----

----

**UNITED      STATES**

**SECURITIES      AND EXCHANGE COMMISSION**

**Washington,      D.C. 20549**

**_____________________**

**FORM      10-Q**

**FOR      THE QUARTERLY PERIOD ENDED JUNE 30, 2006**

**_____________________**

**TXU      Corp.**

|  Texas                                    |   |   75-2669310                                                   |
|-----------------------------------------------------|--------|--------------------------------------------------------------------------|
|  (State                of Incorporation)  |   |  (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) |

**_____________________**

----

----

| **TABLE                OF CONTENTS**                                                                                                                                                                              |
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                                                                                                                                                                                                                        | **Page**** ** |
|  **Glossary**                                                                                                                                                                                                     | ii |
|  **Part                I.  ****Financial                information**                                                                                                                                   |   |
|  **Item                1.     Financial Statements** Condensed                Statements of Consolidated Income -Three                and Six Months Ended June 30, 2006 and 2005   | 1  |
| Condensed                Statements of Consolidated Comprehensive Income -Three                and Six Months Ended June 30, 2006 and 2005                                                                        | 2  |
| Condensed                Statements of Consolidated Cash Flows -Six                Months Ended June 30, 2006 and 2005                                                                                            | 3  |
| Condensed                Consolidated Balance Sheets -June                30, 2006 and December 31, 2005                                                                                                          | 5  |
| Notes                to Condensed Consolidated Financial Statements                                                                                                                                               | 6  |
| Report                of Independent Registered Public Accounting Firm                                                                                                                                                 | 32 |
|  **Item                2.    ****Management’s                Discussion and Analysis of Financial Condition****and                Results of Operations**                          | 33 |
| **Item                3.    ****Quantitative                and Qualitative Disclosures About Market Risk**                                                                                   | 72 |
| **Item                4.    ****Controls                and Procedures**                                                                                                                      | 77 |
| **Part                II.    ****Other                Information**                                                                                                                                |   |
| **Item                1.     ****Legal                Proceedings**                                                                                                                      | 78 |
| **Item                1A.         ****Risk                Factors**                                                                                                  | 78 |
| **Item                2.    ****Unregistered                Sales of Equity Securities and Use of Proceeds**                                                                                  | 80 |
| **Item                4.    ****Submission                of Matters to a Vote of Security Holders**                                                                                          | 80 |
| **Item                6.    ****Exhibits**                                                                                                                                                         | 81 |
| **Signature**                                                                                                                                                                                                          | 84 |
|                                                                                                                                                                                                                        |   |

**TXU      Corp. files periodic reports on Form 10-K and Form 10-Q and current reports      on      Form 8-K which are generally made available to the public, free of charge,      on      the TXU Corp. website at http://www.txucorp.com, shortly after they have been      filed with the Securities and Exchange Commission. To the extent any of those      reports are not posted on the TXU Corp. website, TXU Corp. will provide copies      of such reports upon request. The information on TXU Corp.’s website shall not      be deemed a part of, or incorporated by reference into, this report on Form      10-Q.**

**GLOSSARY**

| **1999                Restructuring Legislation**  | legislation                that restructured the electric utility industry in Texas to provide                for                retail competition                                                                                           |
|---------------------------------------------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| **2005                Form 10-K**                  | TXU                Corp.’s Annual Report on Form 10-K for the year ended December 31,                2005                                                                                                                               |
| **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**                                           | Emerging                Issues Task Force                                                                                                                                                                                                     |
| **EITF                02-3**                       | EITF                Issue 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                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                                                                                                                                                                                                                                |

