TXU
      EXECUTIVE ANNUAL INCENTIVE PLAN


Plan
      Document




























































































Amended,
      effective as of January 1, 2006














Contents





TXU
                Executive Annual Incentive PlanArticle
                I.
            Purpose
            1Article
                II.
            Definitions
            1Article
                III.
            Eligibility
                and Participation
            4Article
                IV.
            Establishment
                of Performance Goals
            4Article
                V.
            Establishment
                of Awards
            4Article
                VI.
            Application
                of Individual Performance Modifier and Determination of Individual
                Participant Awards
            5Article
                VII.
            Payment
                of Awards
            6Article
                VIII.
            Termination
                of Employment and Partial Awards
            6Article
                IX
            Administrative
                Provisions
            7




















i






**TXU
        EXECUTIVE ANNUAL INCENTIVE PLAN**
  **Article
        I.**  **Purpose** **.**
  The
        TXU
        Executive Annual Incentive Plan (the “Plan”) is amended effective as of January
        1, 2006. The Plan, as herein amended, supersedes and replaces all other Plan
        documents. The Plan provides for annual bonus incentive award opportunities
        for
        eligible Participants payable in cash. The maximum Award payable under the
        Plan
        to an individual shall be subject to the limitations established under the
        TXU
        2005 Omnibus Incentive Plan, approved by Company shareholders on May 20,
        2005.
  The
        principal purposes of the Plan are to attract, motivate and retain key
        employees; to align the interests of Participants, Participating Employers
        and
        Company shareholders by rewarding performance that satisfies established
        performance goals; to motivate Participant behaviors that drive successful
        results at the corporate, business unit and individual levels; and to support
        collaboration across essential organizational interfaces.
  **Article
        II.**  **Definitions** **.**
  When
        used
        in the Plan, the following terms shall have the meanings set forth
        below:
  (a)  “ Additional
        Persons ”
means
        such other individuals who are not Section 16 Officers, under the Plan, but
        who
        are senior officers and key employees identified by the O&C Committee, in
        consultation with the Company’s Chief Executive Officer.
  (b)  “ Aggregate
        Incentive Pool ”
means
        the amount equal to the Target Incentive Pool multiplied by the Weighted
        Funding
        Percentage.
  (c)  “ Allocation
        Criteria ”
means
        the criteria or methodology established by the SLT, in accordance with Article
        IV, to allocate the Aggregate Incentive Pool among the Participating Employers,
        as described in Article V.
  (d)  “ Award ”
means
        the amount payable to a Participant under this Plan for any Plan Year, as
        determined in accordance with the terms of the Plan.
  (e)  “ Base
        Salary ”
means
        the annualized base salary designated for the Participant in the applicable
        payroll records of the Participating Employer, prior to any deferrals, and
        excluding any overtime pay, bonuses, incentive compensation, expense
        reimbursements and fringe benefits of any kind for the applicable Plan
        Year.
  (f)  “ Business
        Unit ”
means,
        individually, or “Business Units” means, collectively, the ”Energy”,
“Wholesale”, “Power” and “Business Services” business units of the Company,
        which are the participating Employers in this Plan.
  (g)  “ Company ”
means
        TXU Corp., and its successors and assigns, with respect to a particular
        Participant, Company means such Participant’s employer.
   
