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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, 2008**

**— OR—**

 

**Commission File Number 1-12833**

 

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**Energy Future Holdings Corp.**

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

 

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**Securities registeredpursuant to Section 12(b) of the Act: None**

**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 Securities Act.    Yes   ̈    No  x

Indicate by check mark if the registrant is notrequired to file reports pursuant to Section 13 or Section 15(d) of the Act.    Yes   ̈    No  x

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

Indicate by check mark if disclosure of delinquent filers pursuant to Item 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 definitiveproxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K.     x

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. Seedefinitions 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 ExchangeAct).    Yes   ̈     No  x

As of February 27, 2009, there were 1,666,636,562 shares of common stock outstanding, without par value, of Energy Future Holdings Corp. (substantially all of which were owned by Texas Energy Future Holdings Limited Partnership, EnergyFuture Holdings Corp.’s parent holding company, and none of which is publicly traded). 

**DOCUMENTS INCORPORATED 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**  17**Item 1B.** **UNRESOLVED STAFF COMMENTS**  33**Item 3.** **LEGAL PROCEEDINGS**  34**Item 4.** **SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS**  38 **PART II**  **Item 5.** **MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES**  39**Item 6.** **SELECTED FINANCIAL DATA**  40**Item 7.** **MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS**  44**Item 7A.** **QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK**  108**Item 8.** **FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA**  115**Item 9.** **CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE**  224**Item 9A.** **CONTROLS AND PROCEDURES**  224**Item 9B.** **OTHER INFORMATION**  228 **PART III**  **Item 10.** **DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE**  228**Item 11.** **EXECUTIVE COMPENSATION**  235**Item 12.** **SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS**  272**Item 13.** **CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE**  276**Item 14.** **PRINCIPAL ACCOUNTANT FEES AND SERVICES**  280 **PART IV**  **Item 15.** **EXHIBITS AND FINANCIAL STATEMENT SCHEDULES**  282
 

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**Energy Future Holdings Corp.’s annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports onForm 8-K and any amendments to those reports are made available to the public, free of charge, on the Energy Future Holdings Corp. website at http://www.energyfutureholdings.com, as soon as reasonably practicable after they have been filed with orfurnished to the Securities and Exchange Commission. Energy Future Holdings Corp. will provide copies of current reports not posted on the website upon request. The information on Energy Future Holdings Corp.’s website shall not be deemed apart of, or incorporated by reference into, this report on Form 10-K. Readers should not rely on or assume the accuracy of any representation or warranty in any agreement that EFH Corp. has filed as an exhibit to this Form 10-K because suchrepresentation or warranty may be subject to exceptions and qualifications contained in separate disclosure schedules, may represent the parties’ risk allocation in the particular transaction, may be qualified by materiality standards thatdiffer from what may be viewed as material for securities law purposes or may no longer continue to be true as of any given date.**

This Form 10-K andother Securities and Exchange Commission filings of Energy Future Holdings Corp. and its subsidiaries occasionally make references to EFH Corp., EFC Holdings, Intermediate Holding, TCEH, TXU Energy, Luminant, Oncor Holdings or Oncor when describingactions, 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 notbe interpreted to imply that the parent company is actually undertaking the action or has the rights or obligations of the relevant subsidiary company or that the subsidiary company is undertaking an action or has the rights or obligations of itsparent company or any other affiliate. 

 

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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**2007 Form 10-K**  EFH Corp.’s Annual Report on Form 10-K for the year ended December 31, 2007**Adjusted EBITDA**  Adjusted EBITDA means EBITDA adjusted to exclude non-cash items, unusual items and other adjustments allowable under certain debt arrangements of EFH Corp. and its subsidiaries. See thedefinition of EBITDA below. Adjusted EBITDA and EBITDA are not recognized terms under GAAP and, thus, are non-GAAP financial measures. EFH Corp. is providing Adjusted EBITDA in this Form 10-K (see reconciliation in Exhibits 99(b) and 99(c)) solelybecause of the important role that Adjusted EBITDA plays in respect of the certain covenants contained in EFH Corp.’s debt arrangements. EFH Corp. does not intend for Adjusted EBITDA (or EBITDA) to be an alternative to net income as a measureof operating performance or an alternative to cash flows from operating activities as a measure of liquidity or an alternative to any other measure of financial performance presented in accordance with GAAP. Additionally, EFH Corp. does not intendfor Adjusted EBITDA (or EBITDA) to be used as a measure 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 servicerequirements. Because not all companies use identical calculations, EFH Corp.’s 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.**CAIR**  Clean Air Interstate Rule**Capgemini**  Capgemini Energy LP, a subsidiary of Cap Gemini North America Inc. that provides business support services to EFH Corp. and its subsidiaries**CO2**  carbon dioxide**Competitive Electric segment**  Refers to the EFH Corp. business segment that includes TCEH and equipment salvage and resale activities related to eight cancelled coal-fueled generation units.**CREZ**  Competitive Renewable Energy Zones**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.**EFC Holdings**  Refers to Energy Future Competitive Holdings Company, a direct, wholly- owned subsidiary of EFH Corp. and the direct parent of TCEH.**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.**EPA**  US Environmental Protection Agency**EPC**  engineering, procurement and construction
 

