<PAGE>

                                                                     EXHIBIT 4.3

               CENTERPOINT ENERGY TRANSITION BOND COMPANY II, LLC

                                     Issuer

                                       and

                            WILMINGTON TRUST COMPANY

                                     Trustee

                      DEUTSCHE BANK TRUST COMPANY AMERICAS

                             Securities Intermediary

                          FIRST SUPPLEMENTAL INDENTURE

                          Dated as of December 16, 2005

                             ----------------------

                    Senior Secured Transition Bonds, Series A

<PAGE>

This FIRST SUPPLEMENTAL INDENTURE dated as of December 16, 2005 (this
"Supplement"), by and among CenterPoint Energy Transition Bond Company II, LLC,
a Delaware limited liability company (the "Issuer"), Wilmington Trust Company, a
Delaware banking corporation, in its capacity as trustee (the "Trustee"), and
Deutsche Bank Trust Company Americas, a New York banking corporation, in its
capacity as securities intermediary (the "Securities Intermediary") is entered
into pursuant to the Indenture dated as of even date herewith among the Issuer,
the Trustee and the Securities Intermediary (the "Indenture").

                     PRELIMINARY STATEMENT; GRANTING CLAUSE

      Section 9.01 of the Indenture provides, among other things, that the
Issuer and the Trustee may at any time and from time to time enter into one or
more Supplemental Indentures for the purpose of authorizing the issuance by the
Issuer of a Series of Transition Bonds and specifying the terms thereof. The
Issuer has duly authorized the execution and delivery of this Supplement and the
creation of a Series of Transition Bonds with an initial aggregate principal
amount of $1,851,000,000 to be known as the Issuer's Senior Secured Transition
Bonds, Series A (the "Senior Secured Transition Bonds, Series A"). All acts and
all things necessary to make the Senior Secured Transition Bonds, Series A, when
duly executed by the Issuer and authenticated by or on behalf of the Trustee as
provided in the Indenture and this Supplement and issued by the Issuer, the
valid, binding and legal obligations of the Issuer and to make this Supplement a
valid and enforceable supplement to the Indenture have been done, performed and
fulfilled and the execution and delivery hereof have been in all respects duly
and lawfully authorized. The Issuer and the Trustee are executing and delivering
this Supplement in order to provide for the Senior Secured Transition Bonds,
Series A.

            The "Series Trust Estate" shall consist of, and the Issuer hereby
absolutely and irrevocably Grants to the Trustee, as trustee for the benefit of
the Holders of the Senior Secured Transition Bonds, Series A issued and
outstanding, all of the Issuer's right, title and interest whether now owned or
hereafter acquired (and whether now existing or hereafter arising), in, to and
under (a) the Transition Property relating to the Senior Secured Transition
Bonds, Series A purchased by the Issuer pursuant to the Sale Agreement relating
to the Senior Secured Transition Bonds, Series A and all proceeds thereof, (b)
the Sale Agreement relating to the Senior Secured Transition Bonds, Series A,
(c) the Bill of Sale delivered by the Seller pursuant to the Sale Agreement
relating to the Senior Secured Transition Bonds, Series A, (d) the Servicing
Agreement relating to the Senior Secured Transition Bonds, Series A and the
Intercreditor Agreement executed in connection therewith, (e) the Administration
Agreement, (f) the Collection Account relating to the Senior Secured Transition
Bonds, Series A and all subaccounts thereof (including, without limitation, the
General Subaccount, the Overcollateralization Subaccount, the Capital Subaccount
and the Excess Funds Subaccount relating to the Senior Secured Transition Bonds,
Series A) and all cash, securities, instruments, investment property or other
assets credited to or deposited in that Collection Account or any subaccount
thereof from time to time or purchased with funds therefrom, and all financial
assets and securities entitlements carried therein or credited thereto, (g) the
REP Deposit Account relating to the Senior Secured Transition Bonds, Series A,
(h) all other property of whatever kind owned from time to time by the Issuer
other than any cash released to the Issuer by the Trustee pursuant to Section
8.02 of the Indenture, (i) all present and future claims, demands, causes and
choses in action in respect of any or all of the foregoing and (j) all payments
on or under and all

<PAGE>

proceeds of every kind and nature whatsoever in respect of any or all of the
foregoing, including all proceeds of the conversion, voluntary or involuntary,
into cash or other liquid property, all cash proceeds, accounts, accounts
receivable, general intangibles, notes, drafts, acceptances, chattel paper,
checks, deposit accounts, insurance proceeds, condemnation awards, payment
intangibles, letter-of-credit rights, investment property, commercial tort
claims, documents, rights to payment of any and every kind, and other forms of
obligations and receivables, instruments and other property which at any time
constitute all or part of or are included in the proceeds of any of the
foregoing; provided, however, that, for the avoidance of doubt, the Series
Trust Estate does not include any funds received by the issuer representing
payments in respect of letters of credit for which each of Deutsche Bank Trust
Company Americas and Wilmington Trust Company is the beneficiary.

