment relief to more customers, or any other
change in law that makes it more difficult for CenterPoint Houston or retail
electric providers to terminate service to nonpaying customers or that requires
CenterPoint Houston or retail electric providers to apply more lenient credit
standards in accepting retail electric customers.

                                       4
<PAGE>

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 retail electric
providers, 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 retail electric provider. 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, as servicer, has experienced some difficulties 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 transition charges might be delayed or reduced. In that event,
our payments on the transition bonds might be delayed or reduced.

IF WE 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 collection disruption. 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 RETAIL ELECTRIC
PROVIDERS.

     As required by the Restructuring Act, retail electric customers pay the
transition charges to retail electric providers who supply them with electric
power. The retail electric providers 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 retail electric providers 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,
2005, CenterPoint Houston did business with approximately 66 retail electric
providers. Reliant Energy, through its subsidiaries, is CenterPoint Houston's
largest customer, accounting for approximately 56% of CenterPoint Houston's
outstanding receivables from retail electric providers as of December 31, 2005.

     Failure by the retail electric providers 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. The servicer does not pay any
shortfalls resulting from the failure of any retail electric provider to forward
transition charge collections.

     Adjustments to the transition charges and any credit support provided by a
retail electric provider, while available to compensate for a failure by a
retail electric provider 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 retail electric providers 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 retail electric providers and
therefore the servicer may face greater difficulty in collecting transition
charges from the provider of last resort.

                                       5
<PAGE>

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

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, or ERCOT, 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 retail electric provider, the
transmission and distribution utility or another person authorized by the
customer. As of December 31, 2005, 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 retail electric providers
regarding payments and payment shortfalls resulting in missing or delayed
payments of principal and interest and lengthened weighted average life of the
transition bonds.

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 retail
electric providers 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 retail electric
provider'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.

     If the servicer is billing customers for transition charges, the servicer
may terminate transmission and distribution service to the customer for
non-payment of transition charges pursuant to the applicable rules of the Texas
Utility Commission. Nonetheless, 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, retail
electric providers generally may not terminate service to a customer (1) on a
holiday or weekend day or the day immediately preceding a holiday or weekend,
(2) during certain extreme weather conditions, (3) if such disconnection would
cause a person to become seriously ill or more seriously ill, (4) if such
customer is an energy assistance client under certain circumstances or (5) 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, retail electric providers will not be able to collect
transition charges from these retail electric customers. Although retail
electric providers have to pay the servicer the transition charges on behalf of
those customers (subject to any charge-off allowance and reconciliation rights
if non-paying customers make up a sufficiently large part of the retail electric
providers customers), required service to non-paying customers could affect the
ability of retail electric providers to make such payment.

                                       6
<PAGE>

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 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
the transition bonds.

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 retail
electric providers or its general funds. The transition charges are segregated
only when the servicer pays them to the trustee.

     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.

                                       7
<PAGE>

     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.

                                       8
<PAGE>

     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;

         -  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.

                                       9
<PAGE>

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 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 preexisting 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 retail electric provider that is
affiliated with us or the servicer. If the servicer or we are considered to be
an "insider" of the retail electric provider, 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.

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.

                                       10
<PAGE>


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 OF RETAIL ELECTRIC
PROVIDERS

RETAIL ELECTRIC PROVIDERS 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 RETAIL ELECTRIC PROVIDER ENTERS BANKRUPTCY
PROCEEDINGS.

     A retail electric provider 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-offs, within 35 days of the billing by the servicer. A
retail electric provider 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 retail electric provider, 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 retail electric provider as of the date of
bankruptcy. If so, the collections of the transition charges held by a retail
electric provider 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 retail electric provider 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 RETAIL ELECTRIC PROVIDER ENTERS BANKRUPTCY PROCEEDINGS, ANY CASH DEPOSIT OF
THE RETAIL ELECTRIC PROVIDER HELD BY THE TRUSTEE MIGHT NOT BE AVAILABLE TO COVER
AMOUNTS OWED BY THE RETAIL ELECTRIC PROVIDER.

