----

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**For      the fiscal year ended December 31, 2006**

| Texas                                                                         | 75-2669310                                          |
|-------------------------------------------------------------------------------|-----------------------------------------------------|
| (State                or other jurisdiction of incorporation or organization) | (I.R.S.                Employer Identification No.) |

| 1601                Bryan Street Dallas, TX 75201-3411            | (214)                812-4600                                                            |
|-------------------------------------------------------------------|------------------------------------------------------------------------------------------|
| (Address                of principal executive offices)(Zip Code) | (Registrant’s                telephone number, including area                code) |

|                     | ** **                                     | ***Name                of Each Exchange                on*** |
|--------------------------|------------------------------------------------|--------------------------------------------------------------|
| ***Registrant***         | ***Title                of Each Class***       | ***Which                Registered***                        |
| TXU                Corp. | Common                Stock, without par value | New                York Stock Exchange                       |
|                     |                                           | The                Chicago Stock Exchange                    |

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**TABLE      OF CONTENTS **

| **Glossary**                                                                                                                             | iii    |
|-----------------------------------------------------------------------------------------------------------------------------------------------|--------|
| **PART                  I**                                                                                                                   |   |
| **Items                  1. and 2. BUSINESS AND PROPERTIES**                                                                             | 1      |
| TXU                  CORP. Business and Strategy                                                                                         | 1      |
| Operating                  Segments                                                                                                      | 5      |
| TXU                  Energy Holdings Operating Segment Strategy and Business                  Activities                                 | 7      |
| TXU                  Electric Delivery Operating Segment Strategy and Business                  Activities                               | 15     |
| Environmental                  Regulations and Related Considerations                                                                    | 19     |
|                                                                                                                                          |   |
| **Item                  1A.** **RISK                  FACTORS**                                                                     | 23     |
|                                                                                                                                          |   |
| **Item                  1B.** **UNRESOLVED                  STAFF COMMENTS**                                                        | 35     |
|                                                                                                                                          |   |
| **Item                  3.** **LEGAL                  PROCEEDINGS**                                                                 | 36     |
|                                                                                                                                          |   |
| **Item                  4.** **SUBMISSION                  OF MATTERS TO A VOTE OF SECURITY HOLDERS**                               | 40     |
|                                                                                                                                          |   |
| **EXECUTIVE                  OFFICERS OF TXU CORP.**                                                                                     | 41     |
|                                                                                                                                          |   |
| **PART                  II**                                                                                                                  |   |
|                                                                                                                                          |   |
| **Item                  5.** **MARKET                  FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER**** **        |   |
| **MATTERS                  AND ISSUER PURCHASES OF EQUITY SECURITIES**                                                                   | 44     |
|                                                                                                                                          |   |
| **Item                  6.** **SELECTED                  FINANCIAL DATA**                                                           | 45     |
|                                                                                                                                          |   |
| **Item                  7.** **MANAGEMENT’S                  DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION                  AND** |   |
| **RESULTS                  OF OPERATIONS**                                                                                               | 45     |
|                                                                                                                                          |   |
| **Item                  7A.** **QUANTITATIVE                  AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK**                       | 45     |
|                                                                                                                                          |   |
| **Item                  8.** **FINANCIAL                  STATEMENTS AND SUPPLEMENTARY DATA**                                       | 45     |
|                                                                                                                                          |   |
| **Item                  9.** **CHANGES                  IN AND DISAGREEMENTS WITH ACCOUNTANTS ON                  ACCOUNTING**           |   |
| **AND                  FINANCIAL DISCLOSURE**                                                                                            | 45     |
|                                                                                                                                          |   |
| **Item                  9A.** **CONTROLS                  AND PROCEDURES**                                                          | 45     |
|                                                                                                                                          |   |
| **Item                  9B.** **OTHER                  INFORMATION**                                                                | 45     |
|                                                                                                                                          |   |
| **PART                  III**                                                                                                                 |   |
|                                                                                                                                          |   |
| **Item                  10.** **DIRECTORS,                  EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE**                           | 46     |
|                                                                                                                                          |   |
| **Item                  11.** **EXECUTIVE                  COMPENSATION**                                                           | 46     |
|                                                                                                                                          |   |
| **Item                  12.** **SECURITY                  OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND                  MANAGEMENT**       |   |
| **AND                  RELATED STOCKHOLDER MATTERS**                                                                                     | 47     |
|                                                                                                                                          |   |
| **Item                  13.** **CERTAIN                  RELATIONSHIPS AND RELATED TRANSACTIONS, AND                  DIRECTOR**         |   |
| **INDEPENDENCE**                                                                                                                         | 47     |
|                                                                                                                                          |   |
| **Item                  14.** **PRINCIPAL                  ACCOUNTANT FEES AND SERVICES**                                           | 47     |

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|                                                                                                   |   |
|--------------------------------------------------------------------------------------------------------|--------|
| **PART                  IV**                                                                           |   |
|                                                                                                   |   |
| **Item                  15.** **EXHIBITS                  AND FINANCIAL STATEMENT SCHEDULES**     |   |
| **APPENDIX                  A - Financial Information of TXU Corp. and                  Subsidiaries** | A-1    |
| **APPENDIX                  B - Exhibits to 2006 Form 10-K**                                           | B-1    |

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**GLOSSARY**

| **1999                Restructuring Legislation**  | legislation                that restructured the electric utility industry in Texas to provide                for                retail competition                                                                                                                                                                                                          |
|---------------------------------------------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| **APB                25**                          | Accounting                Principles Board Opinion No. 25, “Accounting for Stock Issued to                Employees”                                                                                                                                                                                                                             |
| **Capgemini**                                      | Capgemini                Energy LP, a subsidiary of Cap Gemini North America Inc. that provides                business support services to TXU Corp. and its subsidiaries                                                                                                                                                                                   |
| **Commission**                                     | Public                Utility Commission of Texas                                                                                                                                                                                                                                                                                                            |
| **EITF                02-3**                       | Emerging                Issues Task Force Issue No. 02-3, “Issues Involved in Accounting for                Derivative Contracts Held for Trading Purposes and Contracts Involved                in                Energy Trading and Risk Management Activities”                                                                                |
| **EPA**                                            | US                Environmental Protection Agency                                                                                                                                                                                                                                                                                                            |
| **ERCOT**                                          | Electric                Reliability Council of Texas, the Independent System Operator and                the                regional reliability coordinator of the various electricity systems                within                Texas                                                                                                                   |
| **ERISA**                                          | Employee                Retirement Income Security Act                                                                                                                                                                                                                                                                                                       |
| **FASB**                                           | Financial                Accounting Standards Board, the designated organization in the private                sector for establishing standards for financial accounting and                reporting                                                                                                                                                       |
| **FERC**                                           | US                Federal Energy Regulatory Commission                                                                                                                                                                                                                                                                                                       |
| **FIN**                                            | Financial                Accounting Standards Board Interpretation                                                                                                                                                                                                                                                                                           |
| **FIN                45**                          | FIN                No. 45, “Guarantor’s Accounting and Disclosure Requirements for                Guarantees, Including Indirect Guarantees of Indebtedness of Others                - An                Interpretation of FASB Statements No. 5, 57, and 107 and Rescission                of                FASB Interpretation No. 34”  |
| **FIN                46R**                         | FIN                No. 46R (Revised 2003), “Consolidation of Variable Interest                Entities”                                                                                                                                                                                                                                          |
| **FIN                47**                          | FIN                No. 47, “Accounting for Conditional Asset Retirement Obligations ― An                Interpretation of FASB Statement No. 143”                                                                                                                                                                                          |
| **FIN                48**                          | FIN                No. 48, “Accounting for Uncertainty in Income Taxes”                                                                                                                                                                                                                                                                          |
| **Fitch**                                          | Fitch                Ratings, Ltd. (a credit rating agency)                                                                                                                                                                                                                                                                                                  |
| **GW**                                             | gigawatts                                                                                                                                                                                                                                                                                                                                                    |
| **GWh**                                            | gigawatt-hours                                                                                                                                                                                                                                                                                                                                               |

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| **historical                  service territory**  | the                  territory, largely in north Texas, being served by TXU Corp.’s regulated                  electric utility subsidiary at the time of entering retail competition                  on                  January 1, 2002                                                                                                                                                                                                                                                                                                                                                                                                             |
|---------------------------------------------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| **IRS**                                            | US                  Internal Revenue Service                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |
| **kV**                                             | kilovolts                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |
| **kWh**                                            | kilowatt-hours                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |
| **market                  heat rate**              | Heat                  rate is a measure of the efficiency of converting a fuel source                  to                  electricity. The market heat rate is based on the price offer of                  the                  marginal supplier in Texas (generally gas plants) in generating                  electricity and is calculated by dividing the wholesale market                  price of                  power by the market price of natural gas.                                                                                                                                                                                       |
| **Merger                  Agreement**              | Agreement                  and Plan of Merger, dated February 25, 2007, among TXU Corp., Merger                  Sub                  Parent and Merger Sub.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |
| **Merger                  Sub**                    | Texas                  Energy Future Merger Sub Corp., a Texas corporation and a wholly-owned                  subsidiary of Merger Sub Parent.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |
| **Merger                  Sub Parent**             | Texas                  Energy Future Holdings Limited Partnership, a Delaware limited                  partnership.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |
| **MMBtu**                                          | million                  British thermal units                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |
| **Moody’s**                                  | Moody’s                  Investors Services, Inc. (a credit rating agency)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |
| **MW**                                             | megawatts                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |
| **MWh**                                            | megawatt-hours                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |
| **NRC**                                            | US                  Nuclear Regulatory Commission                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |
| **PRB**                                            | Powder                  River Basin - a coal mining region that covers southeast Montana                  and                  northeast Wyoming. TXU Corp. purchases coal from this region from                  multiple                  suppliers, which is currently blended with lignite to fuel the                  Big Brown,                  Monticello and Martin Lake generating plants.                                                                                                                                                                                                                                                        |
| **price-to-beat                  rate**            | residential                  and small business customer electricity rates established by the                  Commission that (i) were required to be charged in a REP’s historical                  service territories until the earlier of January 1, 2005 or the                  date when                  40% of the electricity consumed by such customer classes is supplied                  by                  competing REPs, adjusted periodically for changes in fuel costs,                  and (ii)                  were required to be made available to those customers until January                  1,                  2007  |
| **PURA**                                           | Public                  Utility Regulatory Act                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |
| **REP**                                            | retail                  electric provider                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |
| **RRC**                                            | Railroad                  Commission of Texas, which has oversight of lignite mining                  activity                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |
| **S&P**                                        | Standard                  & Poor’s Ratings Services, a division of The McGraw Hill Companies,                  Inc. (a credit rating agency)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |
| **SEC**                                            | US                  Securities and Exchange Commission                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |
| **Settlement                  Plan**               | regulatory                  settlement plan that received final approval by the Commission                  in January                  2003                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |
| **SFAS**                                           | Statement                  of Financial Accounting Standards issued by the FASB                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |
| **SFAS                  5**                        | SFAS                  No. 5, “Accounting for Contingencies”                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |
| **SFAS                  34**                       | SFAS                  No. 34, “Capitalization of Interest Cost”                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |
| **SFAS                  71**                       | SFAS                  No. 71, “Accounting for the Effect of Certain Types of                  Regulation”                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |

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| **SFAS                  87**           | SFAS                  No. 87, “Employers’ Accounting for Pensions”                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |
|---------------------------------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| **SFAS                  106**          | SFAS                  No. 106, “Employers' Accounting for Postretirement Benefits Other Than                  Pensions”                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |
| **SFAS                  109**          | SFAS                  No. 109, “Accounting for Income Taxes”                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |
| **SFAS                  115**          | SFAS                  No. 115, “Accounting for Certain Investments in Debt and Equity                  Securities”                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |
| **SFAS                  123R**         | SFAS                  No. 123 (revised 2004), “Share-Based Payment”                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |
| **SFAS                  133**          | SFAS                  No. 133, “Accounting for Derivative Instruments and Hedging Activities” as                  amended and interpreted                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |
| **SFAS                  140**          | SFAS                  No. 140, “Accounting for Transfers and Servicing of Financial Assets and                  Extinguishments of Liabilities, a replacement of FASB Statement                  125”                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |
| **SFAS                  142**          | SFAS                  No. 142, “Goodwill and Other Intangible Assets”                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |
| **SFAS                  143**          | SFAS                  No. 143, “Accounting for Asset Retirement Obligations”                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |
| **SFAS                  144**          | SFAS                  No. 144, “Accounting for the Impairment or Disposal of Long-Lived                  Assets”                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |
| **SFAS                  157**          | SFAS                  No. 157, “Fair Value Measurements”                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |
| **SFAS                  158**          | SFAS                  No. 158, “Accounting for Defined Benefit Pension and Other Postretirement                  Plans”                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |
| **SFAS                  159**          | SFAS                  No. 159, “The Fair Value Option for Financial Assets and Financial                  Liabilities - Including an Amendment of FASB Statement No.                  115”                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |
| **SG&A**                           | selling,                  general and administrative                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |
| **Short-cut                  method**  | refers                  to the short-cut method under SFAS 133 that allows entities to                  assume no                  hedge ineffectiveness in a hedging relationship of interest rate                  risk if                  certain conditions are met                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |
| **Sponsors**                           | The                  private investment group, consisting of entities advised by or                  affiliated                  with Kohlberg Kravis Roberts & Co. and Texas Pacific Group, that                  directly and indirectly owns Merger Sub Parent and Merger                  Sub.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |
| **TCEQ**                               | Texas                  Commission on Environmental Quality                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |
| **TXU                  Australia**     | refers                  to TXU Australia Group Pty Ltd, a former subsidiary of TXU Corp.,                  and its                  subsidiaries                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |
| **TXU                  Big Brown**     | TXU                  Big Brown Company LP, a Texas limited partnership and subsidiary                  of TXU                  Energy Company, which owns two lignite/coal-fueled generation units                  in                  Texas                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |
| **TXU                  Corp.**         | Refers                  to TXU Corp., a holding company, and/or its subsidiaries, depending                  on                  context. This Form 10-K and other SEC filings of TXU Corp. and                  its                  subsidiaries occasionally make references to TXU Corp., TXU Energy                  Company                  or TXU Electric Delivery when describing actions, rights or obligations                  of                  their respective subsidiaries. These references reflect the fact                  that the                  subsidiaries are consolidated with their respective parent companies                  for                  financial reporting purposes. However, these references should                  not be                  interpreted to imply that the parent company is actually undertaking                  the                  action or has the rights or obligations of the relevant subsidiary                  company.  |
| **TXU                  DevCo**         | Refers                  to subsidiaries of TXU Corp. that have been established for the                  purpose of                  developing new lignite/coal-fueled generation facilities. The TXU                  DevCo                  subsidiaries are currently not subsidiaries of TXU Energy                  Company.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |

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| **TXU                Electric Delivery**     | Refers                to TXU Electric Delivery Company, a subsidiary of TXU Corp., and/or                its                bankruptcy remote financing subsidiary, TXU Electric Delivery Transition                Bond Company LLC, depending on context. This form 10-K and other                SEC                filings of TXU Corp. and its subsidiaries occasionally make references                to                TXU Corp., TXU Energy Company or TXU Electric Delivery when describing                actions, rights or obligations of their respective subsidiaries.                These                references reflect the fact that the subsidiaries are consolidated                with                their respective parent companies for financial reporting purposes.                However, these references should not be interpreted to imply that                the                parent company is actually undertaking the action or has the rights                or                obligations of the relevant subsidiary company.  |
|---------------------------------------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| **TXU                Energy Company**        | Refers                to TXU Energy Company LLC, a subsidiary of TXU Corp., and/or its                subsidiaries, depending on context, engaged in electricity generation                and                wholesale and retail energy markets activities. This Form 10-K and                other                SEC filings of TXU Corp. and its subsidiaries occasionally make references                to TXU Corp., TXU Energy Company or TXU Electric Delivery when describing                actions, rights or obligations of their respective subsidiaries.                These                references reflect the fact that the subsidiaries are consolidated                with                their respective parent companies for financial reporting purposes.                However, these references should not be interpreted to imply that                the                parent company is actually undertaking the action or has the rights                or                obligations of the relevant subsidiary company.               |
| **TXU                Energy Holdings**       | Refers                to the TXU Corp. business segment that includes TXU Energy Company                and its                subsidiaries, TXU DevCo and its subsidiaries, activities of other                TXU                Corp. subsidiaries to pursue opportunities for generation facility                development in markets outside Texas and activity of a lease trust                holding                certain combustion turbines.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |
| **TXU                Europe**                | TXU                Europe Limited, a former subsidiary of TXU Corp.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |
| **TXU                Fuel**                  | TXU                Fuel Company, a former subsidiary of TXU Energy Company                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |
| **TXU                Gas**                   | TXU                Gas Company, a former subsidiary of TXU Corp.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |
| **TXU                Portfolio Management**  | TXU                Portfolio Management Company LP, a subsidiary of TXU Energy                Company                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |
| **US**                                       | United                States of America                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |
| **US                Holdings**               | TXU                US Holdings Company, a subsidiary of TXU Corp.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |
| **VEBA**                                     | refers                to voluntary employees’ beneficiary association                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |

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**PART      I**

**Items      1. and 2. BUSINESS AND PROPERTIES**

**TXU      CORP. BUSINESS AND STRATEGY**

**Business        Summary**

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|   | · | market                rules support fair and robust competition, while providing opportunities                to optimize the generation fleet operations and purchased power                requirements; |
|--------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | peak                demand is expected to grow at an average rate of 2.3% per                year; |
|--------|--------|----------------------------------------------------------------------------------------------------|

|   | · | it                is a sizeable market with 62 gigawatts (GW) of peak demand and                approximately 33 GW of average demand;                and |
|--------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | as                projected by ERCOT, in the absence of generation additions, annual                reserve                margins are expected to fall below ERCOT’s desired margin of 12.5% as                early as 2009, thus providing opportunities for generation owners                and                developers. Reserve margin is defined as the excess of system capability                over peak load expressed as a percentage of peak                load. |
|--------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

**Proposed        Merger**

***Summary        Description of Merger Agreement and Proposed Merger***

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** **

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***Financing            in Connection with the Proposed Merger***

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**Operating          Segments**

***TXU      Energy Holdings segment***

***TXU      Electric Delivery segment***

***Corporate      and Other***

**Overview      of Business Growth Strategies**

| ·   | Phase                one involved divesting of value-disadvantaged businesses and using                the                sales proceeds, operating cash flows and cash on hand to simplify                the                capital structure and improve financial flexibility. This phase also                included changing pricing and commodity price hedging strategies                to                reflect rising natural gas prices, resolving significant litigation                risks                and lowering business process costs through a significant outsourcing                arrangement. Phase one was completed in                2004. |
|--------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| ·   | Phase                two included implementation of initiatives to achieve operational                excellence across the business, targeting industry-leading performance                standards for productivity, reliability and customer service and                embedding                a high-performance industrial culture. Phase two work has been largely                completed but remains ongoing as a basis for continuous process                improvement. |
|--------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| ·   | Phase                three included development and implementation of the growth strategy                for                TXU Corp. and its two operating segments. In 2006, actions were initiated                to execute this strategy by way of several key initiatives launched                during                the year, including planned development of new generation                facilities.  TXU                Corp. has agreed to modify this strategy in connection with the proposed                merger. |
|--------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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| ·   | Access                to structurally advantaged assets - TXU Corp. believes that long-term                success in the electricity industry is based upon having access to                structurally advantaged assets. TXU Corp. expects that energy markets                will                continue to go through cycles and believes that assets with a structural                cost advantage are best positioned to succeed in the long term. TXU                Corp.                believes that its business segments are well-positioned across the                electricity value chain. |
|--------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| ·   | Industrial                skill set - TXU Corp. believes an industrial skill set is crucial                for high                performance and sustained high returns in asset-intensive businesses.                The                transition from regulation to competition in the electricity sector                amplifies the importance of this skill set, and will likely create                a                significant performance advantage for those who successfully transform                their operations. TXU Corp. will continue to focus on upgrading four                critical skill sets: operational excellence, market leadership, a                systematic risk/return mindset applied to all key decisions and rigorous                performance management. A key driver of this effort is an overall                program                called the TXU Operating System, which is a program to drive ongoing                productivity improvements through application of lean operating techniques                and deployment of an industrial skill                set. |
|--------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| ·   | Building                and leveraging quality scale - TXU Corp. believes that building and                leveraging quality scale enables sustained value creation. Scale                allows                companies to eliminate duplicative costs, better manage supply costs                and                build and standardize distinctive process expertise. Scale also allows                companies to take part in large capital investments, such as new                generation facilities, with a smaller fraction of overall capital                at risk                and with an enhanced ability to streamline                costs. |
|--------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   |   | Quality                  scale is derived from structurally advantaged regional positions                  and                  enables companies to develop a deep understanding of regional wholesale                  markets and distinctive insights into market dynamics and regulatory                  frameworks, enabling better execution in today’s volatile commodity                  environment. Regional scale can also create access to advantaged                  development opportunities. |
|--------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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**TXU      ENERGY HOLDINGS OPERATING SEGMENT STRATEGY**

**AND      BUSINESS ACTIVITIES**

**Business      Organization**

**TXU      Power**

***Strategy***

***Overview      of Generation Assets***

|  **Fuel                Type** | ** ** | **Capacity                (MW)** | ** ** | **Number                of Plants** | ** ** | **Number                of Units (a)** |   |
|------------------------------------|------------|----------------------------------|------------|-------------------------------------|------------|----------------------------------------|--------|
|                               |       |                             |       |                                |       |                                   |   |
| Nuclear                            |       |                             | 2,300      |                                |       | 1                                      |   |   | 2 |   |
| Lignite/coal                       |       |                             | 5,837      |                                |       | 4                                      |   |   | 9 |   |
| Natural                gas (b)(c)  |       |                             | 9,468      |                                |       | 14                                     |   |   | 35 |   |
| Total                              |       |                             | 17,605     |                                |       | 19                                     |   |   | 46 |   |

| (a) | Leased                units consist of six natural gas-fueled units totaling 390 MW of                capacity.                All other units are owned.             |
|-----|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| (b) | Includes                1,679 MW representing seven units mothballed and not currently available                for dispatch.                                         |
| (c) | Excludes                585 MW representing nine combustion turbine units currently operated                for                an unaffiliated party’s benefit. |

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***Nuclear      Generation Assets***

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***Lignite/Coal-Fueled      Generation Assets***

***Security        Interest***

***Natural      Gas-Fueled Generation Assets***

***Regulation***

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**TXU      Energy**

***Strategy***

***Market      Territory***

***Price-to-Beat      Rates***

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***Pricing      and Marketing Initiatives***

|   | · | a                one-time customer appreciation bonus of $100 to residential customers                who                were receiving service from TXU Energy on October 29, 2006 and living                in                areas where TXU Energy offered its price-to-beat rate. The bonus                is                expected to be paid out in the form of credits on customer bills                and is                expected to be fully settled in                2007; |
|--------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | price                protection from any future price increases due to volatile commodity                prices for its residential price-to-beat and other month-to-month                customers paying a rate that is equal to the price-to-beat rate as                of                December 31, 2006 who choose to remain on their existing plan and                meet                certain other criteria, for a period of three years or until at least                January 1, 2010; |
|--------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | a                limited-time incentive of $25 to customers switching to one of the                many                pricing plans other than the basic month-to-month plan;                and |
|--------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | extension                through September 1, 2007 of TXU Energy’s unique 10 percent                low-income-customer discount program, as TXU Energy continues to                work with                elected officials to restore state funding for this important                program. |
|--------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

**TXU      Wholesale**

***Strategy***

***Portfolio      Management***

***Commercial      Wholesale Market Activities***

----

***Risk      Management Practices***

***Renewable      Energy Activities***

**TXU        DevCo **

***Strategy***

***Texas        Generation Facilities Development***

----

***Potential          Nuclear Generation Development***

----

**TXU      ELECTRIC DELIVERY OPERATING SEGMENT STRATEGY**

**AND      BUSINESS ACTIVITIES**

***Business      Organization***

***Strategy***

***Electricity      Transmission***

----

|                                                                   | Number                of Interconnected Lines |
|------------------------------------------------------------------------|-----------------------------------------------|
| Grid                Connections                                        | 345                kV                         | 138                kV | 69                kV |
| Centerpoint                Energy Inc.                            | 8                                             | ― | ― |
| American                Electric Power Company, Inc (a).          | 4                                             | 7 | 12 |
| Lower                Colorado River Authority                     | 6                                             | 20 | 3 |
| Texas                Municipal Power Agency                       | 8                                             | 9 | ― |
| Texas                New Mexico Power                             | 2                                             | 9 | 11 |
| Brazos                Electric Power Cooperative                  | 4                                             | 94 | 21 |
| Rayburn                Country Electric Cooperative               | ―                                       | 27 | 7 |
| City                of Georgetown                                 | ―                                       | 2 | ― |
| Other                small systems operating wholly within Texas  | ―                                       | 10 | 3 |

| (a) | One                of the four 345-kV lines is an asynchronous high voltage direct current                interconnection with the Southwest Power                Pool. |
|-----|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

***Electricity      Distribution** ***

----

***Customers***

***Technology      Initiatives***

|   | · | increase                network reliability and power                quality; |
|--------|--------|-------------------------------------------------------------------------------|

|   | · | prevent,                detect and restore customer outages more effectively;                and |
|--------|--------|--------------------------------------------------------------------------------------------------|

|   | · | implement                advanced meter monitoring more                efficiently. |
|--------|--------|-------------------------------------------------------------------------------------|

----

***New      Utility Services Joint Venture***

***Regulation      and Rates***

----

**ENVIRONMENTAL      REGULATIONS AND RELATED CONSIDERATIONS**

***Climate      Change and Carbon Dioxide***

|  | · | Climate                change is a global issue requiring a comprehensive solution addressing                all                greenhouse gases, sources and economic sectors in all                countries; |
|--|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | Development                  of US energy and enviornmental policy should seek to ensure US                  energy                  security and independence; |
|--------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | Solutions                  should encourage investment in a diverse supply of new generation                  to meet                  US needs to maintain adequate reserve margins and support economic                  growth,                  as well as address customer's needs for affordable and reliable                  energy; |
|--------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|  | · | Policies                    should encourage significant investments in research and development                    and                    deployment of a broad spectrum of solutions, including energy                    efficiency,                    renewable energy and coal, natural gas and nuclear-fueled generation                    technologies; and |
|--|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|  | · | Any                mandate to reduce greenhouse gas emissions                should be developed under a market-based framework that is consistent                with                expected technology development timelines and supports the displacement                of                old, inefficient power generation technology with advanced, more                efficient                technology. |
|--|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

| ·   | Investing                in technology ─ TXU Corp. expects to invest up to $2 billion over the next                five to seven years for the development and commercialization of                cleaner                power plant technologies, including integrated gasification combined                cycle, the next generation of more efficient ultra-supercritical                coal and                pulverized coal emissions technology to reduce CO2                emission intensity. A number of actions, including research and                development investments and partnerships, have already been initiated                to                advance next-generation technologies. |
|--------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| ·   | Providing                electricity from renewable sources ─ TXU Corp. intends to become a leader                in providing electricity from renewable sources by more than doubling                its                purchases of wind power to more than 1,500 MW. TXU Corp. also intends                to                promote solar power through solar/photovoltaic                rebates. |
|--------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| ·   | Committing                to demand side management initiatives ─ TXU Corp. intends to invest $400                million over the next five years in programs designed to encourage                customer electricity demand efficiencies. |
|--------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| ·   | Reducing                CO2                emissions by increasing production efficiency ─ TXU Corp. expects to                increase production efficiency of its existing generation facilities                by up                to 2 percent. |
|--------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| ·   | Developing                a nuclear generation facility ─ TXU Corp. plans to develop an application                to file with the NRC for combined construction and operating licenses                for                up to 3,400 MW of new nuclear generation capacity at its Comanche                Peak                nuclear generation plant. TXU Corp. expects to submit the application                in                2008. Nuclear generation is the lowest emission source of baseload                generation available. |
|--------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

***Sulfur      Dioxide, Nitrogen Oxide and Mercury Air Emissions***

----

***Water***

*.*

***Radioactive      Waste***

----

***Solid      Waste, including Fly Ash Associated with Lignite/Coal-Fueled      Generation***

***Environmental      Capital Expenditures***

----

**Item      1A. RISK FACTORS**

***Risks        Relating to TXU Corp.’s Businesses***

**TXU        Corp.’s businesses are subject to ongoing complex governmental regulations and        legislation that have impacted, and may in the future impact, TXU Corp.’s        business and/or results of operations.**

**The        litigation environment in which TXU Corp. operates poses a significant risk        to        its business.**

----

**TXU        Corp. may lose a significant number of retail customers in its historical        service territory due to competitive REP marketing activity and faces        competition from incumbent providers outside its historical service        territory.**

**TXU        Corp.’s revenues and results of operations may be negatively impacted by        decreases in market prices for power, decreases in prices of commodities,        such        as natural gas, and decreases in market heat rates.**

----

| ·   | severe                or unexpected weather conditions, |
|--------------------|---------------------------------------------------------|
| ·   | seasonality, |
|--------------------|--------------|
| ·   | changes                in electricity and fuel usage, |
|--------------------|-------------------------------------------------------|
| ·   | illiquidity                in the wholesale power or other markets, |
|--------------------|---------------------------------------------------------------------|
| ·   | transmission                or transportation constraints, inoperability or                inefficiencies, |
|--------------------|------------------------------------------------------------------------------------------------------------|
| ·   | availability                of                competitively priced alternative energy                sources, |
|--------------------|---------------------------------------------------------------------------------------------------------------|
| ·   | changes                in** **supply                and demand for energy commodities, |
|--------------------|---------------------------------------------------------------------------------------------|
| ·   | changes                in generation efficiency and market heat                rates, |
|--------------------|---------------------------------------------------------------------------------------|
| ·   | outages                at TXU Corp.’s generation facilities or those of its                competitors, |
|--------------------|---------------------------------------------------------------------------------------------------------------|
| ·   | changes                in production and storage levels of natural gas, lignite, coal, crude                oil                and refined products, |
|--------------------|------------------------------------------------------------------------------------------------------------------------------------------------------|
| ·   | natural                disasters, wars, sabotage, terrorist acts, embargoes and other                catastrophic events, and |
|--------------------|-------------------------------------------------------------------------------------------------------------------------------|
| ·   | federal,                state and local energy, environmental and other regulation and                legislation. |
|--------------------|--------------------------------------------------------------------------------------------------------------------|

**TXU        Corp.’s assets or positions cannot be fully hedged against changes in commodity        prices and market heat rates, and its hedging transactions may not work as        planned or hedge counterparties may default on their obligations to TXU        Corp.**

----

**TXU        Corp. may suffer material losses, costs and liabilities due to its ownership        and        operation of the Comanche Peak nuclear generation plant.**

| ·   | *Operational                Risk -*                Operations at any nuclear generation plant could degrade to the point                where the plant would have to be shut down. If such degradations                were to                occur, the process of identifying and correcting the causes of the                operational downgrade to return the plant to operation could require                significant time and expense, resulting in both lost revenue and                increased                fuel and purchased power expense to meet supply commitments. Rather                than                incurring substantial costs to restart the plant, the plant could                be shut                down. Furthermore, a shut-down or failure at any other nuclear generation                plant could cause regulators to require a shut-down or reduced                availability at Comanche Peak. In 2007, certain equipment at Comanche                Peak                is expected to be replaced, which will require extended outages.                The cost                of replacing the equipment is currently expected to be                material. |
|--------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| ·   | *Regulatory                Risk* *-*                The NRC may modify, suspend or revoke licenses and impose civil penalties                for failure to comply with the Atomic Energy Act, the regulations                under it                or the terms of the licenses of nuclear generation facilities. Unless                extended, the NRC operating licenses for Comanche Peak Unit 1 and                Unit 2                will expire in 2030 and 2033, respectively. Changes in regulations                by the                NRC could require a substantial increase in capital expenditures                or result                in increased operating or decommissioning                costs. |
|--------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| ·   | *Nuclear                Accident Risk* *-*                Although the safety record of Comanche Peak and other nuclear generation                plants generally has been very good, accidents and other unforeseen                problems have occurred both in the US and elsewhere. The consequences                of                an accident can be severe and include loss of life and property damage.                Any resulting liability from a nuclear accident could exceed TXU                Corp.’s                resources, including insurance                coverage. |
|--------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

**The        operation and maintenance of electricity generation and delivery facilities        involves significant risks that could adversely affect TXU Corp.’s results of        operations and financial condition.**

**TXU        Corp.’s cost of compliance with environmental laws and regulations are        significant, and the cost of compliance with new environmental laws could        materially adversely affect TXU Corp.’s results of operations and financial        condition. Recently, federal laws aimed at regulating the emission of greenhouse        gases have been proposed and it is likely that additional bills will be        introduced in 2007. The future impacts of greenhouse gas legislation on TXU        Corp. will depend in large part on the details of the legislation and the        timetable for mandatory compliance. TXU Corp. continues to assess the financial        and operational risks posed by possible future greenhouse gas legislation        at the        federal and state levels. TXU Corp. is unable to predict their future impacts        on        its financial condition and operations.**

----

**The        rates of TXU Corp.’s electric delivery business are subject to regulatory        review.**

**TXU        Corp.’s growth strategy, including its investment in lignite/coal-fueled        generation facilities, may not be executed as planned which could adversely        impact its financial condition and results of operations.**

----

----

**TXU        Corp.’s retail business is subject to the risk that sensitive customer data may        be compromised, which could result in an adverse impact to its reputation        and/or        results of operations of the retail business.**

**InfrastruX        Energy Services faces challenges to transition into a consolidated and        independent business. It may not be able to provide TXU Electric Delivery        sufficient services.**

----

**Ongoing        performance improvement initiatives may not achieve desired cost reductions        and        may instead result in significant additional costs if        unsuccessful.**

**TXU        Corp. relies on the infrastructure of local utilities or independent        transmission system operators to provide electricity to, and to obtain        information about, their customers. Any infrastructure failure could negatively        impact customer satisfaction and could have a material negative impact on        TXU        Corp.’s business and results of operations.**

**TXU        Corp. offers bundled services to its retail customers, with some bundled        services offered at fixed prices and for fixed terms. If TXU Corp.’s costs for        these bundled services exceed the prices paid by its customers, TXU Corp.’s        results of operations could be materially adversely        affected.**

**TXU        Corp.’s retail business is subject to the risk that it will not be able to        profitably serve its customers given the announced price protection and price        cuts, which could result in an adverse impact to its reputation and/or results        of operations of the retail business.**

----

**Changes        in technology may reduce the value of TXU Corp.’s generation plants and/or        electric delivery facilities and may significantly impact its business in        other        ways as well.**

**TXU        Corp.’s future results of operations may be negatively impacted by settlement        adjustments determined by ERCOT related to prior periods.**

**TXU        Corp.’s results of operations and financial condition could be negatively        impacted by any development or event beyond its control that causes economic        weakness in the ERCOT region.**

**A        downgrade in TXU Corp.’s (or an applicable subsidiary’s) credit ratings could        negatively affect TXU Corp.’s (or the pertinent subsidiary’s) ability to access        capital and could require TXU Corp. or its subsidiaries to post collateral        or        repay certain indebtedness.**

----

**TXU        Corp. is a holding company, and its obligations are structurally subordinated        to        existing and future liabilities and preferred stock of its        subsidiaries.**

**In        the future, TXU Corp. could have liquidity needs that could be difficult        to        satisfy under some circumstances.**

| ·   | changes                in credit markets that reduce available credit or the ability to                renew                existing liquidity facilities on acceptable                terms; |
|--------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| ·   | inability                to access commercial paper markets; |
|--------------------|--------------------------------------------------------------|
| ·   | changes                in interest rates; |
|--------------------|-------------------------------------------|
| ·   | a                deterioration of TXU Corp.’s credit or the credit of its subsidiaries or a                reduction in TXU Corp.’s credit ratings or the credit ratings of its                subsidiaries; |
|--------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| ·   | extreme                volatility in TXU Corp.’s markets that increases margin or credit                requirements; |
|--------------------|-----------------------------------------------------------------------------------------------------------------------------|
| ·   | a                material breakdown in TXU Corp.’s risk management procedures;                and |
|--------------------|---------------------------------------------------------------------------------------------------------|
| ·   | the                occurrence of material adverse changes in TXU Corp.’s businesses that                restrict TXU Corp.’s ability to access its liquidity                facilities. |
|--------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

**TXU        Corp.’s common stock price has been and may continue to be        volatile.**

| ·   | developments                related to the consummation of the proposed                merger; |
|--------------------|------------------------------------------------------------------------------------------------|
| ·   | developments                related to TXU Corp.’s businesses; |
|--------------------|----------------------------------------------------------------------|
| ·   | commodity                prices, in particular natural gas prices; |
|--------------------|--------------------------------------------------------------------|
| ·   | market                heat rates in the Texas electricity                market; |
|--------------------|----------------------------------------------------------------------------------|
| ·   | fluctuations                in TXU Corp.’s results of operations; |
|--------------------|-------------------------------------------------------------------------|
| ·   | the                level of dividends and share repurchases; |
|--------------------|--------------------------------------------------------------|
| ·   | TXU                Corp.’s credit quality and any significant change in its credit                ratings; |
|--------------------|------------------------------------------------------------------------------------------------------------------|
| ·   | effect                of significant events relating to the energy sector in                general; |
|--------------------|------------------------------------------------------------------------------------------------------|
| ·   | sales                of TXU Corp. securities into the                marketplace; |
|--------------------|-----------------------------------------------------------------------------------|
| ·   | general                conditions in the industry and the energy markets in which TXU Corp.                is a                participant; |
|--------------------|---------------------------------------------------------------------------------------------------------------------------------------------|
| ·   | the                worldwide economy; |
|--------------------|---------------------------------------|
| ·   | an                outbreak of war or hostilities; |
|--------------------|---------------------------------------------------|
| ·   | a                shortfall in revenues or earnings compared to securities analysts’                expectations; |
|--------------------|------------------------------------------------------------------------------------------------------------------------|
| ·   | changes                in analysts’ recommendations or projections;                and |
|--------------------|----------------------------------------------------------------------------------------------|
| ·   | actions                by credit rating agencies. |
|--------------------|---------------------------------------------------|

***Risks        Relating to the Proposed Merger***

**TXU        Corp. cannot make any assurance that the proposed merger will be        consummated.**

| ·   | management’s                attention from TXU Corp.’s day-to-day business may be                diverted; |
|--------------------|------------------------------------------------------------------------------------------------------------------------|
| ·   | TXU                Corp. may lose key employees; |
|--------------------|--------------------------------------------------|
| ·   | TXU                Corp.’s relationships with customers and vendors may be disrupted as a                result of uncertainties with regard to its business and                prospects; |
|--------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| ·   | TXU                Corp. may be required to pay significant transaction costs related                to the                proposed Merger, such as a transaction termination (break-up) fee                of up to                $1.0 billion; and |
|--------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| ·   | the                market price of shares of TXU Corp. common stock may decline to the                extent                that the current market price of those shares reflects a market assumption                that the proposed merger will be                completed. |
|--------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

**TXU        Corp. may not be able to attract or retain key management        employees.**

**TXU          Corp. and its subsidiaries (excluding TXU Electric Delivery) will have          substantially more debt.**

**Indebtedness          incurred in connection with the proposed merger will cause the subordination          of          existing indebtedness.**

**Item        1B. UNRESOLVED STAFF COMMENTS**

----

**Item      3. LEGAL      PROCEEDINGS**

***    Litigation***
*** ***

----

----

----

***Regulatory***
* *
***Investigations***
*2005        State of the Market Report for the ERCOT Wholesale*
*Electricity        Markets*

----

* *

**Item      4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS**

----

**EXECUTIVE      OFFICERS OF TXU CORP.**

|     **Name                of Officer** | ** ** |     **Age** | ** ** |  **Positions                and Offices Presently Held (Current Term Expires****on                June 14, 2007)**                   | ** ** |  **Date                First Elected to Present Offices****(Current                Term Expires****on                June 14, 2007)** | ** ** |    **Business                Experience****(Preceding                Five Years)**                                                                                                                                                                                                                                                                                                                                                                                                                   |
|------------------------------------------------------------|------------|---------------------------------|------------|-------------------------------------------------------------------------------------------------------------------------------------------|------------|--------------------------------------------------------------------------------------------------------------------------------------------|------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|  C.                John Wilder                        |       |  48                        |       |  Chairman,                President and CEO                                                                                          |       |  May                20, 2005                                                                                                          |       |  Chairman,                President and CEO of TXU Corp. since May 2005; prior thereto President                and                Chief Executive of TXU Corp. (2004-2005); prior thereto Executive                Vice                President and Chief Financial Officer of Entergy Corporation.                                                                                                                                                                                                     |
|  T.                L. Baker                           |       |  61                        |       |  Chairman                of the Board and Chief Executive of TXU Electric Delivery                                                   |       |  July                26, 2004                                                                                                         |       |  Chairman                of the Board and Chief Executive of TXU Electric Delivery since July                2004;                prior thereto Executive Vice President of TXU Corp. and President                and                Chief Executive of TXU Energy Holdings (2003-2004); prior thereto,                Vice                Chairman of TXU Electric Delivery (2002-2003); prior thereto, President                of                TXU Electric Delivery (2001-2002).                        |
|  James                A. Burke                        |       |  38                        |       |  Chairman                of the Board, President and Chief Executive of TXU Energy                                                   |       |  August                16, 2005                                                                                                       |       |  Chairman                of the Board, President and Chief Executive of TXU Energy since August                2005 and Executive Vice President of TXU Energy Holdings since July                2006;                prior thereto, Senior Vice President Consumer Markets of TXU Energy                (2004-2005); prior thereto, President and Chief Operating Officer                of Gexa                Energy; prior thereto, Senior Vice President, Reliant Resources                Incorporated. |
|  David                A. Campbell                     |       |  38                        |       |  Executive                Vice President, Planning, Strategy and Risk and Acting Chief Financial                Officer of TXU Corp. |       |  May                21, 2004                                                                                                          |       |  Executive                Vice President, Planning, Strategy and Risk of TXU Corp. since May                2004                and Acting Chief Financial Officer of TXU Corp. since March 2006                and                Executive Vice President of TXU Energy Holdings since September 2006;                prior thereto, Principal of McKinsey & Company,                Inc.                                                                                                                |
|  M.                Rizwan Chand                       |       |  43                        |       |  Senior                Vice President of TXU Corp.                                                                                   |       |  August                19, 2005                                                                                                       |       |  Senior                Vice President of TXU Corp. since August 2005 and Senior Vice President                of                TXU Energy Holdings, TXU Electric Delivery and TXU Electric Delivery                Transition Bond Company, LLC since July 2005; prior thereto, Vice                President of Human Resources and Corporate Relations for Kennametal,                Inc.                                                                                                                  |

----

|   **Name                of Officer** | ** ** |     **Age** | ** ** |  **Positions                and Offices Presently Held (Current Term Expires****on                June 14, 2007)** | ** ** |  **Date                First Elected to Present Offices****(Current                Term Expires****on                June 14, 2007)** | ** ** |    **Business                Experience****(Preceding                Five Years)** |
|------------------------------------------------|------------|---------------------------------|------------|-------------------------------------------------------------------------------------------------------------------------|------------|--------------------------------------------------------------------------------------------------------------------------------------------|------------|---------------------------------------------------------------------------------------------------|

|  Michael                P. Childers |   |  45 |   |  President                and Chief Executive of Generation Development of TXU DevCo                                                    |   |  August                28, 2006 |   |  President                and Chief Executive of Generation Development of TXU DevCo since                August                2006 and Executive Vice President and Chief Executive of Generation                Development of TXU Energy Holdings since March 2006; prior thereto,                President and Chief Executive Officer of DevCo (May 2006-August 2006);                prior thereto, Senior Vice President of TXU Business Services and                Senior                Vice President of TXU Energy Holdings (2005-2006); prior thereto,                President of the Engineering, Construction and Maintenance Division                and                Executive Vice President for The Shaw Group; prior thereto, President                of                Entergy Asset Management; prior thereto, Chief Operating Officer                of                Entergy Wholesale                Management Operations. |
|------------------------------------------|--------|----------|--------|----------------------------------------------------------------------------------------------------------------------------------------------|--------|--------------------------------------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|  Charles                R. Enze     |   |  53 |   |  President                and Chief Executive of Generation Construction of TXU DevCo                                                   |   |  August                28, 2006 |   |  President                and Chief Executive of Generation Construction of TXU DevCo since                August                2006 and Executive Vice President and Chief Executive of Generation                Construction of TXU Energy Holdings since June 2006; prior thereto,                Vice                President of Engineering and Projects for Shell International Exploration                & Production.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |
|  M.                S. Greene        |   |  61 |   |  Chairman                of the Board, President and Chief Executive of TXU Energy Holdings                and TXU                Power |   |  July                26, 2004   |   |  Chairman                of the Board, President and Chief Executive of TXU Energy Holdings                since                July 2005 and TXU Power since July 2004; prior thereto, Chairman                of the                Board, President and Chief Executive of TXU Power and Executive Vice                President of TXU Energy Holdings (2004-2005); prior thereto, Vice                Chairman                and Chief Executive of TXU Electric Delivery (March 2004-July 2004);                prior                thereto, Vice Chairman of TXU Electric Delivery (2003-2004); prior                thereto, President of TXU Electric Delivery (2002-2003); prior thereto,                President, Transmission Division of TXU Electric Delivery                (2001-2002).                                                                                                                                                 |

----

|   **Name                of Officer** | ** ** |     **Age** | ** ** |  **Positions                and Offices Presently Held (Current Term Expires****on                June 14, 2007)** | ** ** |  **Date                First Elected to Present Offices****(Current                Term Expires****on                June 14, 2007)** | ** ** |    **Business                Experience****(Preceding                Five Years)** |
|------------------------------------------------|------------|---------------------------------|------------|-------------------------------------------------------------------------------------------------------------------------|------------|--------------------------------------------------------------------------------------------------------------------------------------------|------------|---------------------------------------------------------------------------------------------------|

|  Michael                T. McCall   |   |  49 |   |  Chairman                of the Board, President and Chief Executive of TXU Wholesale                               |   |  August                16, 2005 |   |  Chairman                of the Board, President and Chief Executive of TXU Wholesale since                August                2005 and Executive Vice President of TXU Energy Holdings since April                2006;                prior thereto, Senior Vice President of TXU Power (2004-2005) prior                thereto President of TXU Gas (2003-2004); prior thereto, Vice President                of                TXU Business Services Company (1999-2003).                                                                                                                                                                                                                                                                                                                                                                                           |
|------------------------------------------|--------|----------|--------|--------------------------------------------------------------------------------------------------------------------------|--------|--------------------------------------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|  David                P. Poole      |   |  44 |   |  Executive                Vice President and General Counsel of TXU Corp.                                           |   |  March                16, 2006  |   |  Executive                Vice President and General Counsel of TXU Corp. since March 2006                and                Executive Vice President of TXU Energy Holdings since September 2006;                prior thereto, Senior Vice President and Chief Legal Officer of TXU                Power                (January 2005 - September 2006) and Senior Vice President of TXU                Corp.                (January 2005 - May 2005); prior thereto, Senior Vice President of                TXU                Business Services Company (July 2004 - March 2005); prior thereto,                Vice                President and Associate General Counsel of TXU Business Services                Company                (May 2004 - July 2004); prior thereto, Managing partner of the Dallas                office of Hunton & Williams LLP. |
|  Jonathan                A. Siegler |   |  34 |   |  Vice                President of Strategy, Mergers and Acquisition of TXU Business Services                Company |   |  August                30, 2004 |   |  Vice                President of Strategy, Mergers and Acquisition of TXU Business Services                Company since August 2004; prior thereto, Engagement Manager for                McKinsey                & Company; prior thereto Lieutenant in US                Navy.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |

----

**PART      II**

**Item      5.  MARKET      FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS      AND ISSUER PURCHASES OF EQUITY SECURITIES**

|                         |   | Price                Range |   | Dividends                Declared |   |
|------------------------------|--------|----------------------------|--------|-----------------------------------|--------|
| Quarter                Ended |   | 2006                       |   | 2005                              |   | 2006 |   | 2005 |   |
|                         |   | High                       |   | Low                               |   | High |   | Low |   |   |   |   |   |
| March                31      |   | $                          | 53.90  |                              | $      | 44.43 |   | $ | 40.38 |   | $ | 30.22 |   | $ | 0.4125 |   | $ | 0.2813 |   |
| June                30  |   |                       | 59.93  |                              |   | 44.10 |   |   | 43.63 |   |   | 37.36 |   |   | 0.4125 |   |   | 0.2813 |   |
| September                30  |   |                       | 67.21  |                              |   | 58.14 |   |   | 56.59 |   |   | 40.17 |   |   | 0.4125 |   |   | 0.2813 |   |
| December                31   |   |                       | 65.44  |                              |   | 53.05 |   |   | 58.30 |   |   | 44.01 |   |   | 0.4325 |   |   | 0.4124 |   |
|                         |   |                       |   |                              |   |   |   |   |   |   |   |   |   | $ | 1.6700 |   | $ | 1.2563 |   |

----

**Item      6. SELECTED      FINANCIAL DATA**

**Item      7. MANAGEMENT’S      DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS      OF OPERATIONS**

**Item      7A. QUANTITATIVE      AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK**

**Item      8. FINANCIAL      STATEMENTS AND SUPPLEMENTARY DATA**

**Item      9. CHANGES      IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL      DISCLOSURE**

**Item      9A. CONTROLS      AND PROCEDURES**

**Item      9B. OTHER      INFORMATION**

----

**PART      III**

**Item      10. DIRECTORS      AND EXECUTIVE OFFICERS OF THE REGISTRANT**

**Item      11. EXECUTIVE      COMPENSATION**

----

| **Item                12.** | **                  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND                RELATED                STOCKHOLDER MATTERS** |
|-----------------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------|

|                                                                            | **(a)****Number                of securities to****be                issued upon exercise****of                outstanding options,****warrants                and rights** | **(b)****Weighted-average****exercise                price of****outstanding                options,****warrants                and rights** | **(c)****Number                of securities****remaining                available for****future                issuance under****equity                compensation****plans,                excluding****securities                reflected in****column                (a)** |
|---------------------------------------------------------------------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------|----------------------------------------------------------------------------------------------------------------------------------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                                                                            |                                                                                                                                                                        |                                                                                                                                         |                                                                                                                                                                                                                                                                             |
| Equity                compensation plans approved by security holders      | 4,250,340(1)                                                                                                                                                                | N/A                                                                                                                                          | 19,151,807(2)                                                                                                                                                                                                                                                                    |
| Equity                compensation plans not approved by security holders  | ―                                                                                                                                                                     | N/A                                                                                                                                          | ―                                                                                                                                                                                                                                                                          |
|                                                                            | 4,250,340(1)                                                                                                                                                                | N/A                                                                                                                                          | 19,151,807(2)                                                                                                                                                                                                                                                                    |

|   | (1) | Amount                includes 2,825,613 shares representing outstanding target awards                under the                Long-Term Incentive Compensation Plan (LTIP) and 1,424,727 shares                representing outstanding target awards under the Omnibus Incentive                Compensation Plan (OICP). The LTIP and OICP awards can pay out at                0% to                either 175% or 200% of the initial grant, for a total of up to 8,612,956                shares. |
|--------|-----|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | (2) | Represents                shares under the LTIP and OICP. Shares may be newly issued or purchased                on                the open market. (See Note 22 to Financial                Statements.) |
|--------|-----|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

***TXU      Gas Company (TXU Gas) Option Plan***

***Summary***
* *

**Item      13. CERTAIN      RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR      INDEPENDENCE**

**Item      14. PRINCIPAL      ACCOUNTANT FEES AND SERVICES**

----

**PART      IV**

**Item      15. EXHIBITS      AND FINANCIAL STATEMENT SCHEDULES**

|   | Page |
|--------|------|

| Financial                  Statements (included in Appendix A to this report):                        |   |
|-------------------------------------------------------------------------------------------------------|--------|
|                                                                                                  |   |
| Selected                  Financial Data                                                    | A-2    |
| Management’s                  Discussion and Analysis of Financial Condition                    |   |
| and                  Results of Operations                                                       | A-4    |
| Management’s                  Annual Report on Internal Controls over Financial Reporting  | A-74   |
| Reports                  of Independent Registered Public Accounting Firm                        | A-75   |
| Statements                  of Consolidated Income for each of the three years in the                 |   |
| period                  ended December 31, 2006                                                  | A-77   |
| Statements                  of Consolidated Comprehensive Income for each of the                      |   |
| three                  years in the period ended December 31, 2006                               | A-78   |
| Statements                  of Consolidated Cash Flows for each of the three years in                 |   |
| the                  period ended December 31, 2006                                              | A-79   |
| Consolidated                  Balance Sheets, December 31, 2006 and 2005                    | A-81   |
| Statements                  of Consolidated Shareholders’ Equity for each of the three years in |   |
| the                  period ended December 31, 2006                                              | A-82   |
| Notes                  to Financial Statements                                                   | A-84   |

----

**SIGNATURES**

**Pursuant      to the requirements of Section 13 or 15(d) of the Securities Exchange Act of      1934, TXU Corp. has duly caused this report to be signed on its behalf by the      undersigned, thereunto duly authorized.**

| ** **                             | ** ** | ** ** | **TXU                CORP.**                                     | ** ** |
|----------------------------------------|------------|------------|------------------------------------------------------------------|------------|
| ** **                             | ** ** | ** ** | ** **                                                       | ** ** |
| **Date:                March 1, 2007** | ** ** | **By**     | **/s/                C. JOHN WILDER**                            | ** ** |
| ** **                             | ** ** | ** ** | **(C.                John Wilder, Chairman, President and CEO)** | ** ** |

**Pursuant      to the requirements of the Securities Exchange Act of 1934, this report has      been      signed below by the following persons on behalf of TXU Corp. and in the      capacities and on the date indicated. **

|   | Signature                                                                                                           |   | Title                                       |   | Date                         |
|--------|---------------------------------------------------------------------------------------------------------------------|--------|---------------------------------------------|--------|------------------------------|
|   |                                                                                                                |   |                                        |   |                         |
| /s/    | C.                JOHN WILDER                                                                                       |   | Principal                Executive          |   |                         |
|   | (C.                John Wilder, Chairman, President and CEO)                                                        |   | Officer                and Director         |   | March                1, 2007 |
|   |                                                                                                                |   |                                        |   |                         |
|   |                                                                                                                |   |                                        |   |                         |
| /s/    | DAVID                A. CAMPBELL                                                                                    |   | Principal                Financial Officer  |   | March                1, 2007 |
|   | (David                A. Campbell, Executive Vice President and Acting Chief                Financial Officer) |   |                                        |   |                         |
|   |                                                                                                                |   |                                        |   |                         |
|   |                                                                                                                |   |                                        |   |                         |
| /s/    | STANLEY                J. SZLAUDERBACH                                                                              |   | Principal                Accounting Officer |   | March                1, 2007 |
|   | (Stanley                J. Szlauderbach, Senior Vice President and Controller)                                      |   |                                        |   |                         |
|   |                                                                                                                |   |                                        |   |                         |
|   |                                                                                                                |   |                                        |   |                         |
|   |                                                                                                                |   | Director                                    |   |                         |
|   | (E.                Gail de Planque)                                                                                 |   |                                        |   |                         |
|   |                                                                                                                |   |                                        |   |                         |
|   |                                                                                                                |   |                                        |   |                         |
| /s/    | LELDON                E. ECHOLS                                                                                     |   | Director                                    |   | March                1, 2007 |
|   | (Leldon                E. Echols)                                                                                   |   |                                        |   |                         |
|   |                                                                                                                |   |                                        |   |                         |
|   |                                                                                                                |   |                                        |   |                         |
| /s/    | KERNEY                LADAY                                                                                         |   | Director                                    |   | March                1, 2007 |
|   | (Kerney                Laday)                                                                                       |   |                                        |   |                         |
|   |                                                                                                                |   |                                        |   |                         |
|   |                                                                                                                |   |                                        |   |                         |
| /s/    | JACK                E. LITTLE                                                                                       |   | Director                                    |   | March                1, 2007 |
|   | (Jack                E. Little)                                                                                     |   |                                        |   |                         |
|   |                                                                                                                |   |                                        |   |                         |
|   |                                                                                                                |   |                                        |   |                         |
| /s/    | GERARDO                I. LOPEZ                                                                                     |   | Director                                    |   | March                1, 2007 |
|   | (Gerardo                I. Lopez)                                                                                   |   |                                        |   |                         |
|   |                                                                                                                |   |                                        |   |                         |
|   |                                                                                                                |   |                                        |   |                         |
| /s/    | J.                E. OESTERREICHER                                                                                  |   | Director                                    |   | March                1, 2007 |
|   | (J.                E. Oesterreicher)                                                                                |   |                                        |   |                         |
|   |                                                                                                                |   |                                        |   |                         |
|   |                                                                                                                |   |                                        |   |                         |
| /s/    | MICHAEL                W. RANGER                                                                                    |   | Director                                    |   | March                1, 2007 |
|   | (Michael                W. Ranger)                                                                                  |   |                                        |   |                         |
|   |                                                                                                                |   |                                        |   |                         |
|   |                                                                                                                |   |                                        |   |                         |
| /s/    | LEONARD                H. ROBERTS                                                                                   |   | Director                                    |   | March                1, 2007 |
|   | (Leonard                H. Roberts)                                                                                 |   |                                        |   |                         |
|   |                                                                                                                |   |                                        |   |                         |
|   |                                                                                                                |   |                                        |   |                         |
| /s/    | GLENN                F. TILTON                                                                                      |   | Director                                    |   | March                1, 2007 |
|   | (Glenn                F. Tilton)                                                                                    |   |                                        |   |                         |

----

**Appendix      A**

**TXU      CORP. AND SUBSIDIARIES**

**INDEX      TO FINANCIAL INFORMATION**

**December      31, 2006**

|                                                                                                                                | **Page** |
|-------------------------------------------------------------------------------------------------------------------------------------|----------|
|                                                                                                                                |     |
| Selected                  Financial Data - Consolidated Financial Statistics                                                   | A-2      |
| Management’s                  Discussion and Analysis of Financial Condition and Results of                  Operations  | A-4      |
| Management’s                  Annual Report on Internal Controls over Financial Reporting                                | A-74     |
| Reports                  of Independent Registered Public Accounting Firm                                                      | A-75     |
| Financial                  Statements:                                                                                              |     |
| Statements                  of Consolidated Income                                                                                  | A-77     |
| Statements                  of Consolidated Comprehensive Income                                                                    | A-78     |
| Statements                  of Consolidated Cash Flows                                                                              | A-79     |
| Consolidated                  Balance Sheets                                                                                        | A-81     |
| Statements                  of Consolidated Shareholders’ Equity                                                              | A-82     |
| Notes                  to Financial Statements                                                                                      | A-84     |

----

**TXU      CORP. AND SUBSIDIARIES**

**SELECTED      FINANCIAL DATA**

|                                                                                    |   | Year                  Ended December 31,                                    |    |
|-----------------------------------------------------------------------------------------|--------|-----------------------------------------------------------------------------|---------|
|                                                                                    |   | 2006                                                                        |    | 2005 |   | 2004 |   | 2003 |   | 2002 |   |
|                                                                                    |   | (millions                  of dollars, except ratios and per share amounts) |    |
|                                                                                    |   |                                                                        |    |   |   |   |   |   |   |   |   |
| Operating                  revenues                                                |   | $                                                                           | 10,856  |   | $ | 10,662 |   | $ | 9,216 |   | $ | 8,532 |   | $ | 8,125 |   |
| Income                  from continuing operations before extraordinary gain (loss) and |   |                                                                        |    |   |   |   |   |   |   |   |   |   |   |   |   |   |
| cumulative                  effect of changes in accounting principles                  |   | $                                                                           | 2,465   |   | $ | 1,775 |   | $ | 81 |   | $ | 566 |   | $ | 105 |   |
| Income                  (loss) from discontinued operations, net of tax effect     |   | $                                                                           | 87      |   | $ | 5 |   | $ | 378 |   | $ | 74 |   | $ | (4,181 | ) |
| Extraordinary                  gain (loss), net of tax effect                      |   | $                                                                           | ─ |   | $ | (50 | ) | $ | 16 |   | $ | ─ |   | $ | (134 | ) |
| Cumulative                  effect of changes in accounting principles, net             |   |                                                                        |    |   |   |   |   |   |   |   |   |   |   |   |   |   |
| of                  tax effect                                                          |   | $                                                                           | ─ |   | $ | (8 | ) | $ | 10 |   | $ | (58 | ) | $ | ─ |   |
| Exchangeable                  preferred membership interest buyback premium        |   | $                                                                           | ─ |   | $ | ─ |   | $ | 849 |   | $ | ─ |   | $ | ─ |   |
| Preference                  stock dividends                                        |   | $                                                                           | ─ |   | $ | 10 |   | $ | 22 |   | $ | 22 |   | $ | 22 |   |
| Net                  income (loss) available for common stock                      |   | $                                                                           | 2,552   |   | $ | 1,712 |   | $ | (386 | ) | $ | 560 |   | $ | (4,232 | ) |
|                                                                                    |   |                                                                        |    |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Common                  stock data (millions):                                          |   |                                                                        |    |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Basic                  shares outstanding - average                                     |   |                                                                        | 460     |   |   | 476 |   |   | 600 |   |   | 643 |   |   | 556 |   |
| Diluted                  shares outstanding - average                                   |   |                                                                        | 467     |   |   | 486 |   |   | 600 |   |   | 758 |   |   | 556 |   |
| Shares                  outstanding - end of year                                       |   |                                                                        | 459     |   |   | 471 |   |   | 480 |   |   | 648 |   |   | 644 |   |
|                                                                                    |   |                                                                        |    |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Basic                  earnings per share:                                              |   |                                                                        |    |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net                  income (loss) available to common stock from                       |   |                                                                        |    |   |   |   |   |   |   |   |   |   |   |   |   |   |
| continuing                  operations                                                  |   | $                                                                           | 5.36    |   | $ | 3.71 |   | $ | (1.32 | ) | $ | 0.85 |   | $ | 0.15 |   |
| Income                  (loss) from discontinued operations, net of tax effect          |   | $                                                                           | 0.19    |   | $ | 0.01 |   | $ | 0.63 |   | $ | 0.11 |   | $ | (7.52 | ) |
| Extraordinary                  gain (loss), net of tax effect                           |   | $                                                                           | ─ |   | $ | (0.10 | ) | $ | 0.03 |   | $ | ─ |   | $ | (0.24 | ) |
| Cumulative                  effect of changes in accounting principles, net             |   |                                                                        |    |   |   |   |   |   |   |   |   |   |   |   |   |   |
| of                  tax effect                                                          |   | $                                                                           | ─ |   | $ | (0.02 | ) | $ | 0.02 |   | $ | (0.09 | ) | $ | ─ |   |
| Net                  income (loss) available for common stock                           |   | $                                                                           | 5.55    |   | $ | 3.60 |   | $ | (0.64 | ) | $ | 0.87 |   | $ | (7.61 | ) |
|                                                                                    |   |                                                                        |    |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Diluted                  earnings per share:                                            |   |                                                                        |    |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net                  income (loss) available to common stock from                       |   |                                                                        |    |   |   |   |   |   |   |   |   |   |   |   |   |   |
| continuing                  operations(a)                                               |   | $                                                                           | 5.27    |   | $ | 2.61 |   | $ | (1.32 | ) | $ | 0.79 |   | $ | 0.15 |   |
| Income                  (loss) from discontinued operations, net of tax effect          |   | $                                                                           | 0.19    |   | $ | 0.01 |   | $ | 0.63 |   | $ | 0.10 |   | $ | (7.52 | ) |
| Extraordinary                  gain (loss), net of tax effect                           |   | $                                                                           | ─ |   | $ | (0.10 | ) | $ | 0.03 |   | $ | ─ |   | $ | (0.24 | ) |
| Cumulative                  effect of changes in accounting principles, net             |   |                                                                        |    |   |   |   |   |   |   |   |   |   |   |   |   |   |
| of                  tax effect                                                          |   | $                                                                           | ─ |   | $ | (0.02 | ) | $ | 0.02 |   | $ | (0.08 | ) | $ | ─ |   |
| Net                  income (loss) available for common stock                           |   | $                                                                           | 5.46    |   | $ | 2.50 |   | $ | (0.64 | ) | $ | 0.81 |   | $ | (7.61 | ) |
|                                                                                    |   |                                                                        |    |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Dividends                  declared per share                                      |   | $                                                                           | 1.67    |   | $ | 1.26 |   | $ | 0.47 |   | $ | 0.25 |   | $ | 0.96 |   |
| Book                  value per share - end of year                                |   | $                                                                           | 4.66    |   | $ | 1.01 |   | $ | 0.71 |   | $ | 8.67 |   | $ | 7.40 |   |
| Return                  on average common stock equity(b)                          |   |                                                                        | 188.5   | % |   | 433.7 | % |   | 2.0 | % |   | 10.5 | % |   | 1.3 | % |
| Ratio                  of earnings to fixed charges                                |   |                                                                        | 5.11    |   |   | 3.80 |   |   | 1.16 |   |   | 1.94 |   |   | 1.22 |   |
| Ratio                  of earnings to combined fixed charges                            |   |                                                                        |    |   |   |   |   |   |   |   |   |   |   |   |   |   |
| and                  preference dividends                                               |   |                                                                        | 5.11    |   |   | 3.74 |   |   | 1.11 |   |   | 1.87 |   |   | 1.17 |   |
|                                                                                    |
|                                                                                    |
| See                  notes on page A-3.                                                 |

----

**TXU      CORP. AND SUBSIDIARIES**

**SELECTED      FINANCIAL DATA (CONTINUED)**

|                                                                              |   | Year                Ended December 31,              |    |
|-----------------------------------------------------------------------------------|--------|-----------------------------------------------------|---------|
|                                                                              |   | 2006                                                |    | 2005 |   | 2004 |   | 2003 |   | 2002 |   |
|                                                                              |   | (millions                of dollars, except ratios) |    |
|                                                                              |   |                                                |    |   |   |   |   |   |   |   |   |
| Total                assets - end of year                                         |   | $                                                   | 25,922  |   | $ | 25,539 |   | $ | 23,189 |   | $ | 31,284 |   | $ | 31,384 |   |
| Property,                plant & equipment - net - end of year                |   |                                                | 18,756  |   |   | 17,192 |   |   | 16,676 |   |   | 16,803 |   |   | 16,526 |   |
| Capital                expenditures                                          |   |                                                | 2,180   |   |   | 1,047 |   |   | 912 |   |   | 721 |   |   | 813 |   |
| Capitalization                - end of year                                       |   |                                                |    |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Equity-linked                debt securities                                 |   | $                                                   | ─ |   | $ | 179 |   | $ | 285 |   | $ | 1,440 |   | $ | 1,440 |   |
| Exchangeable                subordinated notes (c)                           |   |                                                | ─ |   |   | — |   |   | — |   |   | — |   |   | 639 |   |
| Long-term                debt held by subsidiary trusts                      |   |                                                | ─ |   |   | — |   |   | — |   |   | 546 |   |   | 546 |   |
| All                other long-term debt, less amounts due currently          |   |                                                | 10,631  |   |   | 11,153 |   |   | 12,127 |   |   | 9,168 |   |   | 8,003 |   |
| Exchangeable                preferred membership interests (c)               |   |                                                | ─ |   |   | — |   |   | — |   |   | 646 |   |   | — |   |
| Preferred                stock of subsidiaries:                                   |   |                                                |    |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Not                subject to mandatory redemption (d)                       |   |                                                | ─ |   |   | — |   |   | 38 |   |   | 113 |   |   | 190 |   |
| Subject                to mandatory redemption                               |   |                                                | ─ |   |   | — |   |   | — |   |   | — |   |   | 21 |   |
| Preference                stock                                              |   |                                                | ─ |   |   | — |   |   | 300 |   |   | 300 |   |   | 300 |   |
| Common                stock equity                                           |   |                                                | 2,140   |   |   | 475 |   |   | 339 |   |   | 5,619 |   |   | 4,766 |   |
| Total                                                                             |   | $                                                   | 12,771  |   | $ | 11,807 |   | $ | 13,089 |   | $ | 17,832 |   | $ | 15,905 |   |
| Capitalization                ratios - end of year                                |   |                                                |    |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Equity-linked                debt securities                                      |   |                                                | — | % |   | 1.5 | % |   | 2.2 | % |   | 8.1 | % |   | 9.1 | % |
| Exchangeable                subordinated notes                                    |   |                                                | — |   |   | — |   |   | — |   |   | — |   |   | 4.0 |   |
| Long-term                debt held by subsidiary trusts                           |   |                                                | — |   |   | — |   |   | — |   |   | 3.1 |   |   | 3.4 |   |
| All                other long-term debt, less amounts due currently               |   |                                                | 83.2    |   |   | 94.5 |   |   | 92.6 |   |   | 51.4 |   |   | 50.3 |   |
| Exchangeable                preferred membership interests                        |   |                                                | — |   |   | — |   |   | — |   |   | 3.6 |   |   | — |   |
| Preferred                stock of subsidiaries (d)                                |   |                                                | — |   |   | — |   |   | 0.3 |   |   | 0.6 |   |   | 1.3 |   |
| Preference                stock                                                   |   |                                                | — |   |   | — |   |   | 2.3 |   |   | 1.7 |   |   | 1.9 |   |
| Common                stock equity                                                |   |                                                | 16.8    |   |   | 4.0 |   |   | 2.6 |   |   | 31.5 |   |   | 30.0 |   |
| Total                                                                             |   |                                                | 100.0   | % |   | 100.0 | % |   | 100.0 | % |   | 100.0 | % |   | 100.0 | % |
|                                                                              |   |                                                |    |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Notes                payable - commercial paper                              |   | $                                                   | 1,296   |   | $ | 358 |   | $ | — |   | $ | — |   | $ | — |   |
| Notes                payable - banks                                         |   |                                                | 195     |   |   | 440 |   |   | 210 |   |   | — |   |   | 2,306 |   |
| Long-term                debt due currently                                  |   |                                                | 485     |   |   | 1,250 |   |   | 229 |   |   | 678 |   |   | 941 |   |
|                                                                              |   |                                                |    |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Embedded                interest cost on long-term debt - end of year (e)         |   |                                                | 6.6     | % |   | 6.3 | % |   | 6.0 | % |   | 6.3 | % |   | 6.8 | % |
| Embedded                interest cost on long-term debt held by subsidiary trusts |   |                                                | ─ | % |   | — | % |   | ─ | % |   | 6.4 | % |   | 7.8 | % |
| Embedded                dividend cost on preferred stock of subsidiaries -        |   |                                                |    |   |   |   |   |   |   |   |   |   |   |   |   |   |
| end                of year (f)                                                    |   |                                                | ─ | % |   | ─ | % |   | 4.4 | % |   | 9.7 | % |   | 6.5 | % |

| (a) | The                2005 diluted per share results reflect the unfavorable impact associated                with the accelerated share repurchase program. (See                Note 2 to Financial Statements.)                                                                                                                                                                                                                                                                                                                                     |
|-----|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| (b) | Based                on income from continuing operations before extraordinary gain (loss)                and                cumulative effect of changes in accounting principles.                                                                                                                                                                                                                                                                                                                                                                |
| (c) | Amount                is net of discount.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |
| (d) | Preferred                stock outstanding at the end of 2006 and 2005 has a stated amount                of $51                thousand.                                                                                                                                                                                                                                                                                                                                                                                                          |
| (e) | Represents                the annual interest using year-end rates for variable rate debt and                reflecting effects of interest rate swaps and amortization of any                discounts, premiums, issuance costs and any deferred gains/losses                on                reacquisitions divided by the carrying value of the debt plus or                minus the                unamortized balance of any discounts, premiums, issuance costs and                gains/losses on reacquisitions at the end of the year. |
| (f) | Includes                the unamortized balance of the loss on reacquired preferred stock                and                associated amortization. The embedded dividend cost excluding the                effects                of the loss on reacquired preferred stock is 6.0% for                2002.                                                                                                                                                                                                                                     |

----

**MANAGEMENT’S      DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF      OPERATIONS**

**BUSINESS      **

**Operating      Segments**

----

**Business      Strategy**

**Overview**

| ·   | Phase                one involved divesting of value-disadvantaged businesses and using                the                sales proceeds, operating cash flows and cash on hand to simplify                the                capital structure and improve financial flexibility. This phase also                included changing pricing and commodity price hedging strategies                to                reflect rising natural gas prices, resolving significant litigation                risks                and lowering business process costs through a significant outsourcing                arrangement. Phase one was completed in 2004. As discussed in Note                8 to                Financial Statements, these restructuring actions resulted in net                charges                to 2004 income from continuing operations totaling $1.2 billion ($828                million after-tax). Also see Note 3 to Financial Statements for the                effect                on results from discontinued operations. |
|--------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| ·   | Phase                two included implementation of initiatives to achieve operational                excellence across the business, targeting industry-leading performance                standards for productivity, reliability and customer service and                embedding                a high-performance industrial culture. Phase two work has been largely                completed but remains ongoing as a basis for continuous process                improvement. |
|--------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| ·   | Phase                three included development and implementation of the growth strategy                for                TXU Corp. and its two business segments. In 2006, actions were initiated                to execute this strategy by way of several key initiatives launched                during                the year, including planned development of new generation                facilities.  TXU Corp. has agreed to modify this strategy in                connection with the proposed                merger. |
|--------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

**TXU      Energy Holdings Segment Significant Developments**

*Texas      Generation Facilities Development*

----

*Potential        Nuclear Generation Development*

*Investment      in Cleaner Coal-Fueled Generation Technologies*

----

*Long-term      Hedging Program*

| ·   | In                  June 2006, TXU DevCo entered into a related series of hedging transactions                  under an agreement that allows hedging of movements in electricity                  prices.** **See                  Note 19 to Financial Statements for a discussion of a loss of $109                  million                  ($71 million after-tax) recorded upon inception of these hedging                  transactions. This agreement was amended and restated in February                  2007. |
|--------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| ·   | In                  February 2007, TXU DevCo entered into a series of hedging transactions                  under an agreement that allows hedging of movements in electricity                  prices.                  A “day one” loss of approximately $70 million ($46 million after-tax) is                  expected to be recorded in the first quarter of 2007 to recognize                  the                  below-market pricing of the                  transactions. |
|--------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

**TXU      Electric Delivery Segment Significant Developments**

*New      Utility Services Joint Venture*

*Technology      Initiatives*

|   | · | increase                network reliability and power                quality; |
|--------|--------|-------------------------------------------------------------------------------|

|   | · | prevent,                detect and restore customer outages more effectively;                and |
|--------|--------|--------------------------------------------------------------------------------------------------|

|   | · | implement                advanced meter monitoring more                efficiently. |
|--------|--------|-------------------------------------------------------------------------------------|

----

----

**KEY      RISKS AND CHALLENGES**

*Natural      Gas Price and Market Heat-Rate Exposure*

|   | · | improving                customer service to attract and retain high-value                customers; |
|--------|--------|------------------------------------------------------------------------------------------------------|

|   | · | continuing                to follow a retail pricing strategy that appropriately reflects the                magnitude and costs of commodity price                risk; |
|--------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | continuing                reduction of fixed costs to better withstand gross margin volatility;                and |
|--------|--------|--------------------------------------------------------------------------------------------------------------------|

|   | · | employing                disciplined hedging and risk management strategies through physical                and                financial energy-related (electricity and natural gas) contracts                to                partially hedge gross margins. |
|--------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

*Competitive      Markets and Customer Retention*

|   | · | Customer                retention strategy remains focused on delivering world-class customer                service and improving the overall customer experience. In line with                this                strategy, TXU Corp. continues to implement initiatives to improve                call                center response time and effectiveness as well as Internet interaction                with customers; |
|--------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | TXU                Energy Company intends to establish itself as the most innovative                retailer                in the Texas market as it is critical in the fully competitive environment                and continues to develop tailored product offerings to meet customer                needs; |
|--------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | A                comprehensive customer initiative to provide residential customers                with                greater savings and price certainty was introduced in the fourth                quarter                of 2006. This initiative includes a $100 customer appreciation bonus                (see                Note 7 to Financial Statements), a $25 incentive to customers who                switch                from the basic rate (former price-to-beat rate) plan to a discounted                rate                plan, and a three-year rate cap for customers who remain on plans                with the                basic rate; and |
|--------|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | Initiatives                in the business market are focused largely on programs targeted to                retain                the existing highest-value customers and to recapture customers who                have                switched REPs. Initiatives include a more disciplined contracting                and                pricing approach and improved economic segmentation of the business                market                to enhance targeted sales and marketing efforts and to more effectively                deploy the direct-sales force. Tactical programs put into place include                improved customer service, new product price/service offerings and                a                multichannel approach for the small business                market. |
|--------|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

*Texas        Generation Development Program*

*Energy      Prices and Regulatory Risk*

----

*New      and Changing Environmental Regulations*

|   | · | Establishing                  a plan to invest up to $2 billion for the development and                  commercialization of cleaner generation plant                  technologies; |
|--------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | Initiating                  the process to file an application to the NRC for licenses to construct                  and operate a new nuclear generation facility in Texas; |
|--------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | Doubling                  the renewable energy (wind generation) portfolio to 1,500                  MW; |
|--------|--------|----------------------------------------------------------------------------------------------------------|

|   | · | Investing                  up to $400 million in programs designed to encourage customer electricity                  demand efficiencies; and |
|--------|--------|------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | Increasing                  production efficiency of its existing generation facilities by                  up to 2                  percent. |
|--------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------|

*Cost      Exposure Related to Nuclear Asset Outages*

----

**APPLICATION      OF CRITICAL ACCOUNTING POLICIES**

***Derivative      Instruments and Mark-to-Market Accounting***
* *
* *

----

|                                                                                                      |       | **Year                Ended December 31,** | ** ** |
|-----------------------------------------------------------------------------------------------------------|------------|--------------------------------------------|------------|
| ** **                                                                                                | ** ** | **2006**                                   | ** ** | **2005** | ** ** | **2004** |   |
|                                                                                                      |       |                                       |       |   |   |   |   |
| Amounts                recognized in net income (after-tax):                                              |       |                                       |       |   |   |   |   |
| Unrealized                ineffectiveness net gains (losses) on unsettled positions                       |       |                                       |       |   |   |   |   |
| accounted                for as cash flow hedges                                                          |       | $                                          | 141        |   | $ | (24 | ) | $ | (14 | ) |
| Reversals                of previously recognized unrealized net losses related                           |       |                                       |       |   |   |   |   |   |   |   |
| to                cash flow hedge positions settled in the period                                         |       |                                       | 14         |   |   | 7 |   |   | 1 |   |
| Unrealized                net gains (losses) on unsettled positions marked-to-market                      |       |                                       |       |   |   |   |   |   |   |   |
| in                net income                                                                              |       |                                       | 15         |   |   | 21 |   |   | (19 | ) |
| Reversals                of previously recognized unrealized net losses (gains) related                to |       |                                       |       |   |   |   |   |   |   |   |
| marked-to-market                positions settled in the period                                           |       |                                       | 7          |   |   | (15 | ) |   | (40 | ) |
| Total                                                                                                     |       | $                                          | 177        |   | $ | (11 | ) | $ | (72 | ) |
|                                                                                                      |       |                                       |       |   |   |   |   |   |   |   |
| Amounts                recognized in other comprehensive income (after-tax):                              |       |                                       |       |   |   |   |   |   |   |   |
| Net                gains (losses) in fair value of unsettled positions accounted for                as    |       |                                       |       |   |   |   |   |   |   |   |
| cash                flow hedges                                                                      |       | $                                          | 568        |   | $ | (47 | ) | $ | (75 | ) |
| Net                losses (gains) on cash flow hedge positions recognized in net                income    |       |                                       |       |   |   |   |   |   |   |   |
| to                offset hedged transactions                                                         |       |                                       | (15        | ) |   | 77 |   |   | 44 |   |
| Total                                                                                                     |       | $                                          | 553        |   | $ | 30 |   | $ | (31 | ) |

|                                                                                                                                           |       | **December                31,** | ** ** |
|------------------------------------------------------------------------------------------------------------------------------------------------|------------|---------------------------------|------------|
| ** **                                                                                                                                     | ** ** | **2006**                        | ** ** | **2005** |   |
| Net                derivative asset (liability) related to cash flow hedges                                                               |       | $                               | 910        |   | $ | (164 | ) |
| Net                derivative liability related to interest rate fair value                hedges                                         |       |                            | (85        | ) |   | (71 | ) |
| Other                derivative assets                                                                                                    |       |                            | 9          |   |   | 9 |   |
| Total                net cash flow hedge and other derivative asset (liability)                                                                |       | $                               | 834        |   | $ | (226 | ) |
|                                                                                                                                           |       |                            |       |   |   |   |   |
| Net                commodity contract asset (a)                                                                                           |       | $                               | 69         |   | $ | 36 |   |
|                                                                                                                                           |       |                            |       |   |   |   |   |
| Long-term                debt fair value adjustments ―decrease                in carrying value (b)                                 |       | $                               | (63        | ) | $ | (44 | ) |
|                                                                                                                                           |       |                            |       |   |   |   |   |
| Net                accumulated other comprehensive gain (loss) included in shareholders’                equity (after-tax amounts)  |       | $                               | 411        |   | $ | (142 | ) |

| (a) | Excludes                amounts not arising from mark-to-market valuations such as payments                and                receipts of cash and other consideration associated with commodity                hedging                and trading activities.                               |
|-----|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| (b) | Includes                unamortized net gains of $6 million in 2006 related to settled interest                rate swaps designated as fair value hedges. The gain is being amortized                to                net income as the hedged transactions are                recognized. |

----

***Revenue      Recognition***
* *

***Accounting      for Contingencies***
*—      *

***Accounting      for Income Taxes***
* *

----

***Impairment      of Long-Lived Assets***

***Depreciation***

----

***Regulatory      Assets***

***Defined      Benefit Pension Plans and Other Postretirement Employee Benefit      Plans***
*—*

|                                                                                     |       | **Year                Ended December 31,** | ** ** |
|------------------------------------------------------------------------------------------|------------|--------------------------------------------|------------|
| ** **                                                                               | ** ** | **2006**                                   | ** ** | **2005** | ** ** | **2004** |   |
| Pension                costs under SFAS 87                                          |       | $                                          | 66         |   | $ | 46 |   | $ | 58 |   |
| OPEB                costs under SFAS 106                                            |       |                                       | 81         |   |   | 71 |   |   | 80 |   |
| Total                benefit costs                                                       |       | $                                          | 147        |   | $ | 117 |   | $ | 138 |   |
| Less                amounts deferred principally as a regulatory asset or property  |       |                                       | (84        | ) |   | (58 | ) |   | (27 | ) |
| Net                amounts recognized as expense                                         |       | $                                          | 63         |   | $ | 59 |   | $ | 111 |   |

----

|   | · | Pension                and OPEB costs increased $30 million to $147 million in 2006 primarily                due                to a lower discount rate (5.75% in 2006 versus 6.00% in 2005) used                to                measure pension and OPEB                obligations. |
|--------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | Pension                and OPEB costs decreased $21 million to $117 million in 2005 due                primarily                to fewer active employees following the 2004 Capgemini outsourcing                and TXU                Gas disposition transactions and other 2004 restructuring actions.                (See                Note 8 to Financial Statements.) |
|--------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | A                curtailment charge of $5 million is included in pension and OPEB                costs in                2004 due to the effects of the Capgemini outsourcing and TXU Gas                disposition transactions. |
|--------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   **Assumption**                             |   | **Increase/(decrease)                in 2006 Pension and****OPEB                Costs** |   |
|--------------------------------------------------------|--------|-----------------------------------------------------------------------------------------|--------|
| Discount                rate - 1% increase             |   | $                                                                                       | (42    | ) |
| Discount                rate - 1% decrease             |   | $                                                                                       | 37     |   |
| Expected                return on assets - 1% increase |   | $                                                                                       | (19    | ) |
| Expected                return on assets - 1% decrease |   | $                                                                                       | 19     |   |

***Regulatory      Recovery of Pension and OPEB Costs***

----

***Stock-Based      Incentive Compensation** -*
* *

|   | · | Expected                volatility of the stock price of TXU Corp. and peer group companies                -                expected volatility is determined based on historical stock price                volatilities using daily stock price returns for the three years                prior to                the grant date. |
|--------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | The                dividend rate for TXU Corp. and peer group companies based on the                observed                dividend payments over the twelve months prior to grant                date. |
|--------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | Risk-free                rate during the three year vesting period - the rate used for the                April 1,                2006 awards was the interest rate at that date for three-year U.S.                Treasury securities, which was                4.83%. |
|--------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | Discount                for liquidation restrictions - this factor estimates the discount                for lack                of marketability of vested awards due to the anticipated time for                the                approval and issuance of the awards, the black-out period immediately                after the grant and additional holding requirements imposed on senior                executives. This discount is determined based on an estimation of                the cost                of a protective put at the award date and is calculated using the                Black-Scholes option pricing model using expected volatility assumptions                based on historical and implied volatility as discussed above and                a                risk-free rate of return over the option                period. |
|--------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

**RESULTS      OF OPERATIONS**

----

**TXU      Corp. Consolidated**

***2006      compared to 2005***

|                                                                     |       | **Year                Ended December 31,** | ** ** | ** **     | ** ** |
|--------------------------------------------------------------------------|------------|--------------------------------------------|------------|----------------|------------|
| ** **                                                               | ** ** |  **2006**                             | ** ** |  **2005** | ** ** | **Increase****(Decrease**) |   |
| TXU                Energy Holdings segment:                              |       |                                       |       |           |       |   |   |
| Retail                electricity revenues                          |       | $                                          | 6,953      |           | $          | 6,330 |   | $ | 623 |   |
| Accrued                customer appreciation bonus                  |       |                                       | (162       | )              |       | ─ |   |   | (162 | ) |
| Wholesale                electricity revenues                       |       |                                       | 2,278      |           |       | 2,807 |   |   | (529 | ) |
| Wholesale                balancing activities                       |       |                                       | (31        | )              |       | 225 |   |   | (256 | ) |
| Results                of risk management and trading activities    |       |                                       | 153        |           |       | (164 | ) |   | 317 |   |
| Other                operating revenues                             |       |                                       | 358        |           |       | 354 |   |   | 4 |   |
|     Total                TXU Energy Holdings segment |       |                                       | 9,549      |           |       | 9,552 |   |   | (3 | ) |
| TXU                Electric Delivery segment                        |       |                                       | 2,449      |           |       | 2,394 |   |   | 55 |   |
| Net                intercompany eliminations                        |       |                                       | (1,142     | )              |       | (1,284 | ) |   | 142 |   |
|     Total                consolidated revenues       |       | $                                          | 10,856     |           | $          | 10,662 |   | $ | 194 |   |

|   | · | A                10% increase in retail electricity revenues was driven by higher                pricing,                partially offset by the effect of an 11% decline in retail sales                volumes.                Higher retail prices reflected increases in natural gas prices that                resulted in the regulatory-approved price-to-beat rate increases                implemented in May 2005, October 2005 and January 2006. The decline                in                retail sales volumes reflected a net loss of customers due to competitive                activity and lower average consumption per residential and small                business                customer. |
|--------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | A                $162 million ($105 million after-tax) charge was recorded in the                fourth                quarter of 2006 for a special residential customer appreciation bonus.                See                discussion in Note 7 to Financial Statements for                details. |
|--------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | The                decline in wholesale electricity revenues reflected the reporting                of                wholesale electricity trading activity on a net basis in 2006 as                described                in Note 1 to Financial Statements. |
|--------|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | Wholesale                balancing net revenues/purchases are subject to high variability                as the                activity represents intraday purchases and sales transactions with                ERCOT                for real-time balancing purposes as measured in 15-minute intervals.                See                Note 1 to Financial Statements for a discussion regarding reporting                of                ERCOT balancing activities. |
|--------|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | The                gains arising from risk management and trading activities in 2006                primarily reflect the unrealized effects of changes in natural gas                prices                and market heat rates on positions in the long-term hedging program                implemented in the fourth quarter of 2005, while the losses in 2005                primarily represent realized losses on prior years’ hedging                activities. |
|--------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

*Gross      Margin*

|                                                         |       |
|--------------------------------------------------------------|------------|
|                                                         |       | **Year                Ended December 31,** | ** ** |
| ** **                                                   | ** ** | **2006** | ** ** | **%                of Revenue** | ** ** | **2005** | ** ** | **%                of Revenue** |   |
|                                                         |       |   |   |   |   |   |   |   |   |
| Operating                revenues                       |       | $ | 10,856 |   |   | 100 | % | $ | 10,662 |   |   | 100 | % |
| Costs                and expenses:                           |       |   |   |   |   |   |   |   |   |   |   |   |   |
| Fuel,                purchased power costs and delivery fees |       |   | 2,784 |   |   | 26 |   |   | 4,261 |   |   | 40 |   |
| Operating                costs                               |       |   | 1,373 |   |   | 13 |   |   | 1,425 |   |   | 13 |   |
| Depreciation                and amortization                 |       |   | 813 |   |   | 7 |   |   | 764 |   |   | 7 |   |
| Gross                margin                             |       | $ | 5,886 |   |   | 54 | % | $ | 4,212 |   |   | 40 | % |

|   | · | The                TXU Energy Holdings segment’s gross margin increased $1.7 billion, or 55%,                to $4.7 billion. The gross margin increase reflected the                regulatory-approved price-to-beat increases and unrealized net gains                from                cash flow hedge ineffectiveness and mark-to-market valuations of                positions                in the long-term hedging program. |
|--------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | The                TXU Electric Delivery segment’s gross margin increased $15 million, or 1%,                to $1.2 billion in 2006, driven by higher                revenues. |
|--------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | TXU                Energy Holdings’ operating costs decreased $64 million, or 10%, primarily                reflecting lower maintenance costs due to both nuclear generation                units                having scheduled refueling outages in 2005 compared to one in 2006,                as                well as lower incentive compensation expense in 2006 and the absence                of                combustion turbine lease expense in 2006 resulting from the purchase                of a                lease trust interest in early 2006 (see Note 4 to Financial                Statements). |
|--------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | TXU                Electric Delivery’s operating costs increased $12 million, or 2%, driven                by fees paid to third-party transmission                entities. |
|--------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

|   | · | $39                million in costs associated with the new generation development programs,                principally salaries and consulting                expenses; |
|--------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | $17                million in higher fees related to the sale of accounts receivable                program                due to higher interest rates; |
|--------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | $12                million in executive severance costs;                and |
|--------|--------|-----------------------------------------------------------------------------|

|   | · | $12                million in higher bad debt expense primarily reflecting higher retail                accounts receivable balances due to higher                prices, |
|--------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | $20                million in lower stock-based incentive compensation expense due primarily                to fewer share awards and lower expense related to a deferred compensation                plan; |
|--------|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | $9                million in lower consulting fees related to various strategic initiatives,                including fees in 2005 relating to the TXU Operating System;                and |
|--------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | $7                million in lower compensation expense resulting from cost reduction                initiatives. |
|--------|--------|-------------------------------------------------------------------------------------------------------------------|

----

| ·   | Earnings                in the TXU Energy Holdings segment increased $934 million, or 65%,                to $2.4                billion driven primarily by improved gross margin partially offset                by a                charge for the write-down of the natural gas-fueled generation                plants. |
|--------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| ·   | Earnings                in the TXU Electric Delivery segment decreased $7 million, or 2%,                to $344                million driven by expenses in 2006 related to the cities rate settlement                and the InfrastruX Energy Services joint                venture. |
|--------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| ·   | Corporate                and Other net expenses totaled $242 million in 2006 and $5 million                in                2005. The increase reflected (all amounts                after-tax): |
|--------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | o | a                $138 million tax benefit in 2005 related to TXU Europe (see Note                11 to                Financial Statements); |
|--------|---|----------------------------------------------------------------------------------------------------------------------------------------------|

|   | o | an                $85 million increase (to $241 million) in net interest expense related                to                advances from subsidiaries reflecting higher balances and interest                rates; |
|--------|---|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | o | a                $17 million gain in 2006 related to a settlement of a telecommunications                contract dispute; and |
|--------|---|--------------------------------------------------------------------------------------------------------------------------------|

|   | o | $10                million and $23 million of insurance recoveries in 2006 and 2005,                respectively, related to the 2005 shareholders’ litigation                settlement. |
|--------|---|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | Diluted                earnings per share in 2006 reflected a favorable $0.16 per share                impact                from the repurchase of approximately 18.5 million shares since December                31, 2005. Basic average common shares outstanding decreased 3% to                460                million shares reflecting these share repurchases. Diluted average                common                shares decreased 4% to 467 million shares. (See Note 2 to Financial                Statements.) |
|--------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | Diluted                earnings per share in 2005 reflect an unfavorable impact associated                with                the November 2004 accelerated share repurchase program. See Notes                2 and 17                to Financial Statements. |
|--------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