  (h)  “ Disability”
        or “Disabled ”
means
        disability as determined under the TXU Long-Term Disability Income Plan,
        or any
        successor plan covering Participants.
  (i)  “ Individual
        Performance Modifier ”
means
        individual Participant performance established by the SLT, in accordance
        with
        Article IV, and used in determining a Participant’s Award. The Individual
        Performance Modifier may include, without limitation, Company or Business
        Unit
        financial or operational measures, individual management and other goals,
        personal job objectives and competencies, the demonstration of team building
        and
        support attributes, and general demeanor and behavior.
  (j)  “ O&C
        Committee ”
means
        the Organization and Compensation Committee of the Board of Directors of
        the
        Company.
  (k)  “ Operating
        Cash Flow ”
means
        cash flow from operating activities as defined in SFAS Number 95, Statement
        of
        Cash Flows, as adjusted by the O&C Committee to reflect nonrecurring and
        unusual transactions or events, and the like
  (l)  “ Operating
        Cash Flow Funding Percentage ”
means
        a
        percentage used to calculate the Aggregate Incentive Pool established by
        the
        O&C Committee based on the amount or level of Operating Cash Flow for the
        particular Plan Year.
  (m)  “ Operational
        EPS ”
means
        the Company’s income from continuing operations net of preference stock
        dividends and excluding special items and all effects of recording unrealized
        gains and losses from cash flow hedge ineffectiveness and other mark-to-market
        valuations of positions in the long-term hedging program, divided by diluted
        common shares outstanding, in either case adjusted by the O&C Committee to
        reflect recapitalizations, nonrecurring and unusual transactions or events,
        stock dividends, and the like.
  (n)  “ Operatonal
        EPS Funding Percentage ”
means
        a
        percentage used to calculate the Aggregate Incentive Pool established by
        the
        O&C Committee based on the amount or level of Operational EPS for the
        particular Plan Year.
  (o)  “ Participant ”
means
        an individual who is an elected officer of a Participating Employer having
        a
        title of vice president or above and who is employed by the Company for a
        period
        of three full months during the Plan Year.
  (p)  “ Participating
        Employer ”
means,
        the Company and each of the Business Units. Additional Participating Employers
        may be added with the approval of the O&C Committee, and participation in
        the Plan by any such additional Participating Employers will commence as
        of the
        effective date designated by the O&C Committee.
  (q)  “ Plan ”
means
        this TXU Executive Annual Incentive Plan.
  (r)  “ Plan
        Year ”
means
        the twelve (12) month period beginning January 1 and ending December
        31.
   
  (s)  “ Retirement ”
means
        retirement from active employment with the Company upon attaining at least
        age
        55, completing at least 15 years of accredited service, or otherwise meeting
        the
        criteria for retiring under the TXU Retirement Plan, or a successor
        plan.
  (t)  “Section
        16 Officers ”
means
        the Company’s Chief Executive Officer and other Section 16 Officers, as defined
        under the charter of the O&C Committee.
 
 (u)  “ SLT ”
means
        the group of executive officers of the Company referred to internally as
        the
        Senior Leadership Team.
 
 (v)  “ Target
        Award ”
means
        an Award level of an individual Participant, expressed as a percentage of
        the
        Participant’s Base Salary, which is anticipated based on target performance of
        Company, Business Unit and individual Participant performance. The Target
        Award
        shall be used in calculating an individual’s actual Award for a Plan
        year.
  (w)  “ Target
        Incentive Pool ”
means
        the amount equal to the aggregate of the Target Awards for all Participants,
        or
        a selected group of Participants, as the context may require.
  (x)  “ Target
        Operating Cash Flow ”
means
        the target amount of Operating Cash Flow established by the O&C Committee
        and used in determining the Aggregate Incentive Pool.
  (y)  “ Target
        Operational EPS ”
means
        the target amount of Operational EPS established by the O&C Committee and
        used in determining the Aggregate Incentive Pool.
  (z)  “ Threshold
        Operating Cash Flow ”
means
        an amount of Operating Cash Flow established by the O&C Committee, which is
        necessary to fund any portion of the Aggregate Incentive Pool.
  (aa)  “ Threshold
        Operational EPS ”
means
        an amount of Operational earnings per share established by the O&C
        Committee, which is necessary to fund any portion of the Aggregate Incentive
        Pool attributable to Operational EPS.
  (bb)  “ Weighted
        Funding Percentage ”
means
        the percentage that is the average of the Operating Cash Flow Funding Percentage
        and the Operational EPS Funding Percentage.
   
  **Article
        III.**  **Eligibility
        and Participation** **.**
  All
        individuals who, as of the first day of a Plan Year, meet the definition
        of a
        Participant hereunder, shall be eligible to participate in this Plan for
        such
        Plan Year. Awards, if any, for individuals who become Participants during
        the
        Plan Year or whose participation in this Plan is terminated during the Plan
        Year, shall be determined under, and in accordance with, Article VIII hereof.
        Participation in this Plan for any Plan Year shall not entitle an individual
        to
        future participation.
 