| **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                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |
| **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 (generally gas plants) in generating electricity                and is                calculated by dividing the wholesale market price of power by the                market                price of natural gas.                                                                                                                                                                                         |
| **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                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |
| **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)                are required to be made available to those customers until January                1,                2007  |
| **PURA**                                         | Texas                Public Utility Regulatory Act                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |
| **reference                plants**              | eight                new power generation units to be built by subsidiaries of TXU Corp.                with a                proprietary standardized “reference” plant design and construction                planning process                                                                                                                                                                                                                                                                                                                                                                                          |
| **REP**                                          | retail                electric provider                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |
| **S&P**                                      | Standard                & Poor’s Ratings Services, a division of the McGraw Hill Inc.                Companies (a credit rating agency)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |
| **SEC**                                          | US                Securities and Exchange Commission                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |
| **SFAS**                                         | Statement                of Financial Accounting Standards issued by the FASB                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |
| **SFAS                109**                      | SFAS                No. 109, “Accounting for Income Taxes”                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |
| **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                143**               | SFAS                No. 143, “Accounting for Asset Retirement Obligations”                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |
| **SFAS                144**               | SFAS                No. 144, “Accounting for the Impairment or Disposal of Long-Lived                Assets”                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |
| **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                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |
| **TCEQ**                                  | Texas                Commission on Environmental Quality                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |
| **TXU                Big Brown**          | TXU                Big Brown Company LP, a Texas limited partnership and subsidiary                of TXU                Energy Holdings, which owns two lignite/coal-fired generation units                in                Texas                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |
| **TXU                Corp.**              | Refers                to TXU Corp., a holding company, and/or its consolidated subsidiaries,                depending on context. This Form 10-Q and other SEC filings of TXU                Corp.                and its subsidiaries occasionally make references to TXU Corp., TXU                Energy                Holdings 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                company 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 TXU Generation Development Company LLC, a Delaware limited liability                company and holding company subsidiary of TXU Corp., which has been                established for the purpose of developing and constructing new                lignite/coal-fired generation facilities in Texas. While an affiliate                of                TXU Energy Holdings, TXU DevCo is not a subsidiary of, or a parent                company                to, TXU Energy Holdings                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |
| **TXU                Electric Delivery**  | Refers                to TXU Electric Delivery Company, a subsidiary of TXU Corp., and/or                its                consolidated bankruptcy remote financing subsidiary, TXU Electric                Delivery                Transition Bond Company LLC, depending on context. This Form 10-Q                and                other SEC filings of TXU Corp. and its subsidiaries occasionally                make                references to TXU Corp., TXU Energy Holdings 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 company 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 TXU Energy Company LLC, a subsidiary of TXU Corp., and/or its                consolidated subsidiaries, depending on context. This Form 10-Q and                other                SEC filings of TXU Corp. and its subsidiaries occasionally make references                to TXU Corp., TXU Energy Holdings 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 company 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                Europe**                | TXU                Europe Limited, a former subsidiary of TXU Corp.                                                          |
|---------------------------------------------------|-----------------------------------------------------------------------------------------------------------------------------------|
| **TXU                Gas**                   | TXU                Gas Company, a former subsidiary of TXU Corp.                                                             |
| **TXU                Portfolio Management**  | TXU                Portfolio Management Company LP, a subsidiary of TXU Energy                Holdings                       |
| **US**                                       | United                States of America                                                                                      |
| **US                GAAP**                   | accounting                principles generally accepted in the US                                                            |
| **US                Holdings**               | TXU                US Holdings Company, a subsidiary of TXU Corp. and parent of TXU                Energy                Holdings |