**TXU      Corp. Consolidated**

***2005      compared to 2004***

| ·   | Operating                revenues in the TXU Energy Holdings segment increased $1.2 billion,                or                14%, to $9.6 billion driven by higher retail and wholesale pricing,                which                was primarily the result of higher natural gas prices. The effect                of                higher pricing was partially offset by the effect of lower retail                sales                volumes. Retail sales volumes declined 17% primarily reflecting a                net loss                of customers to competitive activity, particularly in the large business                market, partially offset by the effect of warmer                weather. |
|--------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| ·   | Operating                revenues in the TXU Electric Delivery segment increased $168 million,                or                8%, to $2.4 billion in 2005. The revenue increase was driven by a                5%                increase in delivered volumes, due largely to warmer weather and                an                increase in delivery points. The balance of the growth reflected                $46                million in higher transition charges associated with securitization                bonds                issued in 2004 (offset in total by higher amortization of the related                regulatory asset as discussed below). Additionally, higher transmission                and distribution tariffs driven by TXU Electric Delivery’s ongoing                transmission investment program and market growth contributed to                increased                revenues. |
|--------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| ·   | Consolidated                revenue growth reflected a $128 million reduction in the intercompany                sales elimination, primarily reflecting lower sales by TXU Electric                Delivery to TXU Energy Holdings, while its sales to nonaffiliated                REPs                increased. |
|--------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

*Gross      Margin*

|                                                         |       | **Year                Ended December 31,** | ** ** |
|--------------------------------------------------------------|------------|--------------------------------------------|------------|
| ** **                                                   | ** ** | **2005**                                   | ** ** | **%                of Revenue** | ** ** | **2004** | ** ** | **%                of Revenue** |   |
|                                                         |       |                                       |       |   |   |   |   |   |   |
| Operating                revenues                       |       | $                                          | 10,662     |   |   | 100 | % | $ | 9,216 |   |   | 100 | % |
| Costs                and expenses:                           |       |                                       |       |   |   |   |   |   |   |   |   |   |   |
| Fuel,                purchased power costs and delivery fees |       |                                       | 4,261      |   |   | 40 | % |   | 3,755 |   |   | 41 | % |
| Operating                costs                               |       |                                       | 1,425      |   |   | 13 | % |   | 1,429 |   |   | 15 | % |
| Depreciation                and amortization                 |       |                                       | 764        |   |   | 7 | % |   | 709 |   |   | 8 | % |
| Gross                margin                             |       | $                                          | 4,212      |   |   | 40 | % | $ | 3,323 |   |   | 36 | % |

| ·   |  The                TXU Energy Holdings                segment’s gross margin increased $831 million, or 38%, to $3.0 billion,                driven by higher pricing partially offset by higher per MWh cost                of                purchased power and gas-fueled generation as well as the effect of                lower                sales volumes. |
|--------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| ·   | The                TXU Electric Delivery segment’s gross margin increased $80 million, or 7%,                to $1.2 billion in 2005, driven by higher operating                revenues. |
|--------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | TXU                Energy Holdings’ operating costs declined $35 million, or 5%. As discussed                below in the business segment analysis, this decline was due to a                number                of factors, including the absence of $43 million of costs related                to                activities no longer performed. |
|--------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| ·   | TXU                Electric Delivery’s operating costs rose $28 million, or 4%, driven by                increased spending for reliability initiatives and higher property                taxes                due to increased investments in property. |
|--------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

|   | · | $93                million resulting from cost reduction initiatives including the Capgemini                outsourcing agreement; |
|--------|--------|------------------------------------------------------------------------------------------------------------------------------------|

|   | · | $52                million in nonrecurring executive compensation costs in                2004; |
|--------|--------|-------------------------------------------------------------------------------------------------|

|   | · | $50                million in reduced incentive compensation expense including $15 million                due to a one-time incentive compensation program in wholesale operations                in 2004; |
|--------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | $42                million in consulting and professional fees in 2004 related to the                formulation and execution of strategic                initiatives; |
|--------|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | $34                million in lower bad debt expense as a result of stricter disconnect                policies and more focused collection activities;                and |
|--------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | $15                million in reduced pension and other postretirement benefits primarily                due                to the effect of Texas legislation enacted in the second quarter                of 2005.                (See Note 21 to Financial                Statements.) |
|--------|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|  | · | $138                    million in additional tax benefit recorded in the first quarter                    of 2005                    related to the TXU Europe write-off. This benefit reflects identification                    of tax planning strategies TXU Corp. would implement to ensure                    utilization                    of capital losses associated with the write-off of the investment                    in TXU                    Europe; and |
|--|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | $75                      million tax benefit recorded in the second quarter of 2004                      arising from                      the sale of TXU Fuel Company (TXU                      Fuel). |
|--------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

|   | · | Earnings                in the TXU Energy Holdings segment increased $1.0 billion to $1.4                billion                driven by improved gross margin, the effect of restructuring-related                charges in 2004 and lower SG&A                expenses. |
|--------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | Earnings                in the TXU Electric Delivery segment increased $96 million, or 38%,                to                $351 million driven by higher operating revenues and the impact of                2004                restructuring-related charges and a rate case settlement charge (see                Note                8 to Financial Statements). |
|--------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | Corporate                and other activities resulted in net expenses of $5 million in 2005                compared to $582 million in 2004. The improvement of $577 million                reflected (all amounts after-tax): |
|--------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | o | $382                million of debt extinguishment losses due primarily to                restructuring-related actions in                2004; |
|--------|---|-------------------------------------------------------------------------------------------------------------------------------------------------|

|   | o | $138                million income tax benefit recorded in 2005 related to TXU                Europe; |
|--------|---|-------------------------------------------------------------------------------------------------------|

|   | o | $56                million for a litigation accrual in                2004; |
|--------|---|-----------------------------------------------------------------------------|

|   | o | $52                million pre and after-tax in nonrecurring executive compensation                in                2004; |
|--------|---|----------------------------------------------------------------------------------------------------------------------------|

|   | o | $27                million in restructuring-related consulting and professional fees                in 2004;                and |
|--------|---|---------------------------------------------------------------------------------------------------------------------------------|

|   | o | $23                million insurance recovery in 2005 related to the 2005 shareholders                litigation settlement, |
|--------|---|------------------------------------------------------------------------------------------------------------------------------|

|   | · | The                2005 diluted per share results reflect an unfavorable impact associated                with the November 2004 accelerated share repurchase program. See                Note 17                to Financial Statements. |
|--------|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | Diluted                earnings per share in 2005 reflected the favorable impact of 114                million                fewer average shares outstanding in 2005. Basic average common shares                outstanding decreased 21% to 476 million shares reflecting the repurchase                of 105 million shares in November 2004 under the accelerated share                repurchase program and the repurchase of 12 million shares in 2005.                (See                Notes 2 and 17 to Financial Statements.) Diluted average common shares                decreased 19% to 486 million                shares. |
|--------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | Per                share results in 2004 were unfavorably impacted by TXU Corp.’s repurchase                of TXU Energy Holdings’ exchangeable preferred membership interests in                April 2004 (see Notes 2 and 17 to Financial Statements). For 2004,                results                per diluted share of common stock equaled results per basic share                because                of antidilution accounting                rules. |
|--------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

**Energy-Related      Commodity Contracts and Mark-to-Market Activities**

* *

|                                                                                                      |       | **December                31,** | ** ** |
|-----------------------------------------------------------------------------------------------------------|------------|---------------------------------|------------|
| ** **                                                                                                | ** ** | **2006**                        | ** ** | **2005** | ** ** | **2004** |   |
|                                                                                                      |       |                            |       |   |   |   |   |
| Commodity                contract net asset (liability) at beginning of period                            |       | $                               | (56        | ) | $ | 23 |   | $ | 108 |   |
|                                                                                                      |       |                            |       |   |   |   |   |   |   |   |
| Settlements                of positions included in the opening balance (1)                               |       |                            | 11         |   |   | (23 | ) |   | (61 | ) |
|                                                                                                      |       |                            |       |   |   |   |   |   |   |   |
| Unrealized                mark-to-market valuations of positions held at end of period                (2) |       |                            | 22         |   |   | 32 |   |   | (29 | ) |
|                                                                                                      |       |                            |       |   |   |   |   |   |   |   |
| Other                activity (3)                                                                         |       |                            | ─    |   |   | (88 | ) |   | 5 |   |
|                                                                                                      |       |                            |       |   |   |   |   |   |   |   |
| Commodity                contract net asset (liability) at end of period                                  |       | $                               | (23        | ) | $ | (56 | ) | $ | 23 |   |
|                                                                                  |       |                            |       |   |   |   |   |   |   |   |

|   | (1) | Represents                reversals of unrealized mark-to-market valuations of these positions                recognized in net income prior to the beginning of the period, to                offset                gains and losses realized upon settlement of the positions in the                current                period. |
|--------|-----|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | (2) | Includes                gains and losses recorded at contract inception dates. In June 2006,                a                subsidiary of TXU Corp. entered into a related series of commodity                hedge                transactions at below-market prices resulting in a $109 million loss                at                inception date. See Note 18 to Financial                Statements. |
|--------|-----|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | (3) | These                amounts have not been recognized in prior and current year mark-to-market                earnings. Includes initial values of positions involving the receipt                or                payment of cash or other consideration such as option premiums paid                and                received. Activity in 2005 included $75 million of natural gas received                related to physical swap transactions and a $12 million charge related                to                nonperformance by a coal contract                counterparty. |
|--------|-----|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|                                                                                 |   | **December                31,** |   |
|--------------------------------------------------------------------------------------|--------|---------------------------------|--------|
| ** **                                                                           |   | **2006**                        |   | **2005** |   | **2004** |   |
|                                                                                 |   |                            |   |   |   |   |   |
| Unrealized                gains/(losses) related to contracts marked-to-market  |   | $                               | 33     |   | $ | 9 |   | $ | (90 | ) |
|                                                                                 |   |                            |   |   |   |   |   |   |   |   |
| Ineffectiveness                gains/(losses) related to cash flow hedges (a)   |   |                            | 239    |   |   | (27 | ) |   | (19 | ) |
|                                                                                 |   |                            |   |   |   |   |   |   |   |   |
| Total                unrealized gains (losses) related to commodity contracts   |   | $                               | 272    |   | $ | (18 | ) | $ | (109 | ) |

|   | (a) | See                Note 19 to Financial Statements. |
|--------|-----|-----------------------------------------------------|

----

***Maturity      Table***

|                                                |   | **Maturity                dates of unrealized commodity contract net assets (liabilities) at                December 31, 2006** |   |
|-----------------------------------------------------|--------|---------------------------------------------------------------------------------------------------------------------------------|--------|
|  **Source                of fair value ** |   | **Less                than****1                year**                                                                           |   | **1-3                years** |   | **4-5                years** |   | **Excess                of****5                years** |   | **Total** |   |
| Prices                actively quoted          |   | $                                                                                                                               | (24    | ) | $ | 6 |   | $ | 33 |   | $ | 4 |   | $ | 19 |   |
| Prices                provided by other             |   |                                                                                                                            |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| external                sources(a)                  |   |                                                                                                                            | 57     |   |   | 8 |   |   | (64 | ) |   | 59 |   |   | 60 |   |
| Prices                based on models          |   |                                                                                                                            | (7     | ) |   | (3 | ) |   | ─ |   |   | ─ |   |   | (10 | ) |
| Total                                               |   | $                                                                                                                               | 26     |   | $ | 11 |   | $ | (31 | ) | $ | 63 |   | $ | 69 |   |
| Percentage                of total fair value  |   |                                                                                                                            | 38     | % |   | 16 | % |   | (45 | )% |   | 91 | % |   | 100 | % |
|                                                |   |                                                                                                                            |   |   |   |   |   |   |   |   |   |   |   |   |   |   |

----

**TXU      Energy Holdings Segment**

***Financial      Results***

|                                                                                                |   | **Year                Ended December 31,** |   |
|-----------------------------------------------------------------------------------------------------|--------|--------------------------------------------|--------|
| ** **                                                                                          |   | **2006**                                   |   | **2005** |   | **2004** |   |
|                                                                                                |   |                                       |   |   |   |   |   |
| Operating                revenues                                                              |   | $                                          | 9,549  |   | $ | 9,552 |   | $ | 8,402 |   |
|                                                                                                |   |                                       |   |   |   |   |   |   |   |   |
| Costs                and expenses:                                                                  |   |                                       |   |   |   |   |   |   |   |   |
|                                                                                                |   |                                       |   |   |   |   |   |   |   |   |
| Fuel,                purchased power costs and delivery fees                                        |   |                                       | 3,928  |   |   | 5,545 |   |   | 5,173 |   |
|                                                                                                |   |                                       |   |   |   |   |   |   |   |   |
| Operating                costs                                                                      |   |                                       | 604    |   |   | 668 |   |   | 703 |   |
|                                                                                                |   |                                       |   |   |   |   |   |   |   |   |
| Depreciation                and amortization                                                        |   |                                       | 334    |   |   | 313 |   |   | 350 |   |
|                                                                                                |   |                                       |   |   |   |   |   |   |   |   |
| Selling,                general and administrative expenses                                         |   |                                       | 571    |   |   | 522 |   |   | 666 |   |
|                                                                                                |   |                                       |   |   |   |   |   |   |   |   |
| Franchise                and revenue-based taxes                                                    |   |                                       | 126    |   |   | 114 |   |   | 117 |   |
|                                                                                                |   |                                       |   |   |   |   |   |   |   |   |
| Other                income                                                                         |   |                                       | (17    | ) |   | (64 | ) |   | (110 | ) |
|                                                                                                |   |                                       |   |   |   |   |   |   |   |   |
| Other                deductions                                                                     |   |                                       | 215    |   |   | 15 |   |   | 611 |   |
|                                                                                                |   |                                       |   |   |   |   |   |   |   |   |
| Interest                income                                                                      |   |                                       | (202   | ) |   | (70 | ) |   | (31 | ) |
|                                                                                                |   |                                       |   |   |   |   |   |   |   |   |
| Interest                expense and related charges                                                 |   |                                       | 388    |   |   | 393 |   |   | 353 |   |
|                                                                                                |   |                                       |   |   |   |   |   |   |   |   |
| Total                costs and expenses                                                             |   |                                       | 5,947  |   |   | 7,436 |   |   | 7,832 |   |
|                                                                                                |   |                                       |   |   |   |   |   |   |   |   |
| Income                from continuing operations before income taxes and                cumulative  |   |                                       |   |   |   |   |   |   |   |   |
| effect                of changes in accounting principles                                           |   |                                       | 3,602  |   |   | 2,116 |   |   | 570 |   |
|                                                                                                |   |                                       |   |   |   |   |   |   |   |   |
| Income                tax expense                                                              |   |                                       | 1,239  |   |   | 687 |   |   | 162 |   |
|                                                                                                |   |                                       |   |   |   |   |   |   |   |   |
| Income                from continuing operations before cumulative effect of                changes |   |                                       |   |   |   |   |   |   |   |   |
| in                accounting principles                                                             |   | $                                          | 2,363  |   | $ | 1,429 |   | $ | 408 |   |
|                                                                                                |   |                                       |   |   |   |   |   |   |   |   |

----

**TXU      Energy Holdings Segment**

***Sales      Volume Data***

|                                                                                           |   | **Year                Ended December 31,** |    | **Change                %** |   | **Change                %** |   |
|------------------------------------------------------------------------------------------------|--------|--------------------------------------------|---------|-----------------------------|--------|-----------------------------|--------|
| ** **                                                                                     |   | **2006**                                   |    | **2005**                    |   | **2004**                    |   | **2006/2005** |   | **2005/2004** |   |
|                                                                                           |   |                                       |    |                        |   |                        |   |   |   |   |   |
| **Sales                volumes:**                                                              |   |                                       |    |                        |   |                        |   |   |   |   |   |
|                                                                                           |   |                                       |    |                        |   |                        |   |   |   |   |   |
| Retail                electricity sales volumes - gigawatt hours (GWh):                        |   |                                       |    |                        |   |                        |   |   |   |   |   |
| Historical                service territory:                                                   |   |                                       |    |                        |   |                        |   |   |   |   |   |   |   |   |   |   |
| Residential                                                                               |   |                                       | 25,932  |                        |   | 29,239                      |   |   | 30,897 |   |   | (11.3 | ) |   | (5.4 | ) |
| Small                business (a)                                                         |   |                                       | 7,753   |                        |   | 9,004                       |   |   | 10,476 |   |   | (13.9 | ) |   | (14.1 | ) |
| Total                historical service territory                                              |   |                                       | 33,685  |                        |   | 38,243                      |   |   | 41,373 |   |   | (11.9 | ) |   | (7.6 | ) |
| Other                territories:                                                              |   |                                       |    |                        |   |                        |   |   |   |   |   |   |   |   |   |   |
| Residential                                                                               |   |                                       | 3,663   |                        |   | 3,416                       |   |   | 3,089 |   |   | 7.2 |   |   | 10.6 |   |
| Small                business (a)                                                         |   |                                       | 671     |                        |   | 674                         |   |   | 363 |   |   | (0.4 | ) |   | 85.7 |   |
| Total                other territories                                                         |   |                                       | 4,334   |                        |   | 4,090                       |   |   | 3,452 |   |   | 6.0 |   |   | 18.5 |   |
| Large                business and other customers                                         |   |                                       | 14,031  |                        |   | 15,843                      |   |   | 25,466 |   |   | (11.4 | ) |   | (37.8 | ) |
| Total                retail electricity                                                        |   |                                       | 52,050  |                        |   | 58,176                      |   |   | 70,291 |   |   | (10.5 | ) |   | (17.2 | ) |
| Wholesale                electricity sales volumes                                        |   |                                       | 36,931  |                        |   | 52,001                      |   |   | 48,309 |   |   | (29.0 | ) |   | 7.6 |   |
| Net                sales (purchases) of balancing electricity                                  |   |                                       |    |                        |   |                        |   |   |   |   |   |   |   |   |   |   |
| to/from                ERCOT(b)                                                           |   |                                       | 874     |                        |   | 4,787                       |   |   | (1,613 | ) |   | (81.7 | ) |   | ─ |   |
| Total                sales volumes                                                             |   |                                       | 89,855  |                        |   | 114,964                     |   |   | 116,987 |   |   | (21.8 | ) |   | (1.7 | ) |
|                                                                                           |   |                                       |    |                        |   |                        |   |   |   |   |   |   |   |   |   |   |
| **Average                volume (kWh) per retail customer (c):**                               |   |                                       |    |                        |   |                        |   |   |   |   |   |   |   |   |   |   |
|                                                                                           |   |                                       |    |                        |   |                        |   |   |   |   |   |   |   |   |   |   |
| Residential                                                                               |   |                                       | 15,359  |                        |   | 15,825                      |   |   | 15,619 |   |   | (2.9 | ) |   | 1.3 |   |
| Small                business                                                             |   |                                       | 30,360  |                        |   | 32,078                      |   |   | 34,095 |   |   | (5.4 | ) |   | (5.9 | ) |
| Large                business and other customers                                         |   |                                       | 285,277 |                        |   | 243,538                     |   |   | 351,542 |   |   | 17.1 |   |   | (30.7 | ) |
|                                                                                           |   |                                       |    |                        |   |                        |   |   |   |   |   |   |   |   |   |   |
| **Weather                (service territory average) - percent of normal                (d):** |   |                                       |    |                        |   |                        |   |   |   |   |   |   |   |   |   |   |
|                                                                                           |   |                                       |    |                        |   |                        |   |   |   |   |   |   |   |   |   |   |
| Percent                of normal:                                                              |   |                                       |    |                        |   |                        |   |   |   |   |   |   |   |   |   |   |
| Cooling                degree days                                                             |   |                                       | 117.6   | %                           |   | 107.0                       | %      |   | 90.0 | % |   |   |   |   |   |   |
| Heating                degree days                                                             |   |                                       | 79.2    | %                           |   | 90.0                        | %      |   | 90.1 | % |   |   |   |   |   |   |

|   | (a) | Customers                with demand of less than 1 MW                annually. |
|--------|-----|---------------------------------------------------------------------------------|

|   | (b) | See                Note 1 to Financial Statements for discussion of trading and ERCOT                balancing activity in 2006. |
|--------|-----|----------------------------------------------------------------------------------------------------------------------------------|

|   | (c) | Calculated                using average number of customers for                period. |
|--------|-----|----------------------------------------------------------------------------------------|

|   | (d) | Weather                data is obtained from Weatherbank, Inc., an independent company that                collects and archives weather data from reporting stations of the                National                Oceanic and Atmospheric Administration (a federal agency under the                US                Department of Commerce). |
|--------|-----|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

**TXU      Energy Holdings Segment**

***Customer      Count Data***

|                                                                                             |   | **Year                Ended December 31,** |   | **Change                %** |   | **Change                %** |   |
|--------------------------------------------------------------------------------------------------|--------|--------------------------------------------|--------|-----------------------------|--------|-----------------------------|--------|
| ** **                                                                                       |   | **2006**                                   |   | **2005**                    |   | **2004**                    |   | **2006/2005** |   | **2005/2004** |   |
|                                                                                             |   |                                       |   |                        |   |                        |   |   |   |   |   |
| Customer                counts:                                                                  |   |                                       |   |                        |   |                        |   |   |   |   |   |
|                                                                                             |   |                                       |   |                        |   |                        |   |   |   |   |   |
| Retail                electricity customers (end of period and in thousands)                (a): |   |                                       |   |                        |   |                        |   |   |   |   |   |
| Historical                service territory:                                                     |   |                                       |   |                        |   |                        |   |   |   |   |   |
| Residential                                                                                      |   |                                       | 1,624  |                        |   | 1,769                       |   |   | 1,951 |   |   | (8.2 | ) |   | (9.3 | ) |
| Small                business (b)                                                                |   |                                       | 258    |                        |   | 281                         |   |   | 309 |   |   | (8.2 | ) |   | (9.1 | ) |
| Total                historical service territory                                                |   |                                       | 1,882  |                        |   | 2,050                       |   |   | 2,260 |   |   | (8.2 | ) |   | (9.3 | ) |
|                                                                                             |   |                                       |   |                        |   |                        |   |   |   |   |   |   |   |   |   |   |
| Other                territories:                                                                |   |                                       |   |                        |   |                        |   |   |   |   |   |   |   |   |   |   |
| Residential                                                                                      |   |                                       | 247    |                        |   | 213                         |   |   | 194 |   |   | 16.0 |   |   | 9.8 |   |
| Small                business (b)                                                                |   |                                       | 9      |                        |   | 7                           |   |   | 6 |   |   | 28.6 |   |   | 16.7 |   |
| Total                other territories                                                           |   |                                       | 256    |                        |   | 220                         |   |   | 200 |   |   | 16.4 |   |   | 10.0 |   |
|                                                                                             |   |                                       |   |                        |   |                        |   |   |   |   |   |   |   |   |   |   |
| Large                business and other customers                                                |   |                                       | 44     |                        |   | 55                          |   |   | 76 |   |   | (20.0 | ) |   | (27.6 | ) |
| Total                retail electricity customers                                                |   |                                       | 2,182  |                        |   | 2,325                       |   |   | 2,536 |   |   | (6.2 | ) |   | (8.3 | ) |

|   | (a) | Based                on number of meters. |
|--------|-----|-------------------------------------------|

|   | (b) | Customers                with demand of less than 1 MW                annually. |
|--------|-----|---------------------------------------------------------------------------------|

----

**TXU      Energy Holdings Segment**

***Revenue      and Market Share Data***

| ** **                                                                |   | **Year                Ended December 31,** |   | **Change                %** |   | **Change                %** |   |
|---------------------------------------------------------------------------|--------|--------------------------------------------|--------|-----------------------------|--------|-----------------------------|--------|
| ** **                                                                |   | **2006**                                   |   | **2005**                    |   | **2004**                    |   | **2006/2005** |   | **2005/2004** |   |
| **Operating                revenues:**                                    |   |                                       |   |                        |   |                        |   |   |   |   |   |
| Retail                electricity revenues:                               |   |                                       |   |                        |   |                        |   |   |   |   |   |
| Historical                service territory:                              |   |                                       |   |                        |   |                        |   |   |   |   |   |
| Residential                                                          |   | $                                          | 3,804  |                        | $      | 3,444                       |   | $ | 3,164 |   |   | 10.5 |   |   | 8.8 |   |
| Small                business (a)                                    |   |                                       | 1,153  |                        |   | 1,086                       |   |   | 1,103 |   |   | 6.2 |   |   | (1.5 | ) |
| Total                historical service territory                         |   |                                       | 4,957  |                        |   | 4,530                       |   |   | 4,267 |   |   | 9.4 |   |   | 6.2 |   |
|                                                                      |   |                                       |   |                        |   |                        |   |   |   |   |   |   |   |   |   |   |
| Other                territories:                                         |   |                                       |   |                        |   |                        |   |   |   |   |   |   |   |   |   |   |
| Residential                                                          |   |                                       | 559    |                        |   | 405                         |   |   | 298 |   |   | 38.0 |   |   | 35.9 |   |
| Small                business (a)                                    |   |                                       | 80     |                        |   | 65                          |   |   | 34 |   |   | 23.1 |   |   | 91.2 |   |
| Total                other territories                                    |   |                                       | 639    |                        |   | 470                         |   |   | 332 |   |   | 36.0 |   |   | 41.6 |   |
|                                                                      |   |                                       |   |                        |   |                        |   |   |   |   |   |   |   |   |   |   |
| Large                business and other customers                    |   |                                       | 1,357  |                        |   | 1,330                       |   |   | 1,771 |   |   | 2.0 |   |   | (24.9 | ) |
| Total                retail electricity revenues                     |   |                                       | 6,953  |                        |   | 6,330                       |   |   | 6,370 |   |   | 9.8 |   |   | (0.6 | ) |
| Wholesale                electricity revenues (b)                    |   |                                       | 2,278  |                        |   | 2,807                       |   |   | 1,886 |   |   | (18.8 | ) |   | 48.8 |   |
| Net                sales (purchases) of balancing electricity             |   |                                       |   |                        |   |                        |   |   |   |   |   |   |   |   |   |   |
| to/from                ERCOT (b)                                     |   |                                       | (31    | )                           |   | 225                         |   |   | (92 | ) |   | ─ |   |   | ─ |   |
| Net                gains (losses) from risk management and trading        |   |                                       |   |                        |   |                        |   |   |   |   |   |   |   |   |   |   |
| activities                                                           |   |                                       | 153    |                        |   | (164                        | )      |   | (103 | ) |   | ─ |   |   | (59.2 | ) |
| Other                operating revenues (c)                          |   |                                       | 196    |                        |   | 354                         |   |   | 341 |   |   | (44.6 | ) |   | 3.8 |   |
| Total                operating revenues                                   |   | $                                          | 9,549  |                        | $      | 9,552                       |   | $ | 8,402 |   |   | ─ |   |   | 13.7 |   |
|                                                                      |   |                                       |   |                        |   |                        |   |   |   |   |   |   |   |   |   |   |
| **Risk                management and trading activities:**                |   |                                       |   |                        |   |                        |   |   |   |   |   |   |   |   |   |   |
| Realized                net gains (losses) on settled positions (d)  |   | $                                          | (119   | )                           | $      | (146                        | )      | $ | 6 |   |   |   |   |   |   |   |
| Reversal                of prior periods’ unrealized net (gains)    |   |                                       |   |                        |   |                        |   |   |   |   |   |   |   |   |   |   |
| losses                on positions settled in current period              |   |                                       | 32     |                        |   | (12                         | )      |   | (59 | ) |   |   |   |   |   |   |
| Other                unrealized net gains (losses), including cash        |   |                                       |   |                        |   |                        |   |   |   |   |   |   |   |   |   |   |
| flow                hedge ineffectiveness                                 |   |                                       | 240    |                        |   | (6                          | )      |   | (50 | ) |   |   |   |   |   |   |
| Total                net gains (losses)                                   |   | $                                          | 153    |                        | $      | (164                        | )      | $ | (103 | ) |   |   |   |   |   |   |
|                                                                      |   |                                       |   |                        |   |                        |   |   |   |   |   |   |   |   |   |   |
| **Average                revenues per MWh:**                              |   |                                       |   |                        |   |                        |   |   |   |   |   |   |   |   |   |   |
| Residential                                                          |   | $                                          | 147.43 |                        | $      | 117.86                      |   | $ | 101.88 |   |   | 25.1 |   |   | 15.7 |   |
| Small                business                                        |   | $                                          | 146.39 |                        | $      | 118.90                      |   | $ | 104.87 |   |   | 23.1 |   |   | 13.4 |   |
| Large                business and other customers                    |   | $                                          | 96.67  |                        | $      | 83.96                       |   | $ | 69.54 |   |   | 15.1 |   |   | 20.7 |   |
|                                                                      |   |                                       |   |                        |   |                        |   |   |   |   |   |   |   |   |   |   |
| **Estimated                share of ERCOT retail markets (e)(f):**        |   |                                       |   |                        |   |                        |   |   |   |   |   |   |   |   |   |   |
| Historical                service territory:                              |   |                                       |   |                        |   |                        |   |   |   |   |   |   |   |   |   |   |
| Residential                                                               |   |                                       | 65     | %                           |   | 72                          | %      |   | 81 | % |   |   |   |   |   |   |
| Small                business                                             |   |                                       | 64     | %                           |   | 71                          | %      |   | 78 | % |   |   |   |   |   |   |
| Total                ERCOT:                                               |   |                                       |   |                        |   |                        |   |   |   |   |   |   |   |   |   |   |
| Residential                                                               |   |                                       | 37     | %                           |   | 39                          | %      |   | 44 | % |   |   |   |   |   |   |
| Small                business                                             |   |                                       | 26     | %                           |   | 29                          | %      |   | 31 | % |   |   |   |   |   |   |
| Large                business and other customers                         |   |                                       | 14     | %                           |   | 20                          | %      |   | 33 | % |   |   |   |   |   |   |

| (a) | Customers                with demand of less than 1 MW annually.                                                                                                                                                                                                                           |
|-----|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| (b) | See                Note 1 to Financial Statements for discussion of reporting of trading                and                ERCOT balancing activity in 2006.                                                                                                                               |
| (c) | Includes                a $162 million charge for a special customer appreciation bonus.                This                charge does not affect the computation of residential average revenues                per                MWh. See Note 7 to Financial Statements.              |
| (d) | Includes                physical commodity trading activity not subject to mark-to-market                accounting of $34 million in net losses, $61 million in net gains                and $13                million in net gains in 2006, 2005 and 2004,                respectively. |
| (e) | Based                on number of meters.                                                                                                                                                                                                                                                  |
| (f) | Estimated                market share is based on the number of customers that have                choice.                                                                                                                                                                                 |

----

**TXU      Energy Holdings Segment**

***Production,      Purchased Power and Delivery Cost Data***

| ** **                                                                                                                  |   | **Year                Ended December 31,** |   | **Change                %** |   | **Change                %** |   |
|-----------------------------------------------------------------------------------------------------------------------------|--------|--------------------------------------------|--------|-----------------------------|--------|-----------------------------|--------|
| ** **                                                                                                                  |   | **2006**                                   |   | **2005**                    |   | **2004**                    |   | **2006/2005** |   | **2005/2004** |   |
| **Fuel,                purchased power costs and delivery fees ($                millions):**                               |   |                                       |   |                        |   |                        |   |   |   |   |   |
| Nuclear                fuel                                                                                            |   | $                                          | 85     |                        | $      | 78                          |   | $ | 82 |   |   | 9.0 |   |   | (4.9 | ) |
| Lignite/coal                                                                                                           |   |                                       | 475    |                        |   | 475                         |   |   | 506 |   |   | ─ |   |   | (6.1 | ) |
| Total                baseload fuel                                                                                          |   |                                       | 560    |                        |   | 553                         |   |   | 588 |   |   | 1.3 |   |   | (6.0 | ) |
| Natural                gas fuel and purchased power                                                                    |   |                                       | 1,787  |                        |   | 3,285                       |   |   | 2,820 |   |   | (45.6 | ) |   | 16.5 |   |
| Other                costs                                                                                             |   |                                       | 228    |                        |   | 281                         |   |   | 221 |   |   | (18.9 | ) |   | 27.1 |   |
| Fuel                and purchased power costs (a)                                                                           |   |                                       | 2,575  |                        |   | 4,119                       |   |   | 3,629 |   |   | (37.5 | ) |   | 13.5 |   |
| Delivery                fees (b)                                                                                       |   |                                       | 1,353  |                        |   | 1,426                       |   |   | 1,544 |   |   | (5.1 | ) |   | (7.6 | ) |
| Total                                                                                                                       |   | $                                          | 3,928  |                        | $      | 5,545                       |   | $ | 5,173 |   |   | (29.2 | ) |   | 7.2 |   |
|                                                                                                                        |   |                                       |   |                        |   |                        |   |   |   |   |   |   |   |   |   |   |
| **Fuel                and purchased power costs (which excludes generation plant operating                costs) per MWh:** |   |                                       |   |                        |   |                        |   |   |   |   |   |   |   |   |   |   |
|                                                                                                                        |   |                                       |   |                        |   |                        |   |   |   |   |   |   |   |   |   |   |
| Nuclear                fuel                                                                                            |   | $                                          | 4.29   |                        | $      | 4.23                        |   | $ | 4.31 |   |   | 1.4 |   |   | (1.9 | ) |
| Lignite/coal                (c)                                                                                        |   | $                                          | 12.20  |                        | $      | 11.68                       |   | $ | 12.96 |   |   | 4.5 |   |   | (9.9 | ) |
| Natural                gas fuel and purchased power                                                                    |   | $                                          | 62.99  |                        | $      | 60.37                       |   | $ | 47.88 |   |   | 4.3 |   |   | 26.1 |   |
|                                                                                                                        |   |                                       |   |                        |   |                        |   |   |   |   |   |   |   |   |   |   |
| **Delivery                fee per MWh**                                                                                |   | $                                          | 25.71  |                        | $      | 24.20                       |   | $ | 21.75 |   |   | 6.2 |   |   | 11.3 |   |
|                                                                                                                        |   |                                       |   |                        |   |                        |   |   |   |   |   |   |   |   |   |   |
| **Production                and purchased power volumes (GWh):**                                                            |   |                                       |   |                        |   |                        |   |   |   |   |   |   |   |   |   |   |
|                                                                                                                        |   |                                       |   |                        |   |                        |   |   |   |   |   |   |   |   |   |   |
| Nuclear                                                                                                                |   |                                       | 19,795 |                        |   | 18,371                      |   |   | 18,979 |   |   | 7.8 |   |   | (3.2 | ) |
| Lignite/coal                                                                                                           |   |                                       | 43,837 |                        |   | 44,005                      |   |   | 42,339 |   |   | (0.4 | ) |   | 3.9 |   |
| Total                baseload generation                                                                                    |   |                                       | 63,632 |                        |   | 62,376                      |   |   | 61,318 |   |   | 2.0 |   |   | 1.7 |   |
| Natural                gas-fueled generation                                                                           |   |                                       | 3,989  |                        |   | 3,504                       |   |   | 4,726 |   |   | 13.8 |   |   | (25.9 | ) |
| Purchased                power (a)                                                                                     |   |                                       | 24,380 |                        |   | 50,920                      |   |   | 54,394 |   |   | (52.1 | ) |   | (6.4 | ) |
| Total                energy supply                                                                                          |   |                                       | 92,001 |                        |   | 116,800                     |   |   | 120,438 |   |   | (21.2 | ) |   | (3.0 | ) |
| Less                line loss and power imbalances                                                                     |   |                                       | 2,146  |                        |   | 1,836                       |   |   | 3,451 |   |   | 16.9 |   |   | (46.8 | ) |
| Net                energy supply volumes                                                                                    |   |                                       | 89,855 |                        |   | 114,964                     |   |   | 116,987 |   |   | (21.8 | ) |   | (1.7 | ) |
|                                                                                                                        |   |                                       |   |                        |   |                        |   |   |   |   |   |   |   |   |   |   |
| **Baseload                capacity factors (%):**                                                                           |   |                                       |   |                        |   |                        |   |   |   |   |   |   |   |   |   |   |
|                                                                                                                        |   |                                       |   |                        |   |                        |   |   |   |   |   |   |   |   |   |   |
| Nuclear                                                                                                                |   |                                       | 98.8   | %                           |   | 91.5                        | %      |   | 94.3 | % |   | 8.0 |   |   | (3.0 | ) |
| Lignite/coal                                                                                                           |   |                                       | 89.1   | %                           |   | 89.8                        | %      |   | 86.0 | % |   | (0.8 | ) |   | 4.4 |   |
| Total                baseload                                                                                               |   |                                       | 91.8   | %                           |   | 90.3                        | %      |   | 88.4 | % |   | 1.7 |   |   | 2.1 |   |

| (a) | See                Note 1 to Financial Statements for discussion of reporting of trading                and                ERCOT balancing activity in 2006.                                                                                                       |
|-----|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| (b) | Includes                delivery fee charges from TXU Electric Delivery that are eliminated                in                consolidation ($1.144 billion, $1.285 billion and $1.417 billion                in 2006,                2005 and 2004, respectively). |
| (c) | Includes                depreciation and amortization of lignite mining assets, which is                reported                in the depreciation and amortization expense line item, but is part                of                overall fuel costs.           |

----

**TXU      Energy Holdings Segment**

***2006      Compared to 2005***

|                                                                   |   | **Year                Ended December 31,** |   | ** **     |   |
|------------------------------------------------------------------------|--------|--------------------------------------------|--------|----------------|--------|
| ** **                                                             |   |  **2006**                             |   |  **2005** |   | **Increase****(Decrease**) |   |
| Retail                electricity revenues                        |   | $                                          | 6,953  |           | $      | 6,330 |   | $ | 623 |   |
| Accrued                customer appreciation bonus                |   |                                       | (162   | )              |   | ─ |   |   | (162 | ) |
| Wholesale                electricity revenues                     |   |                                       | 2,278  |           |   | 2,807 |   |   | (529 | ) |
| Wholesale                balancing activities                     |   |                                       | (31    | )              |   | 225 |   |   | (256 | ) |
| Results                of risk management and trading activities  |   |                                       | 153    |           |   | (164 | ) |   | 317 |   |
| Other                operating revenues                           |   |                                       | 358    |           |   | 354 |   |   | 4 |   |
| Total                operating revenues                                |   | $                                          | 9,549  |           | $      | 9,552 |   | $ | (3 | ) |

|   | · | Higher                average pricing contributed $1.3 billion to the revenue increase.                Higher                retail prices reflected increases in natural gas prices that resulted                in                the regulatory-approved price-to-beat rate increases implemented                in May                2005, October 2005 and January                2006. |
|--------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | The                effect of higher retail pricing was partially offset by $667 million                in                lower retail volumes. Total retail sales volumes declined 11%. Residential                and small business volumes fell 10% on a net loss of customers due                to                competitive activity and lower average consumption per customer.                The lower                consumption reflected customer efficiency measures in response to                prices                and warmer weather. Large business market sales volumes declined                11% as                the effect of fewer customers was partially offset by higher average                consumption per customer. A change in large business customer mix                reflected a continuing strategy to improve                margins. |
|--------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | Retail                electricity customer counts at December 31, 2006 declined 6% from                December                31, 2005. Total residential and small business customer counts in                the                historical service territory declined 8% and in all combined territories                declined 6%. |
|--------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

|   | · | $205                million in unrealized cash flow hedge ineffectiveness net gains,                which                includes $209 million in net gains on unsettled positions and $4                million                in net losses that represent reversals of previously recorded unrealized                net gains on positions settled in the current                period; |
|--------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | $135                million in unrealized mark-to-market net gains on unsettled economic                hedge                positions that are not being accounted for as cash flow                hedges; |
|--------|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | $109                million in an unrealized “day one” loss on a related series of commodity                price hedges entered into in June 2006 at below-market prices;                and |
|--------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | $112                million in realized net gains on positions accounted for as cash                flow                hedges, including the reclassification of $34 million in net gains                accumulated in other comprehensive income at December 31, 2005, to                offset                hedged electricity revenues recognized in the current                period. |
|--------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | $52                million in realized net losses on positions accounted for as cash                flow                hedges and primarily entered into in prior years (largely 2003),                including                the reclassification of $36 million in net losses accumulated in                other                comprehensive income at December 31, 2005, to offset hedged electricity                revenues recognized in the current                period; |
|--------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | $34                million in unrealized cash flow hedge ineffectiveness net gains,                which                includes $9 million in net gains on unsettled positions and $25 million                in                net gains that represent reversals of previously recorded unrealized                net                losses on positions settled in the current                period; |
|--------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | $125                million in realized net losses on settlement of economic hedge positions                that offset hedged electricity revenues recognized in the current                period;                and |
|--------|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | $54                million in realized net losses on settlement of trading                positions. |
|--------|--------|------------------------------------------------------------------------------------------------------|

----

*Gross      Margin*

|                                                         |   |
|--------------------------------------------------------------|--------|
|                                                         |   | **Year                Ended December 31,** |   |
| ** **                                                   |   | **2006** |   | **%                of Revenue** |   | **2005** |   | **%                of Revenue** |   |
|                                                         |   |   |   |   |   |   |   |   |   |
| Operating                revenues                       |   | $ | 9,549 |   |   | 100 | % | $ | 9,552 |   |   | 100 | % |
| Costs                and expenses:                           |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Fuel,                purchased power costs and delivery fees |   |   | 3,928 |   |   | 41 |   |   | 5,545 |   |   | 58 |   |
| Generation                plant operating costs              |   |   | 604 |   |   | 6 |   |   | 668 |   |   | 7 |   |
| Depreciation                and amortization                 |   |   | 328 |   |   | 4 |   |   | 309 |   |   | 3 |   |
| Gross                margin                             |   | $ | 4,689 |   |   | 49 | % | $ | 3,030 |   |   | 32 | % |

|   | · | higher                pricing, as the average retail sales price per MWh rose 23% and the                average wholesale sales price per MWh rose 17% (10 percentage point                margin                increase); |
|--------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | the                effect of reporting wholesale electricity trading activity on a net                basis                (6 percentage point margin                increase); |
|--------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | the                effect of unrealized cash flow hedge ineffectiveness and mark-to-market                net gains related to the long-term hedge program (1 percentage point                margin increase); |
|--------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | the                combined effect of increased nuclear generation production volumes                and                less need for purchased electricity volumes (2 percentage point margin                increase), |
|--------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | lower                retail sales volumes (2 percentage point margin decrease);                and |
|--------|--------|----------------------------------------------------------------------------------------------------|

|   | · | customer                appreciation bonus (1 percentage point margin                decrease). |
|--------|--------|-------------------------------------------------------------------------------------------------|

|   | · | $49                million in lower maintenance costs due to both nuclear generation                units                having scheduled refueling outages in 2005 compared to one in 2006,                and                reduced other maintenance activity; |
|--------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | $9                million in lower incentive compensation expense;                and |
|--------|--------|---------------------------------------------------------------------------------------|

|   | · | the                absence of $10 million in combustion turbine lease expense in 2006                resulting from the purchase of a lease trust interest in early 2006                (see                Note 4 to Financial Statements), |
|--------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

|   | · | $39                million in costs associated with the new generation development programs,                principally salaries and consulting                expenses; |
|--------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | $14                million in higher bad debt expense reflecting higher retail accounts                receivable balances due to higher prices and the effect of a temporary                regulatory-mandated deferred payment arrangement and disconnect moratorium                applicable to certain retail                customers; |
|--------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | $14                million in higher fees related to the sale of accounts receivable                program                due to higher interest rates; and |
|--------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | $6                million in executive severance expense (including amounts allocated                from                TXU Corp.), |
|--------|--------|--------------------------------------------------------------------------------------------------------------------------------------|

|   | · | $8                million in lower consulting fees primarily reflecting expenses in                2005 for                the development and implementation of the TXU Operating System to                improve                productivity; |
|--------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | $7                million in lower stock-based incentive compensation and deferred                compensation expenses; and |
|--------|--------|------------------------------------------------------------------------------------------------------------------------------|

|   | · | $7                million in lower salaries resulting from cost reduction initiatives                in                late 2005. |
|--------|--------|-----------------------------------------------------------------------------------------------------------------------------------|

|   | · | $33                million in gains on the sale of undeveloped land and mining                land; |
|--------|--------|-----------------------------------------------------------------------------------------------------|

|   | · | an                $8 million insurance recovery related to a generation plant fire                in                2002; |
|--------|--------|---------------------------------------------------------------------------------------------------------------------------|

|   | · | a                $7 million gain on the sale of an investment in an out-of-state                electricity transmission project; |
|--------|--------|-----------------------------------------------------------------------------------------------------------------------------------|

|   | · | a                $4 million gain in connection with a customer’s termination of an                electricity services contract; and |
|--------|--------|--------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | a                $2 million gain on the sale of surplus                equipment. |
|--------|--------|-----------------------------------------------------------------------------------|

----

|   | · | a                $198 million charge related to the write-down of the natural gas-fueled                generation plants to fair value (see Note 6 to Financial                Statements); |
|--------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | $10                million in equity losses (representing amortization expense) related                to                the ownership interest in the TXU Corp. subsidiary holding the capitalized                software licensed to Capgemini; |
|--------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | $6                million of litigation-related charges;                and |
|--------|--------|-----------------------------------------------------------------------------|

|   | · | a                $5 million charge for the termination of an equipment purchase                agreement, |
|--------|--------|-----------------------------------------------------------------------------------------------------------|

|   | · | a                $12 million charge related to a counterparty default under a coal                contract; |
|--------|--------|-------------------------------------------------------------------------------------------------------------|

|   | · | $12                million in transition costs associated with the Capgemini outsourcing                agreement; |
|--------|--------|--------------------------------------------------------------------------------------------------------------------|

|   | · | $7                million in equity losses (representing amortization expense) related                to                the ownership interest in the TXU Corp. subsidiary holding the capitalized                software licensed to Capgemini; |
|--------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | $6                million in accretion expense related to a lease liability for combustion                turbines no longer operated for TXU Energy Holdings’                benefit; |
|--------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | a                $16 million net credit from a reduction in the combustion turbine                lease                liability due to a change in estimated sublease proceeds. As the                original                charge associated with this liability was reported in this line item,                the                related credit was similarly reported;                and |
|--------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | the                release of a previously recorded $6 million reserve for restoration                of a                site that is now expected to be used in generation plant                development. |
|--------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

**TXU      Energy Holdings Segment**

***2005      Compared to 2004***

|   | · | The                retail revenue decline reflected a $1.1 billion decrease attributable                to a                17% drop in sales volumes, primarily reflecting a net loss of customers                due to competitive activity, particularly in the large business market,                partially offset by the effect of warmer weather. A total volume                decline                of 38% in the large business market also reflected a strategy to                improve                margins. Total residential and small business volumes fell 6%, driven                by                competitive activity and stricter disconnect policies and more focused                collection activities, partially offset by the effect of increased                consumption by residential customers due to warmer                weather. |
|--------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | The                effect of lower retail volumes was partially offset by $886 million                in                higher pricing due to increased price-to-beat rates, reflecting                regulatory-approved fuel factor increases in 2005, and higher pricing                in                the competitive business market, both resulting from the effects                of higher                natural gas prices. A favorable $171 million mix shift in the composition                of retail sales from large business to residential and small business                also                offset the effect of lower volumes. |
|--------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | Retail                electricity customer counts at December 31, 2005 declined 8% from                December                31, 2004. Total residential and small business customer counts in                the                historical service territory declined 9% and in all combined territories                declined 8%. |
|--------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

|   | · | $133                million in net realized losses associated with hedges entered into                in                prior years (largely 2003), the offsetting effects of which are reported                in revenues and fuel and purchased power costs. This amount includes                $88                million in losses related to cash flow hedges, which had been recognized                in other comprehensive income; |
|--------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | $84                million reversal of net unrealized gains previously recognized on                power                positions settled in the current period, the offsetting effects of                which                are reported in revenues and fuel and purchased power                costs; |
|--------|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | $79                million in net realized gains on settlement of commodity trading                positions                largely entered into in 2005 and relating primarily to natural gas;                and |
|--------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | $31                million of unrealized ineffectiveness losses relating to cash flow                hedges                principally related to the long-term hedging                program. |
|--------|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