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Table of Contents**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**FIN**  Financial Accounting Standards Board Interpretation**FIN 39**  FIN No. 39, “Offsetting of Amounts Related to Certain Contracts — an Interpretation of APB Opinion No. 10 and FASB Statement No. 105”**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 (As Amended), “Accounting for Uncertainty in Income Taxes”**Fitch**  Fitch Ratings, Ltd. (a credit rating agency)**FSP**  FASB Staff Position**FSP FIN 39-1**  FSP FIN No. 39-1, “Amendment of FASB Interpretation No. 39”**FSP FIN 48-1**  FSP FIN No. 48-1, “Definition of Settlement in FASB Interpretation No. 48”**FSP SFAS 132(R)-1**  FSP SFAS No. 132(R)-1, “Employers’ Disclosures about Postretirement Benefit Plan Assets”**FSP SFAS 140-4 and FIN 46(R)-8**  FSP SFAS No. 140-4 and FIN 46(R)-8, “Disclosures by Public Entities (Enterprises) about Transfers of Financial Assets and Interest in Variable Interest Entities”**FSP SFAS 157-3**  FSP SFAS No. 157-3, “Determining the Fair Value of a Financial Asset When the Market for That Asset Is Not Active”**GAAP**  generally accepted accounting principles**GWh**  gigawatt-hours**historical service territory**  the territory, largely in north Texas, being served by EFH Corp.’s regulated electric utility subsidiary at the time of entering retail competition on January 1, 2002**Intermediate Holding**  Refers to Energy Future Intermediate Holding Company LLC, a direct, wholly-owned subsidiary of EFH Corp. and the direct parent of Oncor Holdings.**IRS**  US Internal Revenue Service**kV**  kilovolts**kWh**  kilowatt-hours**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.
 

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Table of Contents**Luminant**  Refers to wholly-owned subsidiaries of TCEH engaged in competitive market activities consisting of electricity generation, development and construction of new generation facilities, wholesaleenergy sales and purchases as well as commodity risk management and trading activities, all largely in Texas.**Luminant Construction**  Refers to the operations of TCEH established for the purpose of developing and constructing new generation facilities.**Luminant Energy**  Luminant Energy Company LLC, an indirect, wholly-owned subsidiary of TCEH that engages in certain wholesale markets activities**Luminant Power**  Refers to subsidiaries of TCEH engaged in electricity generation activities.**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 natural gasplants) in generating electricity and is calculated by dividing the wholesale market price of electricity by the market price of natural gas.**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**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 consolidated bankruptcy-remote financingsubsidiary, 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, consolidated as a variable interest entity under FIN 46R, of Intermediate Holding and the directmajority owner of Oncor.**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 SFAS 141 whereby the cost or “purchase price” of a business combination, including the amount paid for theequity 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 liabilities is recorded asgoodwill.**Regulated Delivery segment**  Refers to the EFH Corp. business segment, the substantial majority of which consists of the activities of Oncor.**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)**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**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”**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 123 (R)**  SFAS No. 123 (revised 2004), “Share-Based Payment”**SFAS 132 (R)**  SFAS No. 132 (revised 2003), “Employers’ Disclosures About Pensions and Other Postretirement Benefits”**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 No. 125”**SFAS 141**  SFAS No. 141, “Business Combinations”**SFAS 142**  SFAS No. 142, “Goodwill and Other Intangible Assets”**SFAS 144**  SFAS No. 144, “Accounting for the Impairment or Disposal of Long-Lived Assets”**SFAS 146**  SFAS No. 146, “Accounting for Costs Associated with Exit or Disposal Activities”**SFAS 157**  SFAS No. 157, “Fair Value Measurements”**SFAS 158**  SFAS No. 158, “Employers’ Accounting for Defined Benefit Pension and Other Postretirement Plans”
 

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Table of Contents**SFAS 160**  SFAS No. 160, “Noncontrolling Interests in Consolidated Financial Statements — an amendment of ARB No. 51”**SFAS 161**  SFAS No. 161, “Disclosures about Derivative Instruments and Hedging Activities — an amendment of FASB Statement No. 133”**SG&A**  selling, general and administrative**SO2**  sulfur dioxide**Sponsor Group**  Collectively, 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 Holdingsbelow.)**TCEH**  Refers to Texas Competitive Electric Holdings Company LLC, a direct, wholly-owned subsidiary of EFC Holdings and an indirect, wholly-owned subsidiary of EFH Corp., and/or its subsidiaries,depending on context, that are engaged in electricity generation, wholesale and retail energy markets and development and construction 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 debt securities.**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 TCEH Commodity CollateralPosting Facility. See Note 15 to the Financial Statements for details of these facilities.**TCEQ**  Texas Commission on Environmental Quality**Texas Holdings**  Refers to Texas Energy Future Holdings Limited Partnership, a Delaware 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 Delaware limited liability company that purchased a 19.75% equity interest in Oncor in November 2008.**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 is a REP incompetitive areas of ERCOT.**TXU Europe**  TXU Europe Limited, a subsidiary of EFH Corp. that is in administration (similar to bankruptcy) in the United Kingdom**TXU Fuel**  TXU Fuel Company, a former subsidiary of TCEH**TXU Gas**  TXU Gas Company, a former subsidiary of EFH Corp.**US**  United States of America
 

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**PART I**

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

See Glossary on page iii for adefinition of terms and abbreviations. 

**EFH Corp. Business and Strategy**

EFH Corp. is a Dallas-based energy company that manages a portfolio of competitive and regulated energy businesses in Texas. EFH Corp. is a holdingcompany conducting its operations principally through its subsidiaries, TCEH and Oncor. TCEH is wholly-owned, and EFH Corp. holds an approximately 80% interest in Oncor. Immediately below is an organization chart of the major subsidiaries discussedin this report.