**PART        I. FINANCIAL INFORMATION**

**Item        1.   FINANCIAL STATEMENTS**

**TXU        CORP. AND SUBSIDIARIES**

**CONDENSED        STATEMENTS OF CONSOLIDATED INCOME**

**(Unaudited)**

|                                                                                                           |   | **Three                  Months Ended**                              |    | **Six                  Months Ended** |   |
|----------------------------------------------------------------------------------------------------------------|--------|----------------------------------------------------------------------|---------|---------------------------------------|--------|
|                                                                                                           |   | **June                  30,**                                        |    | **June                  30,**         |   |
|                                                                                                           |   | **2006**                                                             |    | **2005**                              |   | **2006** |   | **2005** |   |
|                                                                                                           |   | **(millions                  of dollars, except per share amounts)** |    |
|                                                                                                           |   |                                                                 |    |                                  |   |   |   |   |   |
| **Operating                  revenues**                                                                   |   | $                                                                    | 2,667   |                                  | $      | 2,535 |   | $ | 4,971 |   | $ | 4,593 |   |
|                                                                                                           |   |                                                                 |    |                                  |   |   |   |   |   |   |   |   |   |
| Costs                  and expenses:                                                                           |   |                                                                 |    |                                  |   |   |   |   |   |   |   |   |   |
| Fuel,                  purchased power costs and delivery fees                                                 |   |                                                                 | 658     |                                  |   | 960 |   |   | 1,179 |   |   | 1,721 |   |
| Operating                  costs                                                                               |   |                                                                 | 341     |                                  |   | 359 |   |   | 684 |   |   | 692 |   |
| Depreciation                  and amortization                                                                 |   |                                                                 | 207     |                                  |   | 189 |   |   | 413 |   |   | 377 |   |
| Selling,                  general and administrative expenses                                                  |   |                                                                 | 181     |                                  |   | 177 |   |   | 370 |   |   | 359 |   |
| Franchise                  and revenue-based taxes                                                             |   |                                                                 | 87      |                                  |   | 81 |   |   | 174 |   |   | 165 |   |
| Other                  income (Note 14)                                                                        |   |                                                                 | (42     | )                                     |   | (18 | ) |   | (55 | ) |   | (69 | ) |
| Other                  deductions (Note 14)                                                                    |   |                                                                 | 221     |                                  |   | 33 |   |   | 221 |   |   | 38 |   |
| Interest                  income                                                                               |   |                                                                 | (11     | )                                     |   | ― |   |   | (20 | ) |   | (19 | ) |
| Interest                  expense and related charges (Note 15)                                                |   |                                                                 | 218     |                                  |   | 189 |   |   | 431 |   |   | 384 |   |
| Total                  costs and expenses                                                                      |   |                                                                 | 1,860   |                                  |   | 1,970 |   |   | 3,397 |   |   | 3,648 |   |
|                                                                                                           |   |                                                                 |    |                                  |   |   |   |   |   |   |   |   |   |
| Income                  from continuing operations before income taxes                                    |   |                                                                 | 807     |                                  |   | 565 |   |   | 1,574 |   |   | 945 |   |
|                                                                                                           |   |                                                                 |    |                                  |   |   |   |   |   |   |   |   |   |
| Income                  tax expense                                                                       |   |                                                                 | 310     |                                  |   | 182 |   |   | 561 |   |   | 155 |   |
|                                                                                                           |   |                                                                 |    |                                  |   |   |   |   |   |   |   |   |   |
| **Income                  from continuing operations**                                                    |   |                                                                 | 497     |                                  |   | 383 |   |   | 1,013 |   |   | 790 |   |
|                                                                                                           |   |                                                                 |    |                                  |   |   |   |   |   |   |   |   |   |