*Gross      Margin*

|                                                         |   |
|--------------------------------------------------------------|--------|
|                                                         |   | **Year                Ended December 31,** |   |
| ** **                                                   |   | **2005** |   | **%                of Revenue** |   | **2004** |   | **%                of Revenue** |   |
|                                                         |   |   |   |   |   |   |   |   |   |
| Operating                revenues                       |   | $ | 9,552 |   |   | 100 | % | $ | 8,402 |   |   | 100 | % |
| Costs                and expenses:                           |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Fuel,                purchased power costs and delivery fees |   |   | 5,545 |   |   | 58 | % |   | 5,173 |   |   | 62 | % |
| Generation                plant operating costs              |   |   | 668 |   |   | 7 | % |   | 703 |   |   | 8 | % |
| Depreciation                and amortization                 |   |   | 309 |   |   | 3 | % |   | 327 |   |   | 4 | % |
| Gross                margin                             |   | $ | 3,030 |   |   | 32 | % | $ | 2,199 |   |   | 26 | % |

|   | · | higher                pricing, as the average retail sales price per MWh rose 20%, and                the                average wholesale sales price per MWh rose 38% (15                percentage point margin increase), |
|--------|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | higher                purchased power costs driven by a 26% increase in average purchased                power                prices (5                percentage point margin decrease);                and |
|--------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | a                17% decrease in retail sales volumes (4                percentage point margin decrease). |
|--------|--------|------------------------------------------------------------------------------------------------------------|

----

|   | · | $30                million in lower benefits expense including $13 million in lower                pension                and other postretirement benefit costs (see discussion in SG&A                expenses below regarding these                costs); |
|--------|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | the                absence of $18 million of costs associated with 9 combustion turbine                units                no longer operated for TXU Energy Holdings’                benefit; |
|--------|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | a                $17 million effect of no longer providing customer care support to                TXU Gas                (largely offset by lower related revenues), the operations of which                were                sold in October 2004; and |
|--------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | the                absence of $8 million of costs associated with the TXU Fuel business                sold                in June 2004, |
|--------|--------|------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | $25                million in higher maintenance costs associated with planned nuclear                unit                outages in 2005, reflecting two outages in 2005 and one outage in                2004;                and |
|--------|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | $15                million in supplier credits recorded in                2004. |
|--------|--------|---------------------------------------------------------------------------------|

|   | · | a                net $64 million decline due to cost reduction initiatives, including                the                effect of the Capgemini outsourcing                agreement; |
|--------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | $41                million in reduced incentive compensation expense including a $15                million                one-time incentive compensation program in wholesale operations in                2004; |
|--------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | $38                million in lower bad debt expense as a result of refining and consistently                applying credit and collection policies;                and |
|--------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | an                $11 million net decrease in employee retirement-related expenses                primarily                due to the assumption by TXU Electric Delivery of pension and other                postretirement benefit costs related to service of TXU Energy Holdings’                employees prior to the unbundling of TXU Corp.’s electric utility business                and the deregulation of the Texas electricity industry effective                January                1, 2002 (see Note 21 to Financial                Statements), |
|--------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

|   | · | $33                million in gains on the sale of undeveloped land and mining                land; |
|--------|--------|-----------------------------------------------------------------------------------------------------|

|   | · | an                $8 million insurance reimbursement related to a generation plant                fire in                2002; |
|--------|--------|--------------------------------------------------------------------------------------------------------------------------------|

|   | · | a                $7 million gain on the sale of an investment in an out-of-state                electricity transmission project; |
|--------|--------|-----------------------------------------------------------------------------------------------------------------------------------|

|   | · | $4                million in connection with the termination of a power services contract;                and |
|--------|--------|---------------------------------------------------------------------------------------------------------------|

|   | · | $2                million gain on the sale of surplus                equipment. |
|--------|--------|---------------------------------------------------------------------------------|

|   | · | $88                million in amortization of the gain on the 2002 sale of two generation                plants including $58 million of the remaining unamortized gain recognized                as a result of the termination of a related power purchase and tolling                agreement; and |
|--------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | a                $19 million gain on sale of undeveloped                land. |
|--------|--------|-------------------------------------------------------------------------------|

|   | · | a                $12 million charge related to nonperformance of a counterparty in                connection with a trading coal                contract; |
|--------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | $12                million in transition costs associated with the Capgemini outsourcing                agreement; |
|--------|--------|--------------------------------------------------------------------------------------------------------------------|

|   | · | $7                million in equity losses (representing depreciation expense) in the                TXU                Corp. entity holding the capitalized software licensed to                Capgemini; |
|--------|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | $6                million in accretion expense related to the 2004 impairment of a                lease for                gas-fueled combustion turbines no longer operated for TXU Energy                Holdings’                benefit; |
|--------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | a                $16 million net credit adjusting the impairment loss on the leased                gas-fueled combustion turbines to reflect actual sub-lease proceeds                under                the terms of a third-party contract entered into in 2005;                and |
|--------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | the                release of a previously recorded $6 million reserve for restoration                of                property that is now expected to be used in generation plant                development. |
|--------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | $180                million in lease-related charges primarily related to generation                and                mining assets taken out of service; |
|--------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | $107                million in software write-offs; |
|--------|--------|-----------------------------------------------------|

|   | · | $107                million for employee severance; |
|--------|--------|-----------------------------------------------------|

|   | · | $101                million in termination costs for an existing power purchase and tolling                agreement; and |
|--------|--------|---------------------------------------------------------------------------------------------------------------------------|

|   | · | $79                million for spare parts inventory                writedowns. |
|--------|--------|---------------------------------------------------------------------------------|

----

**TXU      Electric Delivery Segment**

***Financial      Results***

|                                                                                                                                                       |   | **Year                Ended December 31,** |   |
|------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|--------------------------------------------|--------|
| ** **                                                                                                                                                 |   | **2006**                                   |   | **2005** |   | **2004** |   |
|                                                                                                                                                       |   |                                       |   |   |   |   |   |
|                                                                                                                                                       |   |                                       |   |   |   |   |   |
| Operating                revenues                                                                                                                     |   | $                                          | 2,449  |   | $ | 2,394 |   | $ | 2,226 |   |
|                                                                                                                                                       |   |                                       |   |   |   |   |   |   |   |   |
| Costs                and expenses:                                                                                                                         |   |                                       |   |   |   |   |   |   |   |   |
|                                                                                                                                                       |   |                                       |   |   |   |   |   |   |   |   |
| Operating                costs                                                                                                                             |   |                                       | 770    |   |   | 758 |   |   | 730 |   |
|                                                                                                                                                       |   |                                       |   |   |   |   |   |   |   |   |
| Depreciation                and amortization                                                                                                               |   |                                       | 476    |   |   | 446 |   |   | 389 |   |
|                                                                                                                                                       |   |                                       |   |   |   |   |   |   |   |   |
| Selling,                general and administrative expenses                                                                                                |   |                                       | 177    |   |   | 201 |   |   | 219 |   |
|                                                                                                                                                       |   |                                       |   |   |   |   |   |   |   |   |
| Franchise                and revenue-based taxes                                                                                                           |   |                                       | 262    |   |   | 247 |   |   | 248 |   |
|                                                                                                                                                       |   |                                       |   |   |   |   |   |   |   |   |
| Other                income                                                                                                                                |   |                                       | (2     | ) |   | (4 | ) |   | (7 | ) |
|                                                                                                                                                       |   |                                       |   |   |   |   |   |   |   |   |
| Other                deductions                                                                                                                            |   |                                       | 24     |   |   | 11 |   |   | 52 |   |
|                                                                                                                                                       |   |                                       |   |   |   |   |   |   |   |   |
| Interest                income                                                                                                                             |   |                                       | (58    | ) |   | (59 | ) |   | (56 | ) |
|                                                                                                                                                       |   |                                       |   |   |   |   |   |   |   |   |
| Interest                expense and related charges                                                                                                        |   |                                       | 286    |   |   | 269 |   |   | 280 |   |
|                                                                                                                                                       |   |                                       |   |   |   |   |   |   |   |   |
| Total                costs and expenses                                                                                                                    |   |                                       | 1,935  |   |   | 1,869 |   |   | 1,855 |   |
|                                                                                                                                                       |   |                                       |   |   |   |   |   |   |   |   |
| Income                before income taxes, extraordinary gain and cumulative effect of                change                in accounting principle   |   |                                       | 514    |   |   | 525 |   |   | 371 |   |
|                                                                                                                                                       |   |                                       |   |   |   |   |   |   |   |   |
| Income                tax expense                                                                                                                     |   |                                       | 170    |   |   | 174 |   |   | 116 |   |
|                                                                                                                                                       |   |                                       |   |   |   |   |   |   |   |   |
| Income                before extraordinary gain and cumulative effect of change in accounting                principle                                |   | $                                          | 344    |   | $ | 351 |   | $ | 255 |   |

----

**TXU      Electric Delivery Segment**

***Operating      Data***

|                                                                                                            |   | **Year                Ended December 31,** |    | ** ** |   | ** ** |   |
|-----------------------------------------------------------------------------------------------------------------|--------|--------------------------------------------|---------|------------|--------|------------|--------|
| ** **                                                                                                      |   | **2006**                                   |    | **2005**   |   | **2004**   |   | **%                Change****2006/2005** |   | **%                Change 2005/2004** |   |
| Operating                statistics - volumes:                                                                  |   |                                       |    |       |   |       |   |   |   |   |   |
| Electric                energy delivered (GWh)                                                             |   |                                       | 107,098 |       |   | 106,780    |   |   | 101,928 |   |   | 0.3 |   |   | 4.8 |   |
|                                                                                                            |   |                                       |    |       |   |       |   |   |   |   |   |   |   |   |   |   |
| Reliability                statistics (a):                                                                      |   |                                       |    |       |   |       |   |   |   |   |   |   |   |   |   |   |
| System                Average Interruption Duration Index (SAIDI) (nonstorm)                               |   |                                       | 79.09   |       |   | 76.79      |   |   | 75.51 |   |   | 3.0 |   |   | 1.7 |   |
| System                Average Interruption Frequency Index (SAIFI) (nonstorm)                              |   |                                       | 1.17    |       |   | 1.17       |   |   | 1.10 |   |   | ― |   |   | 6.4 |   |
| Customer                Average Interruption Duration Index (CAIDI) (nonstorm)                             |   |                                       | 67.54   |       |   | 65.60      |   |   | 68.75 |   |   | 3.0 |   |   | (4.6 | ) |
|                                                                                                            |   |                                       |    |       |   |       |   |   |   |   |   |   |   |   |   |   |
| Electricity                points of delivery (end of period and in thousands):                                 |   |                                       |    |       |   |       |   |   |   |   |   |   |   |   |   |   |
| Electricity                distribution points of delivery (based                on number of meters) (b)  |   |                                       | 3,056   |       |   | 3,013      |   |   | 2,971 |   |   | 1.4 |   |   | 1.4 |   |
|                                                                                                            |   |                                       |    |       |   |       |   |   |   |   |   |   |   |   |   |   |
| Operating                Revenues:                                                                              |   |                                       |    |       |   |       |   |   |   |   |   |   |   |   |   |   |
| Electricity                distribution revenues (c):                                                           |   |                                       |    |       |   |       |   |   |   |   |   |   |   |   |   |   |
| Affiliated                (TXU Energy Company)                                                             |   | $                                          | 1,137   |       | $      | 1,276      |   | $ | 1,418 |   |   | (10.9 | ) |   | (10.0 | ) |
| Nonaffiliated                                                                                              |   |                                       | 1,046   |       |   | 879        |   |   | 590 |   |   | 19.0 |   |   | 49.0 |   |
| Total                distribution revenues                                                                      |   |                                       | 2,183   |       |   | 2,155      |   |   | 2,008 |   |   | 1.3 |   |   | 7.3 |   |
| Third-party                transmission revenues                                                           |   |                                       | 236     |       |   | 213        |   |   | 192 |   |   | 10.8 |   |   | 10.9 |   |
| Other                miscellaneous revenues                                                                |   |                                       | 30      |       |   | 26         |   |   | 26 |   |   | 15.4 |   |   | ─ |   |
| Total                operating revenues                                                                         |   | $                                          | 2,449   |       | $      | 2,394      |   | $ | 2,226 |   |   | 2.3 |   |   | 7.5 |   |

| (a)  | SAIDI                is the average number of electric service outage minutes per customer                in a                year. SAIFI is the average number of electric service interruptions                per                customer in a year. CAIDI is the average duration in minutes of                interruptions to electric service in a year. The statistics presented                are                based on the preceding twelve months’ data. |
|-----------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| (b)  | Includes                lighting sites, primarily guard lights, for which TXU Energy Company                is                the REP but are not included in TXU Energy Company’s customer count. Such                sites totaled 82,337, 86,495 and 95,252 at December 31, 2006, 2005                and                2004, respectively.                                                                                                                        |
| (c)  | Includes                transition charges associated with the issuance of securitization                bonds                totaling $151 million, $152 million and $106 million for the years                ended                December 31, 2006, 2005 and 2004, respectively. Also includes                disconnect/reconnect fees and other discretionary revenues for services                requested by REPs.                                                  |

----

**TXU      Electric Delivery Segment**

***2006      compared to 2005***

|   | · | $24                  million in higher transmission revenues primarily due to rate increases                  approved in 2005 and 2006 to recover ongoing investment in the                  transmission system; |
|--------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | an                  estimated $16 million due to growth in points of delivery;                  and |
|--------|--------|-----------------------------------------------------------------------------------------------------|

|   | · | $9                  million from increased distribution tariffs to recover higher transmission                  costs. |
|--------|--------|------------------------------------------------------------------------------------------------------------------------|

*Gross      Margin*

|                                                                |   | **Year                Ended December 31,** |   |
|---------------------------------------------------------------------|--------|--------------------------------------------|--------|
| ** **                                                          |   | **2006**                                   |   | **%                of Revenue** |   | **2005** |   | **%                of Revenue** |   |
|                                                                |   |                                       |   |   |   |   |   |   |   |
| Operating                revenues                              |   | $                                          | 2,449  |   |   | 100 | % | $ | 2,394 |   |   | 100 | % |
| Costs                and expenses:                                  |   |                                       |   |   |   |   |   |   |   |   |   |   |   |
| Transmission                and distribution system operating costs |   |                                       | 770    |   |   | 31 | % |   | 758 |   |   | 32 | % |
| Depreciation                and amortization                        |   |                                       | 474    |   |   | 20 | % |   | 446 |   |   | 18 | % |
| Gross                margin                                    |   | $                                          | 1,205  |   |   | 49 | % | $ | 1,190 |   |   | 50 | % |

|   | · | $8                million in lower incentive compensation                expense; |
|--------|--------|-----------------------------------------------------------------------------------|

|   | · | $4                million in decreased employee benefits expense; |
|--------|--------|-------------------------------------------------------------------|

|   | · | $3                million in lower bad debt expense; |
|--------|--------|------------------------------------------------------|

|   | · | $3                million in lower legal and consulting fees;                and |
|--------|--------|----------------------------------------------------------------------------------|

|   | · | $3                million in lower research and development                costs. |
|--------|--------|-----------------------------------------------------------------------------------|

----

|   | · | $13                million in costs as a result of the cities rate settlement (See Note                9 to                Financial Statements); |
|--------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | $7                million in transition costs related to the InfrastruX Energy Services                joint venture; and |
|--------|--------|---------------------------------------------------------------------------------------------------------------------------|

|   | · | $4                million in equity losses (representing amortization expense) related                to                the ownership interest in the TXU Corp. subsidiary holding the capitalized                software licensed to Capgemini. |
|--------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | $3                million in costs associated with transitioning the outsourced activities                to Capgemini; |
|--------|--------|-------------------------------------------------------------------------------------------------------------------------|

|   | · | $3                million in equity losses (representing amortization expense) related                to                the ownership interest in the TXU Corp. subsidiary holding the capitalized                software licensed to Capgemini; and |
|--------|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | $2                million of severance-related charges related to the 2004 restructuring                actions. |
|--------|--------|------------------------------------------------------------------------------------------------------------------|

----

**TXU      Electric Delivery Segment**

***2005      compared to 2004***

|  | · | $46                  million in higher transition charges associated with the issuance                  of                  securitization bonds in June 2004 (offset in total by higher amortization                  of the related regulatory asset as discussed                  below); |
|--|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | approximately                    $30 million related to warmer summer weather; |
|--------|--------|--------------------------------------------------------------------------------|

|   | · | $22                    million from continued implementation of power factor billing                    (power                    factor billing is a tariff adjustment applied to nonresidential                    end-use                    consumers that utilize inefficient                    equipment); |
|--------|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | $21                    million in base growth reflecting an increase in points of                    delivery; |
|--------|--------|----------------------------------------------------------------------------------------------------------------|

|   | · | $21                    million from increased distribution tariffs to recover higher                    transmission                    costs; and |
|--------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------|

|  | · | $21                    million in increased transmission revenues due to rate increases                    approved                    in 2005 and 2004 and higher                    volumes. |
|--|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

*Gross      Margin*

|                                                                |   | **Year                Ended December 31,** |   |
|---------------------------------------------------------------------|--------|--------------------------------------------|--------|
| ** **                                                          |   | **2005**                                   |   | **%                of Revenue** |   | **2004** |   | **%                of Revenue** |   |
|                                                                |   |                                       |   |   |   |   |   |   |   |
| Operating                revenues                              |   | $                                          | 2,394  |   |   | 100 | % | $ | 2,226 |   |   | 100 | % |
| Costs                and expenses:                                  |   |                                       |   |   |   |   |   |   |   |   |   |   |   |
| Transmission                and distribution system operating costs |   |                                       | 758    |   |   | 32 | % |   | 730 |   |   | 33 | % |
| Depreciation                and amortization                        |   |                                       | 446    |   |   | 18 | % |   | 386 |   |   | 17 | % |
| Gross                margin                                    |   | $                                          | 1,190  |   |   | 50 | % | $ | 1,110 |   |   | 50 | % |

|   | · | $13                million in increased spending for system reliability                initiatives; |
|--------|--------|-----------------------------------------------------------------------------------------------------|

|   | · | $7                million in higher property taxes primarily due to increased investments                in                property; |
|--------|--------|--------------------------------------------------------------------------------------------------------------------------------------|

|   | · | $4                million in increased metering expenses due to increased labor costs                to                accommodate increased consumer requested                activities; |
|--------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | $3                million in increased third-party transmission costs due to increased                rates; and |
|--------|--------|------------------------------------------------------------------------------------------------------------------|

|   | · | $3                million in higher transportation expense due to an increase in fuel                and                lease costs, |
|--------|--------|--------------------------------------------------------------------------------------------------------------------------------------|

|   | · | $4                million in decreased employee benefits costs, reflecting lower health                care                costs due to plan changes; and |
|--------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | $4                million in reduced pension and OPEB costs. This reduction reflects                an                amendment to PURA as discussed in Note 21 to Financial                Statements. |
|--------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

|   | · | $16                million from cost reduction initiatives including the effects of                the                Capgemini agreement; |
|--------|--------|--------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | $5                million in decreased employee benefits, reflecting lower health care                costs                due to plan changes; and |
|--------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | $2                million in reduced pension and OPEB costs, as a result of the amendment                to                PURA, |
|--------|--------|----------------------------------------------------------------------------------------------------------------------------------|

|   | · | $3                  million in costs associated with transitioning the outsourced activities                  to Capgemini; |
|--------|--------|-----------------------------------------------------------------------------------------------------------------------------|

|   | · | $3                  million in equity losses (representing amortization expense) related                  to                  the ownership interest in the TXU Corp. subsidiary holding the                  capitalized                  software licensed to Capgemini, and |
|--------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | $2                  million of severance-related charges resulting from the 2004 restructuring                  actions. |
|--------|--------|--------------------------------------------------------------------------------------------------------------------------|

|  | · | a                    $21 million charge for estimated settlement payments arising                    from the 2004                    cities rate settlement; |
|--|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | $20                      million of severance-related charges in connection with the                      Capgemini                      outsourcing transaction and other TXU Corp. restructuring actions;                      and |
|--------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | $8                      million related to transitioning the outsourced activities                      to Capgemini,                      including asset write-downs and other unusual                      charges. |
|--------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

**COMPREHENSIVE      INCOME - Continuing Operations**

|                                                                                                           |   | **Year                Ended December 31,** |   |
|----------------------------------------------------------------------------------------------------------------|--------|--------------------------------------------|--------|
| ** **                                                                                                     |   | **2006**                                   |   | **2005** |   | **2004** |   |
|                                                                                                           |   |                                       |   |   |   |   |   |
| Net                increase (decrease) in fair value of cash flow hedges (all                commodity)        |   |                                       |   |   |   |   |   |
| held                at end of period                                                                      |   | $                                          | 568    |   | $ | (47 | ) | $ | (75 | ) |
| Derivative                value net losses (gains) reported in net income that relate to                hedged |   |                                       |   |   |   |   |   |   |   |   |
| transactions                recognized in the period:                                                          |   |                                       |   |   |   |   |   |   |   |   |
| Commodities                                                                                               |   |                                       | (23    | ) |   | 64 |   |   | 21 |   |
| Financing                - interest rate swaps (a)                                                        |   |                                       | 8      |   |   | 13 |   |   | 23 |   |
|                                                                                                           |   |                                       | (15    | ) |   | 77 |   |   | 44 |   |
| Total                income (loss) effect of cash flow hedges reported in other                comprehensive   |   |                                       |   |   |   |   |   |   |   |   |
| from                continuing operations                                                                 |   | $                                          | 553    |   | $ | 30 |   | $ | (31 | ) |

| (a) | Represents                recognition of net losses on settled                swaps. |
|-----|--------------------------------------------------------------------------------------|

----

**FINANCIAL      CONDITION**

***LIQUIDITY      AND CAPITAL RESOURCES***

***Cash      Flows**— *

|   | · | higher                operating earnings after taking into account noncash items such as                deferred federal income taxes, unrealized mark-to-market valuations                and                the generation plant impairment                charge; |
|--------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | a                favorable change of $503 million in net margin deposits, primarily                reflecting amounts received from counterparties related to natural                gas                positions in the long-term hedging program;                and |
|--------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | a                favorable change of $293 million in working capital (accounts receivable,                accounts payable and inventories) driven by higher wholesale natural                gas                and electricity receivables in 2005 due to higher prices in the fourth                quarter of 2005. |
|--------|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|                                                                                           |   | **Year                Ended December 31,** |    |
|------------------------------------------------------------------------------------------------|--------|--------------------------------------------|---------|
| ** **                                                                                     |   | **2006**                                   |    | **2005** |   | **2004** |   |
|                                                                                           |   |                                       |    |   |   |   |   |
| Cash                used in financing activities:                                              |   |                                       |    |   |   |   |   |
| Net                issuances and (repayments) of borrowings, including                premiums |   |                                       |    |   |   |   |   |
| and                discounts                                                              |   | $                                          | (777    | ) | $ | 356 |   | $ | 155 |   |
| Net                repurchases of common stock                                            |   |                                       | (832    | ) |   | (1,054 | ) |   | (4,575 | ) |
| Repurchase                of preference stock                                             |   |                                       | ─ |   |   | (300 | ) |   | ─ |   |
| Repurchase                of preferred securities of subsidiaries                         |   |                                       | ─ |   |   | (38 | ) |   | (75 | ) |
| Repurchase                of exchangeable preferred membership interests                  |   |                                       | ─ |   |   | ─ |   |   | (1,852 | ) |
| Payment                of common stock dividends                                          |   |                                       | (764    | ) |   | (544 | ) |   | (150 | ) |
| Payment                of preference stock dividends                                      |   |                                       | ─ |   |   | (11 | ) |   | (22 | ) |
| Excess                tax benefit on stock-based compensation                             |   |                                       | 41      |   |   | 28 |   |   | ─ |   |
| Total                                                                                          |   | $                                          | (2,332  | ) | $ | (1,563 | ) | $ | (6,519 | ) |

----

|                                                                                       |   | **Year                Ended December 31,** |    |
|--------------------------------------------------------------------------------------------|--------|--------------------------------------------|---------|
| ** **                                                                                 |   | **2006**                                   |    | **2005** |   | **2004** |   |
|                                                                                       |   |                                       |    |   |   |   |   |
| Cash                provided by (used in) investing activities:                            |   |                                       |    |   |   |   |   |
| Capital                expenditures, including nuclear fuel                           |   | $                                          | (2,297  | ) | $ | (1,104 | ) | $ | (999 | ) |
| Sale                of TXU Australia                                                  |   |                                       | ─ |   |   | ─ |   |   | 1,885 |   |
| Disposition                of TXU Gas                                                 |   |                                       | ─ |   |   | ─ |   |   | 1,905 |   |
| Sale                of TXU Fuel                                                       |   |                                       | ─ |   |   | ─ |   |   | 500 |   |
| Sale                of telecommunications business                                    |   |                                       | ─ |   |   | ─ |   |   | 524 |   |
| Purchase                of lease trust                                                |   |                                       | (69     | ) |   | ─ |   |   | ─ |   |
| Deposit                of proceeds from pollution control revenue bonds with trustee  |   |                                       | (240    | ) |   | ─ |   |   | ─ |   |
| Proceeds                from sale of assets                                           |   |                                       | 20      |   |   | 77 |   |   | 27 |   |
| Return                of investment in trust to support a credit facility             |   |                                       | ─ |   |   | ─ |   |   | 525 |   |
| Investment                in unconsolidated affiliate                                 |   |                                       | (15     | ) |   | ─ |   |   | ─ |   |
| Net                investments in nuclear decommissioning trust fund securities       |   |                                       | (16     | ) |   | (15 | ) |   | (15 | ) |
| Costs                to remove retired property                                       |   |                                       | (40     | ) |   | (44 | ) |   | (40 | ) |
| Other                                                                            |   |                                       | (7      | ) |   | 48 |   |   | (32 | ) |
| Total                                                                                 |   | $                                          | (2,664  | ) | $ | (1,038 | ) | $ | 4,280 |   |

*Capital        Allocation — *

|   | · | $770                  million for increased investment in TXU Electric Delivery’s transmission                  and distribution infrastructure; |
|--------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | $2.1                  billion for investments in the generation activities, including                  $1.3                  billion for construction of one generation unit at Sandow and two                  generation units at Oak Grove; and |
|--------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | pay                  regular cash dividends at levels authorized by the board of directors,                  which currently is in the amount of $1.73 per share                  annually. |
|--------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

*Long-term      Debt Activity *
*—*
* *

|                                           |   | Repayments                and Repurchases |   |
|------------------------------------------------|--------|------------------------------------------------|--------|
| TXU                Corp.:                      |   |                                           |   |
| Senior                notes                    |   | $                                              | 733    |   |
| Equity-linked                senior notes      |   |                                           | 179    |   |
| Other                long-term debt            |   |                                           | 10     |   |
|                                           |   |                                           |   |   |
| TXU                Energy Company:             |   |                                           |   |   |
| Pollution                control revenue bonds |   |                                           | 259    |   |
| Senior                notes                    |   |                                           | 400    |   |
| Other                long-term debt            |   |                                           | 5      |   |
|                                           |   |                                           |   |   |
| TXU                Electric Delivery:          |   |                                           |   |   |
| Transition                bonds                |   |                                           | 93     |   |
|                                           |   |                                           |   |   |
| US                Holdings                |   |                                           | 12     |   |
|                                           |   |                                           |   |   |
| Total                                          |   | $                                              | 1,691  |   |
|                                           |   |                                           |   |   |

***Credit        Facilities***
*—*

***Registered      Financing Arrangements***
* *

***Capitalization***
* *

***Financing      of Investments in New Generation Facilities and Cleaner Coal-fueled Generation      Technologies***
*—      *

*    **Pension      Protection Act***

----

***Income      Tax Payments***

***Short-term        Borrowings***
*—*
* *

***Dividends        -***

*    **Common        Stock        Repurchases***
*—        *

***Sales      of Accounts Receivable***

----

***Liquidity      Effects of Risk Management and Trading Activities***

|   | · | $672                million in cash has been received related to daily margin settled                transactions primarily associated with positions in the long-term                hedging                program; |
|--------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | $9                million in cash has been received from counterparties as                collateral; |
|--------|--------|-------------------------------------------------------------------------------------------------------|

|   | · | $7                million in cash has been posted with counterparties as collateral;                and |
|--------|--------|---------------------------------------------------------------------------------------------------------|

|   | · | $455                million in letters of credit have been posted with counterparties                as                collateral. |
|--------|--------|------------------------------------------------------------------------------------------------------------------------------------|

----

***Financial      Covenants, Credit Rating Provisions and Cross Default      Provisions***

*Credit      Ratings*

|          |                              |   |                              |   |                                 |   |                              |
|---------------|-----------------------------------|--------|-----------------------------------|--------|--------------------------------------|--------|-----------------------------------|
|          | TXU                Corp.          |   | US                Holdings        |   | TXU                Electric Delivery |   | TXU                Energy Company |
|          | (Senior                Unsecured) |   | (Senior                Unsecured) |   | (Senior                Unsecured)    |   | (Senior                Unsecured) |
| S&P       | BB+                               |   | BB+                               |   | BBB-                                 |   | BBB-                              |
| Moody’s | Ba1                               |   | Baa3                              |   | Baa2                                 |   | Baa2                              |
| Fitch         | BB+                               |   | BB+                               |   | BBB                                  |   | BBB-                              |

*Material      Credit Rating Covenants*

----

*Material      Cross Default Provisions *

----

***Long-term* *Contractual      Obligations and Commitments***

| **Contractual                  Cash Obligations**                                  | ** ** | **Less                  Than****One                  Year** | ** ** | **One                  to****Three                  Years** | ** ** | **Three                  to****Five                  Years** | ** ** | **More                  Than****Five                  Years** | ** ** | **Total** |   |
|-----------------------------------------------------------------------------------------|------------|-------------------------------------------------------------|------------|-------------------------------------------------------------|------------|--------------------------------------------------------------|------------|---------------------------------------------------------------|------------|-----------|--------|
|                                                                                    |       |                                                        |       |                                                        |       |                                                         |       |                                                          |       |      |   |
| Long-term                  debt - principal                                        |       | $                                                           | 474        |                                                        | $          | 1,705                                                        |       | $                                                             | 278        |      | $      | 8,644 |   | $ | 11,101 |   |
| Long-term                  debt - interest (a)                                     |       |                                                        | 696        |                                                        |       | 1,262                                                        |       |                                                          | 1,134      |      |   | 5,946 |   |   | 9,038 |   |
| Operating                  and capital leases (b)                                       |       |                                                        | 69         |                                                        |       | 126                                                          |       |                                                          | 111        |      |   | 332 |   |   | 638 |   |
| Contracts                  related to generation development program (c)                |       |                                                        | 1,301      |                                                        |       | 896                                                          |       |                                                          | ―    |      |   | ― |   |   | 2,197 |   |
| Obligations                  under commodity purchase and services agreements (d)  |       |                                                        | 2,075      |                                                        |       | 2,432                                                        |       |                                                          | 851        |      |   | 1,237 |   |   | 6,595 |   |
| Total                  contractual cash obligations (e)                                 |       | $                                                           | 4,615      |                                                        | $          | 6,421                                                        |       | $                                                             | 2,374      |      | $      | 16,159 |   | $ | 29,569 |   |

| (a) | Includes                  net amounts payable under interest rate swaps. Variable interest                  payments                  and net amounts payable under interest rate swaps are calculated                  based on                  interest rates in effect at December 31, 2006.                                                                                                                                                                                                                                              |
|-----|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| (b) | Includes                  short-term noncancellable leases.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |
| (c) | Amounts                  represent scheduled payments under the contracts for the three                  proposed                  new generation units. See Note 16 to Financial                  Statements.                                                                                                                                                                                                                                                                                                                                |
| (d) | Includes                  capacity payments, nuclear fuel and natural gas take-or-pay contracts,                  coal contracts, business services and nuclear-related outsourcing                  and                  other purchase commitments. Amounts presented for variable priced                  contracts assumed the year-end 2006 price remained in effect for                  all                  periods except where contractual price adjustment or index-based                  prices                  were specified. |
| (e) | Table                  does not include estimated 2007 funding of the pension and other                  postretirement benefits plans totaling approximately $153                  million.                                                                                                                                                                                                                                                                                                                                                  |

|   | · | contracts                between affiliated entities and intercompany                debt; |
|--------|--------|--------------------------------------------------------------------------------------------|

|   | · | individual                contracts that have an annual cash requirement of less than $1 million                (however, multiple contracts with one counterparty that are more                than $1                million on an aggregated basis have been included); |
|--------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | contracts                that are cancelable without payment of a substantial cancellation                penalty; |
|--------|--------|--------------------------------------------------------------------------------------------------------------------|

|   | · | Cities                rate settlement agreement, which is discussed below;                and |
|--------|--------|-----------------------------------------------------------------------------------------------|

|   | · | employment                contracts with management. |
|--------|--------|------------------------------------------------------|

***Guarantees***

**OFF      BALANCE SHEET ARRANGEMENTS**

**COMMITMENTS      AND CONTINGENCIES**

**CHANGES      IN ACCOUNTING STANDARDS**

----

**REGULATION      AND RATES**

***Wholesale      Market Activity Investigation***

*Climate      Change and Carbon Dioxide*

***2007      Texas Legislative Session***

***Commission        Review of InfrastruX Energy Services Joint        Venture***

***2006      Cities Rate Settlement***

----

***Advanced      Meter Rulemaking***

***Wholesale      Market Design***

|   | · | to                use a stakeholder process to develop a new wholesale market                model; |
|--------|--------|-----------------------------------------------------------------------------------------------------|

|   | · | to                operate a voluntary day-ahead energy                market; |
|--------|--------|-------------------------------------------------------------------------------|

|   | · | to                directly assign all congestion rents to the resources that caused                the                congestion; |
|--------|--------|-----------------------------------------------------------------------------------------------------------------------------------|

|   | · | to                use nodal energy prices for                resources; |
|--------|--------|-------------------------------------------------------------------------|

|   | · | to                provide information for energy trading hubs by aggregating                nodes; |
|--------|--------|----------------------------------------------------------------------------------------------------|

|   | · | to                use zonal prices for loads; and |
|--------|--------|---------------------------------------------------|

|   | · | to                provide congestion revenue rights (but not physical                rights). |
|--------|--------|-----------------------------------------------------------------------------------------------|

***Transmission      Rates***

----

***Disconnect      Rulemaking***

|   | · | For                “critical care” customers whose interruption or suspension of electric                service would create a dangerous or life-threatening condition,                disconnection was prohibited through September 30,                2006; |
|--------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | With                respect to elderly low-income customers who contacted their electric                provider, disconnection was also prohibited through September 30,                2006.                These customers were entitled to enter into a deferred payment                arrangement; and |
|--------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | All                other low-income customers were able to avoid disconnection through                September 30, 2006 by paying 25% of their current month’s bill and                entering into a deferred payment                arrangement. |
|--------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

***2006      Texas Legislative Special Session***

***TXU      Electric Delivery Rates***

----

***Price-to-Beat      Rates***

|   | · | 10%                and 12% in May and October of 2005, respectively. The latter reflected                a                voluntary discount that expired December 31, 2005;                and |
|--------|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | 12%                in January of 2006 representing the expiration of the voluntary                discount. |
|--------|--------|-------------------------------------------------------------------------------------------------------------|

***Nuclear      Decommissioning***

***Provider      of Last Resort Rule***

----

***Reallocation      of Stranded Cost Recovery***

***Summary***

----

**QUANTITATIVE      AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.**

***RISK      OVERSIGHT***

***COMMODITY      PRICE RISK***

***Long-term      Hedging Program***

----

***VaR      Methodology***

***Trading      VaR***

|                                        |   | **Year                Ended**        |   |
|---------------------------------------------|--------|--------------------------------------|--------|
| ** **                                  |   | **December                31, 2006** |   |
|  Month-end                average VaR: |   | $                                    | 12     |   |
|  Month-end                high VaR:    |   | $                                    | 30     |   |
|  Month-end                low VaR:     |   | $                                    | 5      |   |

***VaR      for Energy-Related Contracts Subject to Mark-to-Market (MtM)      Accounting***

|                                            |   | **Year                Ended**                                      |   | **Year                Ended**                 |   |
|-------------------------------------------------|--------|--------------------------------------------------------------------|--------|-----------------------------------------------|--------|
| ** **                                      |   | **December                31, 2006**                               |   | **December                31, 2005**          |   |
| ** **                                      |   | **Five                to 60 day****holding                period** |   | **Five-day****holding                period** |   | **Five-day****holding                period** |   |
|  Month-end                average MtM VaR: |   | $                                                                  | 149    |                                          | $      | 48 |   | $ | 19 |   |
|  Month-end                high MtM VaR:    |   | $                                                                  | 391    |                                          | $      | 117 |   | $ | 27 |   |
|  Month-end                low MtM VaR:     |   | $                                                                  | 5      |                                          | $      | 5 |   | $ | 12 |   |

----

***Earnings      at Risk (EaR)***

|                                        |   | **Year                Ended**                    |   | **Year                Ended**                 |   |
|---------------------------------------------|--------|--------------------------------------------------|--------|-----------------------------------------------|--------|
| ** **                                  |   | **December                31, 2006**             |   | **December                31, 2005**          |   |
| ** **                                  |   | **Five                to 60 day holding period** |   | **Five-day****holding                period** |   | **Five-day****holding                period** |   |
|  Month-end                average EaR: |   | $                                                | 156    |                                          | $      | 56 |   | $ | 23 |   |
|  Month-end                high EaR:    |   | $                                                | 387    |                                          | $      | 112 |   | $ | 41 |   |
|  Month-end                low EaR:     |   | $                                                | 21     |                                          | $      | 21 |   | $ | 3 |   |

----

***INTEREST      RATE RISK***

|                                                                                   |   | **Expected                Maturity Date** |    | ** **           |   | ** **           |   | ** **           |    | ** **           |   |
|----------------------------------------------------------------------------------------|--------|-------------------------------------------|---------|----------------------|--------|----------------------|--------|----------------------|---------|----------------------|--------|
| ** **                                                                             |   | ** **                                |    | ** **           |   | ** **           |   | ** **           |    | ** **           |   | ** ** |   | **2006** |   | **2006** |   | **2005** |   | **2005** |   |
| ** **                                                                             |   |   **2007**                      |    |   **2008** |   |   **2009** |   |   **2010** |    |   **2011** |   |  **There-****After** |   | **Total****Carrying                Amount** |   | **Total****Fair****Value** |   | **Total****Carrying****Amount** |   | **Total****Fair****Value** |   |
| Equity-linked                debt:                                                     |   |                                      |    |                 |   |                 |   |                 |    |                 |   |   |   |   |   |   |   |   |   |   |   |
| Fixed                rate debt amount                                                  |   |                                      | — |                 |   | —              |   |                 | — |                 |   | — |   |   | — |   |   | — |   | $ | — |   | $ | — |   | $ | 179 |   | $ | 289 |   |
| Average                interest rate                                                   |   |                                      | — |                 |   | —              |   |                 | — |                 |   | — |   |   | — |   |   | — |   |   | — |   |   | — |   |   | 5.80 | % |   | — |   |
|                                                                                   |   |                                      |    |                 |   |                 |   |                 |    |                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| All                other long-term debt: (including                current maturities) |   |                                      |    |                 |   |                 |   |                 |    |                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Fixed                rate debt                                                         |   |                                      |    |                 |   |                 |   |                 |    |                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| amount                (a)                                                              |   | $                                         | 331     |                 | $      | 576                  |   | $                    | 1,129   |                 | $      | 135 |   | $ | 143 |   | $ | 8,172 |   | $ | 10,486 |   | $ | 10,669 |   | $ | 11,493 |   | $ | 11,735 |   |
| Average                interest rate                                                   |   |                                      | 4.90    | %                    |   | 5.90                 | %      |                 | 4.81    | %                    |   | 5.46 | % |   | 5.57 | % |   | 6.46 | % |   | 6.18 | % |   | — |   |   | 6.14 | % |   | — |   |
| Variable                rate debt amount                                               |   | $                                         | 143     |                 |   | —              |   |                 | — |                 |   | — |   |   | — |   | $ | 472 |   | $ | 615 |   | $ | 639 |   | $ | 872 |   | $ | 867 |   |
| Average                interest rate                                                   |   |                                      | 4.11    | %                    |   | —              |   |                 | — |                 |   | — |   |   | — |   |   | 4.32 | % |   | 4.27 | % |   | — |   |   | 4.32 | % |   | — |   |
| Total                Debt                                                              |   | $                                         | 474     |                 | $      | 576                  |   | $                    | 1,129   |                 | $      | 135 |   | $ | 143 |   | $ | 8,644 |   | $ | 11,101 |   | $ | 11,308 |   | $ | 12,544 |   | $ | 12,891 |   |
| Debt                swapped to variable:                                               |   |                                      |    |                 |   |                 |   |                 |    |                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Amount                                                                                 |   | $                                         | 200     |                 | $      | 450                  |   | $                    | 450     |                 |   | — |   |   | — |   | $ | 1,700 |   | $ | 2,800 |   |   |   |   | $ | 3,400 |   |   |   |   |
| Average                pay rate                                                        |   |                                      | 6.66    | %                    |   | 8.12                 | %      |                 | 6.16    | %                    |   | — |   |   | — |   |   | 6.88 | % |   | 6.95 | % |   |   |   |   | 6.48 | % |   |   |   |
| Average                receive rate                                                    |   |                                      | 5.00    | %                    |   | 6.24                 | %      |                 | 4.80    | %                    |   | — |   |   | — |   |   | 6.18 | % |   | 5.89 | % |   |   |   |   | 5.97 | % |   |   |   |
| Debt                swapped to fixed:                                                  |   |                                      |    |                 |   |                 |   |                 |    |                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Amount                                                                                 |   |                                      | — |                 |   | —              |   |                 | — |                 |   | — |   |   | — |   | $ | 300 |   | $ | 300 |   |   |   |   | $ | — |   |   |   |   |
| Average                pay rate                                                        |   |                                      | — |                 |   | —              |   |                 | — |                 |   | — |   |   | — |   |   | 5.18 | % |   | 5.18 | % |   |   |   |   | — |   |   |   |   |
| Average                receive rate                                                    |   |                                      | — |                 |   | —              |   |                 | — |                 |   | — |   |   | — |   |   | 5.37 | % |   | 5.37 | % |   |   |   |   | — |   |   |   |   |

| (a) | Reflects                the maturity date and not the remarketing date for certain debt that                is                subject to mandatory tender for remarketing prior to maturity. See                Note 15                to Financial Statements for details concerning long-term debt subject                to                mandatory tender for remarketing. |
|-----|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

***CREDIT      RISK***

***Credit      Risk***

***Credit      Exposure***

----

|                                     |   |                                                                   |   | ** **                                       |   | ** **                      |   | **Net                Exposure by Maturity** |   |
|------------------------------------------|--------|------------------------------------------------------------------------|--------|--------------------------------------------------|--------|---------------------------------|--------|--------------------------------------------------|--------|
| ** **                               |   | **Exposure                before****Credit                Collateral** |   |   **Credit                Collateral** |   |   **Net****Exposure** |   | **2                years or less**               |   | **Between****2-5                years** |   | **Greater                than****5                years** |   | **Total** |   |
|                                     |   |                                                                   |   |                                             |   |                            |   |                                             |   |   |   |   |   |   |   |
|                                     |   |                                                                   |   |                                             |   |                            |   |                                             |   |   |   |   |   |   |   |
| Investment                grade     |   | $                                                                      | 1,094  |                                             | $      | 41                              |   | $                                                | 1,053  |   | $ | 614 |   | $ | 220 |   | $ | 219 |   | $ | 1,053 |   |
| Noninvestment                grade  |   |                                                                   | 164    |                                             |   | 15                              |   |                                             | 149    |   |   | 111 |   |   | 13 |   |   | 25 |   |   | 149 |   |
| Totals                                   |   | $                                                                      | 1,258  |                                             | $      | 56                              |   | $                                                | 1,202  |   | $ | 725 |   | $ | 233 |   | $ | 244 |   | $ | 1,202 |   |
|                                     |   |                                                                   |   |                                             |   |                            |   |                                             |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Investment                grade     |   |                                                                   | 87     | %                                                |   | 73                              | %      |                                             | 88     | % |   |   |   |   |   |   |   |   |   |   |   |   |
| Noninvestment                grade  |   |                                                                   | 13     | %                                                |   | 27                              | %      |                                             | 12     | % |   |   |   |   |   |   |   |   |   |   |   |   |

----

**FORWARD-LOOKING      STATEMENTS**

|   | · | prevailing                governmental policies and regulatory actions, including those of                the Texas                Legislature, the Governor of Texas, FERC, the Commission, the RRC,                the                NRC, the EPA and the TCEQ, with respect                to: |
|--------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | allowed                prices; |
|--------|--------|--------------------------------|

|   | · | allowed                rates of return; |
|--------|--------|-----------------------------------------|

|   | · | industry,                market and rate structure; |
|--------|--------|-----------------------------------------------------|

|   | · | purchased                power and recovery of investments; |
|--------|--------|-------------------------------------------------------------|

|   | · | operations                of nuclear generating facilities; |
|--------|--------|-------------------------------------------------------------|

|   | · | acquisitions                and disposal of assets and                facilities; |
|--------|--------|-----------------------------------------------------------------------------------|

|   | · | development,                construction and operation of                facilities; |
|--------|--------|--------------------------------------------------------------------------------------|

|   | · | decommissioning                costs; |
|--------|--------|---------------------------------------|

|   | · | present                or prospective wholesale and retail                competition; |
|--------|--------|----------------------------------------------------------------------------------------|

|   | · | changes                in tax laws and policies; and |
|--------|--------|------------------------------------------------------|

|   | · | changes                in and compliance with environmental and safety laws and policies,                including climate change                initiatives; |
|--------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | continued                implementation of the 1999 Restructuring                Legislation; |
|--------|--------|-----------------------------------------------------------------------------------------------|

|   | · | legal                and administrative proceedings and                settlements; |
|--------|--------|-------------------------------------------------------------------------------------|

|   | · | general                industry trends; |
|--------|--------|-----------------------------------------|

|   | · | TXU                Corp.’s ability to attract and retain profitable                customers; |
|--------|--------|-----------------------------------------------------------------------------------------------------|
|   | ·  | TXU              Corp.’s ability to profitably serve its customers given the announced              price protection and price cuts; |
|--------|--------------|--------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | restrictions                on competitive retail pricing; |
|--------|--------|------------------------------------------------------------|

|   | · | changes                in wholesale electricity prices or energy commodity                prices; |
|--------|--------|---------------------------------------------------------------------------------------------------|

|   | · | unanticipated                changes in market heat rates in the Texas electricity                market; |
|--------|--------|-----------------------------------------------------------------------------------------------------------|

|   | · | TXU                Corp.’s ability to effectively hedge against changes in commodity prices                and market heat rates; |
|--------|--------|-----------------------------------------------------------------------------------------------------------------------------------------|

|   | · | weather                conditions and other natural phenomena, and acts of sabotage, wars                or                terrorist activities; |
|--------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | unanticipated                population growth or decline, and changes in market demand and demographic                patterns; |
|--------|--------|----------------------------------------------------------------------------------------------------------------------------------|

|   | · | changes                in business strategy, development plans or vendor                relationships; |
|--------|--------|--------------------------------------------------------------------------------------------------------|

|   | · | access                to adequate transmission facilities to meet changing                demands; |
|--------|--------|----------------------------------------------------------------------------------------------------|

|   | · | unanticipated                changes in interest rates, commodity prices, rates of inflation or                foreign                exchange rates; |
|--------|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | unanticipated                changes in operating expenses, liquidity needs and capital                expenditures; |
|--------|--------|----------------------------------------------------------------------------------------------------------------------|

|   | · | commercial                bank market and capital market                conditions; |
|--------|--------|-------------------------------------------------------------------------------------|

|   | · | competition                for new energy development and other business                opportunities; |
|--------|--------|--------------------------------------------------------------------------------------------------------|