            Such Grant is made to the Trustee to have and to hold in trust to
secure the payment of principal of and premium, if any, and interest on, and any
other amounts (including all fees, expenses, counsel fees and other amounts due
and owing to the Trustee, and any credit enhancement provider) owing in respect
of, the Senior Secured Transition Bonds, Series A equally and ratably without
prejudice, preference, priority or distinction, except as expressly provided in
the Indenture and this Supplement and to secure performance by the Issuer of all
of the Issuer's obligations under the Indenture and this Supplement with respect
to the Senior Secured Transition Bonds, Series A, all as provided in the
Indenture and this Supplement; provided, however, that in no event shall the
proceeds of the issuance of the Senior Secured Transition Bonds, Series A
constitute a portion of the Series Trust Estate.

            The Trustee, as trustee on behalf of the Holders of the Transition
Bonds, acknowledges such Grant, accepts the trusts hereunder in accordance with
the provisions hereof and agrees to perform its duties as set forth in the
Indenture and this Supplement.

                                    ARTICLE I

                                   DEFINITIONS

            All terms used in this Supplement that are defined in the Indenture,
either directly or by reference therein, have the meanings assigned to such
terms in the Indenture, except to the extent such terms are defined or modified
in this Supplement or the context clearly requires otherwise.

                                   ARTICLE II

                          OTHER DEFINITIONAL PROVISIONS

                  SECTION 2.01. "Authorized Denominations" means $1,000 and
integral multiples thereof, except for one Transition Bond of each Tranche which
may be of a smaller denomination.

                  SECTION 2.02. "Calculation Period" means, with respect to a
Payment Date, the period from and including the preceding Payment Date to but
excluding such Payment Date, or in the case of the first Calculation Period,
from and including the Series Issuance Date to but excluding the initial Payment
Date.

                  SECTION 2.03. "Expected Amortization Schedule" means Schedule
A to this Supplement.

                                       2
<PAGE>

                  SECTION 2.04. "Expected Final Payment Date" means, with
respect to any Tranche of the Senior Secured Transition Bonds, Series A, the
expected final payment date therefor, as specified in Article IV of this
Supplement.

                  SECTION 2.05. "Final Maturity Date" means, with respect to any
Tranche of the Senior Secured Transition Bonds, Series A, the final maturity
date thereof, as specified in Article IV of this Supplement.

                  SECTION 2.06. "Interest Rate" has the meaning set forth in
Article IV of this Supplement.

                  SECTION 2.07. "Overcollateralization Amount" has the meaning
set forth in Section 5.04 of this Supplement.

                  SECTION 2.08. "Payment Date" has the meaning set forth in
Section 5.01 of this Supplement.

                  SECTION 2.09. "Record Date" shall mean, with respect to any
Payment Date, the close of business on the Business Day prior to such Payment
Date.

                  SECTION 2.10. "Required Capital Amount" has the meaning set
forth in Section 5.05 of this Supplement.

                  SECTION 2.11. "Series Issuance Date" has the meaning set forth
in Section 3.02 of this Supplement.

                                  ARTICLE III

                       DESIGNATION; SERIES ISSUANCE DATES

                  SECTION 3.01. DESIGNATION. The Senior Secured Transition
Bonds, Series A shall be designated generally as the Issuer's Senior Secured
Transition Bonds, Series A and further denominated as Tranches A-1, A-2, A-3,
A-4 and A-5.

                  SECTION 3.02. SERIES ISSUANCE DATE. The Senior Secured
Transition Bonds, Series A that are authenticated and delivered by the Trustee
to or upon the written order of the Issuer on December 16, 2005 (the "Series
Issuance Date") shall have as their date of authentication December 16, 2005.
Each other Senior Secured Transition Bond, Series A shall be dated the date of
its authentication.

                  SECTION 3.03. BOOK-ENTRY. Upon original issuance, the Senior
Secured Transition Bonds, Series A will be issued in the form of a typewritten
Transition Bond or Transition Bonds representing the Book-Entry Transition
Bonds, to be delivered to DTC, as the initial Clearing Agency, by, or on behalf
of, the Issuer, pursuant to Section 2.11 of the Indenture.

                                       3
<PAGE>

                                   ARTICLE IV

               INITIAL PRINCIPAL BALANCE; INTEREST RATE; EXPECTED
                     FINAL PAYMENT DATE; FINAL MATURITY DATE

            (a) The Transition Bonds of each Tranche of the Senior Secured
      Transition Bonds, Series A shall have the initial principal balance,
      Expected Final Payment Date and Final Maturity Date and bear interest at
      the interest rate (the "Interest Rate") as set forth below:

<TABLE>
<CAPTION>
           Initial Principal    Expected Final       Final
Series          Balance          Payment Date    Maturity Date    Interest Rate
-----      -----------------    --------------   -------------    -------------
<S>        <C>                  <C>              <C>              <C>
A-1          $250,000,000           2/1/09          2/1/11           4.84%
A-2          $368,000,000           8/1/12          8/1/14           4.97%
A-3          $252,000,000           2/1/14          8/1/15           5.09%
A-4          $519,000,000           8/1/17          8/1/19           5.17%
A-5          $462,000,000           8/1/19          8/1/20          5.302%
</TABLE>

            (b) The Expected Final Payment Date for each Tranche of the Senior
      Secured Transition Bonds, Series A will be the date when the outstanding
      principal balance of that Tranche will be reduced to zero if payments are
      made according to the Expected Amortization Schedule for that Tranche. The
      Final Maturity Date for each Tranche of the Senior Secured Transition
      Bonds, Series A will be the date when the Issuer is required to pay the
      entire remaining unpaid principal balance, if any, of all outstanding
      Senior Secured Transition Bonds, Series A of that Tranche.

