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**UNITED STATES**

**SECURITIES AND EXCHANGE COMMISSION**

**Washington, D.C. 20549**

 

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**FORM 10-K**

 

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**For the fiscal year ended December 31, 2010**

**— OR—**

 

**Commission File Number 1-12833**

 

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**Energy FutureHoldings Corp.**

**(Exact name of registrant as specified in its charter)**

 

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**Securitiesregistered pursuant to Section 12(b) of the Act:**

 

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

 

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

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

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

Indicate by check mark whether the registrant has submitted electronically and posted on itscorporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant wasrequired to submit and post such files).    Yes   ̈    No   ̈    (Theregistrant is not currently required to submit such files.) 

Indicate by check mark if disclosure of delinquent filers pursuant toItem 405 of Regulation S-K (229.405 of this chapter) is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of thisForm 10-K or any amendment to this Form 10-K.    x

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

 

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

As ofFebruary 15, 2011, there were 1,671,912,118 shares of common stock, without par value, outstanding of Energy Future Holdings Corp. (substantially all of which were owned by Texas Energy Future Holdings Limited Partnership, Energy FutureHoldings Corp.’s parent holding company, and none of which is publicly traded). 

 

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**DOCUMENTSINCORPORATED BY REFERENCE**

None 

 

 

 

Table of Contents
**TABLE OF CONTENTS**

 
       
**Page**
 **Glossary**   iii  **PART I****  ****Items 1. and 2. BUSINESS AND PROPERTIES**   1  **Item 1A.** **RISK FACTORS**   22  **Item 1B.** **UNRESOLVED STAFF COMMENTS**   42  **Item 3.** **LEGAL PROCEEDINGS**   43  **Item 4.** **(REMOVED AND RESERVED)**   43  **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**   48  **Item 7A.** **QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK**   106  **Item 8.** **FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA**   113  **Item 9.** **CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE**   214  **Item 9A.** **CONTROLS AND PROCEDURES**   214  **Item 9B.** **OTHER INFORMATION**   217  **PART III****  ****Item 10.** **DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE**   217  **Item 11.** **EXECUTIVE COMPENSATION**   226  **Item 12.** **SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS**   252  **Item 13.** **CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE**   255  **Item 14.** **PRINCIPAL ACCOUNTING FEES AND SERVICES**   260  **PART IV****  ****Item 15.** **EXHIBITS, FINANCIAL STATEMENT SCHEDULES**   262  
 
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**Energy Future Holdings Corp.’s (EFH Corp.) annual reports on Form 10-K, quarterly reports on Form10-Q, current reports on Form 8-K and any amendments to those reports are made available to the public, free of charge, on the EFH Corp. website at http://www.energyfutureholdings.com, as soon as reasonably practicable after they have been filedwith or furnished to the Securities and Exchange Commission. The information on EFH Corp.’s website shall not be deemed a part of, or incorporated by reference into, this report on Form 10-K. Readers should not rely on or assume the accuracy ofany representation or warranty in any agreement that EFH Corp. has filed as an exhibit to this Form 10-K because such representation or warranty may be subject to exceptions and qualifications contained in separate disclosure schedules, mayrepresent the parties’ risk allocation in the particular transaction, may be qualified by materiality standards that differ from what may be viewed as material for securities law purposes or may no longer continue to be true as of any givendate.**

This Form 10-K and other Securities and Exchange Commission filings of EFH Corp. and its subsidiaries occasionally make referencesto EFH Corp. (or “we,” “our,” “us” or “the company”), EFCH, EFIH, TCEH, TXU Energy, Luminant, Oncor Holdings or Oncor when describing actions, rights or obligations of their respective subsidiaries. Thesereferences reflect the fact that the subsidiaries are consolidated with, or otherwise reflected in, their respective parent companies’ financial statements for financial reporting purposes. However, these references should not be interpreted toimply that the parent company is actually undertaking the action or has the rights or obligations of the relevant subsidiary company or vice versa. 

 
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**GLOSSARY**

When the following terms and abbreviations appear in the text of this report, they have the meanings indicated below. 