----

|   | · | inability                of various counterparties to meet their obligations with respect                to TXU                Corp.’s financial instruments; |
|--------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | changes                in technology used by and services offered by TXU                Corp.; |
|--------|--------|------------------------------------------------------------------------------------------------|

|   | · | significant                changes in TXU Corp.’s relationship with its employees, including the                availability of qualified personnel, and the potential adverse effects                if                labor disputes or grievances were to                occur; |
|--------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | changes                in assumptions used to estimate future executive compensation                payments; |
|--------|--------|---------------------------------------------------------------------------------------------------------------|

|   | · | significant                changes in critical accounting policies material to TXU Corp.; |
|--------|--------|-------------------------------------------------------------------------------------------|

|   | · | actions                by credit rating agencies; |
|--------|--------|---------------------------------------------------|

|   | · | the                ability of TXU Corp. to implement cost reduction                initiatives; |
|--------|--------|-------------------------------------------------------------------------------------------------|

|   | · | with                respect to TXU Corp.’s lignite/coal generation development program, more                specifically, TXU Corp.’s ability to fund such investments, delays in the                approval of, or failure to obtain, air and other environmental permits                and                the ability to satisfactorily resolve issues relating to any appeal                to the                final judgement issued with respect to the Sandow consent decree,                changes                in competitive market rules, changes in environmental laws or regulations,                changes in electric generation and emissions control technologies,                changes                in projected demand for electricity, the ability of TXU Corp. and                its                contractors to attract and retain, at projected rates, skilled labor                for                constructing the new generating units, changes in wholesale electricity                prices or energy commodity prices, transmission capacity and constraints,                supplier performance risk, changes in the cost and availability of                materials necessary for the construction program and the ability                of TXU                Corp. to manage the significant construction program to a timely                conclusion with limited cost overruns; |
|--------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |  · | with              respect to the proposed merger: the              occurrence of any event, change or other circumstances that could give              rise to the termination of the Merger Agreement or the proposed merger;              the outcome of any legal proceedings that may be instituted against              TXU              Corp. and others related to the Merger Agreement; failure to obtain              shareholder approval or any other failure to satisfy other conditions              required to complete the proposed merger, including required regulatory              approvals; risks that the proposed transaction disrupts current plans              and              operations and the potential difficulties in employee retention as              a              result of the proposed merger; the amount of the costs, fees, expenses              and              charges related to the proposed merger and the execution of certain              financings that will be obtained to consummate the proposed merger;              and              the impact of the substantial indebtedness incurred to finance the              consummation of the proposed merger; and |
|--------|--------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | with                respect to the InfrastruX Energy Services joint venture, the amount                of                time the Commission takes to review the transaction and the results                of                such review. |
|--------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

**TXU      CORP.**

**MANAGEMENT’S      ANNUAL REPORT ON**

**INTERNAL      CONTROL OVER FINANCIAL REPORTING**

*Internal      Control - Integrated Framework*

| /s/                C. JOHN WILDER                  |   | /s/                DAVID A. CAMPBELL                       |
|----------------------------------------------------|--------|------------------------------------------------------------|
|                                               |   |                                                       |
| C.                John Wilder, Chairman, President |   | David                A. Campbell, Executive Vice President |
| and                CEO                             |   | and                Acting Chief Financial Officer          |

----

**REPORT      OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM**

*Internal      Control—Integrated Framework*

*Internal      Control—Integrated Framework*
*Internal      Control—Integrated Framework*

----

**REPORT      OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM **

*      Share-Based Payment,*

*Internal      Control—Integrated Framework*

----

**TXU      CORP. AND SUBSIDIARIES**

**STATEMENTS      OF CONSOLIDATED INCOME**

|                                                                                                        |   | **Year                Ended December 31,**                         |    |
|-------------------------------------------------------------------------------------------------------------|--------|--------------------------------------------------------------------|---------|
| ** **                                                                                                  |   | **2006**                                                           |    | **2005** |   | **2004** |   |
| ** **                                                                                                  |   | **(millions                of dollars, except per share amounts)** |    |
|                                                                                                        |   |                                                               |    |   |   |   |   |
| Operating                revenues                                                                      |   | $                                                                  | 10,856  |   | $ | 10,662 |   | $ | 9,216 |   |
|                                                                                                        |   |                                                               |    |   |   |   |   |   |   |   |
| Costs                and expenses:                                                                          |   |                                                               |    |   |   |   |   |   |   |   |
| Fuel,                purchased power costs and delivery fees                                           |   |                                                               | 2,784   |   |   | 4,261 |   |   | 3,755 |   |
| Operating                costs                                                                         |   |                                                               | 1,373   |   |   | 1,425 |   |   | 1,429 |   |
| Depreciation                and amortization                                                           |   |                                                               | 830     |   |   | 776 |   |   | 760 |   |
| Selling,                general and administrative expenses                                            |   |                                                               | 819     |   |   | 781 |   |   | 1,091 |   |
| Franchise                and revenue-based taxes                                                       |   |                                                               | 390     |   |   | 364 |   |   | 367 |   |
| Other                income                                                                            |   |                                                               | (121    | ) |   | (151 | ) |   | (148 | ) |
| Other                deductions                                                                        |   |                                                               | 269     |   |   | 45 |   |   | 1,172 |   |
| Interest                income                                                                         |   |                                                               | (46     | ) |   | (48 | ) |   | (28 | ) |
| Interest                expense and related charges                                                    |   |                                                               | 830     |   |   | 802 |   |   | 695 |   |
| Total                costs and expenses                                                                |   |                                                               | 7,128   |   |   | 8,255 |   |   | 9,093 |   |
|                                                                                                        |   |                                                               |    |   |   |   |   |   |   |   |
| Income                from continuing operations before income taxes, extraordinary                         |   |                                                               |    |   |   |   |   |   |   |   |
| gain                (loss) and cumulative effect of changes in accounting                principles    |   |                                                               | 3,728   |   |   | 2,407 |   |   | 123 |   |
|                                                                                                        |   |                                                               |    |   |   |   |   |   |   |   |
| Income                tax expense                                                                      |   |                                                               | 1,263   |   |   | 632 |   |   | 42 |   |
|                                                                                                        |   |                                                               |    |   |   |   |   |   |   |   |
| Income                from continuing operations before extraordinary gain (loss)                and        |   |                                                               |    |   |   |   |   |   |   |   |
| cumulative                effect of changes in accounting principles                                   |   |                                                               | 2,465   |   |   | 1,775 |   |   | 81 |   |
|                                                                                                        |   |                                                               |    |   |   |   |   |   |   |   |
| Income                from discontinued operations, net of tax effect (Note 3)                         |   |                                                               | 87      |   |   | 5 |   |   | 378 |   |
|                                                                                                        |   |                                                               |    |   |   |   |   |   |   |   |
| Extraordinary                gain (loss), net of tax effect (Note 4)                                   |   |                                                               | ─ |   |   | (50 | ) |   | 16 |   |
|                                                                                                        |   |                                                               |    |   |   |   |   |   |   |   |
| Cumulative                effect of changes in accounting principles, net of tax                            |   |                                                               |    |   |   |   |   |   |   |   |
| effect                (Note 5)                                                                         |   |                                                               | ─ |   |   | (8 | ) |   | 10 |   |
|                                                                                                        |   |                                                               |    |   |   |   |   |   |   |   |
| Net                income                                                                              |   | $                                                                  | 2,552   |   | $ | 1,722 |   | $ | 485 |   |
|                                                                                                        |   |                                                               |    |   |   |   |   |   |   |   |
| Exchangeable                preferred membership interest buyback premium (Note 17)                    |   |                                                               | ─ |   |   | ─ |   |   | 849 |   |
|                                                                                                        |   |                                                               |    |   |   |   |   |   |   |   |
| Preference                stock dividends                                                              |   |                                                               | ─ |   |   | 10 |   |   | 22 |   |
|                                                                                                        |   |                                                               |    |   |   |   |   |   |   |   |
| Net                income (loss) available for common stock                                            |   | $                                                                  | 2,552   |   | $ | 1,712 |   | $ | (386 | ) |
|                                                                                                        |   |                                                               |    |   |   |   |   |   |   |   |
| Average                shares of common stock outstanding (millions):                                       |   |                                                               |    |   |   |   |   |   |   |   |
| Basic                                                                                                  |   |                                                               | 460     |   |   | 476 |   |   | 600 |   |
| Diluted                                                                                                |   |                                                               | 467     |   |   | 486 |   |   | 600 |   |
|                                                                                                        |   |                                                               |    |   |   |   |   |   |   |   |
| Per                share of common stock ─ Basic:                                                     |   |                                                               |    |   |   |   |   |   |   |   |
| Net                income (loss) from continuing operations available for                                   |   |                                                               |    |   |   |   |   |   |   |   |
| common                stock                                                                            |   | $                                                                  | 5.36    |   | $ | 3.71 |   | $ | (1.32 | ) |
| Income                from discontinued operations, net of tax effect                                  |   |                                                               | 0.19    |   |   | 0.01 |   |   | 0.63 |   |
| Extraordinary                gain (loss), net of tax effect                                            |   |                                                               | ─ |   |   | (0.10 | ) |   | 0.03 |   |
| Cumulative                effect of changes in accounting principles, net of tax effect                |   |                                                               | ─ |   |   | (0.02 | ) |   | 0.02 |   |
| Net                income (loss) available for common stock                                            |   | $                                                                  | 5.55    |   | $ | 3.60 |   | $ | (0.64 | ) |
|                                                                                                        |   |                                                               |    |   |   |   |   |   |   |   |
| Per                share of common stock ─ Diluted:                                                   |   |                                                               |    |   |   |   |   |   |   |   |
| Net                income (loss) from continuing operations available for common                stock  |   | $                                                                  | 5.27    |   | $ | 2.61 |   | $ | (1.32 | ) |
| Income                from discontinued operations, net of tax effect                                  |   |                                                               | 0.19    |   |   | 0.01 |   |   | 0.63 |   |
| Extraordinary                gain (loss), net of tax effect                                            |   |                                                               | ─ |   |   | (0.10 | ) |   | 0.03 |   |
| Cumulative                effect of changes in accounting principles, net of tax effect                |   |                                                               | ─ |   |   | (0.02 | ) |   | 0.02 |   |
| Net                income (loss) available for common stock                                            |   | $                                                                  | 5.46    |   | $ | 2.50 |   | $ | (0.64 | ) |
| Dividends                declared                                                                      |   | $                                                                  | 1.67    |   | $ | 1.26 |   | $ | 0.47 |   |

----

**TXU      CORP. AND SUBSIDIARIES**

**STATEMENTS      OF CONSOLIDATED COMPREHENSIVE INCOME**

|                                                                                                                                                                                                                                         |       | **Year                Ended December 31,** | ** ** |
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|------------|--------------------------------------------|------------|
| ** **                                                                                                                                                                                                                                   | ** ** | **2006**                                   | ** ** | **2005** | ** ** | **2004** | ** ** |
| ** **                                                                                                                                                                                                                                   | ** ** | **(millions                of dollars)**   |       |
| Components                related to continuing operations:                                                                                                                                                                                  |       |                                       |       |   |   |   |   |
|   Income                from                continuing operations before extraordinary gain (loss) and   cumulative                effect                of changes in accounting principles                             |       | $                                          | 2,465      |   | $ | 1,775 |   | $ | 81 |   |
|                                                                                                                                                                                                                                         |       |                                       |       |   |   |   |   |   |   |   |
| Other                comprehensive income (loss), net of tax effects:                                                                                                                                                                        |       |                                       |       |   |   |   |   |   |   |   |
|                                                                                                                                                                                                                                         |       |                                       |       |   |   |   |   |   |   |   |
| Minimum                pension liability adjustments (net of tax (expense) benefit of ($38),                $25                and ($7))                                                                                                |       |                                       | 71         |   |   | (46 | ) |   | 14 |   |
| Cash                flow hedges:                                                                                                                                                                                                             |       |                                       |       |   |   |   |   |   |   |   |
| Net                change in fair value of derivatives held at end of period (net                of                                                                                                                                          |       |                                       |       |   |   |   |   |   |   |   |
| tax                (expense) benefit of $(304), $24 and $40)                                                                                                                                                                                 |       |                                       | 568        |   |   | (47 | ) |   | (75 | ) |
| Derivative                value net losses (gains) reported in net income that relate to hedged                transactions recognized in the period (net of tax (expense) benefit                of                $(8), $42 and $23)  |       |                                       | (15        | ) |   | 77 |   |   | 44 |   |
| Total                effect of cash flow hedges                                                                                                                                                                                              |       |                                       | 553        |   |   | 30 |   |   | (31 | ) |
| Total                adjustments to net income from continuing operations                                                                                                                                                                    |       |                                       | 624        |   |   | (16 | ) |   | (17 | ) |
|                                                                                                                                                                                                                                         |       |                                       |       |   |   |   |   |   |   |   |
| Comprehensive                income from continuing operations                                                                                                                                                                          |       |                                       | 3,089      |   |   | 1,759 |   |   | 64 |   |
|                                                                                                                                                                                                                                         |       |                                       |       |   |   |   |   |   |   |   |
| Components                related to discontinued operations:                                                                                                                                                                                |       |                                       |       |   |   |   |   |   |   |   |
|                                                                                                                                                                                                                                         |       |                                       |       |   |   |   |   |   |   |   |
| Income                from discontinued operations, net of tax effect                                                                                                                                                                   |       |                                       | 87         |   |   | 5 |   |   | 378 |   |
|                                                                                                                                                                                                                                         |       |                                       |       |   |   |   |   |   |   |   |
| Minimum                pension liability adjustments (net of tax expense of $─, $─ and                $5)                                                                                                                   |       |                                       | ―    |   |   | ― |   |   | 10 |   |
| Cumulative                foreign currency translation adjustment                                                                                                                                                                            |       |                                       | ―    |   |   | ― |   |   | (145 | ) |
| Cash                flow hedges:                                                                                                                                                                                                             |       |                                       |       |   |   |   |   |   |   |   |
| Derivative                value net gains reported in net income that relate to hedged transactions                recognized in the period (net of tax expense of $─, $─ and $3)                                           |       |                                       | ―    |   |   | ― |   |   | (6 | ) |
|                                                                                                                                                                                                                                         |       |                                       |       |   |   |   |   |   |   |   |
| Total                adjustments to net income from discontinued operations                                                                                                                                                                  |       |                                       | ―    |   |   | ― |   |   | (141 | ) |
|                                                                                                                                                                                                                                         |       |                                       |       |   |   |   |   |   |   |   |
| Comprehensive                income from discontinued operations                                                                                                                                                                        |       |                                       | 87         |   |   | 5 |   |   | 237 |   |
|                                                                                                                                                                                                                                         |       |                                       |       |   |   |   |   |   |   |   |
| Extraordinary                gain (loss), net of tax effect                                                                                                                                                                             |       |                                       | ―    |   |   | (50 | ) |   | 16 |   |
|                                                                                                                                                                                                                                         |       |                                       |       |   |   |   |   |   |   |   |
| Cumulative                effect of changes in accounting principles, net of tax effect                                                                                                                                                 |       |                                       | ―    |   |   | (8 | ) |   | 10 |   |
|                                                                                                                                                                                                                                         |       |                                       |       |   |   |   |   |   |   |   |
| Comprehensive                income                                                                                                                                                                                                          |       | $                                          | 3,176      |   | $ | 1,706 |   | $ | 327 |   |
|                                                                                                                                                                                                                                         |       |                                       |       |   |   |   |   |   |   |   |

----

**TXU      CORP. AND SUBSIDIARIES**

**STATEMENTS      OF CONSOLIDATED CASH FLOWS**

|                                                                                                            |   | **Year                Ended December 31,** |    |
|-----------------------------------------------------------------------------------------------------------------|--------|--------------------------------------------|---------|
| ** **                                                                                                      |   | **2006**                                   |    | **2005** |   | **2004** |   |
| ** **                                                                                                      |   | **(millions                of dollars)**   |    |
|                                                                                                            |   |                                       |    |   |   |   |   |
| Cash                flows — operating activities:                                                         |   |                                       |    |   |   |   |   |
| Net                income                                                                                  |   | $                                          | 2,552   |   | $ | 1,722 |   | $ | 485 |   |
| Income                from discontinued operations, net of tax effect                                      |   |                                       | (87     | ) |   | (5 | ) |   | (378 | ) |
| Extraordinary                (gain) loss, net of tax effect                                                |   |                                       | ─ |   |   | 50 |   |   | (16 | ) |
| Cumulative                effect of changes in accounting principles, net of tax effect                    |   |                                       | ─ |   |   | 8 |   |   | (10 | ) |
| Income                from continuing operations before extraordinary (gain) loss and                cumulative |   |                                       |    |   |   |   |   |   |   |   |
| effect                of changes in accounting principles                                                  |   |                                       | 2,465   |   |   | 1,775 |   |   | 81 |   |
| Adjustments                to reconcile income from continuing operations to cash provided by                   |   |                                       |    |   |   |   |   |   |   |   |
| operating                activities:                                                                       |   |                                       |    |   |   |   |   |   |   |   |
| Depreciation                and amortization                                                               |   |                                       | 893     |   |   | 836 |   |   | 826 |   |
| Deferred                income tax expense, including utilization of net operating                              |   |                                       |    |   |   |   |   |   |   |   |
| loss                carryforwards                                                                          |   |                                       | 756     |   |   | 481 |   |   | (11 | ) |
| Losses                on early extinguishment of debt                                                      |   |                                       | 1       |   |   | ─ |   |   | 416 |   |
| Asset                writedown charges                                                                     |   |                                       | 6       |   |   | 11 |   |   | 196 |   |
| Charge                (credit) related to impaired leases                                                  |   |                                       | (2      | ) |   | (16 | ) |   | 180 |   |
| Net                gains on sale of assets, including amortization of deferred                gains        |   |                                       | (69     | ) |   | (89 | ) |   | (135 | ) |
| Net                effect of unrealized mark-to-market valuations                                          |   |                                       | (272    | ) |   | 18 |   |   | 109 |   |
| Impairment                of natural gas-fueled generation plants                                          |   |                                       | 198     |   |   | ─ |   |   | ─ |   |
| Customer                appreciation bonus charge (net of amounts credited                                      |   |                                       |    |   |   |   |   |   |   |   |
| to                customers in 2006)                                                                            |   |                                       | 122     |   |   | ─ |   |   | ─ |   |
| Shareholders’                litigation settlement accrual                                           |   |                                       | ─ |   |   | ─ |   |   | 84 |   |
| Bad                debt expense                                                                            |   |                                       | 68      |   |   | 56 |   |   | 90 |   |
| Stock-based                incentive compensation expense                                                  |   |                                       | 27      |   |   | 32 |   |   | 56 |   |
| Recognition                of losses on dedesignated cash flow hedges                                      |   |                                       | 12      |   |   | 20 |   |   | 26 |   |
|   Recognition                of gain on dedesignated fair value hedges                           |   |                                       | (6      | ) |   | (10 | ) |   | (15 | ) |
| Charge                related to coal contract counterparty claim                                          |   |                                       | ─ |   |   | 12 |   |   | ─ |   |
| Net                equity loss (income) from unconsolidated affiliate                                      |   |                                       | 14      |   |   | ─ |   |   | (1 | ) |
| Change                in regulatory-related liabilities                                                    |   |                                       | 1       |   |   | (81 | ) |   | (70 | ) |
| Changes                in operating assets and liabilities:                                                     |   |                                       |    |   |   |   |   |   |   |   |
| Accounts                receivable - trade                                                                 |   |                                       | 337     |   |   | (335 | ) |   | (246 | ) |
| Impact                of accounts receivable sales program                                                 |   |                                       | (44     | ) |   | 197 |   |   | (73 | ) |
| Inventories                                                                                                |   |                                       | (21     | ) |   | (55 | ) |   | 15 |   |
| Accounts                payable - trade                                                                    |   |                                       | (219    | ) |   | (47 | ) |   | 223 |   |
| Commodity                contract assets and liabilities                                                   |   |                                       | ─ |   |   | 76 |   |   | (5 | ) |
| Cash                flow hedge and other derivative assets and liabilities                                 |   |                                       | ─ |   |   | (9 | ) |   | (22 | ) |
| Margin                deposits - net                                                                       |   |                                       | 564     |   |   | 61 |   |   | 34 |   |
| Other                - net assets                                                                          |   |                                       | (92     | ) |   | 35 |   |   | (165 | ) |
| Other                - net liabilities                                                                     |   |                                       | 215     |   |   | (175 | ) |   | 165 |   |
| Cash                provided by operating activities of continuing operations                                   |   |                                       | 4,954   |   |   | 2,793 |   |   | 1,758 |   |
|                                                                                                            |   |                                       |    |   |   |   |   |   |   |   |
| Cash                flows — financing activities:                                                         |   |                                       |    |   |   |   |   |   |   |   |
| Issuances                of securities:                                                                         |   |                                       |    |   |   |   |   |   |   |   |
| Long-term                debt                                                                              |   |                                       | 243     |   |   | 180 |   |   | 5,090 |   |
| Common                stock                                                                                |   |                                       | 180     |   |   | 83 |   |   | 112 |   |
| Retirements/repurchases                of securities:                                                           |   |                                       |    |   |   |   |   |   |   |   |
|     Long-term                debt                held by subsidiary trusts             |   |                                       | ─ |   |   | ─ |   |   | (546 | ) |
| Equity-linked                debt securities                                                               |   |                                       | (179    | ) |   | (106 | ) |   | (1,105 | ) |
| Other                long-term debt                                                                        |   |                                       | (1,512  | ) |   | (269 | ) |   | (3,088 | ) |
| Exchangeable                preferred membership interests                                                 |   |                                       | ─ |   |   | ─ |   |   | (750 | ) |
| Preference                stock                                                                            |   |                                       | ─ |   |   | (300 | ) |   | ─ |   |
| Preferred                securities of subsidiaries                                                        |   |                                       | ─ |   |   | (38 | ) |   | (75 | ) |
| Common                stock                                                                                |   |                                       | (1,012  | ) |   | (1,137 | ) |   | (4,687 | ) |
| Change                in short-term borrowings:                                                                 |   |                                       |    |   |   |   |   |   |   |   |
| Commercial                paper                                                                            |   |                                       | 939     |   |   | 358 |   |   | ─ |   |
| Banks                                                                                                      |   |                                       | (245    | ) |   | 230 |   |   | 210 |   |
| Cash                dividends paid:                                                                             |   |                                       |    |   |   |   |   |   |   |   |
| Common                stock                                                                                |   |                                       | (764    | ) |   | (544 | ) |   | (150 | ) |
| Preference                stock                                                                            |   |                                       | ─ |   |   | (11 | ) |   | (22 | ) |
| Premium                paid for redemption of exchangeable preferred membership                interests   |   |                                       | ─ |   |   | ─ |   |   | (1,102 | ) |
| Excess                tax benefit on stock-based incentive compensation                                    |   |                                       | 41      |   |   | 28 |   |   | ─ |   |
| Debt                premium, discount, financing and reacquisition expenses                                     |   |                                       | (23     | ) |   | (37 | ) |   | (406 | ) |
| Cash                used in financing activities of continuing operations                                       |   |                                       | (2,332  | ) |   | (1,563 | ) |   | (6,519 | ) |

----

**TXU      CORP. AND SUBSIDIARIES**

**STATEMENTS      OF CONSOLIDATED CASH FLOWS (CONT.)**

|                                                                                                   |   | **Year                Ended December 31,** |    |
|--------------------------------------------------------------------------------------------------------|--------|--------------------------------------------|---------|
| ** **                                                                                             |   | **2006**                                   |    | **2005** |   | **2004** |   |
|                                                                                                   |   | **(millions                of dollars)**   |    |
|                                                                                                   |   |                                       |    |
|                                                                                                   |   |                                       |    |   |   |   |   |
| Cash                flows — investing activities:                                                |   |                                       |    |   |   |   |   |
| Capital                expenditures                                                               |   |                                       | (2,180  | ) |   | (1,047 | ) |   | (912 | ) |
| Nuclear                fuel                                                                       |   |                                       | (117    | ) |   | (57 | ) |   | (87 | ) |
| Dispositions                of businesses                                                         |   |                                       | ─ |   |   | ─ |   |   | 4,814 |   |
| Purchase                of lease trust                                                            |   |                                       | (69     | ) |   | ─ |   |   | ─ |   |
| Proceeds                from sales of assets                                                      |   |                                       | 20      |   |   | 77 |   |   | 27 |   |
| Change                in collateral trust                                                         |   |                                       | ─ |   |   | ─ |   |   | 525 |   |
| Proceeds                from sales of nuclear decommissioning trust fund securities               |   |                                       | 207     |   |   | 191 |   |   | 88 |   |
| Investments                in nuclear decommissioning trust fund securities                       |   |                                       | (223    | ) |   | (206 | ) |   | (103 | ) |
| Investment                in unconsolidated affiliate                                             |   |                                       | (15     | ) |   | ─ |   |   | ─ |   |
| Proceeds                from pollution control revenue bonds deposited with trustee               |   |                                       | (240    | ) |   | ─ |   |   | ─ |   |
| Costs                to remove retired property                                                   |   |                                       | (40     | ) |   | (44 | ) |   | (40 | ) |
| Other                                                                                             |   |                                       | (7      | ) |   | 48 |   |   | (32 | ) |
| Cash                provided by (used in) investing activities of continuing                operations |   |                                       | (2,664  | ) |   | (1,038 | ) |   | 4,280 |   |
|                                                                                                   |   |                                       |    |   |   |   |   |   |   |   |
| Discontinued                operations:                                                                |   |                                       |    |   |   |   |   |   |   |   |
| Cash                provided by (used in) operating activities                                    |   |                                       | 30      |   |   | (265 | ) |   | (79 | ) |
| Cash                used in financing activities                                                  |   |                                       | ─ |   |   | ─ |   |   | (10 | ) |
| Cash                provided by (used in) investing activities                                    |   |                                       | ─ |   |   | 4 |   |   | (153 | ) |
| Cash                provided by (used in) discontinued operations                                      |   |                                       | 30      |   |   | (261 | ) |   | (242 | ) |
|                                                                                                   |   |                                       |    |   |   |   |   |   |   |   |
| Net                change in cash and cash equivalents                                            |   |                                       | (12     | ) |   | (69 | ) |   | (723 | ) |
|                                                                                                   |   |                                       |    |   |   |   |   |   |   |   |
| Cash                and cash equivalents ─ beginning balance                                |   |                                       | 37      |   |   | 106 |   |   | 829 |   |
|                                                                                                   |   |                                       |    |   |   |   |   |   |   |   |
| Cash                and cash equivalents ─ ending balance                                   |   | $                                          | 25      |   | $ | 37 |   | $ | 106 |   |

|  See                Notes to Financial Statements. |   |   |   |   |   |   |   |   |   |   |
|---------------------------------------------------------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|

----

**TXU      CORP. AND SUBSIDIARIES**

**CONSOLIDATED      BALANCE SHEETS**

|                                                                              |   | **December                  31,**          |    |
|-----------------------------------------------------------------------------------|--------|--------------------------------------------|---------|
| ** **                                                                        |   | **2006**                                   |    | **2005** |   |
| **ASSETS**                                                                        |   | **(millions                  of dollars)** |    |
| Current                  assets:                                                  |   |                                       |    |
|     Cash                  and cash equivalents           |   | $                                          | 25      |   | $ | 37 |   |
|     Restricted                  cash                     |   |                                       | 58      |   |   | 54 |   |
| Trade                  accounts receivable — net (Note 13)             |   |                                       | 959     |   |   | 1,328 |   |
| Income                  taxes receivable                                     |   |                                       | ― |   |   | 14 |   |
| Inventories                                                                  |   |                                       | 383     |   |   | 364 |   |
| Commodity                  contract assets (Note 18)                         |   |                                       | 276     |   |   | 1,603 |   |
| Cash                  flow hedge and other derivative assets (Note 19)       |   |                                       | 698     |   |   | 65 |   |
| Accumulated                  deferred income taxes (Note 11)                 |   |                                       | 253     |   |   | 717 |   |
| Margin                  deposits related to commodity positions              |   |                                       | 7       |   |   | 247 |   |
| Other                  current assets                                        |   |                                       | 178     |   |   | 129 |   |
| Total                  current assets                                        |   |                                       | 2,837   |   |   | 4,558 |   |
|                                                                              |   |                                       |    |   |   |   |   |
| Restricted                  cash                                             |   |                                       | 258     |   |   | 16 |   |
| Investments                                                                  |   |                                       | 712     |   |   | 643 |   |
| Property,                  plant and equipment — net                   |   |                                       | 18,756  |   |   | 17,192 |   |
| Goodwill                                                                     |   |                                       | 542     |   |   | 542 |   |
| Regulatory                  assets — net                               |   |                                       | 2,028   |   |   | 1,826 |   |
| Commodity                  contract assets (Note 18)                         |   |                                       | 162     |   |   | 338 |   |
| Cash                  flow hedge and other derivative assets (Note 19)       |   |                                       | 248     |   |   | 75 |   |
| Other                  noncurrent assets                                     |   |                                       | 379     |   |   | 349 |   |
|                                                                              |   |                                       |    |   |   |   |   |
| Total                  assets                                                |   | $                                          | 25,922  |   | $ | 25,539 |   |
|                                                                              |   |                                       |    |   |   |   |   |
| LIABILITIES                  AND SHAREHOLDERS’ EQUITY                       |   |                                       |    |   |   |   |   |
|                                                                              |   |                                       |    |   |   |   |   |
| Current                  liabilities:                                             |   |                                       |    |   |   |   |   |
| Short-term                  borrowings (Note 14)                             |   | $                                          | 1,491   |   | $ | 798 |   |
| Long-term                  debt due currently (Note 15)                      |   |                                       | 485     |   |   | 1,250 |   |
| Trade                  accounts payable                                      |   |                                       | 1,093   |   |   | 1,026 |   |
| Commodity                  contract liabilities (Note 18)                    |   |                                       | 278     |   |   | 1,481 |   |
| Cash                  flow hedge and other derivative liabilities (Note 19)  |   |                                       | 39      |   |   | 275 |   |
| Margin                  deposits related to commodity positions              |   |                                       | 681     |   |   | 357 |   |
| Other                  current liabilities                                   |   |                                       | 1,040   |   |   | 1,163 |   |
| Total                  current liabilities                                   |   |                                       | 5,107   |   |   | 6,350 |   |
|                                                                              |   |                                       |    |   |   |   |   |
| Accumulated                  deferred income taxes (Note 11)                 |   |                                       | 4,238   |   |   | 3,697 |   |
| Investment                  tax credits                                      |   |                                       | 363     |   |   | 384 |   |
| Commodity                  contract liabilities (Note 18)                    |   |                                       | 183     |   |   | 516 |   |
| Cash                  flow hedge and other derivative liabilities (Note 19)  |   |                                       | 73      |   |   | 91 |   |
| Long-term                  debt, less amounts due currently (Note 15)        |   |                                       | 10,631  |   |   | 11,332 |   |
| Other                  noncurrent liabilities and deferred credits           |   |                                       | 3,187   |   |   | 2,694 |   |
| Total                  liabilities                                           |   |                                       | 23,782  |   |   | 25,064 |   |
|                                                                              |   |                                       |    |   |   |   |   |
| Commitments                  and Contingencies (Note 16)                          |   |                                       |    |   |   |   |   |
|                                                                              |   |                                       |    |   |   |   |   |
| Shareholders’                  equity (Note 17)                        |   |                                       | 2,140   |   |   | 475 |   |
| Total                  liabilities and shareholders’ equity            |   | $                                          | 25,922  |   | $ | 25,539 |   |

----

**TXU      CORP. AND SUBSIDIARIES**

**STATEMENTS      OF CONSOLIDATED SHAREHOLDERS’ EQUITY**

|                                                                                                              |   | Year                Ended December 31, |    |
|-------------------------------------------------------------------------------------------------------------------|--------|----------------------------------------|---------|
|                                                                                                              |   | 2006                                   |    | 2005 |   | 2004 |   |
|                                                                                                              |   | (millions                of dollars)   |    |
| Common                stock without par value (number of authorized shares —                1,000,000,000): |   |                                   |    |   |   |   |   |
| Balance                at beginning of year                                                                  |   |                                   | 5       |   |   | 2 |   |   | 48 |   |
| Effect                of two-for-one stock split                                                             |   |                                   | ─ |   |   | 3 |   |   | ─ |   |
| Issuances                under Direct Stock Purchase and Dividend Reinvestment Plan                          |   |                                   | ─ |   |   | ─ |   |   | 4 |   |
| Effects                of stock-based incentive compensation plans                                           |   |                                   | ─ |   |   | ─ |   |   | 5 |   |
| Issuance                of shares under equity-linked debt securities                                        |   |                                   | ─ |   |   | ─ |   |   | 101 |   |
| Value                of Thrift Plan shares released by LESOP trustee (Note 21)                               |   |                                   | ─ |   |   | ─ |   |   | 3 |   |
| Cancellation                of repurchased common stock                                                      |   |                                   | ─ |   |   | ─ |   |   | (161 | ) |
| Other                                                                                                        |   |                                   | ─ |   |   | ─ |   |   | 2 |   |
| Balance                at end of year (number of shares outstanding: 2006 —                459,244,523;     |   |                                   |    |   |   |   |   |   |   |   |
| 2005                — 470,845,978; and 2004 — 479,705,760)                                       |   |                                   | 5       |   |   | 5 |   |   | 2 |   |
| Additional                paid-in capital:                                                                        |   |                                   |    |   |   |   |   |   |   |   |
| Balance                at beginning of year                                                                  |   |                                   | 1,840   |   |   | 2,806 |   |   | 8,097 |   |
| Common                stock repurchases                                                                      |   |                                   | (1,012  | ) |   | (1,092 | ) |   | (4,737 | ) |
| Net                premium on repurchase of exchangeable preferred membership                                     |   |                                   |    |   |   |   |   |   |   |   |
| interests                                                                                                         |   |                                   | ─ |   |   | ─ |   |   | (849 | ) |
| Discount                (premium) on repurchase of equity-linked debt securities (related                to       |   |                                   |    |   |   |   |   |   |   |   |
| equity                component) and reversal of contract adjustment payment                liability             |   |                                   | ─ |   |   | (13 | ) |   | 96 |   |
| Effects                of stock-based incentive compensation plans                                           |   |                                   | 27      |   |   | 33 |   |   | 38 |   |
| Excess                tax benefit on stock-based compensation                                                |   |                                   | 41      |   |   | 28 |   |   | ─ |   |
| Cancellation                of repurchased common stock                                                      |   |                                   | ─ |   |   | ─ |   |   | 161 |   |
| Issuance                of shares under equity-linked debt securities                                        |   |                                   | 180     |   |   | 75 |   |   | ─ |   |
| Value                of Thrift Plan shares released by LESOP trustee (Note 21)                               |   |                                   | 2       |   |   | 1 |   |   | ─ |   |
| Effects                of executive deferred compensation plan                                               |   |                                   | 13      |   |   | ─ |   |   | ─ |   |
| Effect                of two-for-one stock split                                                             |   |                                   | ─ |   |   | (3 | ) |   | ─ |   |
| Other                                                                                                        |   |                                   | 13      |   |   | 5 |   |   | ─ |   |
| Balance                at end of year                                                                        |   | $                                      | 1,104   |   | $ | 1,840 |   | $ | 2,806 |   |

----

**TXU      CORP. AND SUBSIDIARIES**

**STATEMENTS      OF CONSOLIDATED SHAREHOLDERS’ EQUITY (CONT.)**

|                                                                                                   |   | Year                Ended December 31, |    |
|--------------------------------------------------------------------------------------------------------|--------|----------------------------------------|---------|
|                                                                                                   |   | 2006                                   |    | 2005 |   | 2004 |   |
|                                                                                                   |   | (millions                of dollars)   |    |
| Retained                earnings:                                                                      |   |                                   |    |   |   |   |   |
| Balance                at beginning of year                                                       |   | $                                      | (1,168  | ) | $ | (2,283 | ) | $ | (2,498 | ) |
| Net                income                                                                         |   |                                   | 2,552   |   |   | 1,722 |   |   | 485 |   |
| Dividends                declared on common stock ($1.67, $1.26 and $0.47 per share)              |   |                                   | (768    | ) |   | (598 | ) |   | (251 | ) |
| Dividends                on preference stock ($0, $3,278 and $7,240 per share)                    |   |                                   | ─ |   |   | (10 | ) |   | (22 | ) |
| LESOP                dividend deduction tax benefit and other                                     |   |                                   | 6       |   |   | 1 |   |   | 3 |   |
| Balance                at end of year                                                             |   |                                   | 622     |   |   | (1,168 | ) |   | (2,283 | ) |
| Accumulated                other comprehensive gain (loss), net of tax effects:                        |   |                                   |    |   |   |   |   |   |   |   |
| Foreign                currency translation adjustments:                                               |   |                                   |    |   |   |   |   |   |   |   |
| Balance                at beginning of year                                                       |   |                                   | ─ |   |   | ─ |   |   | 145 |   |
| Change                during the year                                                                  |   |                                   | ─ |   |   | ─ |   |   | (90 | ) |
| Amounts                related to disposed businesses                                                  |   |                                   | ─ |   |   | ─ |   |   | (55 | ) |
| Balance                at end of year                                                             |   |                                   | ─ |   |   | ─ |   |   | ─ |   |
| Pension                and other postretirement employee benefit liability                adjustments: |   |                                   |    |   |   |   |   |   |   |   |
| Balance                at beginning of year                                                       |   |                                   | (60     | ) |   | (14 | ) |   | (38 | ) |
| Change                in minimum pension liability                                                     |   |                                   | 71      |   |   | (46 | ) |   | 23 |   |
| SFAS                158 transition adjustment                                                          |   |                                   | (13     | ) |   | ─ |   |   | ─ |   |
| Amounts                related to disposed businesses                                                  |   |                                   | ─ |   |   | ─ |   |   | 1 |   |
| Balance                at end of year                                                             |   |                                   | (2      | ) |   | (60 | ) |   | (14 | ) |
| Amounts                related to cash flow hedges:                                                    |   |                                   |    |   |   |   |   |   |   |   |
| Balance                at beginning of year                                                       |   |                                   | (142    | ) |   | (172 | ) |   | (135 | ) |
| Change                during the year                                                                  |   |                                   | 553     |   |   | 30 |   |   | (38 | ) |
| Amounts                related to disposed businesses                                                  |   |                                   | ─ |   |   | ─ |   |   | 1 |   |
| Balance                at end of year                                                             |   |                                   | 411     |   |   | (142 | ) |   | (172 | ) |
| Total                accumulated other comprehensive gain (loss) at end of year                   |   |                                   | 409     |   |   | (202 | ) |   | (186 | ) |
| Total                common stock equity at end of year                                           |   |                                   | 2,140   |   |   | 475 |   |   | 339 |   |
| Preference                stock:                                                                       |   |                                   |    |   |   |   |   |   |   |   |
| Balance                at beginning of year                                                       |   | $                                      | ─ |   | $ | 300 |   | $ | 300 |   |
| Preference                stock redemption                                                        |   |                                   | ─ |   |   | (300 | ) |   | ─ |   |
| Balance                at end of year                                                             |   |                                   | ─ |   |   | ─ |   |   | 300 |   |
| Shareholders’                equity at end of year                                          |   | $                                      | 2,140   |   | $ | 475 |   | $ | 639 |   |

----

**TXU      CORP. AND SUBSIDIARIES**

**NOTES      TO FINANCIAL STATEMENTS**

| **1.** | **SIGNIFICANT                ACCOUNTING POLICIES** |
|--------|----------------------------------------------------|

***Description      of Business***

***Basis      of Presentation***

***Discontinued      Businesses***

***Use      of Estimates***

----

***Earnings      Per Share***

***Derivative      Instruments and Mark-to-Market Accounting***
* *
* *

----

***Revenue      Recognition***
* *

*”*

***Impairment      of Long-Lived Assets***

***Amortization      of Nuclear Fuel***

*Major      Maintenance *

----

***Defined      Benefit Pension Plans and Other Postretirement Employee Benefit      Plans***

***Stock-Based      Incentive Compensation***

***Sales      and Excise Taxes***

***Franchise      and Revenue-Based Taxes***

***Income      Taxes***
* *

***Accounting      for Contingencies***
*—      *

***Cash      Equivalents***

----

***Property,      Plant and Equipment***

***Capitalized      Interest and Allowance For Funds Used During Construction      (AFUDC)**—*

***Inventories***

***Regulatory      Assets and Liabilities**— *

***Investments***
*.*

----

***Changes      in Accounting Standards***

----

| **2.** | **EARNINGS                PER SHARE** |
|--------|---------------------------------------|

***Stock      Split***

|                                                         |   | **For                the Year Ended 2006** |    | **For                the Year Ended 2005** |   | **For                the Year Ended 2004** |   |
|--------------------------------------------------------------|--------|--------------------------------------------|---------|--------------------------------------------|--------|--------------------------------------------|--------|
| ** **                                                   |   | ** **                                 |    | ** **                                 |   | **Per**                                    |   | ** ** |   | ** ** |   | **Per** |   | ** ** |   | ** ** |   | **Per** |   |
| ** **                                                   |   | ** **                                 |    | ** **                                 |   | **Share**                                  |   | ** ** |   | ** ** |   | **Share** |   | ** ** |   | ** ** |   | **Share** |   |
| ** **                                                   |   | **Income**                                 |    | **Shares**                                 |   | **Amount**                                 |   | **Income** |   | **Shares** |   | **Amount** |   | **Income** |   | **Shares** |   | **Amount** |   |
|                                                         |   |                                       |    |                                       |   |                                       |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                         |   |                                       |    |                                       |   |                                       |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Income                from continuing operations before      |   |                                       |    |                                       |   |                                       |   |   |   |   |   |   |   |   |   |   |   |   |   |
| extraordinary                items and accounting            |   |                                       |    |                                       |   |                                       |   |   |   |   |   |   |   |   |   |   |   |   |   |
| changes                                                 |   | $                                          | 2,465   |                                       |   | 459.7                                      |   | $ | 5.36 |   | $ | 1,775 |   |   | 475.9 |   | $ | 3.73 |   | $ | 81 |   |   | 600.4 |   | $ | 0.13 |   |
|                                                         |   |                                       |    |                                       |   |                                       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Exchangeable                preferred membership             |   |                                       |    |                                       |   |                                       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| interest                buyback premium                 |   |                                       | ─ |                                       |   |                                       |   |   |   |   |   | ─ |   |   | ─ |   |   | ─ |   |   | (849 | ) |   | ─ |   |   | (1.41 | ) |
|                                                         |   |                                       |    |                                       |   |                                       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Preference                stock dividends               |   |                                       | ─ |                                       |   | ─                                    |   |   | ─ |   |   | (10 | ) |   | ─ |   |   | (0.02 | ) |   | (22 | ) |   | ─ |   |   | (0.04 | ) |
|                                                         |   |                                       |    |                                       |   |                                       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| **Income                from continuing operations**         |   |                                       |    |                                       |   |                                       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| **available                for common stock-Basic**          |   | $                                          | 2,465   |                                       |   | 459.7                                      |   | $ | 5.36 |   | $ | 1,765 |   |   | 475.9 |   | $ | 3.71 |   | $ | (790 | ) |   | 600.4 |   | $ | (1.32 | ) |
|                                                         |   |                                       |    |                                       |   |                                       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Dilutive                securities/other adjustments:        |   |                                       |    |                                       |   |                                       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                         |   |                                       |    |                                       |   |                                       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Adjustment                related to 2004 accelerated        |   |                                       |    |                                       |   |                                       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| share                repurchase program (a)             |   |                                       | ─ |                                       |   | ─                                    |   |   |   |   |   | (498 | ) |   | ─ |   |   |   |   |   | 12 |   |   | ─ |   |   |   |   |
|                                                         |   |                                       |    |                                       |   |                                       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Exchangeable                preferred membership             |   |                                       |    |                                       |   |                                       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| interests                                               |   |                                       | ─ |                                       |   | ─                                    |   |   |   |   |   | ─ |   |   | ─ |   |   |   |   |   | 17 |   |   | 36.5 |   |   |   |   |
|                                                         |   |                                       |    |                                       |   |                                       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Convertible                senior notes (b)             |   |                                       | 1       |                                       |   | 1.5                                        |   |   |   |   |   | 1 |   |   | 1.5 |   |   |   |   |   | 1 |   |   | 1.4 |   |   |   |   |
|                                                         |   |                                       |    |                                       |   |                                       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Equity-linked                debt securities            |   |                                       | ─ |                                       |   | 0.8                                        |   |   |   |   |   | ─ |   |   | 2.4 |   |   |   |   |   | ─ |   |   | ─ |   |   |   |   |
|                                                         |   |                                       |    |                                       |   |                                       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Stock-based                incentive compensation plan  |   |                                       | ─ |                                       |   | 5.3                                        |   |   |   |   |   | ─ |   |   | 6.6 |   |   |   |   |   | ─ |   |   | 2.6 |   |   |   |   |
|                                                         |   |                                       |    |                                       |   |                                       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| **Income                from continuing operations**         |   |                                       |    |                                       |   |                                       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| **available                for common-Diluted (c)**     |   | $                                          | 2,466   |                                       |   | 467.3                                      |   | $ | 5.27 |   | $ | 1,268 |   |   | 486.4 |   | $ | 2.61 |   | $ | (790 | ) |   | 600.4 |   | $ | (1.32 | ) |

| (a) | Adjustment                to net income represents change in fair value of related settlement                liability. See Note 17 for details of the accelerated share repurchase                program. |
|-----|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| (b) | Adjustment                to net income represents after-tax interest expense.                                                                                                                              |
| (c) | For                the 2004 year, diluted results per share equaled basic results per                share                because of the loss position and antidilution accounting                rules.    |