            (c) Interest on the Senior Secured Transition Bonds, Series A will
      be paid before Principal of the Senior Secured Transition Bonds, Series A.
      If there is a shortfall in the amounts available in the Collection Account
      to make interest payments, the Trustee will distribute Interest Pro Rata
      to each Outstanding Tranche of Senior Secured Transition Bonds, Series A
      based on the amount of Interest payable on each Outstanding Tranche.
      Interest on the Senior Secured Transition Bonds, Series A will be
      calculated on the basis of a 360-day year of twelve 30-day months.

                                   ARTICLE V
                  PAYMENT DATES; EXPECTED AMORTIZATION SCHEDULE
                 FOR PRINCIPAL; INTEREST; OVERCOLLATERALIZATION
                 AMOUNT; REQUIRED CAPITAL AMOUNT; WATERFALL CAPS

                  SECTION 5.01. PAYMENT DATES. The "Payment Dates" for the
Senior Secured Transition Bonds, Series A are February 1 and August 1 of each
year or, if any such date is not a Business Day, the next succeeding Business
Day, commencing on August 1, 2006, and continuing until the earlier of repayment
of such Tranche in full and the applicable Final Maturity Date.

                  SECTION 5.02. EXPECTED AMORTIZATION SCHEDULE FOR PRINCIPAL.
Unless an Event of Default has occurred and is continuing and the unpaid

                                       4
<PAGE>

principal amount of all Tranches of Senior Secured Transition Bonds, Series A
has been declared to be due and payable together with accrued and unpaid
interest thereon, on each Payment Date the Trustee shall distribute to the
Holders of record of the Senior Secured Transition Bonds, Series A as of the
related Record Date amounts payable in respect of the Senior Secured Transition
Bonds, Series A pursuant to Section 8.02(d) of the Indenture as Principal, in
accordance with the Expected Amortization Schedule. To the extent that more than
one Tranche of the Senior Secured Transition Bonds, Series A is to receive
payments of Principal in accordance with the Expected Amortization Schedule on
any Payment Date, such amounts will be allocated Pro Rata between such Tranches
based on the Principal scheduled to be paid to such Tranches in accordance with
the Expected Amortization Schedule on such Payment Date; provided, however, that
if one or more Tranches did not receive Principal on the prior Payment Date and
as a result the aggregate Outstanding Amount of such Tranche or Tranches was not
reduced to the balance indicated in the Expected Amortization Schedule on such
Payment Date, then such Tranches will be:

            (a) allocated funds from the applicable subaccount to make up such
      shortfalls prior to any Tranches receiving funds in respect of Principal
      scheduled to be paid on the current Payment Date, and

            (b) allocated funds from the applicable subaccount in respect of
      prior shortfalls on a Pro Rata basis based on the amount each such
      shortfall bears to the aggregate shortfalls;

provided, however, that other than in the event of an acceleration in no event
shall a Principal payment pursuant to this Section 5.02 on any Tranche on a
Payment Date be greater than the amount that reduces the Outstanding Amount of
such Tranche of Senior Secured Transition Bonds, Series A to the amount
specified in the Expected Amortization Schedule for such Tranche and Payment
Date.

                  SECTION 5.03. INTEREST.

            (a) Interest will be payable on each Tranche of the Senior Secured
      Transition Bonds, Series A on each Payment Date as follows:

      1     if there has been a payment default, any Interest payable but unpaid
            on any prior Payment Date, together with Interest on such unpaid
            Interest, if any, and

      2     accrued Interest on the principal balance of each Tranche of the
            Senior Secured Transition Bonds, Series A as of the close of
            business on the preceding Payment Date, or the date of the original
            issuance of the Tranche of the Senior Secured Transition Bonds,
            Series A, as applicable, after giving effect to all payments of
            Principal made on the preceding Payment Date;

      provided, however, that, with respect to the initial Payment Date or if no
      payment has yet been made, interest on the outstanding principal balance
      shall accrue from and including the Series Issuance Date to, but
      excluding, the following Payment Date, and thereafter from and including
      the previous Payment Date to, but excluding, the applicable

                                       5
<PAGE>

      Payment Date until the Transition Bonds have been paid in full, at the
      interest rate indicated in Article IV.

                  SECTION 5.04. OVERCOLLATERALIZATION AMOUNT. The
"Overcollateralization Amount" for the Senior Secured Transition Bonds, Series A
shall be zero dollars ($0).

                  SECTION 5.05. REQUIRED CAPITAL AMOUNT. The "Required Capital
Amount" for the Senior Secured Transition Bonds, Series A shall be $9,255,000,
which is equal to 0.5% of the initial outstanding principal balance of the
Senior Secured Transition Bonds, Series A.