| Income                  (loss) from discontinued operations, net of tax effect (Note                  4)  |   |                                                                 | ― |                                  |   | (4 | ) |   | 60 |   |   | 11 |   |
|                                                                                                           |   |                                                                 |    |                                  |   |   |   |   |   |   |   |   |   |
| **Net                  income**                                                                           |   | $                                                                    | 497     |                                  | $      | 379 |   | $ | 1,073 |   | $ | 801 |   |
|                                                                                                           |   |                                                                 |    |                                  |   |   |   |   |   |   |   |   |   |
| Preference                  stock dividends                                                               |   |                                                                 | ― |                                  |   | 4 |   |   | ― |   |   | 10 |   |
|                                                                                                           |   |                                                                 |    |                                  |   |   |   |   |   |   |   |   |   |
| **Net                  income available to common shareholders**                                          |   | $                                                                    | 497     |                                  | $      | 375 |   | $ | 1,073 |   | $ | 791 |   |
|                                                                                                           |   |                                                                 |    |                                  |   |   |   |   |   |   |   |   |   |
| Average                  shares of common stock outstanding (millions):                                        |   |                                                                 |    |                                  |   |   |   |   |   |   |   |   |   |
| Basic                                                                                                          |   |                                                                 | 458     |                                  |   | 476 |   |   | 461 |   |   | 476 |   |
| Diluted                                                                                                   |   |                                                                 | 465     |                                  |   | 486 |   |   | 470 |   |   | 486 |   |
|                                                                                                           |   |                                                                 |    |                                  |   |   |   |   |   |   |   |   |   |
| Per                  share of common stock - Basic:                                                            |   |                                                                 |    |                                  |   |   |   |   |   |   |   |   |   |
|                      Income from continuing operations                                     |   | $                                                                    | 1.08    |                                  | $      | 0.81 |   | $ | 2.20 |   | $ | 1.66 |   |
| Preference                  stock dividends                                                               |   |                                                                 | ― |                                  |   | (0.01 | ) |   | ― |   |   | (0.02 | ) |
| Net                  income from continuing operations available for common stock                         |   |                                                                 | 1.08    |                                  |   | 0.80 |   |   | 2.20 |   |   | 1.64 |   |
| Discontinued                  operations, net of tax effect                                               |   |                                                                 | ― |                                  |   | (0.01 | ) |   | 0.13 |   |   | 0.02 |   |
| Net                  income available for common stock                                                    |   | $                                                                    | 1.08    |                                  | $      | 0.79 |   | $ | 2.33 |   | $ | 1.66 |   |
|                                                                                                           |   |                                                                 |    |                                  |   |   |   |   |   |   |   |   |   |
| Per                  share of common stock - Diluted:                                                          |   |                                                                 |    |                                  |   |   |   |   |   |   |   |   |   |
|                      Income from continuing operations                                     |   | $                                                                    | 1.07    |                                  | $      | 0.72 |   | $ | 2.16 |   | $ | 0.60 |   |
| Preference                  stock dividends                                                               |   |                                                                 | ― |                                  |   | (0.01 | ) |   | ― |   |   | (0.02 | ) |
| Net                  income from continuing operations available for common stock                         |   |                                                                 | 1.07    |                                  |   | 0.71 |   |   | 2.16 |   |   | 0.58 |   |
| Discontinued                  operations, net of tax effect                                               |   |                                                                 | ― |                                  |   | (0.01 | ) |   | 0.13 |   |   | 0.02 |   |
| Net                  income available for common stock                                                    |   | $                                                                    | 1.07    |                                  | $      | 0.70 |   | $ | 2.29 |   | $ | 0.60 |   |
|                                                                                                           |   |                                                                 |    |                                  |   |   |   |   |   |   |   |   |   |
| Dividends                  declared                                                                       |   | $                                                                    | 0.413   |                                  | $      | 0.281 |   | $ | 0.826 |   | $ | 0.563 |   |