 **Article
        IV.**  **Establishment
        of Performance Goals** **.**
  For
        each
        Plan Year, the O&C Committee, will establish (i) the Threshold Operational
        EPS, (ii) the Threshold Operating Cash Flow, (iii) the Target Incentive Pool
        Amount, and (iv) the Target Award Level for Section 16 Officers and Additional
        Persons. For each Plan Year, the SLT, with input from the Chief Executive
        Officer of the applicable Business Unit, will determine the (i) the Allocation
        Criteria, (ii) the Individual Performance Modifier, and (iii) the Target
        Award
        Level for each Participant, other than for Section 16 Officers and Additional
        Persons. Such determinations by the O&C Committee and the SLT shall be made
        at such times and shall be based on such criteria as the O&C Committee and
        the SLT shall determine, respectively, in their sole discretion. The O&C
        Committee and the SLT shall each have full authority and discretion, for
        any
        particular Plan Year, to modify any of their respective determinations
        hereunder, with respect to all Participants or any individual Participant,
        including determinations which affect the calculation or amount of Awards,
        in
        order to take into consideration other benefits programs and/or extraordinary
        events affecting the financial results of the Company or a Business Unit.
        Once
        determined, or modified, such determinations shall be communicated to the
        affected Participants in such form and manner as the SLT determines to be
        appropriate.
  **Article
        V.**  **Establishment
        of Awards** .
  A.  Determining
        Performance Results and Aggregate Incentive Pool .
  After
        the
        end of the Plan Year, the O&C Committee shall certify the amount or level of
        the Company’s Operating Cash Flow and Operational EPS, and determine whether the
        Threshold level of each such measure have been attained for such Plan Year.
        The
        O&C Committee shall also determine the Operating Cash Flow Funding
        Percentage, the Operational EPS Funding Percentage, the Weighted Funding
        Percentage, and the resulting Aggregate Incentive Pool for the Plan
        Year.
   
  B.  Allocation
        of Aggregate Incentive Pool Among Participating Employers .
  Upon
        the
        O&C Committee’s determination of the Aggregate Incentive Pool under Section
        V.A. above, the SLT shall allocate the Aggregate Incentive Pool among the
        Participating Employers using the Allocation Criteria. In making such
        allocation, the SLT may take into consideration such factors as it shall
        determine to be appropriate, including without limitation, the financial
        and
        operational performance of each Business Unit, the impact of Business Unit
        performance on overall corporate goals and results, extraordinary circumstances,
        and general business conditions including, but not limited to, other benefits
        provided under the Company’s benefit programs, such as the excess shares
        released from the Leveraged Employee Stock Ownership Plan (LESOP) suspense
        account of the TXU Thrift Plan. The allocation of the Aggregate Annual Incentive
        Pool among the Participating Employers shall be made by the SLT in its sole
        discretion, and there is no requirement that such allocation be made
        proportionally among the Business Units. However, in no case may the total
        amount allocated among the Participating Employers exceed the Aggregate
        Incentive Pool.
  **Article
        VI.**  **Application
        of Individual Performance Modifier and Determination of** **Individual
        Participant Awards** **.**
 
 A.  Individual
        Participant Awards .
 
 The
        SLT
        shall determine each Participant’s Award, other than for Section 16 Officers and
        Additional Persons, for a Plan Year by: (i) multiplying the Participant’s Target
        Award by the ratio of (a) the portion of the Aggregate Incentive Pool allocated
        to the Participant’s Participating Employer after application of the Allocation
        Criteria, to (b) the aggregate Target Incentive Pool for all Participant’s of
        the Participating Employer; and (ii) multiplying such amount by the applicable
        Individual Performance Modifier determined in accordance with Section VI.B.
        below.
 
 B.  Application
        of Individual Performance Modifier .
 
 (i)  As
        described in Section VI.A. above, the amount determined by applying the formula
        set forth in Section VI.A shall be adjusted by applying the Individual
        Performance Modifier for each Participant in the sole discretion of the SLT.
   