----

| **3.** | **DISCONTINUED                OPERATIONS** |
|--------|--------------------------------------------|

|                                                         |   | **TXU                Gas** |    | **TXU                Australia** |   | **Strategic                Retail Services** |   | **Pedrick-****town** |    | **Mexico** |   | **Europe** |   | **Total** |    |
|--------------------------------------------------------------|--------|----------------------------|---------|----------------------------------|--------|----------------------------------------------|--------|----------------------|---------|------------|--------|------------|--------|-----------|---------|
| **2005**                                                     |   |                       |    |                             |   |                                         |   |                 |    |       |   |       |   |      |    |
| Operating                revenues                            |   | $                          | ─ |                             | $      | ─                                      |   | $                    | ─ |       | $      | 12         |   | $         | ─ |   | $ | ─ |   | $ | 12 |   |
| Operating                costs and expenses                  |   |                       | ─ |                             |   | ─                                      |   |                 | ─ |       |   | 14         |   |      | ─ |   |   | ─ |   |   | 14 |   |
| Other                deductions — net                  |   |                       | ─ |                             |   | ─                                      |   |                 | 3       |       |   | ─    |   |      | ─ |   |   | ─ |   |   | 3 |   |
| Operating                loss before income taxes            |   |                       | ─ |                             |   | ─                                      |   |                 | (3      | )          |   | (2         | )      |      | ─ |   |   | ─ |   |   | (5 | ) |
| Income                tax benefit                            |   |                       | ─ |                             |   | ─                                      |   |                 | (1      | )          |   | ─    |   |      | ─ |   |   | ─ |   |   | (1 | ) |
| Credits                (charges) related to exit (after-tax) |   |                       | 3       |                             |   | 10                                           |   |                 | ─ |       |   | (4         | )      |      | 1       |   |   | (1 | ) |   | 9 |   |
| Income                (loss) from discontinued operations    |   | $                          | 3       |                             | $      | 10                                           |   | $                    | (2      | )          | $      | (6         | )      | $         | 1       |   | $ | (1 | ) | $ | 5 |   |

|                                                         |   | **TXU                Gas** |    | **TXU                Australia** |   | **Strategic                Retail Services** |   | **Pedrick-****town** |    | **Telecom** |   | **Mexico** |   | **Europe** |    | **Total** |   |
|--------------------------------------------------------------|--------|----------------------------|---------|----------------------------------|--------|----------------------------------------------|--------|----------------------|---------|-------------|--------|------------|--------|------------|---------|-----------|--------|
| **2004**                                                     |   |                       |    |                             |   |                                         |   |                 |    |        |   |       |   |       |    |      |   |
| Operating                revenues                            |   | $                          | 911     |                             | $      | 835                                          |   | $                    | 17      |        | $      | 32         |   | $          | 54      |      | $      | 4 |   | $ | ─ |   | $ | 1,853 |   |
| Operating                costs and expenses                  |   |                       | 898     |                             |   | 666                                          |   |                 | 20      |        |   | 37         |   |       | 49      |      |   | 4 |   |   | ─ |   |   | 1,674 |   |
| Other                deductions — net                  |   |                       | 101     |                             |   | 2                                            |   |                 | 10      |        |   | ─    |   |       | 16      |      |   | ─ |   |   | 5 |   |   | 134 |   |
| Interest                income                               |   |                       | (9      | )                                |   | (2                                           | )      |                 | (1      | )           |   | ─    |   |       | (5      | )         |   | ─ |   |   | ─ |   |   | (17 | ) |
| Interest                expense and related charges          |   |                       | 37      |                             |   | 96                                           |   |                 | ─ |        |   | ─    |   |       | 19      |      |   | ─ |   |   | ─ |   |   | 152 |   |
| Operating                income (loss) before income taxes   |   |                       | (116    | )                                |   | 73                                           |   |                 | (12     | )           |   | (5         | )      |       | (25     | )         |   | ─ |   |   | (5 | ) |   | (90 | ) |
| Income                tax expense (benefit)                  |   |                       | (27     | )                                |   | 25                                           |   |                 | (4      | )           |   | (2         | )      |       | (8      | )         |   | (1 | ) |   | (2 | ) |   | (19 | ) |
| Credits                (charges) related to exit (after-tax) |   |                       | (193    | )                                |   | 129                                          |   |                 | (6      | )           |   | (17        | )      |       | 1       |      |   | (2 | ) |   | (143 | ) |   | (231 | ) |
| Recognition                of tax benefits                   |   |                       | ─ |                             |   | ─                                      |   |                 | ─ |        |   | ─    |   |       | ─ |      |   | ─ |   |   | ─ |   |   | 680 |   |
| Income                (loss) from discontinued operations    |   | $                          | (282    | )                                | $      | 177                                          |   | $                    | (14     | )           | $      | (20        | )      | $          | (16     | )         | $      | (1 | ) | $ | (146 | ) | $ | 378 |   |

***TXU      Gas***
*—*

----

***TXU      Australia***
*—*

***Strategic      Retail Services***
*—      *

***Pedricktown***
*—*

***Mexico***
*—*

***TXU      Europe***
*—*

***Telecommunications***
*—*
* *

***Income      tax benefits***
*—*

----

| **4.** | **EXTRAORDINARY                ITEMS** |
|--------|----------------------------------------|

***Purchase      of Lease Trust Interest**— *

***Securitization      (Transition) Bonds**—*

**5.     CUMULATIVE      EFFECT OF CHANGES IN ACCOUNTING PRINCIPLES**

| Increase                in property, plant and equipment - net                |   | $      | 5   |   |
|------------------------------------------------------------------------------------|--------|--------|-----|--------|
| Increase                in other noncurrent liabilities and deferred credits  |   |   | (17 | )      |
| Increase                in accumulated deferred income taxes                  |   |   | 4   |   |
| Cumulative                effect of change in accounting principle            |   | $      | (8  | )      |

----

| **6.** | **IMPAIRMENT                OF NATURAL GAS-FUELED GENERATION                PLANTS** |
|--------|--------------------------------------------------------------------------------------|

| **7.** | **CUSTOMER                APPRECIATION BONUS** |
|--------|------------------------------------------------|

----

| **8.** | **RESTRUCTURING                ACTIONS IN 2004** |
|--------|--------------------------------------------------|

|                                                       |   |       |   | **Income                Statement** |   | **Charge/(Credit)                to Earnings** |   |
|------------------------------------------------------------|--------|------------|--------|-------------------------------------|--------|------------------------------------------------|--------|
| ** **                                                 |   | ** ** |   | **Classification**                  |   | **Pretax**                                     |   | **After-tax** |   |
|  TXU              Energy Holdings segment:            |   |            |   |                                |   |                                           |   |   |   |
| Charges                related to leased equipment         |   |       |   |                                |   | Other                deductions                |   | $ | 180 |   | $ | 117 |   |
| Software                write-off                          |   |       |   |                                |   | Other                deductions                |   |   | 107 |   |   | 70 |   |
| Employee                severance costs                    |   |       |   |                                |   | Other                deductions                |   |   | 107 |   |   | 69 |   |
| Power                purchase contract termination charge  |   |       |   |                                |   | Other                deductions                |   |   | 101 |   |   | 66 |   |
| Spare                parts inventory write-down            |   |       |   |                                |   | Other                deductions                |   |   | 79 |   |   | 51 |   |
| Outsourcing                transition costs                |   |       |   |                                |   | Other                deductions                |   |   | 10 |   |   | 6 |   |
| Other                asset impairments                     |   |       |   |                                |   | Other                deductions                |   |   | 6 |   |   | 4 |   |
| Other                charges                               |   |       |   |                                |   | Operating                costs/SG&A        |   |   | 8 |   |   | 6 |   |
| Recognition                of deferred gain on plant sales |   |       |   |                                |   | Other                income                    |   |   | (58 | ) |   | (38 | ) |
| Gain                on sale of undeveloped properties      |   |       |   |                                |   | Other                income                    |   |   | (19 | ) |   | (12 | ) |
| TXU                Electric Delivery segment:              |   |       |   |                                |   |                                           |   |   |   |   |   |   |   |
| Employee                severance costs                    |   |       |   |                                |   | Other                deductions                |   |   | 20 |   |   | 13 |   |
| Cities                rate settlement charge               |   |       |   |                                |   | Other                deductions                |   |   | 21 |   |   | 14 |   |
| Outsourcing                transition costs                |   |       |   |                                |   | Other                deductions                |   |   | 4 |   |   | 3 |   |
| Software                write-off and asset impairment     |   |       |   |                                |   | Other                deductions                |   |   | 4 |   |   | 2 |   |
| Other                charges                               |   |       |   |                                |   | Operating                costs/SG&A        |   |   | 2 |   |   | 1 |   |
| Corporate                and other:                        |   |       |   |                                |   |                                           |   |   |   |   |   |   |   |
| Debt                extinguishment losses                  |   |       |   |                                |   | Other                deductions                |   |   | 416 |   |   | 382 |   |
| Litigation                accrual                          |   |       |   |                                |   | Other                deductions                |   |   | 86 |   |   | 56 |   |
| Executive                compensation                      |   |       |   |                                |   | SG&A                                       |   |   | 52 |   |   | 52 |   |
| Consulting                and professional fees            |   |       |   |                                |   | SG&A                                       |   |   | 54 |   |   | 35 |   |
| Employee                severance costs                    |   |       |   |                                |   | Other                deductions                |   |   | 5 |   |   | 3 |   |
| Transaction                related fees                    |   |       |   |                                |   | Other                deductions                |   |   | 5 |   |   | 3 |   |
| Recognition                of income tax benefit           |   |       |   |                                |   | Income                taxes                    |   |   | ─ |   |   | (75 | ) |
|                                                       |   |       |   |                                |   |                                           |   |   |   |   |   |   |   |
| Total                                                 |   |       |   |                                |   |                                           |   | $ | 1,190 |   | $ | 828 |   |

----

***Sale      of TXU Fuel**—*

***Capgemini      Outsourcing Agreement**—*

----

***Actions      Related to Generation Operations**—*

***Organization      Realignment and Headcount Reductions**—*

***Liability      and Capital Management**—*

***Cities      Rate Settlement**—*

***Litigation**—*

----

| **9.** | **CITIES                RATE SETTLEMENT IN 2006** |
|--------|---------------------------------------------------|

| **10.** | **TEXAS                MARGIN TAX** |
|---------|-------------------------------------|

----

**11.   INCOME      TAXES**

|                                                        |   | **Year                Ended December 31,** |   |
|-------------------------------------------------------------|--------|--------------------------------------------|--------|
| ** **                                                  |   | **2006**                                   |   | **2005** |   | **2004** |   |
|                                                        |   |                                       |   |   |   |   |   |
| Current:                                                    |   |                                       |   |   |   |   |   |
| US                Federal                                   |   | $                                          | 500    |   | $ | 145 |   | $ | 25 |   |
| State                                                       |   |                                       | 5      |   |   | 6 |   |   | 26 |   |
| Non-US                                                      |   |                                       | 1      |   |   | ― |   |   | 2 |   |
| Total                                                       |   |                                       | 506    |   |   | 151 |   |   | 53 |   |
| Deferred:                                                   |   |                                       |   |   |   |   |   |   |   |   |
| US                Federal                              |   |                                       | 715    |   |   | 498 |   |   | 31 |   |
| State                                                  |   |                                       | 63     |   |   | 4 |   |   | (19 | ) |
| Total                                                       |   |                                       | 778    |   |   | 502 |   |   | 12 |   |
| Amortization                of investment tax credits  |   |                                       | (21    | ) |   | (21 | ) |   | (23 | ) |
| Total                                                       |   | $                                          | 1,263  |   | $ | 632 |   | $ | 42 |   |

|                                                                                                                              |   | **Year                Ended December 31,** |    |
|-----------------------------------------------------------------------------------------------------------------------------------|--------|--------------------------------------------|---------|
| ** **                                                                                                                        |   | **2006**                                   |    | **2005** |   | **2004** |   |
| Income                from continuing operations before income taxes, extraordinary gain                (loss)                and |   |                                       |    |   |   |   |   |
| cumulative                effect of changes in accounting principles:                                                             |   |                                       |    |   |   |   |   |
| Domestic                                                                                                                     |   | $                                          | 3,728   |   | $ | 2,408 |   | $ | 123 |   |
| Non-US                                                                                                                       |   |                                       | ─ |   |   | (1 | ) |   | ─ |   |
| Total                                                                                                                             |   | $                                          | 3,728   |   | $ | 2,407 |   | $ | 123 |   |
|                                                                                                                              |   |                                       |    |   |   |   |   |   |   |   |
| Income                taxes at the US federal statutory rate of 35%                                                          |   | $                                          | 1,305   |   | $ | 842 |   | $ | 43 |   |
|                                                                                                                              |   |                                       |    |   |   |   |   |   |   |   |
| Losses                on extinguishment of debt                                                                                   |   |                                       | ─ |   |   | ─ |   |   | 107 |   |
| Lignite                depletion allowance                                                                                        |   |                                       | (51     | ) |   | (33 | ) |   | (25 | ) |
| Production                activities deduction                                                                                    |   |                                       | (14     | ) |   | ─ |   |   | ─ |   |
| Recognition                of benefits related to TXU Europe                                                                      |   |                                       | ─ |   |   | (138 | ) |   | (75 | ) |
| Amortization                of investment tax credits - net of deferred income tax                effect                          |   |                                       | (15     | ) |   | (15 | ) |   | (17 | ) |
| Amortization                (under regulatory accounting) of statutory rate changes                                               |   |                                       | (7      | ) |   | (7 | ) |   | (8 | ) |
| Medicare                subsidy ― other postretirement                employee benefits                                     |   |                                       | (8      | ) |   | (9 | ) |   | (11 | ) |
| Nondeductible                compensation expense                                                                                 |   |                                       | ─ |   |   | (5 | ) |   | 18 |   |
| State                income taxes, net of federal tax benefit                                                                     |   |                                       | 6       |   |   | 7 |   |   | 5 |   |
| Texas                margin tax                                                                                                   |   |                                       | 44      |   |   | ─ |   |   | ─ |   |
| Other,                including audit settlements                                                                                 |   |                                       | 3       |   |   | (10 | ) |   | 5 |   |
| Income                tax expense                                                                                            |   | $                                          | 1,263   |   | $ | 632 |   | $ | 42 |   |
|                                                                                                                              |   |                                       |    |   |   |   |   |   |   |   |
| Effective                tax rate                                                                                            |   |                                       | 33.9    | % |   | 26.3 | % |   | 34.1 | % |

----

***TXU      Europe***

***Deferred      Income Tax Balances**—*

|                                                              |   | **December                31,** |   |
|-------------------------------------------------------------------|--------|---------------------------------|--------|
| ** **                                                        |   | **2006**                        |   | **2005** |   |
| ** **                                                        |   | **Total**                       |   | **Current** |   | **Noncurrent** |   | **Total** |   | **Current** |   | **Noncurrent** |   |
| **Deferred                Income Tax Assets**                |   |                            |   |   |   |   |   |   |   |   |   |   |   |
| Net                operating loss (NOL) carryforwards   |   | $                               | 12     |   | $ | ─ |   | $ | 12 |   | $ | 666 |   | $ | 666 |   | $ | ─ |   |
| Alternative                minimum tax credit                     |   |                            |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| carryforwards                                                     |   |                            | 768    |   |   | 209 |   |   | 559 |   |   | 651 |   |   | ─ |   |   | 651 |   |
| Employee                benefit liabilities                  |   |                            | 496    |   |   | 7 |   |   | 489 |   |   | 410 |   |   | 15 |   |   | 395 |   |
| Unamortized                investment tax credits            |   |                            | 137    |   |   | ─ |   |   | 137 |   |   | 145 |   |   | ─ |   |   | 145 |   |
| Capital                loss carryforward                     |   |                            | 31     |   |   | 31 |   |   | ─ |   |   | 138 |   |   | ─ |   |   | 138 |   |
| Deferred                gain on sale of assets               |   |                            | 121    |   |   | ─ |   |   | 121 |   |   | 136 |   |   | ─ |   |   | 136 |   |
| Other                                                        |   |                            | 242    |   |   | 12 |   |   | 230 |   |   | 356 |   |   | 43 |   |   | 313 |   |
| Total                                                        |   |                            | 1,807  |   |   | 259 |   |   | 1,548 |   |   | 2,502 |   |   | 724 |   |   | 1,778 |   |
|                                                              |   |                            |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| **Deferred                Income Tax Liabilities**                |   |                            |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Book/tax                depreciation differences             |   |                            | 3,523  |   |   | ─ |   |   | 3,523 |   |   | 3,400 |   |   | ─ |   |   | 3,400 |   |
| Mark-to-market                net deductions                 |   |                            | 966    |   |   | 4 |   |   | 962 |   |   | 761 |   |   | 4 |   |   | 757 |   |
| Deductions                related to TXU Europe              |   |                            | 465    |   |   | ─ |   |   | 465 |   |   | 592 |   |   | ─ |   |   | 592 |   |
| Effects                of amounts recorded as                     |   |                            |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| regulatory                assets                                  |   |                            | 484    |   |   | ─ |   |   | 484 |   |   | 538 |   |   | ─ |   |   | 538 |   |
| Other                                                        |   |                            | 354    |   |   | 2 |   |   | 352 |   |   | 191 |   |   | 3 |   |   | 188 |   |
| Total                                                        |   |                            | 5,792  |   |   | 6 |   |   | 5,786 |   |   | 5,482 |   |   | 7 |   |   | 5,475 |   |
| Net                Deferred Income Tax (Asset) Liability     |   | $                               | 3,985  |   | $ | (253 | ) | $ | 4,238 |   | $ | 2,980 |   | $ | (717 | ) | $ | 3,697 |   |

----

----

**12.     OTHER      INCOME AND DEDUCTIONS**

|                                                                                                       |   | **Year                Ended December 31,** |    |
|------------------------------------------------------------------------------------------------------------|--------|--------------------------------------------|---------|
| ** **                                                                                                 |   | **2006**                                   |    | **2005** |   | **2004** |   |
| Other                income:                                                                               |   |                                       |    |   |   |   |   |
| Gain                on contract settlement (a)                                                        |   | $                                          | 26      |   | $ | ─ |   | $ | ─ |   |
| Amortization                of gain on sale of TXU Fuel (Note 8)                                      |   |                                       | 47      |   |   | 47 |   |   | 27 |   |
| Net                gain on sale of other properties and investments (b)                               |   |                                       | 22      |   |   | 42 |   |   | 107 |   |
| Insurance                recovery of litigation settlement (c)                                        |   |                                       | 15      |   |   | 35 |   |   | ─ |   |
| Insurance                recoveries related to generation assets                                      |   |                                       | 2       |   |   | 8 |   |   | ─ |   |
| Electricity                sale agreement termination fee                                             |   |                                       | ─ |   |   | 4 |   |   | ─ |   |
| Equity                portion of allowance for funds used during construction                         |   |                                       | ─ |   |   | 3 |   |   | 4 |   |
| Other                                                                                                 |   |                                       | 9       |   |   | 12 |   |   | 10 |   |
| Total                other income                                                                          |   | $                                          | 121     |   | $ | 151 |   | $ | 148 |   |
| Other                deductions:                                                                           |   |                                       |    |   |   |   |   |   |   |   |
| Charge                for impairment of natural gas-fueled generation plants (Note                6)  |   | $                                          | 198     |   | $ | ─ |   | $ | ─ |   |
| Asset                writedown and generation-related lease termination                                    |   |                                       |    |   |   |   |   |   |   |   |
| charges                (credit) (see Note 8 for 2005 and 2004 items)                                  |   |                                       | 4       |   |   | (16 | ) |   | 376 |   |
| Equity                losses of an unconsolidated affiliate engaged in                broadband-           |   |                                       |    |   |   |   |   |   |   |   |
| over-powerline                activities                                                              |   |                                       | 14      |   |   | ─ |   |   | ─ |   |
| Debt                extinguishment losses (See Note 8 regarding 2004 charges)                         |   |                                       | 1       |   |   | ─ |   |   | 416 |   |
| Litigation                settlements (See Note 8 regarding 2004 charges)                             |   |                                       | 9       |   |   | 7 |   |   | 86 |   |
| Employee                severance charges (See Note 8 regarding 2004 charges)                         |   |                                       | ─ |   |   | 1 |   |   | 132 |   |
| Termination                of electricity purchase contract (See Note 8 regarding                          |   |                                       |    |   |   |   |   |   |   |   |
| 2004                charges)                                                                          |   |                                       | ─ |   |   | ─ |   |   | 101 |   |
| Costs                related to cities rate settlements (Notes 8 and 9)                               |   |                                       | 13      |   |   | 1 |   |   | 21 |   |
| Capgemini                outsourcing transition costs (Note 8 regarding 2004 charges)                 |   |                                       | ─ |   |   | 11 |   |   | 14 |   |
| Restructuring                transaction-related fees                                                 |   |                                       | ─ |   |   | ─ |   |   | 5 |   |
| Expenses                related to canceled construction projects                                     |   |                                       | ─ |   |   | ─ |   |   | 6 |   |
| Transition                costs related to InfrastruX Energy Services joint venture                   |   |                                       | 7       |   |   | ─ |   |   | ─ |   |
| Employee                retirement benefit costs related to discontinued business                     |   |                                       | 23      |   |   | 15 |   |   | ─ |   |
| Charge                (credit) related to coal contract counterparty claim (d)                        |   |                                       | (12     | ) |   | 12 |   |   | ─ |   |
| Other                                                                                                 |   |                                       | 12      |   |   | 14 |   |   | 15 |   |
| Total                other deductions                                                                      |   | $                                          | 269     |   | $ | 45 |   | $ | 1,172 |   |

| (a) | Represents                a gain recorded in the second quarter of 2006 upon the settlement                of a                contract dispute related to antenna site rentals by a telecommunications                company (reported in Corporate and Other nonsegment                operations).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |
|-----|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| (b) | Includes                gains on land sales of $12 million in 2006, $33 million in 2005 and                $19                million in 2004. (All reported in the TXU Energy Holdings segment                except                $1 million in 2006 reported in the TXU Electric Delivery segment.)                The                2006 period also includes a $10 million gain related to the sale                of                mineral interests (reported in Corporate and Other nonsegment operations).                The 2005 period also includes a $7 million gain on the sale of an                out-of-state electricity transmission project (reported in the TXU                Energy                Holdings segment). The 2004 period also includes $30 million in                amortization of a deferred gain related to the sale of generation                plants                in 2002. The remaining $58 million in 2004 represents the recognition                of                the remaining previously deferred gain (reported in the TXU Energy                Holdings segment). See Note 8. |
| (c) | Represents                additional insurance recoveries recorded in the third quarter of                2006 and                second quarter of 2005 related to the 2005 settlement of the shareholders’                litigation (reported in Corporate and Other nonsegment                operations).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |
| (d) | In                the first quarter of 2006, TXU Corp. recorded a credit of $12 million                upon                settlement of a claim against a counterparty for nonperformance under                a                coal contract. A charge in the same amount was recorded in the first                quarter of 2005 for losses due to the nonperformance (reported in                the TXU                Energy Holdings segment).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |

----

| **13.** | **TRADE                ACCOUNTS RECEIVABLE AND SALE OF RECEIVABLES                PROGRAM** |
|---------|---------------------------------------------------------------------------------------------|

***Sale      of Receivables***

----

|                                                                                              |   | **Year                Ended December 31,** |    |
|---------------------------------------------------------------------------------------------------|--------|--------------------------------------------|---------|
| ** **                                                                                        |   | **2006**                                   |    | **2005** |   | **2004** |   |
|                                                                                              |   |                                       |    |   |   |   |   |
| Cash                collections on accounts receivable                                       |   | $                                          | 8,503   |   | $ | 7,450 |   | $ | 8,449 |   |
| Face                amount of new receivables purchased                                      |   |                                       | (8,469  | ) |   | (7,511 | ) |   | (8,149 | ) |
| Discount                from face amount of purchased receivables                            |   |                                       | 44      |   |   | 27 |   |   | 19 |   |
| Program                fees paid                                                             |   |                                       | (40     | ) |   | (23 | ) |   | (12 | ) |
| Servicing                fees paid                                                           |   |                                       | (4      | ) |   | (4 | ) |   | (7 | ) |
| Increase                in subordinated notes payable                                        |   |                                       | 10      |   |   | (136 | ) |   | (174 | ) |
| Operating                cash flows used by (provided to) TXU Corp. under the program   |   | $                                          | 44      |   | $ | (197 | ) | $ | 126 |   |
| Cash                flow related to disposed TXU Gas business                                |   |                                       | ― |   |   | ― |   |   | (53 | ) |
| Cash                flows used by (provided to) continuing operations                   |   | $                                          | 44      |   | $ | (197 | ) | $ | 73 |   |

***Contingencies      Related to Sale of Receivables Program***
* *

| 1) | all                  of the originators cease to maintain their required fixed charge                  coverage                  ratio and debt to capital (leverage) ratio; or                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |
|----|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| 2) | the                  delinquency ratio (delinquent for 31 days) for the sold receivables,                  the                  default ratio (delinquent for 91 days or deemed uncollectible),                  the                  dilution ratio (reductions for discounts, disputes and other allowances)                  or the days collection outstanding ratio exceed stated thresholds                  and the                  financial institutions do not waive such event of termination.                  The                  thresholds apply to the entire portfolio of sold receivables, not                  separately to the receivables of each                  originator. |

***Trade      Accounts Receivable***
**—**

|                                                                                            |   | **December                31,** |   |
|-------------------------------------------------------------------------------------------------|--------|---------------------------------|--------|
| ** **                                                                                      |   | **2006**                        |   | **2005** |   |
| Gross                trade accounts receivable                                             |   | $                               | 1,599  |   | $ | 2,035 |   |
| Undivided                interests in accounts receivable sold by TXU                           |   |                            |   |   |   |   |   |
| Receivables                Company                                                              |   |                            | (627   | ) |   | (671 | ) |
| Allowance                for uncollectible accounts related to undivided interests in           |   |                            |   |   |   |   |   |
| receivables                retained                                                             |   |                            | (13    | ) |   | (36 | ) |
| Trade                accounts receivable                ― reported in balance sheet  |   | $                               | 959    |   | $ | 1,328 |   |

----

***Allowance      for Uncollectible Accounts Receivable***
**—**

|                                                                                   |   | **2006** |   | **2005** |   | **2004** |   |
|----------------------------------------------------------------------------------------|--------|----------|--------|----------|--------|----------|--------|
|                                                                                   |   |     |   |     |   |     |   |
| Allowance                for uncollectible accounts receivable as of January 1    |   | $        | 36     |     | $      | 16       |   | $ | 54 |   |
| Increase                for bad debt expense                                           |   |     | 68     |     |   | 56       |   |   | 90 |   |
| Decrease                for account write-offs                                         |   |     | (80    | )        |   | (68      | )      |   | (121 | ) |
| Changes                related to receivables sold                                     |   |     | 4      |     |   | 17       |   |   | (7 | ) |
| Other                (a)                                                               |   |     | (15    | )        |   | 15       |   |   | ― |   |
| Allowance                for uncollectible accounts receivable as of December 31  |   | $        | 13     |     | $      | 36       |   | $ | 16 |   |

| (a) | Reflects                an allowance established in 2005 for a coal contract dispute that                was                reversed upon settlement in 2006. See Note                12. |
|-----|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

**14.   SHORT-TERM      FINANCING**

***Short-term      Borrowings***
* *

|                                                                                            |   | **At                December 31, 2006** |   | **At                December 31, 2005** |   |
|-------------------------------------------------------------------------------------------------|--------|-----------------------------------------|--------|-----------------------------------------|--------|
| ** **                                                                                      |   | **Outstanding                Amount**   |   | **Interest****Rate                (a)** |   | **Outstanding                Amount** |   | **Interest****Rate                (a)** |   |
|                                                                                            |   |                                    |   |                                    |   |   |   |   |   |
| Commercial                paper                                                                 |   | $                                       | 1,296  |                                    |   | 5.53 | % | $ | 358 |   |   | 4.49 | % |
| Bank                borrowings                                                                  |   |                                    | 195    |                                    |   | 5.97 | % |   | 440 |   |   | 4.86 | % |
| Total                                                                                           |   | $                                       | 1,491  |                                    |   |   |   | $ | 798 |   |   |   |   |
| ______________                                                                                  |
|                                                                                            |
| (a) Weighted                average interest rate at the end of the                period. |

***Credit      Facilities***

|                                                     |                         | At                December 31, 2006 |
|----------------------------------------------------------|------------------------------|-------------------------------------|
| AuthorizedBorrowers                                      | Maturity                Date | FacilityLimit                       | Letters                ofCredit | CashBorrowings | Availability  |
| TXU                Energy Company                        | May                2007      | $1,500                              | $― | $― | $1,500 |
| TXU                Energy Company, TXU Electric Delivery | June                2008     | 1,400                               | 489 | ―  | 911 |
| TXU                Energy Company, TXU Electric Delivery | August                2008   | 1,000                               | ― | 150 | 850 |
| TXU                Energy Company, TXU Electric Delivery | March                2010    | 1,600                               | 3 | ― | 1,597 |
| TXU                Energy Company, TXU Electric Delivery | June                2010     | 500                                 | ― | ― | 500 |
| TXU                Energy Company                        | December                2009 | 500                                 | 455 | 45 | ― |
| Total                                                    |                         | $6,500                              | $947 | $195 | $5,358 |

----

**15.   LONG-TERM      DEBT**

***Long-term      debt***

|                                                                                                                                               |   | **December                31,** |    |
|----------------------------------------------------------------------------------------------------------------------------------------------------|--------|---------------------------------|---------|
| ** **                                                                                                                                         |   | **2006**                        |    | **2005** |   |
| TXU                Energy Company                                                                                                                  |   |                            |    |   |   |
| Pollution                Control Revenue Bonds:                                                                                                    |   |                            |    |   |   |
| Brazos                River Authority:                                                                                                             |   |                            |    |   |   |
| 5.400%                Fixed Series 1994A due May 1, 2029                                                                                           |   | $                               | 39      |   | $ | 39 |   |
| 5.400%                Fixed Series 1994B due May 1, 2029, remarketing date May 1, 2006                (a)                (b)                       |   |                            | ― |   |   | 39 |   |
| 5.400%                Fixed Series 1995A due April 1, 2030, remarketing date May 1, 2006                (a)                (b)                     |   |                            | ― |   |   | 50 |   |
| 5.050%                Fixed Series 1995B due June 1, 2030, remarketing date June 19, 2006                (a)                (c)                    |   |                            | ― |   |   | 114 |   |
| 7.700%                Fixed Series 1999A due April 1, 2033                                                                                         |   |                            | 111     |   |   | 111 |   |
| 6.750%                Fixed Series 1999B due September 1, 2034, remarketing date April                1, 2013                (a)                   |   |                            | 16      |   |   | 16 |   |
| 7.700%                Fixed Series 1999C due March 1, 2032                                                                                         |   |                            | 50      |   |   | 50 |   |
| 4.000%                Floating Series 2001A due October 1, 2030 (e)                                                                                |   |                            | 71      |   |   | 71 |   |
| 4.750%                Fixed Series 2001B due May 1, 2029, remarketing date November 1,                2006 (a)                (d)                  |   |                            | ― |   |   | 19 |   |
| 5.750%                Fixed Series 2001C due May 1, 2036, remarketing date November 1,                2011                (a)                      |   |                            | 217     |   |   | 217 |   |
| 3.960%                Floating Series 2001D due May 1, 2033 (e)                                                                                    |   |                            | 268     |   |   | 268 |   |
| 5.370%                Floating Taxable Series 2001I due December 1, 2036 (e)                                                                       |   |                            | 62      |   |   | 62 |   |
| 4.000%                Floating Series 2002A due May 1, 2037 (e)                                                                                    |   |                            | 45      |   |   | 45 |   |
| 6.750%                Fixed Series 2003A due April 1, 2038, remarketing date April 1, 2013                (a)                                      |   |                            | 44      |   |   | 44 |   |
| 6.300%                Fixed Series 2003B due July 1, 2032                                                                                          |   |                            | 39      |   |   | 39 |   |
| 6.750%                Fixed Series 2003C due October 1, 2038                                                                                       |   |                            | 52      |   |   | 52 |   |
| 5.400%                Fixed Series 2003D due October 1, 2029, remarketing date October                1, 2014                (a)                   |   |                            | 31      |   |   | 31 |   |
| 5.000%                Fixed Series 2006 due March 1, 2041                                                                                          |   |                            | 100     |   |   | ― |   |
|                                                                                                                                               |   |                            |    |   |   |   |   |
| Sabine                River Authority of Texas:                                                                                                    |   |                            |    |   |   |   |   |
| 6.450%                Fixed Series 2000A due June 1, 2021                                                                                          |   |                            | 51      |   |   | 51 |   |
| 5.500%                Fixed Series 2001A due May 1, 2022, remarketing date November 1,                2011                (a)                      |   |                            | 91      |   |   | 91 |   |
| 6.750%                Fixed Series 2001B due May 1, 2030, remarketing date November 1,                2011                (a)                      |   |                            | 107     |   |   | 107 |   |
| 5.200%                Fixed Series 2001C due May 1, 2028                                                                                           |   |                            | 70      |   |   | 70 |   |
| 5.800%                Fixed Series 2003A due July 1, 2022                                                                                          |   |                            | 12      |   |   | 12 |   |
| 6.150%                Fixed Series 2003B due August 1, 2022                                                                                        |   |                            | 45      |   |   | 45 |   |
| 4.110%                Floating Series 2006A due November 1, 2041, remarketing date May                9, 2007                (g) (j)               |   |                            | 47      |   |   | ― |   |
| 4.110%                Floating Series 2006B due November 1, 2041, remarketing date May                9, 2007                (g) (j)               |   |                            | 46      |   |   | ― |   |
|                                                                                                                                               |   |                            |    |   |   |   |   |
| Trinity                River Authority of Texas:                                                                                                   |   |                            |    |   |   |   |   |
| 6.250%                Fixed Series 2000A due May 1, 2028                                                                                           |   |                            | 14      |   |   | 14 |   |
| 5.000%                Fixed Series 2001A due May 1, 2027, remarketing date November 1,                2006 (a)                (d)                  |   |                            | ― |   |   | 37 |   |
| 4.110%                Floating Series 2006 due November 1, 2041, remarketing date May 9,                2007                (g) (j)                |   |                            | 50      |   |   | ― |   |
|                                                                                                                                               |   |                            |    |   |   |   |   |
| Other:                                                                                                                                             |   |                            |    |   |   |   |   |
| 6.125%                Fixed Senior Notes due March 15, 2008 (swapped to variable)                (f)                                               |   |                            | 250     |   |   | 250 |   |
| 7.000%                Fixed Senior Notes due March 15, 2013                                                                                        |   |                            | 1,000   |   |   | 1,000 |   |
| 4.920%                Floating Rate Senior Notes due January 17, 2006 (interest rate in                effect                at December 31, 2005) |   |                            | ― |   |   | 400 |   |
| Capital                lease obligations                                                                                                           |   |                            | 98      |   |   | 103 |   |
| Fair                value adjustments related to interest rate swaps                                                                               |   |                            | 10      |   |   | 9 |   |
| Total                TXU Energy Company                                                                                                            |   | $                               | 3,036   |   | $ | 3,456 |   |

----

|                                                                                                                                |   | **December                31,** |    |
|-------------------------------------------------------------------------------------------------------------------------------------|--------|---------------------------------|---------|
| ** **                                                                                                                          |   | **2006**                        |    | **2005** |   |
| TXU                Electric Delivery                                                                                                |   |                            |    |   |   |
| 6.375%                Fixed Senior Notes due May 1, 2012                                                                            |   | $                               | 700     |   | $ | 700 |   |
| 7.000%                Fixed Senior Notes due May 1, 2032                                                                            |   |                            | 500     |   |   | 500 |   |
| 6.375%                Fixed Senior Notes due January 15, 2015 (swapped to variable)                (f)                              |   |                            | 500     |   |   | 500 |   |
| 7.250%                Fixed Senior Notes due January 15, 2033                                                                       |   |                            | 350     |   |   | 350 |   |
| 5.000%                Fixed Debentures due September 1, 2007 (swapped to variable)                (f)                               |   |                            | 200     |   |   | 200 |   |
| 7.000%                Fixed Debentures due September 1, 2022                                                                        |   |                            | 800     |   |   | 800 |   |
| Unamortized                discount                                                                                                 |   |                            | (16     | ) |   | (17 | ) |
| Sub-total                                                                                                                           |   |                            | 3,034   |   |   | 3,033 |   |
|                                                                                                                                |   |                            |    |   |   |   |   |
| TXU                Electric Delivery Transition Bond Company LLC (h)                                                                |   |                            |    |   |   |   |   |
| 2.260%                Fixed Series 2003 Bonds due in semiannual installments through February                15, 2007               |   |                            | 8       |   |   | 44 |   |
| 4.030%                Fixed Series 2003 Bonds due in semiannual installments through February                15, 2010               |   |                            | 122     |   |   | 122 |   |
| 4.950%                Fixed Series 2003 Bonds due in semiannual installments through February                15, 2013               |   |                            | 130     |   |   | 130 |   |
| 5.420%                Fixed Series 2003 Bonds due in semiannual installments through August                15,                2015  |   |                            | 145     |   |   | 145 |   |
| 3.520%                Fixed Series 2004 Bonds due in semiannual installments through November                15, 2009               |   |                            | 158     |   |   | 215 |   |
| 4.810%                Fixed Series 2004 Bonds due in semiannual installments through November                15, 2012               |   |                            | 221     |   |   | 221 |   |
| 5.290%                Fixed Series 2004 Bonds due in semiannual installments through May                15,                2016     |   |                            | 290     |   |   | 290 |   |
| Total                TXU Electric Delivery Transition Bond Company LLC                                                              |   |                            | 1,074   |   |   | 1,167 |   |
| Total                TXU Electric Delivery                                                                                          |   |                            | 4,108   |   |   | 4,200 |   |
|                                                                                                                                |   |                            |    |   |   |   |   |
| US                Holdings                                                                                                          |   |                            |    |   |   |   |   |
| 7.170%                Fixed Senior Debentures due August 1, 2007                                                                    |   |                            | 10      |   |   | 10 |   |
| 7.460%                Fixed Secured Facility Bonds with amortizing payments through January                2015                     |   |                            | 85      |   |   | 91 |   |
| 9.580%                Fixed Notes due in semiannual installments through December 4,                2019                            |   |                            | 62      |   |   | 65 |   |
| 8.254%                Fixed Notes due in quarterly installments through December 31,                2021                            |   |                            | 59      |   |   | 62 |   |
| 6.171%                Floating Rate Junior Subordinated Debentures, Series D due January                30,                2037 (g) |   |                            | 1       |   |   | 1 |   |
| 8.175%                Fixed Junior Subordinated Debentures, Series E due January 30,                2037                            |   |                            | 8       |   |   | 8 |   |
| Unamortized                premium                                                                                                  |   |                            | 5       |   |   | 5 |   |
| Total                US Holdings                                                                                                    |   |                            | 230     |   |   | 242 |   |
|                                                                                                                                |   |                            |    |   |   |   |   |
| TXU                Corp.                                                                                                            |   |                            |    |   |   |   |   |
| 6.375%                Fixed Senior Notes Series C due January 1, 2008 (swapped to variable)                (f)                      |   |                            | 200     |   |   | 200 |   |
| 6.375%                Fixed Senior Notes Series J due June 15, 2006                                                                 |   |                            | ― |   |   | 683 |   |
| 4.446%                Fixed Senior Notes Series K due November 16, 2006                                                             |   |                            | ― |   |   | 50 |   |
| 5.800%                Fixed Senior Notes Series M due May 16, 2008 (i)                                                              |   |                            | ― |   |   | 179 |   |
| 4.800%                Fixed Senior Notes Series O due November 15, 2009 ($450 swapped to                variable) (f)               |   |                            | 1,000   |   |   | 1,000 |   |
| 5.550%                Fixed Senior Notes Series P due November 15, 2014 ($500 swapped to                variable) (f)               |   |                            | 1,000   |   |   | 1,000 |   |
| 6.500%                Fixed Senior Notes Series Q due November 15, 2024 ($400 swapped to                variable) (f)               |   |                            | 750     |   |   | 750 |   |
| 6.550%                Fixed Senior Notes Series R due November 15, 2034                                                             |   |                            | 750     |   |   | 750 |   |
| 8.820%                Building Financing due semiannually through February 11,                2022                                  |   |                            | 99      |   |   | 109 |   |
| 6.874%                Floating Convertible Senior Notes due July 15, 2033 (g)                                                       |   |                            | 25      |   |   | 25 |   |
| Fair                value adjustments related to interest rate swaps                                                                |   |                            | (73     | ) |   | (53 | ) |
| Unamortized                discount                                                                                                 |   |                            | (9      | ) |   | (9 | ) |
| Total                TXU Corp.                                                                                                      |   |                            | 3,742   |   |   | 4,684 |   |
|                                                                                                                                |   |                            |    |   |   |   |   |
| Total                TXU Corp. consolidated                                                                                         |   |                            | 11,116  |   |   | 12,582 |   |
| Less                amount due currently                                                                                            |   |                            | (485    | ) |   | (1,250 | ) |
| Total                long-term debt                                                                                                 |   | $                               | 10,631  |   | $ | 11,332 |   |

| (a) | These                series are in the multiannual interest rate mode and are subject                to                mandatory tender prior to maturity on the mandatory remarketing date.                On                such date, the interest rate and interest rate period will be reset                for                the bonds. |
|-----|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| (b) | Repurchased                on May 1, 2006 for remarketing at a later date.                                                                                                                                                                                                                                                                     |
| (c) | Repurchased                on June 19, 2006 for remarketing at a later date.                                                                                                                                                                                                                                                                   |
| (d) | Repurchased                on November 1, 2006 for remarketing at a later date.                                                                                                                                                                                                                                                                |
| (e) | Interest                rates in effect at December 31, 2006. These series are in a weekly                interest rate mode and are classified as long-term as they are supported                by long-term irrevocable letters of credit.                                                                                                  |
| (f) | Interest                rates swapped to variable on a net $2.5 billion of $3.9 billion aggregate                principal amount at December 31, 2006.                                                                                                                                                                                        |
| (g) | Interest                rates in effect at December 31, 2006.                                                                                                                                                                                                                                                                                  |
| (h) | These                bonds are nonrecourse to TXU Electric Delivery and were issued to                recover                a regulatory asset.                                                                                                                                                                                               |
| (i) | Equity-linked.                                                                                                                                                                                                                                                                                                                                 |
| (j) | These                series are in a weekly interest rate mode and are subject to mandatory                tender prior to maturity on the mandatory remarketing date. On such                date,                the interest rate period will be reset for the                bonds.                                                        |

----

***Debt-related      Activity in 2006***

***Debt-related      Activity in 2005***

----

***Fair      Value Hedges***
* *

***Long-term      debt fair value adjustments***

|                                                                                                                                                                                            |   | **At                December 31,** |   |
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|------------------------------------|--------|
| ** **                                                                                                                                                                                      |   | **2006**                           |   | **2005** |   |
| Long-term                debt fair value adjustments related to interest rate swaps atbeginning                of period ― net (reduction) increase in debt carrying                value |   | $                                  | (44    | ) | $ | 15 |   |
| Fair                value adjustments during the period                                                                                                                                    |   |                               | (13    | ) |   | (49 | ) |
| Recognition                of net gains on settled fair value hedges (a)                                                                                                                        |   |                               | (6     | ) |   | (10 | ) |
| Long-term                debt fair value adjustments at end of period ― net reduction in                debt                carrying value (net out-of-the-money value of swaps)     |   | $                                  | (63    | ) | $ | (44 | ) |

***Securitization      (Transition) Bonds**— *

----

***Convertible      Senior Notes**— *

***Maturities**—*

| Year                                                                             |   |   |   |
|----------------------------------------------------------------------------------|--------|--------|--------|
| 2007                                                                        |   | $      | 474    |   |
| 2008                                                                        |   |   | 576    |   |
| 2009                                                                        |   |   | 1,129  |   |
| 2010                                                                        |   |   | 135    |   |
| 2011                                                                        |   |   | 143    |   |
| Thereafter                                                                  |   |   | 8,644  |   |
| Unamortized                premium and discount and fair value adjustments  |   |   | (83    | ) |
| Capital                lease obligations                                    |   |   | 98     |   |
| Total                                                                       |   | $      | 11,116 |   |

----

**16.     COMMITMENTS      AND CONTINGENCIES**

***Commitments***

***Generation        Development Program***
*—*
* *

***    Other        Contractual Commitments**— *

|       |   | **Coal                purchase****agreements                and coal transportation****agreements** | ** ** | **Pipeline****transportation                and****storage                reservation****fees** | ** ** |  **Capacity                payments under power purchase****agreements                (a)** | ** ** |   **Nuclear****Fuel                Contracts** | ** ** |   **Water****Rights                Contracts** |   |
|------------|--------|-----------------------------------------------------------------------------------------------------|------------|-------------------------------------------------------------------------------------------------|------------|--------------------------------------------------------------------------------------------------|------------|----------------------------------------------------------|------------|----------------------------------------------------------|--------|
| 2007       |   | $                                                                                                   | 151        |                                                                                            | $          | 62                                                                                               |       | $                                                        | 107        |                                                     | $      | 82 |   | $ | 6 |   |
| 2008       |   |                                                                                                | 98         |                                                                                            |       | 42                                                                                               |       |                                                     | 54         |                                                     |   | 134 |   |   | 7 |   |
| 2009       |   |                                                                                                | 102        |                                                                                            |       | 38                                                                                               |       |                                                     | ―    |                                                     |   | 111 |   |   | 7 |   |
| 2010       |   |                                                                                                | ―    |                                                                                            |       | 37                                                                                               |       |                                                     | ―    |                                                     |   | 36 |   |   | 7 |   |
| 2011       |   |                                                                                                | ―    |                                                                                            |       | 38                                                                                               |       |                                                     | ―    |                                                     |   | 26 |   |   | 7 |   |
| Thereafter |   |                                                                                                | ―    |                                                                                            |       | 16                                                                                               |       |                                                     | ―    |                                                     |   | 121 |   |   | 53 |   |
| Total      |   | $                                                                                                   | 351        |                                                                                            | $          | 233                                                                                              |       | $                                                        | 161        |                                                     | $      | 510 |   | $ | 87 |   |

|   | (a) | On                the basis of TXU Corp.’s current expectations of demand from its                electricity customers as compared with its capacity and take-or-pay                payments, management does not consider it likely that any material                payments will become due for electricity not taken beyond capacity                payments. |
|--------|-----|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

|                                                          |   | **Capital** |   | **Operating**                 |   |
|---------------------------------------------------------------|--------|-------------|--------|-------------------------------|--------|
| ** **                                                    |   | **Leases**  |   | **Leases                (a)** |   |
| 2007                                                          |   | $           | 17     |                          | $      | 52 |   |
| 2008                                                          |   |        | 16     |                          |   | 47 |   |
| 2009                                                          |   |        | 15     |                          |   | 47 |   |
| 2010                                                          |   |        | 14     |                          |   | 45 |   |
| 2011                                                          |   |        | 10     |                          |   | 41 |   |
| Thereafter                                                    |   |        | 47     |                          |   | 285 |   |
| Total                future minimum lease payments            |   |        | 119    |                          | $      | 517 |   |
| Less                amounts representing interest             |   |        | 21     |                          |   |   |   |
| Present                value of future minimum lease payments |   |        | 98     |                          |   |   |   |
| Less                current portion                           |   |        | 11     |                          |   |   |   |
| Long-term                capital lease obligation             |   | $           | 87     |                          |   |   |   |

|   | (a) | Includes                operating leases with initial or remaining noncancelable lease terms                in                excess of one year. Excludes TXU Energy Holdings’ future minimum lease                payments for combustion turbines owned by a lease trust of $17 million                in                2007, $17 million in 2008, $17 million in 2009, $17 million in 2010,                $17                million in 2011 and $51 million in periods                thereafter. |
|--------|-----|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