**TXU        CORP. AND SUBSIDIARIES**

**CONDENSED        STATEMENTS OF CONSOLIDATED COMPREHENSIVE INCOME**

**(Unaudited)**

|                                                                                                                                                                                                                            |   | **Three                  Months Ended****June                  30,** |    | **Six                  Months Ended****June                  30,** |   |
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|----------------------------------------------------------------------|---------|--------------------------------------------------------------------|--------|
|                                                                                                                                                                                                                            |   | **2006**                                                             |    | **2005**                                                           |   | **2006** |   | **2005** |   |
|                                                                                                                                                                                                                            |   | **(millions                  of dollars)**                           |    |
|                                                                                                                                                                                                                            |   |                                                                 |    |                                                               |   |   |   |   |   |
| Components                  related to continuing operations:                                                                                                                                                                   |   |                                                                 |    |                                                               |   |   |   |   |   |
|                                                                                                                                                                                                                            |   |                                                                 |    |                                                               |   |   |   |   |   |
| Income                  from continuing operations                                                                                                                                                                         |   | $                                                                    | 497     |                                                               | $      | 383 |   | $ | 1,013 |   | $ | 790 |   |
|                                                                                                                                                                                                                            |   |                                                                 |    |                                                               |   |   |   |   |   |   |   |   |   |
| Other                  comprehensive income (loss):                                                                                                                                                                             |   |                                                                 |    |                                                               |   |   |   |   |   |   |   |   |   |
|                                                                                                                                                                                                                            |   |                                                                 |    |                                                               |   |   |   |   |   |   |   |   |   |
| Minimum                  pension liability adjustments (net of tax expense of$─,                  $9, $─ and $─)                                                                                         |   |                                                                 | ─ |                                                               |   | 16 |   |   | ─ |   |   | ─ |   |
|                                                                                                                                                                                                                            |   |                                                                 |    |                                                               |   |   |   |   |   |   |   |   |   |
| Cash                  flow hedges:                                                                                                                                                                                              |   |                                                                 |    |                                                               |   |   |   |   |   |   |   |   |   |
| Net                  change in fair value of derivatives held at end of period (net                  oftax                  benefit (expense) of $44, $1, $(16) and $(7)) (See Note                  12)                        |   |                                                                 | (83     | )                                                                  |   | (2 | ) |   | 30 |   |   | 13 |   |
| Derivative                  value net losses related to hedged transactions settled during                  the period                  and reported in net income (net of tax benefit of $6, $11, $6 and                  $22) |   |                                                                 | 12      |                                                               |   | 21 |   |   | 11 |   |   | 41 |   |
| Total                  effect of cash flow hedges                                                                                                                                                                               |   |                                                                 | (71     | )                                                                  |   | 19 |   |   | 41 |   |   | 54 |   |
|                                                                                                                                                                                                                            |   |                                                                 |    |                                                               |   |   |   |   |   |   |   |   |   |
| Comprehensive                  income from continuing operations                                                                                                                                                           |   |                                                                 | 426     |                                                               |   | 418 |   |   | 1,054 |   |   | 844 |   |
|                                                                                                                                                                                                                            |   |                                                                 |    |                                                               |   |   |   |   |   |   |   |   |   |
| Comprehensive                  income (loss) from discontinued operations                                                                                                                                                  |   |                                                                 | ─ |                                                               |   | (4 | ) |   | 60 |   |   | 11 |   |
|                                                                                                                                                                                                                            |   |                                                                 |    |                                                               |   |   |   |   |   |   |   |   |   |
| Comprehensive                  income                                                                                                                                                                                      |   | $                                                                    | 426     |                                                               | $      | 414 |   | $ | 1,114 |   | $ | 855 |   |