  (ii)  To
        determine Participant’s Individual Performance Modifier, the SLT shall assign a
        performance rating to the Participant based on the Participant’s performance
        against his/her performance level in accordance with the following table:
  **Performance
                  Rating**
              **Rating**
              **Individual
                  Performance**
                **Modifier
                  Range**Outstanding
              5
              150%
                  - 200%Exceeds
              4
              110%
                  - 150%Meets
              3
              75%
                  - 110%Inconsistent
              2
              25%
                  - 75%Unacceptable
              1
              0%Too
                  new to rate
              0
              50%
                  - 110%
 
  The
        Participant’s Individual Performance Modifier shall be established by the SLT in
        its sole discretion within the applicable range set forth in the above table.
        In
        no event may the aggregate of the Awards determined to be payable to all
        Participants of a Participating Employer, exceed the portion of the Aggregate
        Incentive Pool allocated to the Participating Employer; and
  in
        no
        event may the aggregate of all Awards determined to be payable to all
        Participants exceed the Aggregate Incentive Pool.
  **Article
        VII.**  **Payment
        of Awards** .
  A.  Time
        and Manner of Award Payments .
  All
        Awards will be paid in cash to Participants by March 15 of the year following
        the applicable Plan Year, subject to applicable tax withholding
        requirements.
  B.  Maximum
        Awards to Covered Employees .
  Notwithstanding
        any provision of this Plan, the maximum Award that may be paid to any
        Participant who has been determined under the provisions of the TXU 2005
        Omnibus
        Incentive Plan (“Omnibus Plan”) to be a Covered Employee for such Plan Year,
        shall not exceed the maximum annual incentive award that has been established
        for such Participant for such Plan Year under the Omnibus Plan.
  **Article
        VIII.**  **Termination
        of Employment and Partial Awards** **.**
  Participation
        in the Plan shall cease immediately upon a Participant’s resignation or
        termination of employment for any reason (with or without cause), or upon
        the
        Participant’s death, Disability or Retirement. In such event, the Participant
        may be eligible for a partial award for such Plan Year in accordance with
        and
        subject to the provisions of this Article VIII.
   
  A.  Resignation
        or Termination .
  If
        a
        Participant resigns or his/her employment with a Participating Employer is
        terminated (with or without cause) prior to the payment of an Award for reasons
        other than death, Disability, Retirement, or transfer to an affiliate of
        the
        Company, such Participant shall forfeit any right to receive such
        Award.
  B.  Death,
        Disability or Retirement .
  If
        a
        Participant dies, becomes Disabled or Retires during a Plan Year after having
        attained at least three (3) full months of participation in the Plan during
        such
        Plan Year, the Participant, or the Participant’s beneficiary in the case of the
        Participant’s death, may, in the sole discretion of the SLT, be entitled to
        receive a partial Award, prorated for the number of months that the individual
        was a Participant hereunder during the Plan Year. For purposes of applying
        this
        proration, a month shall include each month during which the individual was
        employed by a Participating Employer through at least the 15 th day of
        such month prior to the individual’s death, Disability or Retirement. Any such
        Award shall be paid at the time and in the form that all other Awards are
        paid
        for such Plan Year. The decisions of the SLT with respect to such Awards
        shall
        be final and binding on all parties. For purposes of this provision, a
        Participant’s beneficiary shall be his/her surviving spouse or, if he/she has no
        surviving spouse, his/her estate.
  C.  Transfers .
  If
        a
        Participant (i) transfers from a Participating Employer to an affiliate of
        the
        Company after having attained at least three (3) full months of participation
        in
        the Plan during the Plan Year, and (ii) continues to be employed by an affiliate
        of the Company through the remainder of the Plan Year, such individual shall,
        based on criteria determined by the SLT in its sole discretion, be entitled
        to
        receive a partial Award hereunder, prorated on the basis of the number of
        months
        such individual was employed by the Participating Employer during the Plan
        Year.
        For purposes of applying this proration, a Participant shall be deemed to
        have
        been employed by the Participating Employer for a month if such Participant
        was
        employed by the Participating Employer on the 15 th day of
        such month. Any such Award shall be paid at the time and in the form that
        all
        other Awards are paid for such Plan Year. The decisions of the SLT with respect
        to such Awards shall be final and binding on all parties.
   