***Contingencies***

***    Litigation***
*** ***

----

----

----

----

----

***Regulatory** **Investigations****2005      State of the Market Report for the ERCOT Wholesale*
*Electricity      Markets*

* *

***Income      Tax Contingencies***

*TXU      Corp. 1997-2002 Audit*

*TXU      Corp. 2003-2005 Audit*

*TXU      Gas (formerly ENSERCH Corporation) Audits*

----

*TXU      Europe*

***Labor      Contracts***
* *

----

***Environmental      Contingencies***

|   | · | enactment                of state or federal regulations regarding CO2                emissions; |
|--------|--------|--------------------------------------------------------------------------------------------------|

|   | · | other                changes to existing                state or federal regulation regarding air quality, water quality,                control                of toxic substances and hazardous and solid wastes, and other                environmental matters; and |
|--------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | the                identification of sites requiring clean-up or the filing of other                complaints in which TXU Corp. or its subsidiaries may be asserted                to be                potential responsible parties. |
|--------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

***Guarantees**—      *

*Disposed      TXU Gas operations— *

* *

*Residual      value guarantees in operating leases*

----

*Indebtedness      guarantee— *
* *
* *

***Letters      of Credit***

*    **Security        Interest***

***Nuclear      Insurance***

----

----

**17.   SHAREHOLDERS’      EQUITY**

***Declaration      of Dividend***

***Stock      Split**― *

***Common      Stock Repurchase***
*—      *

***Common      Stock Issuance***
*—*
* *

***Accelerated      Share Repurchase Program***
*―      *

***Thrift      Plan***

----

***Direct      Stock Purchase and Dividend Reinvestment Plan***

|                                                 |   | Number                of Shares |       |
|------------------------------------------------------|--------|---------------------------------|------------|
|                                                 |   |                            |       |
| DRIP                Plan                             |   |                            | 3,710,195  |   |
| Thrift                Plan                           |   |                            | 8,849,200  |   |
| Long-Term                Incentive Compensation Plan |   |                            | 5,426,007  |   |
| Omnibus                Incentive Compensation Plan   |   |                            | 17,976,140 |   |
| Convertible                senior notes              |   |                            | 1,523,916  |   |
| Other                                                |   |                            | 1,345,494  |   |
| Total                                                |   |                            | 38,830,952 |   |

***TXU      Corp. Preference Stock***

***US      Holdings’ Preferred* *Stock***

***Exchangeable      Preferred Membership Interests of TXU Energy Holdings***
* *

***Dividend      Restrictions***

----

|                                                                     |   | 2006   |        | 2005   |   | 2004        |   |
|--------------------------------------------------------------------------|--------|--------|-------------|--------|--------|-------------|--------|
|                                                                     |   |   |        |   |   |        |   |
| Balance                at beginning of year                         |   |   | 470,845,978 |   |   | 479,705,760 |   |   | 647,766,184 |   |
| Issuances                under equity-linked debt securities        |   |   | 5,683,791   |   |   | 2,708,250   |   |   | 3,634,742 |   |
| Issuances                under Direct Stock Purchase and Dividend        |   |   |        |   |   |        |   |   |   |   |
| Reinvestment                Plan                                    |   |   | ─     |   |   | ─     |   |   | 220,028 |   |
| Issuances                under stock-based incentive compensation        |   |   |        |   |   |        |   |   |   |   |
| plans                (Note 22)                                           |   |   | 2,200,766   |   |   | 1,093,480   |   |   | 1,187,028 |   |
| Issued                on conversion of convertible senior notes     |   |   | ─     |   |   | 9,716       |   |   | ─ |   |
| Repurchases                                                         |   |   | (18,165,403 | )      |   | (12,476,228 | )      |   | (168,514,888 | ) |
| Forfeitures                and cancellations under stock-based incentive |   |   |        |   |   |        |   |   |   |   |
| compensation                plan                                    |   |   | (1,320,609  | )      |   | (195,000    | )      |   | (4,587,334 | ) |
| Balance                at end of year                               |   |   | 459,244,523 |   |   | 470,845,978 |   |   | 479,705,760 |   |

**18.   COMMODITY      CONTRACT ASSETS AND LIABILITIES**

----

**19.   CASH      FLOW      HEDGE AND OTHER DERIVATIVE ASSETS AND LIABILITIES**

|                                               |   | **December                31,** |   |
|----------------------------------------------------|--------|---------------------------------|--------|
| ** **                                         |   | **2006**                        |   | **2005** |   |
|                                               |   |                            |   |   |   |
| Current                and noncurrent assets:      |   |                            |   |   |   |
| Commodity-related                cash flow hedges  |   | $                               | 933    |   | $ | 131 |   |
| Debt-related                fair value hedges      |   |                            | 4      |   |   | ─ |   |
| Other                                              |   |                            | 9      |   |   | 9 |   |
| Total                                         |   | $                               | 946    |   | $ | 140 |   |
|                                               |   |                            |   |   |   |   |   |
| Current                and noncurrent liabilities: |   |                            |   |   |   |   |   |
| Commodity-related                cash flow hedges  |   | $                               | 23     |   | $ | 295 |   |
| Debt-related                fair value hedges      |   |                            | 89     |   |   | 71 |   |
| Total                                         |   | $                               | 112    |   | $ | 366 |   |

***Other      Cash Flow Hedge Information***

----

|                                                    |   | **Accumulated****Other                Comprehensive                Income****at                December 31,                2006****Gain                (Loss)** |   |
|---------------------------------------------------------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|
| ** **                                              |   | **Commodity-****related**                                                                                                                                       |   | **Debt-****Related** |   |  **Total** |   |
|                                                    |   |                                                                                                                                                            |   |   |   |   |   |
| Dedesignated                hedges - amounts fixed      |   | $                                                                                                                                                               | 131    |   | $ | (57 | ) | $ | 74 |   |
| Hedges                subject to fair value adjustments |   |                                                                                                                                                            | 337    |   |   | ─ |   |   | 337 |   |
| Total                                                   |   | $                                                                                                                                                               | 468    |   | $ | (57 | ) | $ | 411 |   |

----

**20.   INVESTMENTS**

|                                                          |       | **December                31,** | ** ** |
|---------------------------------------------------------------|------------|---------------------------------|------------|
| ** **                                                    | ** ** | **2006**                        | ** ** | **2005** |   |
|                                                          |       |                            |       |   |   |
| Nuclear                decommissioning trust             |       | $                               | 447        |   | $ | 389 |   |
| Assets                related to employee benefit plans  |       |                            | 197        |   |   | 187 |   |
| Land                                                     |       |                            | 36         |   |   | 35 |   |
| Note                receivable from Capgemini       |       |                            | 25         |   |   | 25 |   |
| Investment                in unconsolidated affiliates   |       |                            | 3          |   |   | 3 |   |
| Miscellaneous                other                       |       |                            | 4          |   |   | 4 |   |
| Total                investments                              |       | $                               | 712        |   | $ | 643 |   |

***Nuclear      Decommissioning Trust***
* *

|                             |   | **December                31, 2006** |   |
|----------------------------------|--------|--------------------------------------|--------|
| ** **                       |   | **Cost                (a)**          |   | **Unrealized                gain** |   | **Unrealized                loss** |   | **Fair                market value** |   |
| Debt                securities   |   | $                                    | 169    |   | $ | 5 |   | $ | (1 | ) | $ | 173 |   |
| Equity                securities |   |                                 | 162    |   |   | 117 |   |   | (5 | ) |   | 274 |   |
| Total                            |   | $                                    | 331    |   | $ | 122 |   | $ | (6 | ) | $ | 447 |   |

|                             |   | **December                31, 2005** |   |
|----------------------------------|--------|--------------------------------------|--------|
| ** **                       |   | **Cost                (a)**          |   | **Unrealized                gain** |   | **Unrealized                loss** |   | **Fair                market value** |   |
| Debt                securities   |   | $                                    | 151    |   | $ | 5 |   | $ | (1 | ) | $ | 155 |   |
| Equity                securities |   |                                 | 156    |   |   | 90 |   |   | (12 | ) |   | 234 |   |
| Total                            |   | $                                    | 307    |   | $ | 95 |   | $ | (13 | ) | $ | 389 |   |

***Assets      Related to Employee Benefit Plans***

----

***Capgemini      Agreement***
* *

----

**21.   PENSION      AND OTHER POSTRETIREMENT EMPLOYEE BENEFITS**

***Adoption      of SFAS 158***

|                                                        |       | **December                31, 2006**                         | ** ** |
|-------------------------------------------------------------|------------|--------------------------------------------------------------|------------|
| ** **                                                  | ** ** | **Balances                Prior to Application of SFAS 158** | ** ** | **Increase****(Decrease)                to****Balances** | ** ** | **Balances                After Application of SFAS 158** |   |
|                                                        |       |                                                         |       |   |   |   |   |
| Pension                assets                               |       | $                                                            | 16         |   | $ | (7 | ) | $ | 9 |   |
| Noncurrent                assets:                           |       |                                                         |       |   |   |   |   |   |   |   |
| Accumulated                deferred income taxes            |       | $                                                            | 176        |   | $ | 14 |   | $ | 190 |   |
| Regulatory                assets                            |       | $                                                            | 61         |   | $ | 343 |   | $ | 404 |   |
| Current                liabilities:                         |       |                                                         |       |   |   |   |   |   |   |   |
| Defined                benefit pension and OPEB obligations |       | $                                                            | —    |   | $ | 2 |   | $ | 2 |   |
| Noncurrent                liabilities:                      |       |                                                         |       |   |   |   |   |   |   |   |
| Defined                benefit pension and OPEB obligations |       | $                                                            | 708        |   | $ | 361 |   | $ | 1,069 |   |
| Shareholders’                equity:                  |       |                                                         |       |   |   |   |   |   |   |   |
| Accumulated                other comprehensive income - net |       | $                                                            | 11         |   | $ | (13 | ) | $ | (2 | ) |

----

***Pension      Plan***

***Minimum      Pension Liability Adjustment Prior to SFAS 158***

----

*Detailed      Information Regarding Pension Benefits*

|                                                                                 |       | **Year                  Ended December 31,** | ** ** |
|--------------------------------------------------------------------------------------|------------|----------------------------------------------|------------|
| ** **                                                                           | ** ** | **2006**                                     | ** ** | **2005** | ** ** | **2004** |   |
| *Assumptions                  Used to Determine Net Periodic Pension Cost:*          |       |                                         |       |   |   |   |   |
| Discount                  rate                                                  |       |                                         | 5.75       | % |   | 6.00 | % |   | 6.00%                  - 6.50 | % |
| Expected                  return on plan assets                                 |       |                                         | 8.75       | % |   | 8.75 | % |   | 8.50 | % |
| Rate                  of compensation increase                                  |       |                                         | 3.32       | % |   | 3.31 | % |   | 3.57 | % |
|                                                                                 |       |                                         |       |   |   |   |   |   |   |   |
| *Components                  of Net Pension Cost:*                                   |       |                                         |       |   |   |   |   |   |   |   |
| Service                  cost                                                   |       | $                                            | 42         |   | $ | 37 |   | $ | 46 |   |
| Interest                  cost                                                  |       |                                         | 136        |   |   | 130 |   |   | 130 |   |
| Expected                  return on assets                                      |       |                                         | (147       | ) |   | (145 | ) |   | (142 | ) |
| Amortization                  of prior service cost                             |       |                                         | 3          |   |   | 3 |   |   | 4 |   |
| Amortization                  of net loss                                       |       |                                         | 32         |   |   | 20 |   |   | 13 |   |
| Recognized                  curtailment loss                                    |       |                                         | ─    |   |   | 1 |   |   | 7 |   |
| Net                  periodic pension cost                                      |       | $                                            | 66         |   | $ | 46 |   | $ | 58 |   |
|                                                                                 |       |                                         |       |   |   |   |   |   |   |   |
| *Assumptions                  used to determine benefit obligations at December 31:* |       |                                         |       |   |   |   |   |   |   |   |
| Discount                  rate                                                  |       |                                         | 5.90       | % |   | 5.75 | % |   | 6.00 | % |
| Rate                  of compensation increase                                  |       |                                         | 3.44       | % |   | 3.32 | % |   | 3.57 | % |

| *Change                  in Pension Obligation*:                         |   |   |    |   |   |
|--------------------------------------------------------------------------|--------|--------|---------|--------|--------|
| Projected                  benefit obligation at beginning of year  |   | $      | 2,440   |   | $      | 2,218 |   |
| Service                  cost                                       |   |   | 42      |   |   | 37 |   |
| Interest                  cost                                      |   |   | 136     |   |   | 130 |   |
| Plan                  amendments                                    |   |   | 2       |   |   | ─ |   |
| Actuarial                  (gain) loss                              |   |   | (47     | )      |   | 195 |   |
| Benefits                  paid                                      |   |   | (116    | )      |   | (128 | ) |
| Settlements                                                         |   |   | ─ |   |   | (12 | ) |
| Projected                  benefit obligation at end of year        |   | $      | 2,457   |   | $      | 2,440 |   |
| Accumulated                  benefit obligation at end of year      |   | $      | 2,297   |   | $      | 2,277 |   |
|                                                                     |   |   |    |   |   |   |   |
| *Change                  in Plan Assets*:                                |   |   |    |   |   |   |   |
| Fair                  value of assets at beginning of year          |   | $      | 1,982   |   | $      | 1,995 |   |
| Actual                  return on assets                            |   |   | 220     |   |   | 121 |   |
| Employer                  contributions                             |   |   | 4       |   |   | 3 |   |
| Benefits                  paid                                      |   |   | (116    | )      |   | (128 | ) |
| Settlements                                                              |   |   | ─ |   |   | (9 | ) |
| Fair                  value of assets at end of year                |   | $      | 2,090   |   | $      | 1,982 |   |
|                                                                     |   |   |    |   |   |   |   |
| *Funded                  Status*:                                        |   |   |    |   |   |   |   |
| Projected                  pension benefit obligation               |   | $      | (2,457  | )      | $      | (2,440 | ) |
| Fair                  value of assets                               |   |   | 2,090   |   |   | 1,982 |   |
| Funded                  status at end of year                            |   | $      | (367    | )      |   | (458 | ) |
| Unrecognized                  prior service cost                    |   |   | ─ |   |   | 8 |   |
| Unrecognized                  net loss                              |   |   | ─ |   |   | 357 |   |
| Accrued                  pension cost                                    |   | $      | (367    | )      | $      | (93 | ) |

----

|                                                                                                                 |   | **December                31,** |    |
|----------------------------------------------------------------------------------------------------------------------|--------|---------------------------------|---------|
| ** **                                                                                                           |   | **2006**                        |    | **2005** |   |
| *Amounts                Recognized in the Balance Sheet Consist of*:                                                 |   |                            |    |   |   |
| Other                noncurrent assets (a)                                                                      |   | $                               | 9       |   | $ | 8 |   |
| Intangible                asset                                                                                 |   |                            | ─ |   |   | 9 |   |
| Regulatory                asset                                                                                 |   |                            | ─ |   |   | 66 |   |
| Other                current liabilities                                                                        |   |                            | (2      | ) |   | ─ |   |
| Other                noncurrent liabilities                                                                     |   |                            | (374    | ) |   | (304 | ) |
| Accumulated                other comprehensive income                                                           |   |                            | ─ |   |   | 60 |   |
| Accumulated                deferred income tax assets                                                           |   |                            | ─ |   |   | 68 |   |
| Net                amount recognized                                                                            |   | $                               | (367    | ) | $ | (93 | ) |
|                                                                                                                 |   |                            |    |   |   |   |   |
| *Amounts                Recognized in Other Comprehensive Income and Accumulated Other                Comprehensive* |   |                            |    |   |   |   |   |
| *Income                under SFAS 158 Consist of:*                                                                   |   |                            |    |   |   |   |   |
| Net                loss                                                                                         |   | $                               | 2       |   |   |   |   |
| Prior                service cost                                                                               |   |                            | 5       |   |   |   |   |
| Net                amount recognized                                                                            |   | $                               | 7       |   |   |   |   |
|                                                                                                                 |   |                            |    |   |   |   |   |
| *Amounts                Recognized as Regulatory Assets under SFAS 158 Consist of*:                                  |   |                            |    |   |   |   |   |
| Net                loss                                                                                         |   | $                               | 203     |   |   |   |   |
| Prior                service cost                                                                               |   |                            | 3       |   |   |   |   |
| Net                amount recognized                                                                            |   | $                               | 206     |   |   |   |   |

| (a) | Amounts                represent overfunded plans. |
|-----|----------------------------------------------------|

|                                                                      |   |  **Year                Ended December 31,** |   |
|---------------------------------------------------------------------------|--------|--------------------------------------------------|--------|
| ** **                                                                |   | **2006**                                         |   | **2005** |   |
| *Pension                Plans with PBO and ABO in Excess of Plan Assets*: |   |                                             |   |   |   |
| Projected                benefit obligation                          |   | $                                                | 2,452  |   | $ | 2,435 |   |
| Accumulated                benefit obligation                        |   |                                             | 2,291  |   |   | 2,271 |   |
| Plan                assets                                           |   |                                             | 2,076  |   |   | 1,967 |   |

*Asset      Allocations - *

|                                        |   | **Allocation                of Plan Assets** |   | **Target                Allocation** |   | **Expected                Long-term** |   |
|---------------------------------------------|--------|----------------------------------------------|--------|--------------------------------------|--------|---------------------------------------|--------|
| **Asset                Type**               |   | **2006**                                     |   | **2005**                             |   | **Ranges**                            |   | **Returns** |   |
|                                        |   |                                         |   |                                 |   |                                  |   |   |   |
| US                equities                  |   |                                         | 46.1   | %                                    |   | 49.9                                  | %      |   | 30%-65 | % |   | 9.5 | % |
| International                equities  |   |                                         | 18.6   | %                                    |   | 16.0                                  | %      |   | 5%-20 | % |   | 10.0 | % |
| Fixed                income                 |   |                                         | 31.9   | %                                    |   | 29.4                                  | %      |   | 15%-50 | % |   | 6.8 | % |
| Real                estate                  |   |                                         | 3.4    | %                                    |   | 4.7                                   | %      |   | 0%-10 | % |   | 8.2 | % |
|                                        |   |                                         | 100.0  | %                                    |   | 100.0                                 | %      |   |   |   |   | 8.75 | % |

***Expected      Long-Term Rate of Return on Assets Assumption***

----

***Investment      Strategy***

***Postretirement      Employee Benefits Other Than Pension***
**s**

----

|                                                                               |   | Year                Ended December 31, |    |
|------------------------------------------------------------------------------------|--------|----------------------------------------|---------|
|                                                                               |   | 2006                                   |    | 2005 |   | 2004 |   |
| *Assumptions                used to determine net periodic benefit cost:*          |   |                                   |    |   |   |   |   |
| Discount                rate                                                  |   |                                   | 5.75    | % |   | 6.00 | % |   | 6.00%                - 6.50 | % |
| Expected                return on plan assets                                 |   |                                   | 8.67    | % |   | 8.67 | % |   | 8.66 | % |
|                                                                               |   |                                   |    |   |   |   |   |   |   |   |
| *Components                of Net Postretirement Benefit Cost:*                    |   |                                   |    |   |   |   |   |   |   |   |
| Service                cost                                                   |   | $                                      | 13      |   | $ | 13 |   | $ | 15 |   |
| Interest                cost                                                  |   |                                   | 60      |   |   | 56 |   |   | 60 |   |
| Expected                return on assets                                      |   |                                   | (21     | ) |   | (20 | ) |   | (18 | ) |
| Amortization                of net transition obligation                      |   |                                   | 1       |   |   | 1 |   |   | 2 |   |
| Amortization                of prior service cost/(credit)                    |   |                                   | (3      | ) |   | (3 | ) |   | (2 | ) |
| Amortization                of net loss                                       |   |                                   | 31      |   |   | 24 |   |   | 25 |   |
| Recognized                curtailment gain                                    |   |                                   | ─ |   |   | ─ |   |   | (2 | ) |
| Net                postretirement benefit cost                                     |   | $                                      | 81      |   | $ | 71 |   | $ | 80 |   |
|                                                                               |   |                                   |    |   |   |   |   |   |   |   |
| *Assumptions                used to determine benefit obligations at December 31*: |   |                                   |    |   |   |   |   |   |   |   |
| Discount                rate                                                  |   |                                   | 5.90    | % |   | 5.75 | % |   | 6.00%                - 6.50 | % |

| *Change                in Postretirement Benefit Obligation*:  |   |   |   |   |   |
|----------------------------------------------------------------|--------|--------|--------|--------|--------|
| Benefit                obligation at beginning of year    |   | $      | 1,065  |   | $      | 987 |   |
| Service                cost                                    |   |   | 13     |   |   | 13 |   |
| Interest                cost                                   |   |   | 60     |   |   | 56 |   |
| Participant                contributions                       |   |   | 14     |   |   | 16 |   |
| Medicare                Part D reimbursement                   |   |   | 5      |   |   | ─ |   |
| Actuarial                (gain)/loss                           |   |   | (150   | )      |   | 62 |   |
| Benefits                paid                                   |   |   | (59    | )      |   | (69 | ) |
| Benefit                obligation at end of year          |   | $      | 948    |   | $      | 1,065 |   |
|                                                           |   |   |   |   |   |   |   |
| *Change                in Plan Assets*:                        |   |   |   |   |   |   |   |
| Fair                value of assets at beginning of year  |   | $      | 245    |   | $      | 229 |   |
| Actual                return on assets                         |   |   | 23     |   |   | 12 |   |
| Employer                contributions                          |   |   | 23     |   |   | 52 |   |
| Participant                contributions                       |   |   | 14     |   |   | 14 |   |
| Medicare                Part D reimbursement                   |   |   | 5      |   |   | ─ |   |
| Benefits                paid                                   |   |   | (59    | )      |   | (62 | ) |
| Fair                value of assets at end of year        |   | $      | 251    |   | $      | 245 |   |

----

|                                                        |   | **Year                Ended December 31,** |    |
|-------------------------------------------------------------|--------|--------------------------------------------|---------|
| ** **                                                  |   | **2006**                                   |    | **2005** |   |
| *Funded                Status*:                             |   |                                       |    |   |   |
| Benefit                obligation                      |   | $                                          | (948    | ) | $ | (1,065 | ) |
| Fair                value of assets                    |   |                                       | 251     |   |   | 245 |   |
| Funded                status at end of year                 |   |                                       | (697    | ) |   | (820 | ) |
| Unrecognized                net transition obligation  |   |                                       | ─ |   |   | 10 |   |
| Unrecognized                prior service credit       |   |                                       | ─ |   |   | (14 | ) |
| Unrecognized                net loss                   |   |                                       | ─ |   |   | 387 |   |
| Accrued                postretirement benefit obligation    |   | $                                          | (697    | ) | $ | (437 | ) |

| *Amounts                Recognized in Other Comprehensive Income and Accumulated Other                Comprehensive* |   |
|----------------------------------------------------------------------------------------------------------------------|--------|
| *Income                under SFAS 158 Consist of:*                                                                   |   |
| Net                loss                                                                                         |   | $ | 15 |   |
| Prior                service cost credit                                                                        |   |   | (13 | ) |
| Net                transition obligation                                                                        |   |   | 1 |   |
| Net                amount recognized                                                                                 |   | $ | 3 |   |
|                                                                                                                 |   |   |   |   |
| *Amounts                Recognized as Regulatory Assets under SFAS 158 Consist                of:*                   |
| Net                loss                                                                                         |   | $ | 202 |   |
| Prior                service cost credit                                                                        |   |   | (12 | ) |
| Net                transition obligation                                                                        |   |   | 8 |   |
| Net                amount recognized                                                                                 |   | $ | 198 |   |

|                                                                                                                              |   | **Not                Medicare Eligible** |   | **Medicare                Eligible** |   |
|-----------------------------------------------------------------------------------------------------------------------------------|--------|------------------------------------------|--------|--------------------------------------|--------|
| ** **                                                                                                                        |   | **December                31,**          |   | **December                31,**      |   |
| ** **                                                                                                                        |   | **2006**                                 |   | **2005**                             |   | **2006** |   | **2005** |   |
| *Assumed                Health Care Cost Trend Rates*:                                                                            |   |                                     |   |                                 |   |   |   |   |   |
| Health                care cost trend rate assumed for next year                                                             |   |                                     | 6.5%   |                                 |   | 8% |   |   | 8% |   |   | 9% |   |
| Rate                to which the cost trend is expected to decline (the ultimate trend                rate)                  |   |                                     | 5.0%   |                                 |   | 5% |   |   | 5% |   |   | 5% |   |
| Year                that the rate reaches the ultimate trend rate                                                            |   |                                     | 2010   |                                 |   | 2010 |   |   | 2012 |   |   | 2012 |   |

|                                                                           |   | **1-Percentage                Point****Increase** |   | **1-Percentage                Point****Decrease** |   |
|--------------------------------------------------------------------------------|--------|---------------------------------------------------|--------|---------------------------------------------------|--------|
| *Sensitivity                Analysis of Assumed Health Care Cost Trend Rates*: |   |                                              |   |                                              |   |
| Effect                on accumulated postretirement obligation            |   | $                                                 | 112    |                                              | $      | (92 | ) |
| Effect                on postretirement benefits cost                     |   |                                              | 8      |                                              |   | (7 | ) |

----

***Asset      Allocations -***

|                                        |       | **Allocation                of Plan Assets****December                31,** | ** ** |
|---------------------------------------------|------------|-----------------------------------------------------------------------------|------------|
| **Asset                Type**               | ** ** | **2006**                                                                    | ** ** | **2005** |   |
|                                        |       |                                                                        |       |   |   |
| US                equities                  |       |                                                                        | 56.8       | % |   | 57.3 | % |
| International                equities  |       |                                                                        | 9.3        | % |   | 7.7 | % |
| Fixed                income                 |       |                                                                        | 32.2       | % |   | 32.8 | % |
| Real                estate                  |       |                                                                        | 1.7        | % |   | 2.2 | % |
|                                        |       |                                                                        | 100.0      | % |   | 100.0 | % |

| **Plan                Type**                        | ** ** | **Expected                Long-term****Returns** |   |
|-----------------------------------------------------|------------|--------------------------------------------------|--------|
| 401(h)                accounts                 |       |                                             | 8.75   | % |
| Life                Insurance VEBA             |       |                                             | 8.75   | % |
| Union                VEBA                      |       |                                             | 8.75   | % |
| Non-Union                VEBA                  |       |                                             | 4.80   | % |
| Insurance                Continuation Reserve  |       |                                             | 7.24   | % |
|                                                     |       |                                             | 8.67   | % |

***Regulatory      Recovery of Pension and OPEB Costs***

|                                                                                     |   | Year                Ended December 31, |   |
|------------------------------------------------------------------------------------------|--------|----------------------------------------|--------|
|                                                                                     |   | 2006                                   |   | 2005 |   | 2004 |   |
| Pension                costs under SFAS 87                                          |   | $                                      | 66     |   | $ | 46 |   | $ | 58 |   |
| OPEB                costs under SFAS 106                                            |   |                                   | 81     |   |   | 71 |   |   | 80 |   |
| Total                benefit costs                                                       |   |                                   | 147    |   |   | 117 |   |   | 138 |   |
| Less                amounts deferred principally as a regulatory asset or property  |   |                                   | (84    | ) |   | (58 | ) |   | (27 | ) |
| Net                amounts recognized as expense                                         |   | $                                      | 63     |   | $ | 59 |   | $ | 111 |   |

***Assumed      Discount Rate***

----

***Amortization      in 2007***

***Contributions      in 2007***

***Future      Benefit Payments***
*—      *

|                                              |   | **2007** | ** ** | **2008** | ** ** | **2009** | ** ** | **2010** | ** ** | **2011** | ** ** | **2012-16** |   |
|---------------------------------------------------|--------|----------|------------|----------|------------|----------|------------|----------|------------|----------|------------|-------------|--------|
| Pension                benefits              |   | $        | 109        |     | $          | 115      |       | $        | 121        |     | $          | 128         |   | $ | 136 |   | $ | 834 |   |
| OPEBs                                             |   | $        | 54         |     | $          | 57       |       | $        | 60         |     | $          | 62          |   | $ | 65 |   | $ | 364 |   |
| Medicare                Part D subsidies received |   | $        | (6         | )        | $          | (7       | )          | $        | (8         | )        | $          | (8          | )      | $ | (9 | ) | $ | (55 | ) |

***Thrift      Plan***

----

**22.   STOCK-BASED      COMPENSATION PLANS**

|                                                                                                                              | OICP                                                                                                                                                                                                                                                                                                                                                                    | LTIP                                                                                                         |
|-----------------------------------------------------------------------------------------------------------------------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------------------------------------------------------------------------------------------------------------|
| Vesting                period                                                                                                     | Three                years                                                                                                                                                                                                                                                                                                                                              | Two                or three years                                                                            |
| Potential                share pay-out as a percent of initial number of awards                granted                            |  0%                to 175% (a)                                                                                                                                                                                                                                                                                                                                     |  0%                to 200%                                                                              |
| Basis                for pay-out percentage - actual TXU Corp. three-year share return                compared                to: | · 50%                of award - threshold TXU Corp. share returns· 50%                of award - share returns of companies comprising the S&P 500 Electric                Utilities Index for 2005 awards and the S&P 500 Electric Utilities                Index and S&P 500 Multi-Utilities Index for 2006 awards                (a) | Share                returns of companies comprising the S&P 500 Electric Utilities                Index |
| Award                type                                                                                                         | Performance                units payable in TXU Corp. stock upon vesting                                                                                                                                                                                                                                                                                                | Restricted                stock and performance units payable in TXU Corp. stock upon vesting                |

| (a) | For                a small number of employees under employment agreements, potential                share                pay-out as a percent of initial number of awards granted is 0% to                200%,                and the number of OICP shares distributed is based 100% on TXU Corp.’s                total share return over the vesting period compared to the total                returns                of companies comprising the Standard & Poor’s 500 Electric Utilities                Index. |
|-----|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | Expected                volatility of the stock price of TXU Corp. and peer group companies                -                expected volatility is determined based on historical stock price                volatilities using daily stock price returns for the three years                prior to                the grant date. |
|--------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | The                dividend rate for TXU Corp. and peer group companies based on the                observed                dividend payments over the twelve months prior to grant                date. |
|--------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | Risk-free                rate (three-year U.S. Treasury securities) during the three year                vesting                period. |
|--------|--------|-----------------------------------------------------------------------------------------------------------------------------------------|

|   | · | Discount                for liquidation restrictions - this factor estimates the discount                for lack                of marketability of vested awards due to the anticipated time for                the                approval and issuance of the awards, the black-out period immediately                after the grant and additional holding requirements imposed on senior                executives. This discount is determined based on an estimation of                the cost                of a protective put at the award date and is calculated using the                Black-Scholes option pricing model using expected volatility assumptions                based on historical and implied volatility as discussed above and                a                risk-free rate of return over the option                period. |
|--------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| **Assumptions**                                            | **2006**                    | **2005**   | **2004**                 |
|------------------------------------------------------------|-----------------------------|------------|--------------------------|
|                                                       |                        |       |                     |
| Expected                volatility                    | 29%                         | 25%-30%    | 25%-35%                  |
| Expected                annual dividend               | $1.65                       | $1.125     |  $1.50-$2.50        |
| Risk-free                rate                         | 4.83%                       | 5.75%      |  2.54%-3.54%        |
| Discount                for post vesting restriction  | 6.4%                - 11.1% | 6.5%-12.5% | 20%                - 25% |

----

|                                                     |   | **LTIP                and OICP****Awards** |       | **TXU                Gas****Stock                Option****Plan** |   |
|----------------------------------------------------------|--------|--------------------------------------------|------------|-------------------------------------------------------------------|--------|
| Number                of awards:                         |   |                                       |       |                                                              |   |
| Balance                — December 31, 2003    |   |                                       | 5,761,666  |                                                              |   | 47,348 |   |
| Granted                in 2004                      |   |                                       | 3,940,530  |                                                              |   | ─ |   |
| Forfeited/expired                                   |   |                                       | (3,420,300 | )                                                                 |   | (8,610 | ) |
| Vested/exercised                                         |   |                                       | (7,334     | )                                                                 |   | (33,466 | ) |
| Balance                — December 31, 2004    |   |                                       | 6,274,562  |                                                              |   | 5,272 |   |
| Granted                in 2005                      |   |                                       | 1,231,392  |                                                              |   | ─ |   |
| Forfeited/expired                                   |   |                                       | (687,940   | )                                                                 |   | (1,520 | ) |
| Vested/exercised                                         |   |                                       | (1,532,032 | )                                                                 |   | (2,232 | ) |
| Balance                — December 31, 2005    |   |                                       | 5,285,982  |                                                              |   | 1,520 |   |
| Granted                in 2006                      |   |                                       | 1,052,222  |                                                              |   | ─ |   |
| Forfeited/expired                                   |   |                                       | (523,946   | )                                                                 |   | (1,520 | ) |
| Vested/exercised                                         |   |                                       | (1,563,918 | )                                                                 |   | ─ |   |
| Balance                — December 31, 2006    |   |                                       | 4,250,340  |                                                              |   | ─ |   |
|                                                     |   |                                       |       |                                                              |   |   |   |
| To                vest/exercisable in — 2007  |   |                                       | 2,159,509  |                                                              |   | ─ |   |
| To                vest/exercisable in — 2008  |   |                                       | 1,084,568  |                                                              |   | ─ |   |
| To                vest/exercisable in — 2009  |   |                                       | 1,006,263  |                                                              |   | ─ |   |

| Weighted                average fair value — 2006         |   |   |   |
|-----------------------------------------------------------------|--------|--------|--------|
| Outstanding                — Beginning of year            |   | $      | 19.26  |   |
| Granted                                                    |   | $      | 42.35  |   |
| Forfeited                                                  |   | $      | 17.63  |   |
| Vested                                                          |   | $      | 26.05  |   |
| Outstanding                — End of year                  |   | $      | 23.60  |   |
|                                                            |   |   |   |   |
| Weighted                average fair value of awards granted in |   |   |   |   |
| 2004                                                       |   | $      | 3.49   |   |
| 2005                                                       |   | $      | 20.68  |   |
| 2006                                                       |   | $      | 42.35  |   |

----

----

**23.   ****FAIR      VALUE OF NONDERIVATIVE FINANCIAL INSTRUMENTS**

|                                                                 |   | **December                31, 2006** |    | **December                31, 2005** |   |
|----------------------------------------------------------------------|--------|--------------------------------------|---------|--------------------------------------|--------|
| ** **                                                           |   | **Carrying****Amount**               |    | **Fair****Value**                    |   | **Carrying****Amount** |   | **Fair****Value** |   |
| **On                balance sheet assets (liabilities):**            |   |                                 |    |                                 |   |   |   |   |   |
| Long-term                debt (including current maturities) (a) (b) |   | $                                    | (11,018 | )                                    | $      | (11,308 | ) | $ | (12,479 | ) | $ | (12,891 | ) |
| LESOP                note receivable (see Note 17)                   |   | $                                    | 210     |                                 | $      | 242 |   | $ | 220 |   | $ | 259 |   |
|                                                                 |   |                                 |    |                                 |   |   |   |   |   |   |   |   |   |
| **Off                balance sheet assets (liabilities):**           |   |                                 |    |                                 |   |   |   |   |   |   |   |   |   |
| Financial                guarantees                                  |   | $                                    | — |                                 | $      | (6 | ) | $ | — |   | $ | (8 | ) |

| (a) | Excludes                capital leases.                                                                    |
|-----|------------------------------------------------------------------------------------------------------------|
| (b) | 2005                amounts include stock purchase contracts related to equity-linked                debt. |

----

**24.   SEGMENT      INFORMATION**

----

|                                                                                     |   | **TXU                Energy Holdings** |    | **TXU                Electric ****Delivery                 ** |   | **Corp.                and Other** |   | **Eliminations** |    | **Consolidated** |   |
|------------------------------------------------------------------------------------------|--------|----------------------------------------|---------|-------------------------------------------------------------------------|--------|------------------------------------|--------|------------------|---------|------------------|--------|
| Operating                Revenues                                                        |   |                                   |    |                                                                    |   |                               |   |             |    |             |   |
| 2006                                                                                     |   | $                                      | 9,549   |                                                                    | $      | 2,449                              |   | $                | 49      |             | $      | (1,191 | ) | $ | 10,856 |   |
| 2005                                                                                     |   |                                   | 9,552   |                                                                    |   | 2,394                              |   |             | 30      |             |   | (1,314 | ) |   | 10,662 |   |
| 2004                                                                                     |   |                                   | 8,402   |                                                                    |   | 2,226                              |   |             | 31      |             |   | (1,443 | ) |   | 9,216 |   |
| Regulated                Revenues - Included in OperatingRevenues                        |   |                                   |    |                                                                    |   |                               |   |             |    |             |   |   |   |   |   |   |
| 2006                                                                                     |   |                                   | — |                                                                    |   | 2,449                              |   |             | — |             |   | (1,139 | ) |   | 1,310 |   |
| 2005                                                                                     |   |                                   | — |                                                                    |   | 2,394                              |   |             | — |             |   | (1,278 | ) |   | 1,116 |   |
| 2004                                                                                     |   |                                   | — |                                                                    |   | 2,226                              |   |             | — |             |   | (1,420 | ) |   | 806 |   |
| Affiliated                Revenues - Included in Operating Revenues                      |   |                                   |    |                                                                    |   |                               |   |             |    |             |   |   |   |   |   |   |
| 2006                                                                                     |   |                                   | 8       |                                                                    |   | 1,139                              |   |             | 44      |             |   | (1,191 | ) |   | — |   |
| 2005                                                                                     |   |                                   | 9       |                                                                    |   | 1,278                              |   |             | 27      |             |   | (1,314 | ) |   | — |   |
| 2004                                                                                     |   |                                   | 2       |                                                                    |   | 1,420                              |   |             | 21      |             |   | (1,443 | ) |   | — |   |
| Depreciation                and Amortization                                             |   |                                   |    |                                                                    |   |                               |   |             |    |             |   |   |   |   |   |   |
| 2006                                                                                     |   |                                   | 334     |                                                                    |   | 476                                |   |             | 20      |             |   | — |   |   | 830 |   |
| 2005                                                                                     |   |                                   | 313     |                                                                    |   | 446                                |   |             | 17      |             |   | — |   |   | 776 |   |
| 2004                                                                                     |   |                                   | 350     |                                                                    |   | 389                                |   |             | 21      |             |   | — |   |   | 760 |   |
| Equity                in Earnings (Losses) of Unconsolidated                Subsidiaries |   |                                   |    |                                                                    |   |                               |   |             |    |             |   |   |   |   |   |   |
| 2006                                                                                     |   |                                   | (10     | )                                                                       |   | (4                                 | )      |             | (19     | )                |   | 19 |   |   | (14 | ) |
| 2005                                                                                     |   |                                   | (7      | )                                                                       |   | (3                                 | )      |             | (1      | )                |   | 11 |   |   | — |   |
| 2004                                                                                     |   |                                   | (5      | )                                                                       |   | (2                                 | )      |             | 1       |             |   | 7 |   |   | 1 |   |
| Interest                Income                                                           |   |                                   |    |                                                                    |   |                               |   |             |    |             |   |   |   |   |   |   |
| 2006                                                                                     |   |                                   | 202     |                                                                    |   | 58                                 |   |             | 91      |             |   | (305 | ) |   | 46 |   |
| 2005                                                                                     |   |                                   | 70      |                                                                    |   | 59                                 |   |             | 99      |             |   | (180 | ) |   | 48 |   |
| 2004                                                                                     |   |                                   | 31      |                                                                    |   | 56                                 |   |             | 77      |             |   | (136 | ) |   | 28 |   |
| Interest                Expense and Related Charges                                      |   |                                   |    |                                                                    |   |                               |   |             |    |             |   |   |   |   |   |   |
| 2006                                                                                     |   |                                   | 388     |                                                                    |   | 286                                |   |             | 461     |             |   | (305 | ) |   | 830 |   |
| 2005                                                                                     |   |                                   | 393     |                                                                    |   | 269                                |   |             | 320     |             |   | (180 | ) |   | 802 |   |
| 2004                                                                                     |   |                                   | 353     |                                                                    |   | 280                                |   |             | 198     |             |   | (136 | ) |   | 695 |   |
| Income                Tax Expense (Benefit)                                              |   |                                   |    |                                                                    |   |                               |   |             |    |             |   |   |   |   |   |   |
| 2006                                                                                     |   |                                   | 1,239   |                                                                    |   | 170                                |   |             | (146    | )                |   | — |   |   | 1,263 |   |
| 2005                                                                                     |   |                                   | 687     |                                                                    |   | 174                                |   |             | (229    | )                |   | — |   |   | 632 |   |
| 2004                                                                                     |   |                                   | 162     |                                                                    |   | 116                                |   |             | (236    | )                |   | — |   |   | 42 |   |
| Income                from Continuing Operations                                         |   |                                   |    |                                                                    |   |                               |   |             |    |             |   |   |   |   |   |   |
| Before                Extraordinary Items and Cumulative Effect                          |   |                                   |    |                                                                    |   |                               |   |             |    |             |   |   |   |   |   |   |
| of                Changes in Accounting Principles                                       |   |                                   |    |                                                                    |   |                               |   |             |    |             |   |   |   |   |   |   |
| 2006                                                                                     |   |                                   | 2,363   |                                                                    |   | 344                                |   |             | (242    | )                |   | — |   |   | 2,465 |   |
| 2005                                                                                     |   |                                   | 1,429   |                                                                    |   | 351                                |   |             | (5      | )                |   | — |   |   | 1,775 |   |
| 2004                                                                                     |   |                                   | 408     |                                                                    |   | 255                                |   |             | (582    | )                |   | — |   |   | 81 |   |
| Investment                in Equity Investees                                            |   |                                   |    |                                                                    |   |                               |   |             |    |             |   |   |   |   |   |   |
| 2006                                                                                     |   |                                   | — |                                                                    |   | —                            |   |             | 1       |             |   | — |   |   | 1 |   |
| 2005                                                                                     |   |                                   | — |                                                                    |   | —                            |   |             | — |             |   | — |   |   | — |   |
| Total                Assets (a)                                                          |   |                                   |    |                                                                    |   |                               |   |             |    |             |   |   |   |   |   |   |
| 2006                                                                                     |   |                                   | 18,995  |                                                                    |   | 10,709                             |   |             | 1,676   |             |   | (5,458 | ) |   | 25,922 |   |
| 2005                                                                                     |   |                                   | 17,885  |                                                                    |   | 9,911                              |   |             | 1,717   |             |   | (3,974 | ) |   | 25,539 |   |

----

|                                |   | **TXU                Energy Holdings** |   | **TXU                Electric ****Delivery                 ** |   | **Corp.                and Other** |   | **Eliminations** |   | **Consolidated** |   |
|-------------------------------------|--------|----------------------------------------|--------|-------------------------------------------------------------------------|--------|------------------------------------|--------|------------------|--------|------------------|--------|
| Capital                Expenditures |   |                                   |   |                                                                    |   |                               |   |             |   |             |   |
| 2006                                |   |                                   | 1,330  |                                                                    |   | 840                                |   |             | 10     |             |   | ─ |   |   | 2,180 |   |
| 2005                                |   |                                   | 309    |                                                                    |   | 733                                |   |             | 5      |             |   | ─ |   |   | 1,047 |   |
| 2004                                |   |                                   | 281    |                                                                    |   | 600                                |   |             | 31     |             |   | ─ |   |   | 912 |   |

| (a) | Assets                by segment exclude investments in                affiliates. |
|-----|------------------------------------------------------------------------------------|

----

**25.     SUPPLEMENTARY      FINANCIAL INFORMATION**

***Regulated      Versus Unregulated Operations***
**—**

|                                                                                                           |   | **Year                Ended December 31,** |   |
|----------------------------------------------------------------------------------------------------------------|--------|--------------------------------------------|--------|
| ** **                                                                                                     |   | **2006**                                   |   | **2005** |   | **2004** |   |
| Operating                revenues                                                                              |   |                                       |   |   |   |   |   |
| Regulated                                                                                                 |   | $                                          | 2,449  |   | $ | 2,394 |   | $ | 2,226 |   |
| Unregulated                                                                                               |   |                                       | 9,598  |   |   | 9,582 |   |   | 8,434 |   |
| Intercompany                sales eliminations - regulated                                                |   |                                       | (1,139 | ) |   | (1,278 | ) |   | (1,420 | ) |
| Intercompany                sales eliminations - unregulated                                              |   |                                       | (52    | ) |   | (36 | ) |   | (24 | ) |
| Total                operating revenues                                                                        |   |                                       | 10,856 |   |   | 10,662 |   |   | 9,216 |   |
| Costs                and operating expenses                                                                    |   |                                       |   |   |   |   |   |   |   |   |
| Fuel,                purchased power and delivery fees - unregulated (a)                                  |   |                                       | 2,784  |   |   | 4,261 |   |   | 3,755 |   |
| Operating                costs - regulated                                                                |   |                                       | 770    |   |   | 758 |   |   | 730 |   |
| Operating                costs - unregulated                                                              |   |                                       | 603    |   |   | 667 |   |   | 699 |   |
| Depreciation                and amortization - regulated                                                  |   |                                       | 476    |   |   | 446 |   |   | 389 |   |
| Depreciation                and amortization - unregulated                                                |   |                                       | 354    |   |   | 330 |   |   | 371 |   |
| Selling,                general and administrative expenses - regulated                                   |   |                                       | 172    |   |   | 198 |   |   | 219 |   |
| Selling,                general and administrative expenses - unregulated                                 |   |                                       | 647    |   |   | 583 |   |   | 872 |   |
| Franchise                and revenue-based taxes - regulated                                              |   |                                       | 262    |   |   | 247 |   |   | 248 |   |
| Franchise                and revenue-based taxes - unregulated                                            |   |                                       | 128    |   |   | 117 |   |   | 119 |   |
| Other                income                                                                               |   |                                       | (121   | ) |   | (151 | ) |   | (148 | ) |
| Other                deductions                                                                           |   |                                       | 269    |   |   | 45 |   |   | 1,172 |   |
| Interest                income                                                                            |   |                                       | (46    | ) |   | (48 | ) |   | (28 | ) |
| Interest                expense and other charges                                                         |   |                                       | 830    |   |   | 802 |   |   | 695 |   |
| Total                costs and expenses                                                                        |   |                                       | 7,128  |   |   | 8,255 |   |   | 9,093 |   |
| Income                from continuing operations before income taxes, extraordinary gain                (loss) |   |                                       |   |   |   |   |   |   |   |   |
| and                cumulative effect of changes in accounting principles                                  |   | $                                          | 3,728  |   | $ | 2,407 |   | $ | 123 |   |

| (a) | Includes                unregulated cost of fuel consumed of $927 million in 2006, $968 million                in                2005 and $971 million in 2004. The balance represents energy purchased                for                resale and delivery fees net of intercompany                eliminations. |
|-----|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