 
**1999 Restructuring Legislation**  Texas Electric Choice Plan, the legislation that restructured the electric utility industry in Texas to provide for retail competition**2009 Form 10-K**  EFH Corp.’s Annual Report on Form 10-K for the year ended December 31, 2009**Adjusted EBITDA**  Adjusted EBITDA means EBITDA adjusted to exclude noncash items, unusual items and other adjustments allowable under certain of our debt arrangements. See the definition of EBITDAbelow. Adjusted EBITDA and EBITDA are not recognized terms under GAAP and, thus, are non-GAAP financial measures. We are providing Adjusted EBITDA in this Form 10-K (see reconciliations in Exhibit 99(b), 99(c) and 99(d)) solely because of theimportant role that Adjusted EBITDA plays in respect of certain covenants contained in our debt arrangements. We do not intend for Adjusted EBITDA (or EBITDA) to be an alternative to net income as a measure of operating performance or an alternativeto cash flows from operating activities as a measure of liquidity or an alternative to any other measure of financial performance presented in accordance with US GAAP. Additionally, we do not intend for Adjusted EBITDA (or EBITDA) to be used as ameasure of free cash flow available for management’s discretionary use, as the measure excludes certain cash requirements such as interest payments, tax payments and other debt service requirements. Because not all companies use identicalcalculations, our presentation of Adjusted EBITDA (and EBITDA) may not be comparable to similarly titled measures of other companies.**ancillary services**  Refers to services necessary to support the transmission of energy and maintain reliable operations for the entire transmission system.**baseload**  Refers to the minimum constant level of electricity demand in a system, such as ERCOT, and/or to the electricity generation facilities or capacity normally expected to operatecontinuously throughout the year to serve such demand, such as our nuclear and lignite/coal-fueled generation units.**CAIR**  Clean Air Interstate Rule**Capgemini**  Capgemini Energy LP, a provider of business support services to EFH Corp. and its subsidiaries**CATR**  Clean Air Transport Rule**CFTC**  Commodity Futures Trading Commission**CO2**  carbon dioxide**Competitive Electric segment**  Refers to the EFH Corp. business segment that consists principally of TCEH.**CREZ**  Competitive Renewable Energy Zone**DOE**  US Department of Energy**EBITDA**  Refers to earnings (net income) before interest expense, income taxes, depreciation and amortization. See the definition of Adjusted EBITDA above.**EFCH**  Refers to Energy Future Competitive Holdings Company, a direct, wholly-owned subsidiary of EFH Corp. and the direct parent of TCEH, and/or its subsidiaries, depending oncontext.
 
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Table of Contents**EFH Corp.**  Refers to Energy Future Holdings Corp., a holding company, and/or its subsidiaries, depending on context. Its major subsidiaries include TCEH and Oncor.**EFH Corp. Senior Notes**  Refers collectively to EFH Corp.’s 10.875% Senior Notes due November 1, 2017 (EFH Corp. 10.875% Notes) and EFH Corp.’s 11.25%/12.00% Senior Toggle Notes due November 1,2017 (EFH Corp. Toggle Notes).**EFH Corp. Senior Secured Notes**  Refers collectively to EFH Corp.’s 9.75% Senior Secured Notes due October 15, 2019 (EFH Corp. 9.75% Notes) and EFH Corp.’s 10.000% Senior Secured Notes due January 15,2020 (EFH Corp. 10% Notes).**EFIH**  Refers to Energy Future Intermediate Holding Company LLC, a direct, wholly-owned subsidiary of EFH Corp. and the direct parent of Oncor Holdings.**EFIH Finance**  Refers to EFIH Finance Inc., a direct, wholly-owned subsidiary of EFIH, formed for the sole purpose of serving as co-issuer with EFIH of certain debt securities.**EFIH Notes**  Refers collectively to EFIH’s and EFIH Finance’s 9.75% Senior Secured Notes due October 15, 2019 (EFIH 9.75% Notes) and EFIH’s and EFIH Finance’s 10.000%Senior Secured Notes due December 1, 2020 (EFIH 10% Notes).**EPA**  US Environmental Protection Agency**EPC**  engineering, procurement and construction**ERCOT**  Electric Reliability Council of Texas, the independent system operator and the regional coordinator of various electricity systems within Texas**ERISA**  Employee Retirement Income Security Act of 1974, as amended**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**GAAP**  generally accepted accounting principles**GHG**  greenhouse gas**GWh**  gigawatt-hours**IRS**  US Internal Revenue Service**kV**  kilovolts**kWh**  kilowatt-hours**Lehman**  Refers to certain subsidiaries of Lehman Brothers Holdings Inc., which filed for bankruptcy under Chapter 11 of the US Bankruptcy Code in 2008.**LIBOR**  London Interbank Offered Rate. An interest rate at which banks can borrow funds, in marketable size, from other banks in the London interbank market.**Luminant**  Refers to subsidiaries of TCEH engaged in competitive market activities consisting of electricity generation and wholesale energy sales and purchases as well as commodity riskmanagement and trading activities, all largely in Texas.
 