     If a retail electric provider does not have the credit rating required by
the financing order, it may nevertheless qualify to act as a retail electric
provider 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 retail electric provider becomes bankrupt, the trustee would be stayed from
applying that cash deposit to cover amounts owed by the retail electric
provider, and the trustee might be required to return that cash deposit to the
retail electric provider'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 retail electric
provider in the retail electric provider's bankruptcy proceedings. Two retail
electric providers 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 retail electric providers, but there is no assurance that CenterPoint
Houston will be able to recover such amounts from any bankrupt retail electric
providers in the future.

                                       11
<PAGE>

IF A RETAIL ELECTRIC PROVIDER ENTERS BANKRUPTCY PROCEEDINGS, TRANSITION CHARGE
PAYMENTS MADE BY THAT RETAIL ELECTRIC PROVIDER TO THE SERVICER MIGHT CONSTITUTE
PREFERENCES, AND THE SERVICER MAY BE REQUIRED TO RETURN SUCH FUNDS TO THE
BANKRUPTCY ESTATE OF THE RETAIL ELECTRIC PROVIDER.

     In the event of a bankruptcy of a retail electric provider, a party in
interest might take the position that the remittance of funds by the retail
electric provider 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 preexisting 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 retail electric provider by us or the servicer. To
the extent that transition charges have been commingled with the general funds
of the retail electric provider, 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 retail electric provider that is
affiliated with us or the servicer. If the servicer or we are considered to be
an "insider" of the retail electric provider, 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 retail
electric provider.

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

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.

                                       12
<PAGE>

CENTERPOINT HOUSTON'S RATINGS MIGHT AFFECT THE MARKET VALUE OF 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.

TECHNOLOGICAL CHANGE MIGHT MAKE ALTERNATIVE ENERGY SOURCES MORE ATTRACTIVE IN
THE FUTURE.

     Technological developments might result in the introduction of economically
attractive alternatives to purchasing electricity through CenterPoint Houston's
distribution facilities for increasing numbers of retail customers.
Manufacturers of self-generation facilities may develop smaller-scale, more
fuel-efficient generating units that can be cost-effective options for a greater
number of retail customers. 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.
Technological developments might allow greater numbers of retail customers to
avoid transition charges under such provisions, which may reduce the total
number of retail customers from which transition charges will be collected.

BONDHOLDERS MIGHT RECEIVE PRINCIPAL PAYMENTS ON THE TRANSITION BONDS LATER THAN
EXPECTED.

     The amount and the rate 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 expected from
any retail electric provider, it might have to request adjustments of the
transition charges. If those adjustments 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.

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."

                                       13
<PAGE>

ITEM 3. LEGAL PROCEEDINGS

     None.

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

     Omitted pursuant to Instruction I of Form 10-K.

                                     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
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 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, 2005, 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, 2005, 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.


                                       14

<PAGE>

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 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 income 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.

     For the year ended December 31, 2005, revenue from transition charges was
$99.8 million and investment income was $0.9 million. Interest expense of $34.8
million related to interest on the transition bonds and amortization expense of
$1.2 million related to amortization of debt issuance expenses and the discount
on the transition bonds. We recorded administrative expenses of $2.8 million in
2005 primarily due to an annual true-up of bad debt expense associated with
retail electric providers recorded in the second quarter of 2005 in accordance
with the financing order issued by the Public Utility Commission of Texas (Texas
Utility Commission) in May 2000 (financing order) authorizing our issuance of
the transition bonds.

     For the year ended December 31, 2004, revenue from transition charges was
$74.9 million and investment income was $0.3 million. Interest expense of $36.5
million related to interest on the transition bonds and amortization expense of
$1.5 million related to amortization of debt issuance expenses and the discount
on the transition bonds. We recorded administrative expenses of $2.2 million in
2004 primarily due to an annual true-up of bad debt expense associated with
retail electric providers recorded in the second quarter of 2004 in accordance
with the financing order.