                  SECTION 5.06. PREMIUM. There will be no early redemption of
the Senior Secured Transition Bonds, Series A, and therefore no Premium will be
payable in connection with the early redemption of the Senior Secured Transition
Bonds, Series A.

                  SECTION 5.07. WATERFALL CAPS The Indemnity Amounts payable
with respect to the Senior Secured Transition Bonds, Series A pursuant to
Section 8.02(d)(i) shall not exceed $800,000 during any calendar year. The
amounts paid in respect of the Trustee's fees and expenses in Section
8.02(d)(i), the Servicing Fee in Section 8.02(d)(ii), the administration and
independent managers' fees in Section 8.02(d)(iii), the ordinary periodic
Operating Expenses in Section 8.02(d)(iv) and the remaining Operating Expenses
in Section 8.02(d)(ix) shall not exceed $1,278,500 in the aggregate during any
calendar year unless the PUCT approves a different aggregate amount of such
payments.

                                   ARTICLE VI

                            AUTHORIZED DENOMINATIONS

                  The Senior Secured Transition Bonds, Series A shall be
issuable in the Authorized Denominations.

                                  ARTICLE VII

                                   REDEMPTION

                  The Senior Secured Transition Bonds, Series A shall not be
subject to mandatory or optional redemption.

                                  ARTICLE VIII

                               CREDIT ENHANCEMENT

                  No credit enhancement (other than the Overcollateralization
Amount, the Excess Funds Account, the Required Capital Amount and any
adjustments to the Transition Charges approved by the PUCT as provided in the
Texas Electric Choice Plan) is provided for the Senior Secured Transition Bonds,
Series A.

                                       6
<PAGE>

                                   ARTICLE IX

             DELIVERY AND PAYMENT FOR THE SENIOR SECURED TRANSITION
         BONDS, SERIES A; FORM OF THE SENIOR SECURED TRANSITION BONDS,
                                    SERIES A

            The Trustee shall deliver or cause to be delivered the Senior
Secured Transition Bonds, Series A to the Issuer when authenticated in
accordance with Section 2.02 of the Indenture. Each Senior Secured Transition
Bond, Series A shall be in the form of Exhibit A hereto, which is incorporated
herein by reference.

                                    ARTICLE X

                                  MISCELLANEOUS

                  SECTION 10.01. CONFIRMATION OF INDENTURE. As supplemented by
this Supplement, the Indenture is in all respects ratified and confirmed and the
Indenture, as so supplemented by this Supplement, shall be read, taken, and
construed as one and the same instrument.

                  SECTION 10.02. EFFECTS OF HEADINGS. The Article and Section
headings herein are for convenience only and shall not affect the construction
hereof.

                  SECTION 10.03. COUNTERPARTS. This Supplement may be executed
in any number of counterparts, each of which when so executed shall be deemed to
be an original, but all of such counterparts shall together constitute but one
and the same instrument.

                  SECTION 10.04. GOVERNING LAW. This Supplement shall be
construed in accordance with the laws of the State of Texas, and the
obligations, rights and remedies of the parties hereunder shall be determined in
accordance with such laws.

                  SECTION 10.05. RIGHTS OF TRUSTEE, SECURITIES INTERMEDIARY and
OTHERS. The Trustee, the Securities Intermediary, the authenticating agent, the
Transition Bond Registrar and the Paying Agent shall be entitled to the same
rights, protections, immunities, and indemnities set forth in the Indenture as
if specifically set forth herein.

                                       7
<PAGE>

IN WITNESS WHEREOF, the Issuer, the Trustee and the Securities Intermediary have
caused this Supplement to be duly executed by their respective officers
thereunto duly authorized as of the day and year first above written.

                                     CENTERPOINT ENERGY TRANSITION BOND
                                         COMPANY II, LLC,
                                         as Issuer

                                     By: /s/ MARC KILBRIDE
                                         --------------------------------------
                                         Name: Marc Kilbride
                                         Title: Manager

                                     WILMINGTON TRUST COMPANY,
                                        not in its individual capacity but
                                        solely as Trustee on behalf of the
                                        Transition Bondholders

                                     By: /s/ ERWIN M. SORIANO
                                         --------------------------------------
                                         Name: Erwin M. Soriano
                                         Title: Assistant Vice President

                                     DEUTSCHE BANK TRUST COMPANY AMERICAS,
                                        not in its individual capacity but
                                        solely as Securities Intermediary

                                     By: /s/ JENNA KAUFMAN
                                         --------------------------------------
                                         Name: Jenna Kaufman
                                         Title: Vice President