**TXU        CORP. AND SUBSIDIARIES**

**CONDENSED        STATEMENTS OF CONSOLIDATED CASH FLOWS**

**(Unaudited)**

|                                                                                                                                                    |   | **Six                  Months Ended**      |    |
|---------------------------------------------------------------------------------------------------------------------------------------------------------|--------|--------------------------------------------|---------|
|                                                                                                                                                    |   | **June                  30,**              |    |
|                                                                                                                                                    |   | **2006**                                   |    | **2005** |   |
|                                                                                                                                                    |   | **(millions                  of dollars)** |    |
| Cash                  flows - operating activities:                                                                            |   |                                       |    |   |   |
| Income                  from continuing operations                                                                                                 |   | $                                          | 1,013   |   | $ | 790 |   |
| Adjustments                  to reconcile income from continuing operations to cash provided                  by                  operating activities: |   |                                       |    |   |   |   |   |
| Depreciation                  and amortization                                                                                                     |   |                                       | 444     |   |   | 407 |   |
| Deferred                  income taxes and investment tax credits - net                                                                            |   |                                       | 319     |   |   | 4 |   |
| Impairment                  of natural gas-fired generation plants                                                                                 |   |                                       | 198     |   |   | ― |   |
| Inventory                  write-off related to natural gas-fired generation plants                                                                |   |                                       | 3       |   |   | ― |   |
| Net                  effect of unrealized mark-to-market valuations                                                                                |   |                                       | (29     | ) |   | (18 | ) |
| Charge                  (credit) related to impaired leases                                                                                        |   |                                       | 2       |   |   | (12 | ) |
| Net                  gain from sale of assets                                                                                                      |   |                                       | (24     | ) |   | (25 | ) |
| Gain                  on contract settlement                                                                                                       |   |                                       | (26     | ) |   | ― |   |
| Change                  in regulatory-related liabilities                                                                                          |   |                                       | ― |   |   | (41 | ) |
| Litigation                  settlement accrual                                                                                                     |   |                                       | 1       |   |   | (35 | ) |
| Charge                  related to coal contract counterparty claim                                                                                |   |                                       | ― |   |   | 12 |   |
| Net                  equity loss from unconsolidated affiliate                                                                                     |   |                                       | 7       |   |   | ― |   |
| Stock-based                  compensation expense                                                                                                  |   |                                       | 9       |   |   | 15 |   |
| Bad                  debt expense                                                                                                                  |   |                                       | 30      |   |   | 19 |   |
| Changes                  in operating assets and liabilities                                                                                       |   |                                       | (43     | ) |   | (522 | ) |
| Cash                  provided by operating activities from continuing                  operations                                                      |   |                                       | 1,904   |   |   | 594 |   |
|                                                                                                                                                    |   |                                       |    |   |   |   |   |
| Cash                  flows - financing activities:                                                                                                     |   |                                       |    |   |   |   |   |
| Issuances                  of securities:                                                                                                               |   |                                       |    |   |   |   |   |
| Long-term                  debt                                                                                                                    |   |                                       | 100     |   |   | 71 |   |
| Common                  stock                                                                                                                      |   |                                       | 180     |   |   | 4 |   |
| Retirements/repurchases                  of securities:                                                                                                 |   |                                       |    |   |   |   |   |
| Equity-linked                  debt                                                                                                                |   |                                       | (179    | ) |   | (31 | ) |
| Long-term                  debt                                                                                                                    |   |                                       | (1,346  | ) |   | (92 | ) |
| Common                  stock                                                                                                                      |   |                                       | (865    | ) |   | (530 | ) |
| Preference                  stock                                                                                                                  |   |                                       | ― |   |   | (300 | ) |
| Change                  in notes payable:                                                                                                               |   |                                       |    |   |   |   |   |
| Commercial                  paper                                                                                                                  |   |                                       | 905     |   |   | ― |   |
| Banks                                                                                                                                              |   |                                       | 800     |   |   | 1,110 |   |
| Cash                  dividends paid:                                                                                                                   |   |                                       |    |   |   |   |   |
| Common                  stock                                                                                                                      |   |                                       | (384    | ) |   | (274 | ) |
| Preference                  stock                                                                                                                  |   |                                       | ― |   |   | (11 | ) |
| Debt                  premium, discount, financing and reacquisition expenses                                                                      |   |                                       | (17     | ) |   | (29 | ) |
| Cash                  used in financing activities from continuing operations                                                                           |   |                                       | (806    | ) |   | (82 | ) |

**TXU        CORP. AND SUBSIDIARIES**

**CONDENSED        STATEMENTS OF CONSOLIDATED CASH FLOWS**

**(Unaudited)**

|                                                                                        |   | **Six                  Months Ended**      |    |
|---------------------------------------------------------------------------------------------|--------|--------------------------------------------|---------|
|                                                                                        |   | **June                  30,**              |    |
|                                                                                        |   | **2006**                                   |    | **2005** |   |
|                                                                                        |   | **(millions                  of dollars)** |    |
| Cash                  flows - investing activities:                                         |   |                                       |    |   |   |
| Capital                  expenditures                                                  |   |                                       | (825    | ) |   | (507 | ) |
| Nuclear                  fuel                                                          |   |                                       | (30     | ) |   | (26 | ) |
| Purchase                  of lease trust                                               |   |                                       | (69     | ) |   | ― |   |
| Proceeds                  from pollution control revenue bonds deposited with trustee  |   |                                       | (99     | ) |   | ― |   |
| Proceeds                  from sales of nuclear decommissioning trust fund securities  |   |                                       | 144     |   |   | 95 |   |
| Investments                  in nuclear decommissioning trust fund securities          |   |                                       | (151    | ) |   | (102 | ) |
| Investment                  in unconsolidated affiliate                                |   |                                       | (15     | ) |   | ― |   |
| Other                                                                                  |   |                                       | (17     | ) |   | 30 |   |
| Cash                  used in investing activities from continuing operations               |   |                                       | (1,062  | ) |   | (510 | ) |
|                                                                                        |   |                                       |    |   |   |   |   |
| Discontinued                  operations:                                                   |   |                                       |    |   |   |   |   |
| Cash                  used in operating activities                                     |   |                                       | (1      | ) |   | (21 | ) |
| Cash                  used in investing activities                                     |   |                                       | ― |   |   | (2 | ) |
| Cash                  used in discontinued operations                                  |   |                                       | (1      | ) |   | (23 | ) |
|                                                                                        |   |                                       |    |   |   |   |   |
| Net                  change in cash and cash equivalents                               |   |                                       | 35      |   |   | (21 | ) |
| Cash                  and cash equivalents - beginning balance                         |   |                                       | 37      |   |   | 106 |   |
| Cash                  and cash equivalents - ending balance                            |   | $                                          | 72      |   | $ | 85 |   |