     For the year ended December 31, 2003, revenue from transition charges was
$63.5 million and investment income was $0.3 million. Interest expense of $37.6
million related to interest on the transition bonds and amortization expense of
$1.6 million related to amortization of debt issuance expenses and the discount
on the transition bonds. We recorded administrative expenses of $0.6 million in
2003.

     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)
expected principal payments and interest expense on the transition bonds, (2)
amortization of the transition property, debt issuance expenses and the discount
on the transition bonds and (3) the 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
Texas Utility Commission to correct prospectively 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.

     CenterPoint Houston is required to true-up transition charges annually on
November 1st in compliance with the financing order. CenterPoint
Houston's most recent true-up filing to adjust transition charges was approved
by the Texas Utility Commission and became effective November 1, 2005. The
adjusted transition charges are designed to collect $77.6 million during the
twelve-month period ending October 31, 2006. This amount reflects a reduction of
$10.6 million due to an over-recovery during the twelve-month period ended
October 31, 2005. This over-recovery results from growth in billings in the
residential and small commercial sectors which exceeded the previous forecasts
for the twelve-month period ended October 31, 2005, as well as additional
revenue due to weather that was warmer than normal. The $10.6 million

                                       15

<PAGE>

over-recovery reduces the revenues that are otherwise required by 12% for the
twelve-month collection period ending October 31, 2006.

     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.

     Immediately following the March 15, 2006 debt service payment, the
aggregate balance in the Overcollateralization Subaccount and the Capital
Subaccount was at the targeted aggregate balance for these accounts of $5.1
million, and an additional $15.1 million was held in the Reserve Subaccount.

     CenterPoint Houston has investment grade credit ratings from Moody's
Investors Service, Inc., Standard & Poor's Rating Services, a division of the
McGraw Hill Companies, and Fitch, Inc. (Fitch). In December 2005, Fitch revised
CenterPoint Houston's first mortgage bond ratings from "BBB+" to "A-" and
CenterPoint Houston's general mortgage bond ratings from "BBB" to "BBB+".

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

     At December 31, 2004 and 2005, we had outstanding fixed-rate debt
aggregating $675.9 million and $629.1 million in principal amount and having a
fair value of $709.1 million and $642.6 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 $12 million if interest rates were to decline by 10% from their
levels at December 31, 2005.

                                       16
<PAGE>
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) as of December 31, 2004 and 2005, 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, 2005. 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, the financial statements referred to above present fairly, in
all material respects, the financial position of CenterPoint Energy Transition
Bond Company, LLC at December 31, 2004 and 2005, and the results of their
operations and their cash flows for each of the three years in the period ended
December 31, 2005, in conformity with accounting principles generally accepted
in the United States of America.

DELOITTE & TOUCHE LLP

Houston, Texas
March 29, 2006


                                       17
<PAGE>


                CENTERPOINT ENERGY TRANSITION BOND COMPANY, LLC

                              STATEMENTS OF INCOME
                         AND CHANGES IN MEMBER'S EQUITY

<TABLE>
<CAPTION>
                                                                       YEAR ENDED DECEMBER 31,
                                                                    ----------------------------
                                                                      2003      2004      2005
                                                                    -------   -------   --------
                                                                           (IN THOUSANDS)
<S>                                                                 <C>       <C>       <C>
REVENUES:
   Transition charge revenue ....................................   $63,542   $74,929   $ 99,754
   Investment income ............................................       262       270        935
                                                                    -------   -------   --------
      Total operating revenues ..................................    63,804    75,199    100,689
                                                                    -------   -------   --------
EXPENSES:
   Interest expense .............................................    37,585    36,510     34,815
   Amortization of transition property ..........................    24,016    35,034     61,827
   Amortization of transition bond discount and issuance costs ..     1,612     1,457      1,229
   Administrative and general expenses ..........................       591     2,198      2,818
                                                                    -------   -------   --------
      Total operating expenses ..................................    63,804    75,199    100,689
                                                                    -------   -------   --------
NET INCOME ......................................................        --        --         --
MEMBER'S EQUITY AT BEGINNING OF THE YEAR ........................     3,745     3,745      3,745
CONTRIBUTED CAPITAL .............................................        --        --         --
                                                                    -------   -------   --------
MEMBER'S EQUITY AT THE END OF THE YEAR ..........................   $ 3,745   $ 3,745   $  3,745
                                                                    =======   =======   ========
</TABLE>