*Interest      Expense and Related Charges*
* *

|                                                                                                      |   | **Year                Ended December 31,** |    |
|-----------------------------------------------------------------------------------------------------------|--------|--------------------------------------------|---------|
| ** **                                                                                                |   | **2006**                                   |    | **2005** |   | **2004** |   |
|                                                                                                      |   |                                       |    |   |   |   |   |
| Interest                                                                                        |   | $                                          | 861     |   | $ | 798 |   | $ | 637 |   |
| Distributions                on exchangeable preferred membership interests of                            |   |                                       |    |   |   |   |   |   |   |   |
| TXU                Energy Company (a)                                                                     |   |                                       | ― |   |   | ― |   |   | 22 |   |
| Interest                on long-term debt held by subsidiary trust                                   |   |                                       | ― |   |   | ― |   |   | 19 |   |
| Preferred                stock dividends of subsidiaries                                             |   |                                       | ― |   |   | 3 |   |   | 2 |   |
| Amortization                of debt discounts, premiums and issuance cost                            |   |                                       | 16      |   |   | 18 |   |   | 27 |   |
| Capitalized                interest including debt portion of allowance for borrowed                funds |   |                                       |    |   |   |   |   |   |   |   |
| used                during construction                                                                   |   |                                       | (47     | ) |   | (17 | ) |   | (12 | ) |
| Total                interest expense and related charges                                            |   | $                                          | 830     |   | $ | 802 |   | $ | 695 |   |

| (a) | In                April 2004, TXU Corp. purchased from unaffiliated holders TXU Energy                Company’s preferred membership                interests. |
|-----|----------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

***Restricted      Cash***
**—**

|                                                                |       | **Balance                Sheet Classification** | ** ** |
|---------------------------------------------------------------------|------------|-------------------------------------------------|------------|
| ** **                                                          | ** ** | **At                December 31, 2006**         | ** ** | **At                December 31, 2005** | ** ** |
| ** **                                                          | ** ** | **Current****Assets**                           | ** ** | **Noncurrent****Assets** | ** ** | **Current                Assets** | ** ** | **Noncurrent****Assets** |   |
|                                                                |       |                                            |       |   |   |   |   |   |   |
| Pollution                control revenue bond funds held            |       |                                            |       |   |   |   |   |   |   |
| by                trustee (See Note 15)                             |       | $                                               | ─    |   | $ | 241 |   | $ | ― |   | $ | ― |   |
| Amounts                related to securitization (transition) bonds |       |                                            | 55         |   |   | 17 |   |   | 46 |   |   | 13 |   |
| All                other                                       |       |                                            | 3          |   |   | ─ |   |   | 8 |   |   | 3 |   |
| Total                restricted cash                                |       | $                                               | 58         |   | $ | 258 |   | $ | 54 |   | $ | 16 |   |

***Inventories      by Major Category***

|                                                                      |   | **December                31,** |   |
|---------------------------------------------------------------------------|--------|---------------------------------|--------|
| ** **                                                                |   | **2006**                        |   | **2005** |   |
| Materials                and supplies                                |   | $                               | 189    |   | $ | 163 |   |
| Fuel                stock                                            |   |                            | 94     |   |   | 81 |   |
| Natural                gas in storage                                |   |                            | 75     |   |   | 99 |   |
| Environmental                energy credits and emission allowances  |   |                            | 25     |   |   | 21 |   |
| Total                inventories                                          |   | $                               | 383    |   | $ | 364 |   |

***Property,      Plant and Equipment*—**

|                                                                                              |   | **December                31,** |   |
|---------------------------------------------------------------------------------------------------|--------|---------------------------------|--------|
| ** **                                                                                        |   | **2006**                        |   | **2005** |   |
| TXU                Energy Holdings:                                                               |   |                            |   |   |   |
| Generation                                                                                        |   | $                               | 15,926 |   | $ | 15,887 |   |
| Nuclear                fuel (net of accumulated amortization of $1,123 and                $1,058) |   |                            | 159    |   |   | 115 |   |
| Other                assets                                                                       |   |                            | 402    |   |   | 389 |   |
| TXU                Electric Delivery:                                                             |   |                            |   |   |   |   |   |
| Transmission                                                                                      |   |                            | 3,179  |   |   | 2,829 |   |
| Distribution                                                                                      |   |                            | 7,788  |   |   | 7,384 |   |
| Other                assets                                                                       |   |                            | 415    |   |   | 401 |   |
| Corporate                and Other                                                           |   |                            | 466    |   |   | 465 |   |
| Total                                                                                             |   |                            | 28,335 |   |   | 27,470 |   |
| Less                accumulated depreciation                                                 |   |                            | 11,319 |   |   | 10,804 |   |
| Net                of accumulated depreciation                                                    |   |                            | 17,016 |   |   | 16,666 |   |
| Construction                work in progress:                                                     |   |                            |   |   |   |   |   |
| TXU                Energy Holdings (includes $1,070 related to DevCo)                             |   |                            | 1,607  |   |   | 401 |   |
| TXU                Electric Delivery                                                              |   |                            | 123    |   |   | 106 |   |
| Corporate                and Other                                                                |   |                            | 10     |   |   | 19 |   |
| Total                construction work in progress                                                |   |                            | 1,740  |   |   | 526 |   |
| Property,                plant and equipment — net                                          |   | $                               | 18,756 |   | $ | 17,192 |   |

----

***Asset      Retirement Obligations***

| Asset                retirement liability at December 31, 2005            |   | $      | 558    |   |
|--------------------------------------------------------------------------------|--------|--------|--------|--------|
| Additions:                                                                     |   |   |   |   |
| Accretion                                                                 |   |   | 36     |   |
| Incremental                mining reclamation costs                       |   |   | 21     |   |
| Reductions:                                                                    |   |   |   |   |
| Net                change in mining land reclamation estimated liability  |   |   | (4     | )      |
| Mining                reclamation payments                                |   |   | (26    | )      |
| Asset                retirement liability at December 31, 2006            |   | $      | 585    |   |

***Intangible      Assets***

|                                                              |       | **As                of December 31, 2006** | ** ** | **As                of December 31, 2005** | ** ** |
|-------------------------------------------------------------------|------------|--------------------------------------------|------------|--------------------------------------------|------------|
| ** **                                                        | ** ** | **Gross**                                  | ** ** | ** **                                 | ** ** | ** ** | ** ** | **Gross** | ** ** | ** ** | ** ** | ** ** | ** ** |
| ** **                                                        | ** ** | **Carrying**                               | ** ** | **Accumulated**                            | ** ** | ** ** | ** ** | **Carrying** | ** ** | **Accumulated** | ** ** | ** ** | ** ** |
| ** **                                                        | ** ** | **Amount**                                 | ** ** | **Amortization**                           | ** ** | **Net** | ** ** | **Amount** | ** ** | **Amortization** | ** ** | **Net** |   |
| Intangible                assets subject to amortization included |       |                                       |       |                                       |       |   |   |   |   |   |   |   |   |
| in                property, plant and equipment:                  |       |                                       |       |                                       |       |   |   |   |   |   |   |   |   |
| Capitalized                software placed in service             |       | $                                          | 423        |                                       | $          | 339 |   | $ | 84 |   | $ | 386 |   | $ | 314 |   | $ | 72 |   |
| Land                easements                                     |       |                                       | 180        |                                       |       | 65 |   |   | 115 |   |   | 178 |   |   | 63 |   |   | 115 |   |
| Mineral                rights and other                           |       |                                       | 31         |                                       |       | 25 |   |   | 6 |   |   | 31 |   |   | 24 |   |   | 7 |   |
| Total                                                             |       | $                                          | 634        |                                       | $          | 429 |   | $ | 205 |   | $ | 595 |   | $ | 401 |   | $ | 194 |   |

| **Year** |   |   |   |
|----------|--------|--------|--------|
|     |   |   |   |
| 2007     |   | $      | 29     |   |
| 2008     |   |   | 27     |   |
| 2009     |   |   | 21     |   |
| 2010     |   |   | 11     |   |
| 2011     |   |   | 7      |   |

----

***Regulatory      Assets and Liabilities** *—**

|                                                                                      |   | **December                31,** |    |
|-------------------------------------------------------------------------------------------|--------|---------------------------------|---------|
| ** **                                                                                |   | **2006**                        |    | **2005** |   |
| **Regulatory                Assets**                                                      |   |                            |    |   |   |
| Generation-related                regulatory assets securitized by transition bonds  |   | $                               | 1,316   |   | $ | 1,461 |   |
| Securities                reacquisition costs                                        |   |                            | 112     |   |   | 119 |   |
| Recoverable                deferred income taxes — net                         |   |                            | 90      |   |   | 107 |   |
| Storm-related                service recovery costs                                  |   |                            | 138     |   |   | 110 |   |
| Employee                retirement costs                                             |   |                            | 461     |   |   | 89 |   |
| Nuclear                decommissioning cost under-recovery                           |   |                            | ─ |   |   | 8 |   |
| Employee                severance costs                                              |   |                            | 44      |   |   | 33 |   |
| Total                regulatory assets                                               |   |                            | 2,161   |   |   | 1,927 |   |
|                                                                                      |   |                            |    |   |   |   |   |
| **Regulatory                Liabilities**                                                 |   |                            |    |   |   |   |   |
| Investment                tax credit and protected excess deferred taxes             |   |                            | 63      |   |   | 71 |   |
| Over-collection                of securitization (transition) bond revenues          |   |                            | 34      |   |   | 28 |   |
| Nuclear                decommissioning cost over-recovery                            |   |                            | 17      |   |   | ─ |   |
| Other                regulatory liabilities                                          |   |                            | 19      |   |   | 2 |   |
| Total                regulatory liabilities                                          |   |                            | 133     |   |   | 101 |   |
|                                                                                      |   |                            |    |   |   |   |   |
| Net                regulatory assets                                                      |   | $                               | 2,028   |   | $ | 1,826 |   |

***Severance      Liability Related to Strategic Initiatives*—**

|                                                                       |   | **TXU**      |   | **TXU**      |   | ** **                     |   | ** ** |    |
|----------------------------------------------------------------------------|--------|--------------|--------|--------------|--------|--------------------------------|--------|------------|---------|
| ** **                                                                 |   | **Energy**   |   | **Electric** |   | **Corp.**                      |   | ** ** |    |
| ** **                                                                 |   | **Holdings** |   | **Delivery** |   | **&                Other** |   | **Total**  |    |
|                                                                       |   |         |   |         |   |                           |   |       |    |
| Liability                for severance costs as of January 1, 2005         |   | $            | 42     |         | $      | 12                             |   | $          | 1       |   | $ | 55 |   |
| Additions                to liability                                      |   |         | 4      |         |   | ─                        |   |       | 1       |   |   | 5 |   |
| Payments                charged against liability                          |   |         | (22    | )            |   | (8                             | )      |       | (2      | ) |   | (32 | ) |
| Other                adjustments to the liability                          |   |         | (6     | )            |   | ─                        |   |       | ─ |   |   | (6 | ) |
| Liability                for severance costs as of December 31, 2005  |   |         | 18     |         |   | 4                              |   |       | ─ |   |   | 22 |   |
| Additions                to liability (a)                                  |   |         | 8      |         |   | 8                              |   |       | ─ |   |   | 16 |   |
| Payments                charged against liability                          |   |         | (24    | )            |   | (10                            | )      |       | ─ |   |   | (34 | ) |
| Other                adjustments to the liability                          |   |         | (1     | )            |   | (1                             | )      |       | ─ |   |   | (2 | ) |
| Liability                for severance costs as of December 31, 2006  |   | $            | 1      |         | $      | 1                              |   | $          | ─ |   | $ | 2 |   |

|   | (a) | TXU                Energy Company and TXU Electric Delivery additions to liability are                both                related to services agreements entered into with certain providers.                TXU                Electric Delivery amount was recorded with an offset to a regulatory                asset. |
|--------|-----|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | (b) | The                table above excludes severance capitalized as a regulatory asset                or                included in discontinued                operations. |
|--------|-----|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

***Supplemental      Cash Flow Information** *—**

|                                                                        |   | **Year                Ended December 31,** |    |
|-----------------------------------------------------------------------------|--------|--------------------------------------------|---------|
| ** **                                                                  |   | **2006**                                   |    | **2005** |   | **2004** |   |
| Cash                payments (receipts) related to continuing operations:   |   |                                       |    |   |   |   |   |
| Interest                (net of amounts capitalized)                   |   | $                                          | 823     |   | $ | 774 |   | $ | 695 |   |
| Income                taxes                                       |   | $                                          | 220     |   | $ | 89 |   | $ | 15 |   |
| Cash                payments (receipts) related to discontinued operations: |   |                                       |    |   |   |   |   |   |   |   |
| Interest                (net of amounts capitalized)                   |   | $                                          | ― |   | $ | ― |   | $ | 106 |   |
| Income                taxes                                       |   | $                                          | ― |   | $ | 30 |   | $ | 69 |   |
| Noncash                investing and financing activities:                  |   |                                       |    |   |   |   |   |   |   |   |
| Noncash                construction expenditures (a)                   |   | $                                          | 228     |   | $ | 61 |   | $ | 76 |   |
| Generation                plant rail spur capital lease                |   | $                                          | ― |   | $ | 95 |   | $ | ― |   |
| Consolidation                of lease trust:                                |   |                                       |    |   |   |   |   |   |   |   |
| Increase                in assets                                      |   | $                                          | ― |   | $ | 35 |   | $ | ─ |   |
| Increase                in debt                                        |   | $                                          | ― |   | $ | 96 |   | $ | ─ |   |

----

***Quarterly      Information (unaudited)***
* *
* *

|                                                                                  |   | **Quarter                Ended** |   |
|---------------------------------------------------------------------------------------|--------|----------------------------------|--------|
| ** **                                                                            |   | **March                31**      |   | **June                30** |   | **Sept.                30** |   | **Dec.                31** |   |
| **2006:**                                                                             |   |                             |   |   |   |   |   |   |   |
| Operating                revenues                                                |   | $                                | 2,304  |   | $ | 2,667 |   | $ | 3,510 |   | $ | 2,375 |   |
| Net                income from continuing operations available for common stock  |   |                             | 516    |   |   | 497 |   |   | 984 |   |   | 469 |   |
| Income                from discontinued operations, net of tax effect            |   |                             | 60     |   |   | ─ |   |   | 20 |   |   | 6 |   |
| Net                income available for common stock                             |   | $                                | 576    |   | $ | 497 |   | $ | 1,004 |   | $ | 475 |   |
| Per                share of common stock - Basic:                                     |   |                             |   |   |   |   |   |   |   |   |   |   |   |
| Net                income from continuing operations available for common stock  |   | $                                | 1.11   |   | $ | 1.08 |   | $ | 2.15 |   | $ | 1.03 |   |
| Discontinued                operations, net of tax effect                        |   |                             | 0.13   |   |   | ─ |   |   | 0.04 |   |   | 0.01 |   |
| Net                income available for common stock                             |   | $                                | 1.24   |   | $ | 1.08 |   | $ | 2.19 |   | $ | 1.04 |   |
| Per                share of common stock - Diluted:                                   |   |                             |   |   |   |   |   |   |   |   |   |   |   |
| Net                income from continuing operations available for common stock  |   | $                                | 1.09   |   | $ | 1.07 |   | $ | 2.11 |   | $ | 1.02 |   |
| Discontinued                operations, net of tax effect                        |   |                             | 0.13   |   |   | ─ |   |   | 0.04 |   |   | 0.01 |   |
| Net                income available for common stock                             |   | $                                | 1.22   |   | $ | 1.07 |   | $ | 2.15 |   | $ | 1.03 |   |

----

|                                                                                                                                                                   |   | **Quarter                Ended** |    |
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|----------------------------------|---------|
| ** **                                                                                                                                                             |   | **March                31**      |    | **June                30** |   | **Sept.                30** |   | **Dec.                31** |   |
| **2005:**                                                                                                                                                              |   |                             |    |   |   |   |   |   |   |
| Operating                revenues                                                                                                                                 |   | $                                | 2,058   |   | $ | 2,535 |   | $ | 3,314 |   | $ | 2,755 |   |
| Income                from continuing operations before extraordinary loss and cumulative                effect                of change in accounting principle  |   |                             | 405     |   |   | 383 |   |   | 571 |   |   | 414 |   |
| Preference                stock dividends                                                                                                                         |   |                             | 5       |   |   | 4 |   |   | ─ |   |   | ─ |   |
| Net                income available to common stock from continuing operations                                                                                    |   |                             | 400     |   |   | 379 |   |   | 571 |   |   | 414 |   |
| Income                (loss) from discontinued operations, net of tax effect                                                                                      |   |                             | 16      |   |   | (4 | ) |   | (6 | ) |   | ─ |   |
| Extraordinary                loss, net of tax effect                                                                                                              |   |                             | ─ |   |   | ─ |   |   | ─ |   |   | (50 | ) |
| Cumulative                effect of change in accounting principle, net of tax effect                                                                             |   |                             | ─ |   |   | ─ |   |   | ─ |   |   | (8 | ) |
| Net                income available for common stock                                                                                                              |   | $                                | 416     |   | $ | 375 |   | $ | 565 |   | $ | 356 |   |
| Per                share of common stock - Basic:                                                                                                                      |   |                             |    |   |   |   |   |   |   |   |   |   |   |
| Net                income available to common stock from continuing operations                                                                                    |   | $                                | 0.85    |   | $ | 0.80 |   | $ | 1.19 |   | $ | 0.87 |   |
| Income                (loss) from discontinued operations, net of tax effect                                                                                      |   |                             | 0.03    |   |   | (0.01 | ) |   | (0.01 | ) |   | ─ |   |
| Extraordinary                loss, net of tax effect                                                                                                              |   |                             | ─ |   |   | ─ |   |   | ─ |   |   | (0.10 | ) |
| Cumulative                effect of change in accounting principle, net of tax effect                                                                             |   |                             | ─ |   |   | ─ |   |   | ─ |   |   | (0.02 | ) |
| Net                income available for common stock                                                                                                              |   | $                                | 0.88    |   | $ | 0.79 |   | $ | 1.18 |   | $ | 0.75 |   |
| Per                share of common stock - Diluted:                                                                                                                    |   |                             |    |   |   |   |   |   |   |   |   |   |   |
| Net                income (loss) available to common stock from continuing                operations                                                              |   | $                                | (0.13   | ) | $ | 0.71 |   | $ | 1.17 |   | $ | 0.86 |   |
| Income                (loss) from discontinued operations, net of tax effect                                                                                      |   |                             | 0.03    |   |   | (0.01 | ) |   | (0.01 | ) |   | ─ |   |
| Extraordinary                loss, net of tax effect                                                                                                              |   |                             | ─ |   |   | ─ |   |   | ─ |   |   | (0.10 | ) |
| Cumulative                effect of change in accounting principle, net of tax effect                                                                             |   |                             | ─ |   |   | ─ |   |   | ─ |   |   | (0.02 | ) |
| Net                income (loss) available for common stock                                                                                                       |   | $                                | (0.10   | ) | $ | 0.70 |   | $ | 1.16 |   | $ | 0.74 |   |

----

**26.   SUBSEQUENT        EVENTS**

** **

----

----

| **Exhibits** | **Previously                Filed* With File****Number**                                                          | **As****Exhibit** |    |                                                                                                                                                                                                                                                                                                                                                  |
|--------------|-------------------------------------------------------------------------------------------------------------------|-------------------|---------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|         |                                                                                                              |
| **(2)**      | **Plan                of Purchase, Sale, Reorganization, Arrangement, Liquidation, or                Succession** |
| 2(a)         | 1-12833                Form                8-K (filed                February 26, 2007)                           | 2.1               | — | Agreement                and Plan of Merger, dated February 25, 2007, by and among TXU Corp.,                Texas Energy Future Holdings Limited Partnership and Texas Energy                Future                Merger Sub Corp                                                                                                              |
| **(3(i))**   | **Articles                of Incorporation.**                                                                     |
| 3(a)         | 1-12833                Form                8-K (filed                May 19, 2006)                                | 3.1               | — | Restated                Certificate of Formation of TXU Corp., dated May 19,                2006                                                                                                                                                                                                                                                      |
| (3(ii))      | By-laws.                                                                                                          |
| 3(b)         | 1-12833                Form                8-K (filed                December 27, 2006)                           | 3.1               | — | Restated                Bylaws of TXU Corp., effective December 20, 2006.                                                                                                                                                                                                                                                                             |
| **(4)**      | **Instruments                Defining the Rights of Security Holders, Including                Indentures.****    |
|         | TXU                Corp.                                                                                          |
| 4(a)         | 1-12833                Form                10-K (1997)(filed                March 27, 1998)                       | 4(ff)             | — | Indenture,                dated as of January 1, 1998, relating to TXU Corp.’s 6.375% Series C                Exchange Notes.                                                                                                                                                                                                                   |
| 4(b)         | 1-12833                Form                10-K (1997)(filed                March 27, 1998)                       | 4(hh)             | — | Officer’s                Certificate establishing the terms of TXU Corp.’s Series C Exchange                Notes.                                                                                                                                                                                                                        |
| 4(c)         | 333-110125Form                S-3 (filed October 31, 2003)                                                        | 4(g)              | — | Indenture                (For Unsecured Debt Securities Series N), dated as of July 1, 2003,                between TXU Corp. and The Bank of New York, as trustee.                                                                                                                                                                                   |
| 4(d)         | 333-110125Form                S-3 (filed October 31, 2003)                                                        | 4(h)              | — | Officer’s                Certificate, dated July 15, 2003, establishing the terms of the Floating                Rate Convertible Senior Notes due 2033.                                                                                                                                                                                        |
| 4(e)         | 1-12833                Form 10-K (2005) (filed March 16, 2005)                                                    | 4(o)              | — | Indenture                (For Unsecured Debt Securities Series O), dated as of November 1,                2004,                between TXU Corp. and The Bank of New York. TXU Corp.’s Indentures for its                Series P, Q and R Senior Notes are not being filed as they are                substantially similar to this Indenture. |
| 4(f)         | 1-12833                Form 10-K (2005) (filed March 16, 2005)                                                    | 4(p)              | — | Officers’                Certificate, dated November 26, 2004, establishing the terms of TXU                Corp.’s 4.80% Series O Senior Notes due November 15,                2009.                                                                                                                                                     |
| 4(g)         | 1-12833                Form 10-K (2005) (filed March 16, 2005)                                                    | 4(q)              | — | Officers’                Certificate, dated November 26, 2004, establishing the terms of TXU                Corp.’s 5.55% Series P Senior Notes due November 15,                2014.                                                                                                                                                     |

----

| **Exhibits** | **Previously                Filed* With File****Number**                                     | **As****Exhibit** | ** ** |                                                                                                                                                                                                                                                                                                                            |
|--------------|----------------------------------------------------------------------------------------------|-------------------|------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| 4(h)         | 1-12833                Form 10-K (2005) (filed March 16, 2005)                               | 4(r)              | —    | Officers’                Certificate, dated November 26, 2004, establishing the terms of TXU                Corp.’s 6.50% Series Q Senior Notes due November 15,                2024.                                                                                                                               |
| 4(i)         | 1-12833                Form 10-K (2005) (filed March 16, 2005)                               | 4(s)              | —    | Officers’                Certificate, dated November 26, 2004, establishing the terms of TXU                Corp.’s 6.55% Series R Senior Notes due November 15,                2034.                                                                                                                               |
|         | TXU                Electric Delivery Company                                                 |
| 4(j)         | 333-100240Form                S-4(filed                October 2, 2002)                      | 4(a)              | —    | Indenture                and Deed of Trust, dated as of May 1, 2002, between TXU Electric                Delivery                Company and The Bank of New York, as Trustee.                                                                                                                                                  |
| 4(k)         | 1-12833                Form                8-K (filed October 31, 2005)                      | 10.1              | —    | Supplemental                Indenture No. 1, dated October 25, 2005, to Indenture and Deed of                Trust,                dated as of May 1, 2002, between TXU Electric Delivery Company and                The                Bank of New York.                                                                       |
| 4(l)         | 333-100240Form                S-4 (filed                October 2, 2002)                     | 4(b)              | —    | Officer’s                Certificate, dated May 6, 2002, establishing the terms of TXU Electric                Delivery Company’s 6.375% Senior Notes (formerly Senior Secured Notes) due                2012 and 7.000% Senior Notes (formerly Senior Secured Notes) due                2032.                      |
| 4(m)         | 333-106894Form                S-4(filed                July 9, 2003)                         | 4(c)              | —    | Officer’s                Certificate, dated December 20, 2002, establishing the terms of TXU                Electric Delivery Company’s 6.375% Senior Notes (formerly Senior Secured                Notes) due 2015 and 7.250% Senior Notes (formerly Senior Secured                Notes)                due 2033. |
| 4(n)         | 333-100242Form                S-4 (filed                October 2, 2002)                     | 4(a)              | —    | Indenture                (for Unsecured Debt Securities), dated as of August 1, 2002, between                TXU                Electric Delivery Company and The Bank of New York, as                Trustee.                                                                                                                  |
| 4(o)         | 333-100242Form                S-4 (filed                October 2, 2002)                     | 4(b)              | —    | Officer’s                Certificate, dated August 30, 2002, establishing the terms of TXU                Electric                Delivery Company’s 5% Debentures due 2007 and 7% Debentures due                2022.                                                                                              |
|         | TXU                Energy Company LLC                                                        |              |       |
| 4(p)         | 333-108876Form                S-4(filed                September 17, 2003)                   | 4(a)              | —    | Indenture                (For Unsecured Debt Securities), dated as of March 1, 2003, between                TXU                Energy Company LLC and The Bank of New York.                                                                                                                                                     |
| 4(q)         | 333-108876Form                S-4(filed                September 17, 2003)                   | 4(b)              | —    | Officer’s                Certificate, dated March 11, 2003, establishing the terms of TXU                Energy                Company’s 6.125% Senior Notes due 2008 and 7.000% Senior Notes due                2013.                                                                                              |
| **(10)**     | **Material                Contracts.**                                                       |
|         | Management                Contracts.                                                         |
| 10(a)        | 1-12833                Form                10-K (2003)                (filed March 15, 2004) | 10(j)             | —    | Employment                Agreement, dated February 21, 2004, by and between C. John Wilder                and TXU                Corp.                                                                                                                                                                                         |

----

| **Exhibits** | **Previously                Filed* With File****Number**                                                          | **As****Exhibit** | ** ** |                                                                                                                                                           |
|--------------|-------------------------------------------------------------------------------------------------------------------|-------------------|------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------|
| 10(b)        | 1-12833                Form                8-K (filed June 24, 2005)                                              | 10.1              | —    | First                Amendment, dated June 21, 2005, to the Employment Agreement, dated                February 21, 2004, between C. John Wilder and TXU Corp. |
| 10(c)        | 1-12833                Form                8-K (filed August 18, 2005)                                            | 10.2              | —    | Employment                Agreement, dated October 11, 2004, by and between TXU Energy Company                LLC                and James Burke.              |
| 10(d)        | 1-12833                Form                10-K (2004)                (filed March 16, 2005)                      | 10(l)             | —    | Employment                Agreement, dated May 14, 2004, by and between David Campbell and                TXU                Corp.                             |
| 10(e)        | 1-12833                Form                10-Q (Quarter                ended March 31, 2006) (filed May 5, 2006) | 10(a)             | —    | Election                of David P. Poole as Executive Vice President and General Counsel                of TXU                Corp.                           |
| 10(f)        | 1-12833                Form                10-Q (Quarter                ended March 31, 2006) (filed May 5, 2006) | 10(b)             | —    | Employment                Agreement of David P. Poole, Executive Vice President and General                Counsel                of TXU Corp.                 |
| 10(g)        |                                                                                                              |              | —    | Employment                Agreement, dated August 2, 2004, by and between Jonathan A. Siegler                and                TXU Corp.                      |
| 10(h)        |                                                                                                              |              | —    | Summary                of Additional Employment Arrangements between Jonathan A. Siegler                and TXU                Corp.                           |
| 10(i)        |                                                                                                              |              | —    | Summary                of Employment Arrangement between T.L. Baker and TXU                Corp.                                                               |
| 10(j)        |                                                                                                              |              | —    | Summary                of Employment Arrangement between M. Rizwan Chand and TXU                Corp.                                                          |
| 10(k)        |                                                                                                              |              | —    | Summary                of Employment Arrangement between Michael P. Childers and TXU                Corp.                                                      |
| 10(l)        |                                                                                                              |              | —    | Summary                of Employment Arrangement between Mike Greene and TXU                Corp.                                                              |
| 10(m)        |                                                                                                              |              | —    | Summary                of Employment Arrangement between Mike McCall and TXU Energy                Company.                                                    |
| 10(n)        |                                                                                                              |              | —    | Summary                of Employment Arrangement between Charles R. Enze and TXU                Corp.                                                          |
| 10(o)        |                                                                                                              |              | —    | Summary                of Consulting Arrangement between Kirk Oliver and TXU                Corp.                                                              |
| 10(p)        | 1-12833                Form                8-K (filed February 22, 2006)                                          | 10.6              | —    | Determination                of the Organization and Compensation Committee of the Board of Directors                of TXU Corp., dated February 15, 2006     |
| 10(q)        | 1-12833                Form                8-K (filed April 6, 2006)                                              | 10.1              | —    | Form                of Non-Disclosure, Non-Solicitation and Non-Competition                Agreement                                                           |

----

| **Exhibits** | **Previously                Filed* With File****Number**                     | **As****Exhibit** |    |                                                                                                                                                                         |
|--------------|------------------------------------------------------------------------------|-------------------|---------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|         | Benefit                Plans.                                                |
| 10(r)        | 1-12833                Form                8-K (filed May 19, 2006)          | 10.1              | — | TXU                Corp. Non-employee Director Compensation Arrangements                                                                                                     |
| 10(s)        | 1-12833                Form                8-K (filed May 19, 2006)          | 10.2              | — | TXU                Deferred Compensation Plan for Outside Directors, as amended and                restated,                dated May 18, 2006.                              |
| 10(t)        | 1-12833                Form                8-K (filed February 22, 2006)     | 10.2              | — | TXU                Deferred and Incentive Compensation Plan, as amended and restated,                dated                February 16, 2006.                                 |
| 10(u)        |                                                                         |              | — | TXU                Executive Annual Incentive Plan, as amended and restated, executed                December 29, 2006 to be effective as of January 1,                2006. |
| 10(v)        | 1-12833                Form                10-K (2005) (filed March 6, 2006) | 10(r)             | — | TXU                Corp. 2005 Omnibus Incentive Plan, as amended and restated, effective                as                of February 16, 2006.                              |
| 10(w)        | 1-12833                Form                8-K (filed February 22, 2006)     | 10.1              | — | TXU                Salary Deferral Program, as amended and restated, dated February                16,                2006.                                                  |
| 10(x)        | 1-12833                Form                8-K (filed February 22, 2006)     | 10.4              | — | TXU                Deferred Compensation Plan for Directors of Subsidiaries, as amended                and                restated, dated February 16, 2006.                 |
| 10(y)        | 1-12833Form                10-K(2002)                (filed March 12, 2003)  | 10(e)             | — | TXU                Long-Term Incentive Compensation Plan, as amended and restated, effective                May 10, 2002 (“LTICP”).                              |
| 10(z)        | 1-12833Form                8-K (filed January 6, 2005)                       | 10.1.1            | — | Form                of Performance Unit Award Agreement, by and between TXU Corp. and                LTICP                Participant (“Unit Award Agreement”).  |
| 10(aa)       | 1-12833Form                8-K (filed January 6, 2005)                       | 10.1.2            | — | Form                of Amendment to Unit Award Agreement, dated December 31, 2004, by                and                between TXU Corp. and LTICP Participant.             |
| 10(bb)       | 1-12833Form                8-K (filed January 6, 2005)                       | 10.1.3            | — | Form                of Addendum to Unit Award Agreement, by and between TXU Corp. and                LTICP                Participant.                                       |
| 10(cc)       | 1-12833Form                8-K (filed January 6, 2005)                       | 10.2              | — | Form                of Restricted Stock Award Agreement, by and between TXU Corp. and                LTICP                Participant (Performance-Based).                   |
| 10(dd)       | 1-12833Form                8-K (filed January 6, 2005)                       | 10.3              | — | Form                of Restricted Stock Award Agreement, by and between TXU Corp. and                LTICP                Participant (Chairman Agreement).                  |
| 10(ee)       | 1-12833Form                8-K (filed January 6, 2005)                       | 10.4              | — | Form                of Restricted Stock Award Agreement, by and between TXU Corp. and                LTICP                Participant (Time-Based).                          |

----

| **Exhibits** | **Previously                Filed* With File****Number**                                                   | **As****Exhibit** |    |                                                                                                                                                                                                                                                                                                                                                                                                                               |
|--------------|------------------------------------------------------------------------------------------------------------|-------------------|---------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| 10(ff)       | 1-12833Form                8-K (filed June 16, 2006)                                                       | 10.1              | — | Form                of Amended and Restated Performance Unit Award Agreement, by and                between                TXU Corp. and Participant (Unit Award: adjusted 0% to                175%)                                                                                                                                                                                                                              |
| 10(gg)       | 1-12833Form                8-K (filed May 23, 2005)                                                        | 10.2              | — | Form                of Amended and Restated Performance Unit Award Agreement, by and                between                TXU Corp. and Participant (Unit I Award: adjusted 0% to                200%)                                                                                                                                                                                                                            |
| 10(hh)       | 1-12833Form                8-K (filed May 23, 2005)                                                        | 10.4              | — | Performance                Unit Award Agreement, by and between TXU Corp. and C. John                Wilder.                                                                                                                                                                                                                                                                                                                       |
| 10(ii)       | 1-12833Form                8-K (filed June 16, 2006)                                                       | 10.3              | — | Form                of Performance Unit Award Agreement, by and between TXU Corp. and                Participant (Unit I Award).                                                                                                                                                                                                                                                                                                   |
| 10(jj)       | 1-12833Form                8-K (filed June 16, 2006)                                                       | 10.4              | — | Form                of Performance Unit Award Agreement, by and between TXU Corp. and                Participant (Unit II Award).                                                                                                                                                                                                                                                                                                  |
| 10(kk)       | 1-12833Form                8-K (filed June 16, 2006)                                                       | 10.5              | — | Form                of Performance Unit Award Agreement, by and between TXU Corp. and                Participant (Unit III Award).                                                                                                                                                                                                                                                                                                 |
| 10ll)        | 1-12833Form                8-K (filed May 23, 2005)                                                        | 10.7              | — | TXU                Corp. 2005 Executive Severance Plan.                                                                                                                                                                                                                                                                                                                                                                            |
| 10(mm)       | 1-12833Form                8-K (filed May 23, 2005)                                                        | 10.6              | — | TXU                Corp. Executive Change in Control Policy.                                                                                                                                                                                                                                                                                                                                                                       |
| 10(nn)       | 1-12833                Form                10-K (2005) (filed March 6, 2006)                               | 10(gg)            | — | TXU                Split Dollar Life Insurance Program, as amended and restated, executed                March 2, 2006, effective as of May 20, 2005.                                                                                                                                                                                                                                                                              |
| 10(oo)       | 1-12833                Form                8-K (filed February 22, 2006)                                   | 10.5              | — | TXU                Second Supplemental Retirement Plan, as amended and restated, dated                February 16, 2006.                                                                                                                                                                                                                                                                                                           |
|         | Credit                Agreements.                                                                          |
| 10(pp)       | 1-12833Form                8-K(filed                April 1, 2005)                                         | 10(a)             | — | $3.5                billion Amended and Restated Credit Agreement, dated March 31, 2005,                by                and among TXU Energy Company LLC and TXU Electric Delivery Company                and                JPMorgan Chase Bank, N.A., Citibank, N.A., Wachovia Bank, National                Association, Bank of America N.A., Calyon New York Branch and certain                other lenders party thereto. |
| 10(qq)       | 1-12833Form                10-Q (Quarter                ended September 30, 2004) (filed November 5, 2004) | 10(c)             | — | $500                million Credit Agreement, dated as of November 4, 2004, between TXU                Energy                Company LLC and Wachovia Bank, National                Association.                                                                                                                                                                                                                                   |

----

| **Exhibits** | **Previously                Filed* With File****Number**                                                  | **As****Exhibit** | ** ** |                                                                                                                                                                                                                                                                                                                                                                                                                                             |
|--------------|-----------------------------------------------------------------------------------------------------------|-------------------|------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| 10(rr)       | 1-2833                Form 8-K (filed August 18, 2005)                                                    | 10.1              | —    | $1.0                billion Revolving Credit Agreement, dated August 12, 2005, by and                among                TXU Electric Delivery Company, TXU Energy Company LLC, Citibank,                N.A.,                JPMorgan Chase Bank, N.A., Calyon New York Branch, Deutsche Bank                AG New                York Branch and Wachovia Bank, National Association and certain other                lenders party thereto. |
|         | Other                Material Contracts.                                                                  |
|         |                                                                                                      |              |       |                                                                                                                                                                                                                                                                                                                                                                                                                                             |
| 10(ss)       | 1-12833Form                10-Q(Quarter                ended June 30, 2004) (filed August 6, 2004)        | 10(k)             | —    | Agreement                and Plan of Merger by and between TXU Gas Company and Atmos Energy                Corporation, dated June 17, 2004.                                                                                                                                                                                                                                                                                                     |
| 10(tt)       | 1-12833Form                10-Q(Quarter                ended September 30, 2004) (filed November 5, 2004) | 10(a)             | —    | Guaranty,                dated October 1, 2004, from TXU Corp. to Atmos Energy                Corporation.                                                                                                                                                                                                                                                                                                                                       |
| 10(uu)       | 1-12833Form                10-Q(Quarter                ended June 30, 2004) (filed August 6, 2004)        | 10(l)             | —    | Master                Framework Agreement, dated May 17, 2004, by and between TXU Electric                Delivery Company and CapGemini Energy LP.                                                                                                                                                                                                                                                                                              |
| 10(vv)       | 1-12833Form                10-Q(Quarter                ended June 30, 2004) (filed August 6, 2004)        | 10(m)             | —    | Master                Framework Agreement, dated May 17, 2004, by and between TXU Energy                Company                LLC and CapGemini Energy LP.                                                                                                                                                                                                                                                                                      |
| 10(ww)       | 1-12833Form                10-K (2002)(filed                March 12, 2003)                               | 10(w)             | —    | Stipulation                and Joint Application for Approval of Settlement as approved by the                PUC in                Docket Nos. 21527 and 24892.                                                                                                                                                                                                                                                                                 |
| 10(xx)       | 1-12833                Form                10-K (2005) (filed March 6, 2006)                              | 10(ss)            | —    | Extension                and Modification of Settlement Agreement executed on January 27,                2006, by                and among TXU Electric Delivery Company and Steering Committee of                cities                served by TXU Electric Delivery Company, on behalf of the cities                listed                therein.                                                                                           |
| 10(yy)       | 1-12833                Form                10-K (2005) (filed March 6, 2006)                              | 10(tt)            | —    | Agreement                to Resolve Outstanding Franchise Issues executed on January 27, 2006,                by                and among TXU Electric Delivery Company and Steering Committee of                cities                served by TXU Electric Delivery Company, on behalf of the cities                listed                therein.                                                                                            |
| 10(zz)       | 1-12833                Form                10-K (2003)                (filed March 15, 2004)              | 10(qq)            | —    | Lease                Agreement, dated as of February 14, 2002, between State Street Bank                and                Trust Company of Connecticut, National Association, as owner trustee                of                ZSF/Dallas Tower Trust, a Delaware grantor trust, as Lessor and TXU                Properties Company, a Texas corporation, as Lessee (Energy Plaza                Property).                                   |

----

| **Exhibits** | **Previously                Filed* With File****Number**                                                  | **As****Exhibit** |    |                                                                                                                                                                                                                                                                                                                                |
|--------------|-----------------------------------------------------------------------------------------------------------|-------------------|---------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| 10(aaa)      | 1-12833                Form                10-K (2003)                (filed March 15, 2004)              | 10(rr)            | — | Guaranty                Agreement, dated February 14, 2002, by TXU Corp. in favor of State                Street                Bank and Trust Company of Connecticut, National Association, as owner                trustee of ZSF/Dallas Tower Trust, a Delaware grantor trust, as                Lessor.                         |
| 10(bbb)      | 1-12833                Form                10-K (2003)                (filed March 15, 2004)              | 10(ss)            | — | Additional                Guaranty Agreement, dated November 19, 2002, by TXU Energy Company                LLC in                favor of State Street Bank and Trust Company of Connecticut, National                Association, as owner trustee of ZSF/Dallas Tower Trust, a Delaware                grantor trust, as Lessor. |
| 10(ccc)      | 1-12833                Form                10-K (2004)                (filed March 16, 2005)              | 10(xx)            | — | Settlement                Agreement, dated January 27, 2005, between TXU Corp. and certain                other                parties thereto regarding the settlement of certain claims related                to TXU                Europe.                                                                                      |
| 10(ddd)      | 1-12833                Form                10-K (2004)                (filed March 16, 2005)              | 10(yy)            | — | Memorandum                of Understanding, dated January 20, 2005, regarding the settlement                of                certain shareholder claims made against TXU Corp.                                                                                                                                                     |
| 10(eee)      | 1-12833Form                10-Q(Quarter                ended June 30, 2006) (filed August 7, 2006)        | 10(j)             | — | Master                Framework Agreement by and between TXU Electric Delivery Company                and                InfrastruX Energy Services Group LP, dated June 25,                2006.                                                                                                                                   |
| 10(fff)      | 1-12833Form                10-Q(Quarter                ended June 30, 2006) (filed August 7, 2006)        | 10(l)             | — | Field                Services Agreement by TXU Electric Delivery and InfrastruX Energy                Services                Group LP, dated June 24, 2006.                                                                                                                                                                        |
| 10(ggg)      | 1-12833Form                10-Q(Quarter                ended September 30, 2006) (filed November 9, 2006) | 10(a)             | — | Form                of Purchase Order by and between TXU Generation Development Company                LLC                and The Babcox and Wilcox Company, effective as of June 5, 2006                (confidential treatment has been requested for portions of this                exhibit).                                   |
| 10(hhh)      | 1-12833Form                10-Q(Quarter                ended September 30, 2006) (filed November 9, 2006) | 10(c)             | — | Form                of Purchase Order by and between TXU Generation Development Company                LLC                and Alstom Power Inc., effective as of September 21, 2006 (confidential                treatment has been requested for portions of this                exhibit).                                         |
| 10(iii)      |                                                                                                      |              | — | Amended                and Restated Transaction Confirmation by TXU Generation Development                Company LLC, dated February 2007 (confidential treatment has been                requested for portions of this exhibit).                                                                                                 |
| 10(jjj)      |                                                                                                      |              | — | Transaction                Confirmation by TXU Generation Development Company LLC, dated February                2007 (confidential treatment has been requested for portions of this                exhibit).                                                                                                                      |

----

| **Exhibits** | **Previously                Filed* With File****Number**                                                  | **As****Exhibit** | ** ** |                                                                                                                                                                                                                   |
|--------------|-----------------------------------------------------------------------------------------------------------|-------------------|------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| 10(kkk)      | 1-12833Form                10-Q(Quarter                ended September 30, 2006) (filed November 9, 2006) | 10(d)             | —    | Deed                of Trust, Assignment of Rents, Security Agreement, Financing Statement                and                Fixture Filing, dated as of August 28, 2006, regarding the Big Brown                Lien. |
| **(12)**     | **Statement                Regarding Computation of Ratios.**                                             |
| 12           |                                                                                                      |              | —    | Computation                of Ratio of Earnings to Fixed Charges, and Ratio of Earnings to Combined                Fixed Charges and Preference Dividends.                                                             |
| **(21)**     | **Subsidiaries                of the Registrant.**                                                        |
| 21           |                                                                                                      |              | —    | Subsidiaries                of TXU Corp.                                                                                                                                                                               |
| **(23)**     | **Consents                of Experts.**                                                                   |
| 23(a)        |                                                                                                      |              | —    | Consent                of Deloitte & Touche LLP, Independent Auditors for TXU                Corp.                                                                                                                 |
| **(31)**     | **Rule                13a - 14(a)/15d - 14(a) Certifications.**                                           |
| 31(a)        |                                                                                                      |              | —    | Certification                of C. John Wilder, principal executive officer of TXU Corp., pursuant                to                Section 302 of the Sarbanes-Oxley Act of 2002.                                     |
| 31(b)        |                                                                                                      |              | —    | Certification                of David A. Campbell, acting principal financial officer of TXU Corp.,                pursuant to Section 302 of the Sarbanes-Oxley Act of                2002.                           |
| **(32)**     | **Section                1350 Certifications.**                                                           |
| 32(a)        |                                                                                                      |              | —    | Certification                of C. John Wilder, principal executive officer of TXU Corp., pursuant                to                Section 906 of the Sarbanes-Oxley Act of 2002.                                     |
| 32(b)        |                                                                                                      |              | —    | Certification                of David A. Campbell, acting principal financial officer of TXU Corp.,                pursuant to Section 906 of the Sarbanes-Oxley Act of                2002.                           |
| **(99)**     | **Additional                Exhibits.**                                                                   |
| 99(a)        | Post-Effective                Amendment No. 1 to 33-55408Form                S-3 (filed July, 1993)       | 99(b)             | —    | Agreement                dated as of January 30, 1990, between TU Electric and Tex-La Electric                Cooperative of Texas, Inc.                                                                               |

| * | Incorporated                herein by reference. |
|---|--------------------------------------------------|

----