**TXU        CORP. AND SUBSIDIARIES**

**CONDENSED        CONSOLIDATED BALANCE SHEETS**

**(Unaudited)**

|                                                                              |   | **June                  30,**              |    | **December                  31,** |   |
|-----------------------------------------------------------------------------------|--------|--------------------------------------------|---------|-----------------------------------|--------|
|                                                                              |   | **2006**                                   |    | **2005**                          |   |
|                                                                              |   | **(millions                  of dollars)** |    |
| **ASSETS**                                                                        |   |
| Current                  assets:                                             |   |                                       |    |                              |   |
| Cash                  and cash equivalents                                   |   | $                                          | 72      |                              | $      | 37 |   |
| Restricted                  cash                                             |   |                                       | 43      |                              |   | 54 |   |
| Trade                  accounts receivable — net                       |   |                                       | 1,015   |                              |   | 1,328 |   |
| Income                  taxes receivable                                     |   |                                       | ― |                              |   | 14 |   |
| Inventories                                                                  |   |                                       | 385     |                              |   | 364 |   |
| Commodity                  contract assets                                   |   |                                       | 607     |                              |   | 1,603 |   |
| Cash                  flow hedge and other derivative assets                 |   |                                       | 89      |                              |   | 65 |   |
| Accumulated                  deferred income taxes                           |   |                                       | 645     |                              |   | 717 |   |
| Margin                  deposits related to commodity positions              |   |                                       | 70      |                              |   | 247 |   |
| Other                  current assets                                        |   |                                       | 164     |                              |   | 129 |   |
| Total                  current assets                                             |   |                                       | 3,090   |                              |   | 4,558 |   |
|                                                                              |   |                                       |    |                              |   |   |   |
| Restricted                  cash                                             |   |                                       | 120     |                              |   | 16 |   |
| Investments                                                                  |   |                                       | 667     |                              |   | 643 |   |
| Property,                  plant and equipment — net                   |   |                                       | 17,524  |                              |   | 17,192 |   |
| Goodwill                                                                     |   |                                       | 542     |                              |   | 542 |   |
| Regulatory                  assets — net                               |   |                                       | 1,775   |                              |   | 1,826 |   |
| Commodity                  contract assets                                   |   |                                       | 197     |                              |   | 338 |   |
| Cash                  flow hedge and other derivative assets                 |   |                                       | 316     |                              |   | 75 |   |
| Other                  noncurrent assets                                     |   |                                       | 391     |                              |   | 349 |   |
|                                                                              |   |                                       |    |                              |   |   |   |
| Total                  assets                                                     |   | $                                          | 24,622  |                              | $      | 25,539 |   |
|                                                                              |
| **LIABILITIES                  AND SHAREHOLDERS’ EQUITY**                   |
| Current                  liabilities:                                             |   |                                       |    |                              |   |   |   |
| Notes                  payable:                                                   |   |                                       |    |                              |   |   |   |
| Commercial                  paper                                            |   | $                                          | 1,263   |                              | $      | 358 |   |
| Banks                                                                             |   |                                       | 1,240   |                              |   | 440 |   |
| Long-term                  debt due currently                                |   |                                       | 169     |                              |   | 1,250 |   |
| Trade                  accounts payable                                      |   |                                       | 811     |                              |   | 1,026 |   |
| Commodity                  contract liabilities                              |   |                                       | 637     |                              |   | 1,481 |   |
| Cash                  flow hedge and other derivative liabilities            |   |                                       | 65      |                              |   | 275 |   |
| Margin                  deposits related to commodity positions              |   |                                       | 54      |                              |   | 357 |   |
| Other                  current liabilities                                   |   |                                       | 977     |                              |   | 1,163 |   |
| Total                  current liabilities                                        |   |                                       | 5,216   |                              |   | 6,350 |   |
|                                                                              |   |                                       |    |                              |   |   |   |
| Accumulated                  deferred income taxes                           |   |                                       | 3,955   |                              |   | 3,697 |   |
| Investment                  tax credits                                      |   |                                       | 374     |                              |   | 384 |   |
| Commodity                  contract liabilities                              |   |                                       | 346     |                              |   | 516 |   |
| Cash                  flow hedge and other derivative liabilities            |   |                                       | 477     |                              |   | 91 |   |
| Long-term                  debt, less amounts due currently                  |   |                                       | 10,872  |                              |   | 11,332 |   |
| Other                  noncurrent liabilities and deferred credits           |   |                                       | 2,793   |                              |   | 2,694 |   |
| Total                  liabilities                                                |   |                                       | 24,033  |                              |   | 25,064 |   |
|                                                                              |   |                                       |    |                              |   |   |   |
| Commitments                  and Contingencies (Note 9)                           |   |                                       |    |                              |   |   |   |
|                                                                              |   |                                       |    |                              |   |   |   |
| Shareholders’                  equity (Note 8):                             |   |                                       |    |                              |   |   |   |
| Common                  stock without par value: Authorized shares: 1,000,000,000 |   |                                       |    |                              |   |   |   |
| Outstanding                  shares: 461,613,546 and 470,845,978             |   |                                       | 5       |                              |   | 5 |   |
| Additional                  paid-in capital                                  |   |                                       | 1,217   |                              |   | 1,840 |   |
| Retained                  deficit                                            |   |                                       | (472    | )                                 |   | (1,168 | ) |
| Accumulated                  other comprehensive loss                        |   |                                       | (161    | )                                 |   | (202 | ) |
| Total                  shareholders’ equity                            |   |                                       | 589     |                              |   | 475 |   |
| Total                  liabilities and shareholders’ equity                 |   | $                                          | 24,622  |                              | $      | 25,539 |   |