                 See Notes to the Company's Financial Statements

                                       18

<PAGE>

                 CENTERPOINT ENERGY TRANSITION BOND COMPANY, LLC

                                 BALANCE SHEETS

<TABLE>
<CAPTION>
                                                                             DECEMBER 31,
                                                                         -------------------
                                                                           2004       2005
                                                                         --------   --------
                                                                            (IN THOUSANDS)
<S>                                                                      <C>        <C>
                                ASSETS
CURRENT ASSETS:
   Cash and cash equivalents .........................................   $ 23,244   $ 38,377
   Restricted funds ..................................................      3,474      7,336
   Transition charge receivable ......................................     12,983     11,070
                                                                         --------   --------
         Current Assets ..............................................     39,701     56,783

   Intangible transition property ....................................    647,170    585,343
   Unamortized debt issuance costs ...................................      5,433      4,241
                                                                         --------   --------
         Total Assets ................................................   $692,304   $646,367
                                                                         ========   ========
                    LIABILITIES AND MEMBER'S EQUITY

CURRENT LIABILITIES:
   Current portion of long-term debt .................................   $ 46,806   $ 54,295
   Accrued interest ..................................................     10,501      9,959
   Customer deposits .................................................      2,190      3,545
   Fees payable to servicer ..........................................        159        178
                                                                         --------   --------
         Current Liabilities .........................................     59,656     67,977

   Long-term debt:
      Transition bonds, net of unamortized discount of $0.2 million ..    628,903    574,645
                                                                         --------   --------
         Total Liabilities ...........................................    688,559    642,622
                                                                         --------   --------
MEMBER'S EQUITY:
   Contributed capital ...............................................      3,745      3,745
   Retained earnings .................................................         --         --
                                                                         --------   --------
         Total Member's Equity .......................................      3,745      3,745
                                                                         --------   --------
         Total Liabilities and Member's Equity .......................   $692,304   $646,367
                                                                         ========   ========
</TABLE>

                 See Notes to the Company's Financial Statements


                                       19
<PAGE>

                 CENTERPOINT ENERGY TRANSITION BOND COMPANY, LLC

                            STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>
                                                                            YEAR ENDED DECEMBER 31,
                                                                        ------------------------------
                                                                          2003       2004       2005
                                                                        --------   --------   --------
                                                                                (IN THOUSANDS)
<S>                                                                     <C>        <C>        <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
   Net income .......................................................   $     --   $     --   $     --
   Adjustment for non-cash items:
      Amortization of transition bond discount and issuance costs ...      1,612      1,457      1,229
      Amortization of transition property ...........................     24,016     35,034     61,827
   Changes in other assets and liabilities:
      Transition charge receivable ..................................        473     (3,855)     1,913
      Other current assets ..........................................         16         --         --
      Accrued interest ..............................................       (256)      (466)      (542)
      Customer deposits .............................................        699        313      1,355
      Fees payable to servicer ......................................          1         (1)        19
                                                                        --------   --------   --------
         Net cash provided by operating activities ..................     26,561     32,482     65,801
                                                                        --------   --------   --------
CASH FLOWS FROM INVESTING ACTIVITIES:
      Restricted funds ..............................................     (3,306)     2,156     (3,862)
                                                                        --------   --------   --------
         Net cash provided by (used in) investing activities ........     (3,306)     2,156     (3,862)
                                                                        --------   --------   --------
CASH FLOWS FROM FINANCING ACTIVITIES:
   Payments of long-term debt .......................................    (18,723)   (41,189)   (46,806)
                                                                        --------   --------   --------
         Net cash used in financing activities ......................    (18,723)   (41,189)   (46,806)
                                                                        --------   --------   --------
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS ................      4,532     (6,551)    15,133
CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR ........................     25,263     29,795     23,244
                                                                        --------   --------   --------
CASH AND CASH EQUIVALENTS, END OF YEAR ..............................   $ 29,795   $ 23,244   $ 38,377
                                                                        ========   ========   ========
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
   CASH PAYMENTS:
      Interest ......................................................   $ 37,841   $ 36,976   $ 35,357
</TABLE>

                 See Notes to the Company's Financial Statements


                                       20

<PAGE>

                 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). 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 requires the 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 Public Utility Commission of Texas
(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
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 3.