                                       8
<PAGE>

                                   SCHEDULE A

                         Expected Amortization Schedule

                          Outstanding Principal Balance

<TABLE>
<CAPTION>
              TRANCHE          TRANCHE          TRANCHE          TRANCHE          TRANCHE
 PAYMENT        A-1              A-2              A-3              A-4              A-5
  DATE        BALANCE          BALANCE          BALANCE          BALANCE          BALANCE
---------   ------------     ------------     ------------     ------------     ------------
<S>         <C>              <C>              <C>              <C>              <C>
 Series
Issuance
  Date      $250,000,000     $368,000,000     $252,000,000     $519,000,000     $462,000,000
 8/1/06     $231,435,317     $368,000,000     $252,000,000     $519,000,000     $462,000,000
 2/1/07     $179,908,675     $368,000,000     $252,000,000     $519,000,000     $462,000,000
 8/1/07     $144,571,638     $368,000,000     $252,000,000     $519,000,000     $462,000,000
 2/1/08     $ 89,916,590     $368,000,000     $252,000,000     $519,000,000     $462,000,000
 8/1/08     $ 50,875,178     $368,000,000     $252,000,000     $519,000,000     $462,000,000
 2/1/09                -     $360,066,563     $252,000,000     $519,000,000     $462,000,000
 8/1/09                -     $317,117,443     $252,000,000     $519,000,000     $462,000,000
 2/1/10                -     $253,934,484     $252,000,000     $519,000,000     $462,000,000
 8/1/10                -     $207,053,841     $252,000,000     $519,000,000     $462,000,000
 2/1/11                -     $139,554,687     $252,000,000     $519,000,000     $462,000,000
 8/1/11                -     $ 88,537,461     $252,000,000     $519,000,000     $462,000,000
 2/1/12                -     $ 16,503,845     $252,000,000     $519,000,000     $462,000,000
 8/1/12                -                -     $213,121,395     $519,000,000     $462,000,000
 2/1/13                -                -     $136,291,216     $519,000,000     $462,000,000
 8/1/13                -                -     $ 76,210,864     $519,000,000     $462,000,000
 2/1/14                -                -                -     $513,249,049     $462,000,000
 8/1/14                -                -                -     $448,198,338     $462,000,000
 2/1/15                -                -                -     $360,804,209     $462,000,000
 8/1/15                -                -                -     $290,434,163     $462,000,000
 2/1/16                -                -                -     $197,270,773     $462,000,000
 8/1/16                -                -                -     $121,240,531     $462,000,000
 2/1/17                -                -                -     $ 21,943,148     $462,000,000
 8/1/17                -                -                -                -     $401,924,376
 2/1/18                -                -                -                -     $296,111,800
 8/1/18                -                -                -                -     $207,644,275
 2/1/19                -                -                -                -     $ 94,860,410
 8/1/19                -                -                -                -                -
</TABLE>

<PAGE>

                    EXHIBIT A TO FIRST SUPPLEMENTAL INDENTURE

REGISTERED                                                $

No. _______

                       SEE REVERSE FOR CERTAIN DEFINITIONS

                                    CUSIP NO.

THE PRINCIPAL OF THIS TRANCHE [ ] SENIOR SECURED TRANSITION BOND, SERIES A WILL
BE PAID IN INSTALLMENTS AS SET FORTH HEREIN. ACCORDINGLY, THE OUTSTANDING
PRINCIPAL AMOUNT OF THIS TRANCHE [ ] SENIOR SECURED TRANSITION BOND, SERIES A AT
ANY TIME MAY BE LESS THAN THE AMOUNT SHOWN ON THE FACE HEREOF. THE HOLDER OF
THIS TRANCHE [ ] SENIOR SECURED TRANSITION BOND, SERIES A HEREBY COVENANTS AND
AGREES THAT PRIOR TO THE DATE THAT IS ONE YEAR AND ONE DAY AFTER THE PAYMENT IN
FULL OF THE TRANCHE [ ] SENIOR SECURED TRANSITION BONDS, SERIES A, IT WILL NOT
INSTITUTE AGAINST OR JOIN ANY OTHER PERSON IN INSTITUTING AGAINST THE ISSUER ANY
BANKRUPTCY, REORGANIZATION, ARRANGEMENT, INSOLVENCY OR LIQUIDATION PROCEEDINGS
OR OTHER SIMILAR PROCEEDINGS UNDER THE LAWS OF THE UNITED STATES OR ANY STATE OF
THE UNITED STATES.

               CENTERPOINT ENERGY TRANSITION BOND COMPANY II, LLC

             SENIOR SECURED TRANSITION BONDS, SERIES A, Tranche [ ].

<TABLE>
<CAPTION>
                Initial       Expected Final    Tranche Final
Bond Rate   Principal Amount   Payment Date     Maturity Date
---------   ----------------  --------------    -------------
<S>         <C>               <C>               <C>
  ____%        $_______            ____             ______
</TABLE>

            CenterPoint Energy Transition Bond Company II, LLC, a limited
liability company organized and existing under the laws of the State of Delaware
(herein referred to as the "Issuer"), for value received, hereby promises to pay
to the registered holder under Section 2.05 of the Indenture ("Registered
Holder"), or registered assigns, the Initial Principal Amount shown above in
semiannual installments on the Payment Dates (as defined below) and in the
amounts specified on the reverse hereof or, if less, the amounts determined
pursuant to Section 8.02(d) of the Indenture, in each year, commencing on the
date determined as provided on the reverse hereof and ending on or before the
Final Maturity Date of this Tranche [ ] Senior Secured Transition Bond, Series
A, to pay the entire unpaid principal hereof on such Final Maturity Date and to
pay Interest, at the Bond Rate shown above, on each February 1 and August 1, or
if any such day is not a Business Day, the next succeeding Business Day,
commencing on August 1, 2006 and continuing until the earlier of the payment of
the Principal hereof and the Final Maturity Date of this Tranche [ ] Senior
Secured Transition Bond, Series A

                                      A-1
<PAGE>

(each a "Payment Date"), on the Principal amount of this Tranche [ ] Senior
Secured Transition Bond, Series A outstanding from time to time. Interest on
this Tranche [ ] Senior Secured Transition Bond, Series A will accrue for each
Payment Date from the most recent Payment Date on which Interest has been paid
to but excluding such Payment Date or, if no Interest has yet been paid, from
December 16, 2005. Interest will be computed on the basis of a 360-day year of
twelve 30-day months. Such Principal of and Interest on this Tranche [ ] Senior
Secured Transition Bond, Series A shall be paid in the manner specified on the
reverse hereof.