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Table of Contents**market heat rate**  Heat rate is a measure of the efficiency of converting a fuel source to electricity. Market heat rate is the implied relationship between wholesale electricity prices and naturalgas prices and is calculated by dividing the wholesale market price of electricity, which is based on the price offer of the marginal supplier in ERCOT (generally natural gas plants), by the market price of natural gas. Forward wholesale electricitymarket price quotes in ERCOT are generally limited to two or three years; accordingly, forward market heat rates are generally limited to the same time period. Forecasted market heat rates for time periods for which market price quotes are notavailable are based on fundamental economic factors and forecasts, including electricity supply, demand growth, capital costs associated with new construction of generation supply, transmission development and other factors.**Merger**  The transaction referred to in “Merger Agreement” (defined immediately below) that was completed on October 10, 2007**Merger Agreement**  Agreement and Plan of Merger, dated February 25, 2007, under which Texas Holdings agreed to acquire EFH Corp.**Merger Sub**  Texas Energy Future Merger Sub Corp, a Texas corporation and a wholly-owned subsidiary of Texas Holdings that was merged into EFH Corp. on October 10, 2007**MMBtu**  million British thermal units**Moody’s**  Moody’s Investors Services, Inc. (a credit rating agency)**MW**  megawatts**MWh**  megawatt-hours**NERC**  North American Electric Reliability Corporation**NOx**  nitrogen oxide**NRC**  US Nuclear Regulatory Commission**NYMEX**  Refers to the New York Mercantile Exchange, a physical commodity futures exchange.**Oncor**  Refers to Oncor Electric Delivery Company LLC, a direct, majority-owned subsidiary of Oncor Holdings and an indirect subsidiary of EFH Corp., and/or its consolidatedbankruptcy-remote financing subsidiary, Oncor Electric Delivery Transition Bond Company LLC, depending on context, that is engaged in regulated electricity transmission and distribution activities.**Oncor Holdings**  Refers to Oncor Electric Delivery Holdings Company LLC, a direct, wholly-owned subsidiary of EFIH and the direct majority owner of Oncor, and/or its subsidiaries, depending oncontext.**Oncor Ring-Fenced Entities**  Refers to Oncor Holdings and its direct and indirect subsidiaries, including Oncor.**OPEB**  other postretirement employee benefits**PUCT**  Public Utility Commission of Texas**PURA**  Texas Public Utility Regulatory Act
 