     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 accounting principles generally accepted in the United States of America
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.


                                       21

<PAGE>

     REGULATION AND REGULATORY ASSETS AND LIABILITIES. The Company's business
meets the criteria of Statement of Financial Accounting Standards (SFAS) No. 71,
"Accounting for the Effects of Certain Types of Regulation" (SFAS No. 71). 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 make such payments. Continued applicability of SFAS No. 71 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 SFAS No. 71 to its business.

     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
transition bonds:

     -    The General Subaccount is 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 $31.7 million at December 31,
          2005.

     -    The Reserve Subaccount is 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 $5.4 million at December 31, 2005.

     -    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 $1.3 million at
          December 31, 2005, with a scheduled level of $1.2 million.

     -    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, 2005, the Capital Subaccount had a balance of $3.8 million and is
          classified as Restricted Funds in the Balance Sheets.

     -    As of December 31, 2005, cash deposits provided by retail electric
          providers totaled $3.5 million and are classified as Restricted Funds
          in the Balance Sheets.

     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.

     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 retail
electric providers.

     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, 2005 (in


                                       22
<PAGE>

thousands):

<TABLE>
<CAPTION>
             2001     2002     2003     2004      2005
            ------   ------   ------   ------   -------
<S>         <C>      <C>      <C>      <C>      <C>
January     $   --   $4,584   $4,902   $4,652   $ 6,159
February        --    3,997    4,693    4,554     7,804
March           --    4,297    4,698    5,798     8,136
April           --    5,144    4,986    4,808     6,582
May             --    3,678    4,236    3,754     7,028
June            --    5,805    5,378    6,258     7,952
July            --    5,892    6,195    6,039     8,481
August          --    7,091    5,948    6,668    10,429
September       --    7,195    6,359    7,217    10,164
October          2    8,799    6,403    6,137     9,619
November       414    6,119    4,667    7,055     9,788
December     1,937    5,390    5,516    6,528     7,273
</TABLE>

     AMORTIZATION. The transition property was recorded at acquired cost and is
being amortized over twelve years, the expected life of the transition bonds,
based on estimated revenue from transition charges, interest accruals and other
expenses. The financing order, which authorized 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 SFAS No. 71,
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 will not be subject to United States federal income tax as an entity
separate from CenterPoint Energy. In addition, the Company has received a ruling
from the Comptroller of Public Accounts of the State of Texas to the effect that
(i) the Company's receipt of the transition property, (ii) the Company's receipt
of the transition charges and (iii) the Company's short-term earnings from
investment of the transition charges will be excluded from taxable capital and
taxable earned surplus for purposes of the Texas franchise tax. Accordingly,
there is no provision for income or Texas franchise taxes.

(3)  LONG-TERM DEBT

     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 retail electric providers
in CenterPoint Houston's service territory. The servicer deposits transition
charge collections into the General Subaccount maintained by the trustee.

     Debt service payments on the transition bonds are due semi-annually and are
paid from funds deposited daily with the trustee for the transition bonds by
CenterPoint Houston as servicer of the transition property. Scheduled


                                       23

<PAGE>

final payment dates, final maturity dates and interest rates for the transition
bonds at December 31, 2005, are as follows:

<TABLE>
<CAPTION>
             Scheduled                             Interest
Class   Final Payment Date   Final Maturity Date     Rate         Amount
-----   ------------------   -------------------   --------   -------------
                                                              (in millions)
<S>     <C>                  <C>                   <C>        <C>
A-2     September 15, 2007    September 15, 2009     4.76%       $113.2
A-3     September 15, 2009    September 15, 2011     5.16%        130.0
A-4     September 15, 2013    September 15, 2015     5.63%        385.9
                                                                 ------
                                                                  629.1
Less: Current Maturities (scheduled payments)..............       (54.3)
Less: Unamortized Discount.................................        (0.2)
                                                                 ------
Total Long-Term Debt, net..................................      $574.6
                                                                 ======
</TABLE>

     The following table shows scheduled and actual principal payments on the
transition bonds from the issuance date through December 31, 2005 (in
thousands):

<TABLE>
<CAPTION>
                          Class A-1             Class A-2            Class A-3            Class A-4
                     -------------------   ------------------   ------------------   ------------------
                     Scheduled    Actual   Scheduled   Actual   Scheduled   Actual   Scheduled   Actual
                     ---------   -------   ---------   ------   ---------   ------   ---------   ------
<S>                  <C>         <C>       <C>         <C>      <C>         <C>      <C>         <C>
March 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       --         --        --         --
</TABLE>

     Scheduled principal payments through 2010 for the transition bonds
outstanding at December 31, 2005 are as follows: 2006 - $54.3 million, 2007 -
$59.9 million, 2008 - $65.5 million, 2009 - $73.0 million and 2010 - $80.5
million.

     The estimated fair value of the transition bonds at December 31, 2005 was
$642.6 million.

(4)  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 2003, 2004 and 2005.

     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


                                       24
<PAGE>

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.

     Subsidiaries of Reliant Energy, Inc. (formerly named Reliant Resources,
Inc.) (RRI), a former affiliate of the Company, collect the majority of the
transition charges from retail electric customers.  At December 31, 2005,
subsidiaries of RRI had letters of credit aggregating approximately $11 million
on deposit with the trustee. As with any retail electric provider, the servicer
is expected to direct the trustee to seek recourse against such letters of
credit or alternate form of credit support as a remedy for any payment default
that may occur.


                                       25

<PAGE>
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
        FINANCIAL DISCLOSURE

     None.

ITEM 9A. 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, 2005 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.

     There has been no change in our internal controls over financial reporting
that occurred during the three months ended December 31, 2005 that has
materially affected, or is reasonably likely to materially affect, our internal
controls over financial reporting.

ITEM 9B. OTHER INFORMATION

     None.

                                    PART III

ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

     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

     Omitted pursuant to Instruction I of Form 10-K.

ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES

<TABLE>
<CAPTION>
                                               YEAR ENDED
                                              DECEMBER 31,
                                           -----------------
                                             2004      2005
                                           -------   -------
<S>                                        <C>       <C>
Audit fees .............................   $21,000   $21,300
Audit-related fees (1) .................    20,000    22,000
                                           -------   -------
   Total audit and audit-related fees ..    41,000    43,300
Tax fees ...............................        --        --
All other fees .........................        --        --
                                           -------   -------
   Total fees ..........................   $41,000   $43,300
                                           =======   =======
</TABLE>

----------
(1)  Agreed upon procedures related to securitization financing.


                                       26
<PAGE>

                                     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.


                                       27

<PAGE>

                                   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 29th day of March, 2006.

                                 CENTERPOINT ENERGY TRANSITION BOND COMPANY, LLC
                                                 (Registrant)


                                 By: /s/ Marc Kilbride
                                     ------------------------------------
                                     Marc Kilbride
                                     Manager

     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 29, 2006.

<TABLE>
<CAPTION>
              SIGNATURE                                 TITLE
              ---------                                 -----
<S>                                     <C>


/s/ Gary L. Whitlock                    President and Manager
-------------------------------------   (Principal Executive Officer)
(Gary L. Whitlock)


/s/ Marc Kilbride                       Vice President, Treasurer and Manager
-------------------------------------   (Principal Financial Officer)
(Marc Kilbride)


/s/ James S. Brian                      Manager
-------------------------------------   (Principal Accounting Officer)
(James S. Brian)


/s/ Bernard J. Angelo                   Manager
-------------------------------------
(Bernard J. Angelo)


/s/ Andrew L. Stidd                     Manager
-------------------------------------
(Andrew L. Stidd)
</TABLE>


                                       28
<PAGE>

                 CENTERPOINT ENERGY TRANSITION BOND COMPANY, LLC

                   EXHIBITS TO THE ANNUAL REPORT ON FORM 10-K
                     FOR FISCAL YEAR ENDED DECEMBER 31, 2005

                                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.