            The Principal of and Interest on this Tranche [ ] Senior Secured
Transition Bond, Series A are payable in such coin or currency of the United
States of America as at the time of payment is legal tender for payment of
public and private debts. All payments made by the Issuer with respect to this
Tranche [ ] Senior Secured Transition Bond, Series A shall be applied first to
Interest due and payable on this Tranche [ ] Senior Secured Transition Bond,
Series A as provided above and then to the unpaid Principal of and premium, if
any, on this Tranche [ ] Senior Secured Transition Bond, Series A, all in the
manner set forth in Section 8.02(d) of the Indenture.

            This Tranche [ ] Senior Secured Transition Bond, Series A is a
"transition bond" as such term is defined in the Texas Electric Choice Plan.
Principal and Interest on this Tranche [ ] Senior Secured Transition Bond,
Series A are payable from and secured primarily by the transition property
authorized by the Financing Order. The Texas Electric Choice Plan provides that
the State of Texas pledges "for the benefit and protection of financing parties
and the electric utility, that it will not take or permit any action that would
impair the value of the transition property, or except as permitted . . .
[through the Transition Charge Adjustment Process] . . . reduce, alter, or
impair the transition charges to be imposed, collected, and remitted to
financing parties, until the principal, interest, and premium, and any other
charges incurred and contracts to be performed in connection with the related
transition bonds have been paid and performed in full."

            Reference is made to the further provisions of this Tranche [ ]
Senior Secured Transition Bond, Series A set forth on the reverse hereof, which
shall have the same effect as though fully set forth on the face of this Tranche
[ ] Senior Secured Transition Bond, Series A.

            Unless the certificate of authentication hereon has been executed by
the Trustee whose name appears below by manual signature, this Tranche [ ]
Senior Secured Transition Bond, Series A shall not be entitled to any benefit
under the Indenture referred to on the reverse hereof, or be valid or obligatory
for any purpose.

                                      A-2
<PAGE>

            Unless this certificate is presented by an authorized representative
of The Depository Trust Company, a New York corporation ("DTC"), to Issuer or
its agent for registration of transfer, exchange, or payment, and any
certificate issued is registered in the name of Cede & Co. or in such other name
as is requested by an authorized representative of DTC (and any payment is made
to Cede & Co. or to such other entity as is requested by an authorized
representative of DTC), ANY TRANSFER, PLEDGE, OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL inasmuch as the registered owner
hereof, Cede & Co., has an interest herein.

                                      A-3
<PAGE>

            IN WITNESS WHEREOF, the Issuer has caused this instrument to be
signed, manually or in facsimile, by an Authorized Officer of the Issuer.

Date: ______________

                                              CENTERPOINT ENERGY TRANSITION BOND
                                                COMPANY II, LLC

                                              By: _____________________________
                                                  Name:  ____________
                                                  Title: ____________

                                      A-4
<PAGE>

                     TRUSTEE'S CERTIFICATE OF AUTHENTICATION

Dated: ______________, 200_

            This is one of the Tranche [ ] Senior Secured Transition Bonds,
Series A designated above and referred to in the within-mentioned Indenture.

                                       WILMINGTON TRUST COMPANY,
                                          not in its individual capacity but
                                          solely as Trustee on behalf of the
                                          Transition Bondholders

                                       By: DEUTSCHE BANK TRUST COMPANY AMERICAS,
                                           as Authenticating Agent

                                       By: ____________________________________
                                           Name:
                                           Title:

                                      A-5
<PAGE>

                           REVERSE OF TRANSITION BOND

            This Tranche [ ] Senior Secured Transition Bond, Series A is one of
a duly authorized issue of Transition Bonds of the Issuer, designated as its
Transition Bonds, Series A (herein called the "Senior Secured Transition Bonds,
Series A"), issued and to be issued in one or more Series, which Series are
issuable in one or more Tranches, and this Series, in which this Tranche [ ]
Senior Secured Transition Bond, Series A represents an interest, consists of
Tranches, including the Tranche [ ] Senior Secured Transition Bonds, Series A
(herein called the "Tranche [ ] Senior Secured Transition Bonds, Series A"), all
issued and to be issued under an indenture dated as of December 16, 2005, and a
supplemental indenture thereto dated as of even date therewith (such
supplemental indenture, as supplemented or amended, the "Series A Supplement"
and, collectively with such indenture, as supplemented or amended, the
"Indenture"), each among the Issuer, Wilmington Trust Company, as Trustee (the
"Trustee," which term includes any successor trustee under the Indenture), and
Deutsche Bank Trust Company Americas, as Securities Intermediary, to which
Indenture and all indentures supplemental thereto reference is hereby made for a
statement of the Series Trust Estate pledged, the nature and extent of the
security, the respective rights, obligations and immunities thereunder of the
Issuer, the Trustee and the Transition Bondholders and the terms and conditions
under which additional Transition Bonds may be issued. All terms used in this
Tranche [ ] Transition Bond that are defined in the Indenture, as supplemented
or amended, shall have the meanings assigned to them in the Indenture.