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Table of Contents**purchase accounting**  The purchase method of accounting for a business combination as prescribed by US GAAP, whereby the cost or “purchase price” of a business combination, including theamount paid for the equity and direct transaction costs are allocated to identifiable assets and liabilities (including intangible assets) based upon their fair values. The excess of the purchase price over the fair values of assets and liabilitiesis recorded as goodwill.**Regulated Delivery segment**  Refers to the EFH Corp. business segment that consists of the operations of Oncor.**REP**  retail electric provider**RRC**  Railroad Commission of Texas, which among other things, has oversight of lignite mining activity in Texas**S&P**  Standard & Poor’s Ratings Services, a division of the McGraw-Hill Companies Inc. (a credit rating agency)**SARs**  Stock Appreciation Rights**SARs Plan**  Refers to the Oncor Electric Delivery Company Stock Appreciation Rights Plan**SEC**  US Securities and Exchange Commission**Securities Act**  Securities Act of 1933, as amended**SG&A**  selling, general and administrative**SO2**  sulfur dioxide**Sponsor Group**  Refers collectively to the investment funds affiliated with Kohlberg Kravis Roberts & Co. L.P., TPG Capital, L.P. and GS Capital Partners, an affiliate of Goldman, Sachs& Co. (See Texas Holdings below.)**TCEH**  Refers to Texas Competitive Electric Holdings Company LLC, a direct, wholly-owned subsidiary of EFCH and an indirect subsidiary of EFH Corp., and/or its subsidiaries, dependingon context, that are engaged in electricity generation and wholesale and retail energy markets activities. Its major subsidiaries include Luminant and TXU Energy.**TCEH Finance**  Refers to TCEH Finance, Inc., a direct, wholly-owned subsidiary of TCEH, formed for the sole purpose of serving as co-issuer with TCEH of certain debtsecurities.**TCEH Senior Notes**  Refers collectively to TCEH’s 10.25% Senior Notes due November 1, 2015 and 10.25% Senior Notes due November 1, 2015, Series B (collectively, TCEH 10.25% Notes) andTCEH’s 10.50%/11.25% Senior Toggle Notes due November 1, 2016 (TCEH Toggle Notes).**TCEH Senior Secured Facilities**  Refers collectively to the TCEH Initial Term Loan Facility, TCEH Delayed Draw Term Loan Facility, TCEH Revolving Credit Facility, TCEH Letter of Credit Facility and TCEHCommodity Collateral Posting Facility. See Note 11 to Financial Statements for details of these facilities.**TCEH Senior Secured Second Lien Notes**  Refers collectively to TCEH’s 15% Senior Secured Second Lien Notes due April 1, 2021 and TCEH’s 15% Senior Secured Second Lien Notes due April 1, 2021, SeriesB.**TCEQ**  Texas Commission on Environmental Quality
 
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Table of Contents**Texas Holdings**  Refers to Texas Energy Future Holdings Limited Partnership, a limited partnership controlled by the Sponsor Group that owns substantially all of the common stock of EFHCorp.**Texas Holdings Group**  Refers to Texas Holdings and its direct and indirect subsidiaries other than the Oncor Ring-Fenced Entities.**Texas Transmission**  Refers to Texas Transmission Investment LLC, a limited liability company that owns a 19.75% equity interest in Oncor. Texas Transmission is not affiliated with EFH Corp., any ofits subsidiaries or any member of the Sponsor Group.**TRE**  Refers to Texas Reliability Entity, Inc., an independent organization that develops reliability standards for the ERCOT region and monitors and enforces compliance with NERCstandards and ERCOT protocols.**TXU Energy**  Refers to TXU Energy Retail Company LLC, a direct, wholly-owned subsidiary of TCEH engaged in the retail sale of electricity to residential and business customers. TXU Energy isa REP in competitive areas of ERCOT.**TXU Gas**  TXU Gas Company, a former subsidiary of EFH Corp.**US**  United States of America**VIE**  variable interest entity
 
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**PART I**

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

References in this report to “we,” “our,” “us” and “the company” are to EFH Corp. and/or its subsidiaries as apparent in the context. See “Glossary” fordescriptions of major subsidiaries and other defined terms. 

**EFH Corp. Business and Strategy**

We are a Dallas, Texas-based energy company with a portfolio of competitive and regulated energy businesses in Texas. EFH Corp. is aholding company conducting its operations principally through its TCEH and Oncor subsidiaries. TCEH is wholly-owned, and EFH Corp. holds an approximately 80% equity interest in Oncor. Immediately below is an organization chart of the keysubsidiaries discussed in this report.