<TABLE>
<CAPTION>
                                               Report or Registration       SEC File or
Exhibit Number   Description                   Statement                    Registration Number   Exhibit References
--------------   ---------------------------   --------------------------   -------------------   ------------------
<S>              <C>                           <C>                          <C>                   <C>
4.1              Amended and Restated          Current Report on Form 8-K   333-91093             4.7
                 Certificate of Formation of   filed with the SEC on
                 Reliant Energy Transition     October 23, 2001
                 Bond Company LLC

4.2              Amended and Restated          Current Report on Form 8-K   333-91093             4.3
                 Limited Liability Company     filed with the SEC on
                 Agreement                     October 23, 2001

4.3              Indenture                     Current Report on Form 8-K   333-91093             4.4
                                               filed with the SEC on
                                               October 23, 2001

4.4              Supplemental Indenture        Current Report on Form 8-K   333-91093             4.5
                                               filed with the SEC on
                                               October 23, 2001

4.5              Transition Bonds (included    Current Report on Form 8-K   333-91093             4.6
                 in Exhibit 4.3)               filed with the SEC on
                                               October 23, 2001

10.1             Sale Agreement                Current Report on Form 8-K   333-91093             10.1
                                               filed with the SEC on
                                               October 23, 2001

10.2             Servicing Agreement           Current Report on Form 8-K   333-91093             10.2
                                               filed with the SEC on
                                               October 23, 2001

10.3             Administration Agreement      Current Report on Form 8-K   333-91093             10.3
                                               filed with the SEC on
                                               October 23, 2001

10.4             Intercreditor Agreement       Current Report on Form 8-K   333-91093             10.4
                                               filed with the SEC on
                                               October 23, 2001

10.5             Semiannual Servicer's         Form 10-Q for the            333-91093             10.1
                 Certificate, dated as of      quarterly period ended
                 March 14, 2005, as to the     March 31, 2005
                 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, 2005 payment
                 date.

10.6             Semiannual Servicer's         Form 10-Q for the            333-91093             10.1
                 Certificate, dated as of      quarterly period ended
                 September 14, 2005, as to     September 30, 2005
                 the transition bond
                 balances, the balances of
                 the collection account and
</TABLE>


                                       29
<PAGE>

<TABLE>
<CAPTION>
                                               Report or Registration       SEC File or
Exhibit Number   Description                   Statement                    Registration Number   Exhibit References
--------------   ---------------------------   --------------------------   -------------------   ------------------
<S>              <C>                           <C>                          <C>                   <C>
                 its sub-accounts, and
                 setting forth transfers and
                 payments to be made on the
                 September 15, 2005 payment
                 date.

+31.1            Section 302 Certification
                 of Gary L. Whitlock

+31.2            Section 302 Certification
                 of Marc Kilbride

+32.1            Section 906 Certification
                 of Gary L. Whitlock

+32.2            Section 906 Certification
                 of Marc Kilbride

99.1             Financing Order               Amendment No. 3 to the       333-91093             99.1
                                               Company's Registration
                                               Statement on Form S-3
                                               filed with the SEC on
                                               September 7, 2001

99.2             Internal Revenue Service      Amendment No. 2 to the       333-91093             99.2
                 Private Letter Ruling         Company's Registration
                 relating to the transition    Statement on Form S-3
                 bonds                         filed with the SEC on
                                               August 30, 2001

99.3             State of Texas Comptroller    Amendment No. 2 to the       333-91093             99.3
                 of Public Accounts rulings    Company's Registration
                 relating to the transition    Statement on Form S-3
                 bonds                         filed with the SEC on
                                               August 30, 2001
</TABLE>


                                       30