            The Tranche [ ] Senior Secured Transition Bonds, Series A, the other
Tranches of Senior Secured Transition Bonds, Series A and any other Series of
Transition Bonds issued by the Issuer are and will be equally and ratably
secured by the Series Trust Estate pledged as security therefor as provided in
the Indenture or the Series A Supplement.

            The Principal of this Tranche [ ] Senior Secured Transition Bond,
Series A shall be payable on each Payment Date only to the extent that amounts
in the Collection Account are available therefor, and only until the outstanding
Principal balance thereof on such Payment Date (after giving effect to all
payments of Principal, if any, made on such Payment Date) has been reduced to
the Principal balance specified in the Expected Amortization Schedule which is
attached to the Series A Supplement as Schedule A, unless payable earlier
because an Event of Default shall have occurred and be continuing and the
Trustee or the Transition Bondholders representing not less than a majority of
the Outstanding Amount of the Transition Bonds of all Series have declared the
Transition Bonds to be immediately due and payable in accordance with Section
5.02 of the Indenture. However, actual Principal payments may be made in less
than expected amounts and at later than expected times as determined pursuant to
Section 8.02(d) of the Indenture and Section 5.02 of the Series A Supplement.
The entire unpaid Principal amount of this Tranche [ ] Senior Secured Transition
Bond, Series A shall be due and payable on the Final Maturity Date of this
Tranche [ ] Senior Secured Transition Bond, Series A. Notwithstanding the
foregoing, the entire unpaid Principal amount of the Transition Bonds shall be
due and payable, if not then previously paid, on the date on which an Event of
Default shall have occurred and be continuing and the Trustee or the Transition
Bondholders representing a majority of the Outstanding Amount of the Transition
Bonds have declared the Transition Bonds to be immediately due and payable in
the manner provided in Section 5.02 of the Indenture. All

                                      A-6
<PAGE>

Principal payments on the Tranche [ ] Senior Secured Transition Bonds, Series A
shall be made pro rata to the Tranche [ ] Transition Bondholders entitled
thereto based on the respective Principal amounts of the Senior Secured
Transition Bonds, Series A held by them.

                Payments of Interest on this Tranche [ ] Senior Secured
Transition Bond, Series A due and payable on each Payment Date, together with
the installment of Principal or premium, if any, due on this Tranche [ ] Senior
Secured Transition Bond, Series A on such Payment Date shall be made by check
mailed first-class, postage prepaid, to the Person whose name appears as the
Holder of this Tranche [ ] Senior Secured Transition Bond, Series A in the
Transition Bond Register as of the close of business on the Record Date or in
such other manner as may be provided in the Series A Supplement, except that
with respect to Tranche [ ] Senior Secured Transition Bonds, Series A registered
on the Record Date in the name of a Clearing Agency, payments will be made by
wire transfer in immediately available funds to the account designated by such
Clearing Agency and except for the final installment of Principal and premium,
if any, payable with respect to this Tranche [ ] Senior Secured Transition Bond,
Series A on a Payment Date which shall be payable as provided below. Such checks
shall be mailed to the Person entitled thereto at the address of such Person as
it appears in the Transition Bond Register as of the applicable Record Date
without requiring that this Tranche [ ] Senior Secured Transition Bond, Series A
be submitted for notation of payment. Any reduction in the Principal amount of
this Tranche [ ] Senior Secured Transition Bond, Series A (or any one or more
predecessors to such Transition Bond) effected by any payments made on any
Payment Date shall be binding upon all future Transition Bondholders of this
Tranche [ ] Senior Secured Transition Bond, Series A and of any Tranche [ ]
Senior Secured Transition Bond, Series A issued upon the registration of
transfer hereof or in exchange hereof or in lieu hereof, whether or not noted
hereon. If funds are expected to be available, as provided in the Indenture, for
payment in full of the then remaining unpaid Principal amount of this Tranche [
] Senior Secured Transition Bond, Series A on a Payment Date, then the Trustee,
in the name of and on behalf of the Issuer, will notify the Person who was the
Holder hereof as of the second preceding Record Date to such Payment Date by
notice mailed no later than five days prior to such final Payment Date and shall
specify that such final installment will be payable to the Holder hereof as of
the Record Date immediately preceding such final Payment Date and only upon
presentation and surrender of this Tranche [ ] Senior Secured Transition Bond,
Series A and shall specify the place where this Tranche [ ] Senior Secured
Transition Bond, Series A may be presented and surrendered for payment of such
installment.

            The Issuer shall pay Interest on overdue installments of Interest on
this Tranche [ ] Senior Secured Transition Bond, Series A at the Bond Rate for
Tranche [ ] to the extent lawful.