  **Article
        IX.**  **Administrative
        Provisions** .
  A.  Administration .
  The
        Plan
        shall be administered and interpreted by the Participating Employers through
        the
        individuals who have been provided authority hereunder to carry out the
        administration of this Plan. The O&C Committee and its members, the SLT and
        its members, and any other individual to whom the O&C and/or SLT has
        delegated their responsibilities regarding the administration of this Plan,
        shall have full authority, discretion and power necessary or desirable to
        administer and interpret this Plan. Without in any way limiting the foregoing,
        all such individuals shall have complete authority, discretion and power
        to: (i)
        determine the Participants for each Plan Year; (ii) determine the Individual
        Performance Modifier applicable to each Participant; (iii) evaluate and
        determine the performance of Participants; (iv) determine the amount of the
        Award for each Participant; (v) interpret the provisions of this Plan and
        any
        other documentation used in connection with this Plan, including documentation
        specifying individual Performance Goals, Award opportunities and the like;
        (vi)
        establish and interpret rules and procedures (written or by practice) for
        the
        administration of the Plan; and (vii) make all other determinations and take
        all
        other actions necessary or desirable for the administration or interpretation
        of
        this Plan. All actions, decisions and interpretations of such individuals
        shall
        be final, conclusive and binding on all parties.
  B.  No
        Right to Continued Employment .
  Nothing
        in this Plan shall be deemed by implication, action or otherwise to constitute
        a
        contract of employment, or otherwise to provide a Participant with any right
        of
        continued employment or impose any limitation on any right of a Participating
        Employer to terminate a Participant’s employment at any time.
  C.  No
        Assignment .
  A
        Participant or Participant’s beneficiary shall have no right to anticipate,
        alienate, sell, transfer, assign, pledge or encumber any right to receive
        any
        incentive made under the Plan, nor will any Participant or Participant’s
        beneficiary have any lien on any assets of any Participating Employer, or
        any
        affiliate thereof, by reason of any award made under the Plan.
  D.  Withholding .
  The
        Participating Employers shall have the right to deduct or withhold, or require
        a
        Participant to remit to the applicable Participating Employer, any taxes
        required by law to be withheld from Awards made under this Plan.
   
  E.  Amendment
        of Plan .
  The
        Plan
        may be amended, suspended or terminated at any time and from time to time,
        by
        action of the O&C Committee, provided no such amendment, suspension or
        termination adversely affects any Participant’s right to receive any amount to
        which they have become entitled under the terms of this Plan prior to such
        amendment, suspension or termination. In order to be effective, any amendment
        of
        this Plan or any Award must be in writing. No oral statement, representation
        or
        the like shall have the effect of amending or modifying this Plan or any
        Award,
        or otherwise have any binding effect on the Company, the O&C Committee, the
        SLT, or any individual who has been delegated authority by the O&C Committee
        or the SLT to administer this Plan.
  F.  No
        Obligation to Continue Plan .
  The
        adoption of the Plan does not imply any commitment to continue to maintain
        the
        Plan, or any modified version of the Plan, or any other plan for incentive
        compensation for any succeeding year.
  G.  Governing
        Law .
  The
        Plan
        shall be construed in accordance with, and governed by, the laws of the State
        of
        Texas. Any disputes arising under this Plan and any action to enforce any
        provisions hereof, shall be maintained exclusively in the appropriate courts
        of
        Dallas County, Texas.
  H.  Severability .
  In
        case
        any provision of the Plan shall be held illegal or void, such illegality
        or
        invalidity shall not affect the remaining provisions of this Plan, but shall
        be
        fully severable, and the Plan shall be construed and enforced as if said
        illegal
        or invalid provisions had never been inserted herein.
  I.  Limitation
        of Liability .
  Except
        for their own gross negligence or willful misconduct regarding the performance
        of the duties specifically assigned to them under, or their willful breach
        of
        the terms of this Plan, the Participating Employer, the O&C Committee and
        its members, the SLT and its members, and any other entity or individual
        administering any aspect of this Plan shall be held harmless by the Participants
        and their respective representatives, heirs, successors, and assigns, against
        liability or losses occurring by reason of any act or omission under the
        Plan.
  Executed
        December 29, 2006, to be effective as January 1, 2006.
  TXU
                  Corp.By:
              /s/
                  RIZ CHANDRiz
                  ChandSenior
                  Vice President, Human Resources