            As provided in the Indenture and subject to certain limitations set
forth therein, the transfer of this Tranche [ ] Senior Secured Transition Bond,
Series A may be registered in the Transition Bond Register upon surrender of
this Tranche [ ] Senior Secured Transition Bond, Series A for registration of
transfer at the office or agency designated by the Issuer pursuant to the
Indenture, duly endorsed by, or accompanied by a written instrument of transfer
in form satisfactory to the Trustee duly executed by the Holder hereof or his
attorney duly authorized in writing, with such signature guaranteed by an
Eligible Guarantor Institution, and thereupon one or more new Tranche [ ] Senior
Secured Transition Bonds, Series A of any Authorized Denominations and in the
same aggregate unpaid Principal amount will be issued to the

                                      A-7
<PAGE>

designated transferee or transferees. No service charge will be charged for any
registration of transfer or exchange of this Tranche [ ] Transition Bond, but
the transferor may be required to pay a sum sufficient to cover any tax or other
governmental charge that may be imposed in connection with any registration of
transfer or exchange.

            Prior to the due presentment for registration of transfer of this
Tranche [ ] Senior Secured Transition Bond, Series A, the Issuer, the Trustee
and any agent of the Issuer or the Trustee may treat the Person in whose name
this Tranche [ ] Senior Secured Transition Bond, Series A is registered (as of
the day of determination) as the owner hereof for the purpose of receiving
payments of Principal of and premium, if any, and Interest on this Tranche [ ]
Senior Secured Transition Bond, Series A and for all other purposes whatsoever,
whether or not this Tranche [ ] Senior Secured Transition Bond, Series A be
overdue, and neither the Issuer, the Trustee nor any such agent shall be
affected by notice to the contrary.

            The Indenture permits, with certain exceptions as therein provided,
the amendment thereof and the modification of the rights and obligations of the
Issuer and the rights of the Transition Bondholders under the Indenture at any
time by the Issuer with the consent of the Transition Bondholders representing a
majority of the Outstanding Amount of all Transition Bonds at the time
Outstanding of each Series or Tranche to be affected. The Indenture also
contains provisions permitting the Transition Bondholders representing specified
percentages of the Outstanding Amount of the Transition Bonds of all Series, on
behalf of all Transition Bondholders, to waive compliance by the Issuer with
certain provisions of the Indenture and certain past defaults under the
Indenture and their consequences. Any such consent or waiver by the Transition
Bondholders of this Tranche [ ] Senior Secured Transition Bond, Series A (or any
one or more predecessors of such Transition Bonds) shall be conclusive and
binding upon such Transition Bondholder and upon all future Transition
Bondholders of this Tranche [ ] Senior Secured Transition Bond, Series A and of
any Tranche [ ] Senior Secured Transition Bond, Series A issued upon the
registration of transfer hereof or in exchange hereof or in lieu hereof whether
or not notation of such consent or waiver is made upon this Tranche [ ] Senior
Secured Transition Bond, Series A The Indenture also permits the Trustee to
amend or waive certain terms and conditions set forth in the Indenture without
the consent of the Transition Bondholders.

            The term "Issuer" as used in this Tranche [ ] Senior Secured
Transition Bond, Series A includes any successor to the Issuer under the
Indenture.

            The Issuer is permitted by the Indenture, under certain
circumstances, to merge or consolidate.

            The Tranche [ ] Senior Secured Transition Bonds, Series A are
issuable only in registered form in Authorized Denominations as provided in the
Indenture and the Series A Supplement, subject to certain limitations therein
set forth.

            This Tranche [ ] Senior Secured Transition Bond, Series A, the
Indenture and the Series A Supplement shall be construed in accordance with the
laws of the State of Texas, without reference to its conflict of law provisions,
and the obligations, rights and remedies of the parties hereunder and thereunder
shall be determined in accordance with such laws.

                                      A-8
<PAGE>

            No reference herein to the Indenture and no provision of this
Tranche [ ] Senior Secured Transition Bond, Series A or of the Indenture shall
alter or impair the obligation of the Issuer, which is absolute and
unconditional, to pay the Principal of and Interest on this Tranche [ ] Senior
Secured Transition Bond, Series A at the times, place, and rate, and in the coin
or currency herein prescribed.

                                   ASSIGNMENT

            Social Security or taxpayer I.D. or other identifying number of
assignee ______________.

            FOR VALUE RECEIVED, the undersigned hereby sells, assigns and
transfers unto _______________

                         (name and address of assignee)

the Tranche [ ] Senior Secured Transition Bond, Series A and all rights
thereunder, and hereby irrevocably constitutes and appoints

                         (name and address of appointee)

attorney, to transfer said Tranche [ ] Senior Secured Transition Bond, Series A
on the books kept for registration thereof, with full power of substitution in
the premises.

Dated:

______________________          _________________________________*
                                Signature Guaranteed:

_______________________         _________________________________

* NOTE: The signature to this assignment must correspond with the name of the
registered owner as it appears on the face of the Tranche [ ] Senior Secured
Transition Bond, Series A in every particular, without alteration, enlargement
or any change whatsoever.


                                                                             A-9