**TXU        CORP. AND SUBSIDIARIES**

**NOTES        TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**

**(Unaudited)**

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

***Description        of Business***

***Basis        of Presentation***

***Stock        Split***

***Discontinued        Businesses***

***Use        of Estimates***

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

***Earnings        Per Share ─***

***Changes        in Accounting Standards —***

| **2.** | **IMPAIRMENT                  OF NATURAL GAS-FIRED GENERATION                  PLANTS** |
|--------|-----------------------------------------------------------------------------------------|

| **3.** | **TEXAS                  MARGIN TAX** |
|--------|---------------------------------------|

| **4.** | **DISCONTINUED                  OPERATIONS** |
|--------|----------------------------------------------|

|   |                                                 |   | **Three                  Months Ended** |   |   | **Six                  Months Ended** |   |
|--------|------------------------------------------------------|--------|-----------------------------------------|--------|--------|---------------------------------------|--------|
|   |                                                 |   | **June                  30, 2005**      |   |   | **June                  30, 2005**    |   |
|   | Operating                  revenues                  | $      | 6                                       |   | $      | 12                                    |   |
|   | Operating                  costs and expenses        |   | 7                                       |   |   | 14                                    |   |
|   | Operating                  loss before income taxes  |   | (1)                                     |   |   | (2)                                   |   |
|   | Income                  tax benefit                  |   | ―                                 |   |   | ―                               |   |
|   | Charges                  related to exit (after-tax) |   | ―                                 |   |   | (2)                                   |   |
|   | Loss                  from discontinued operations   | $      | (1)                                     |   | $      | (4)                                   |   |

| **5.** | **TAX                  BENEFIT RELATED TO TXU                  EUROPE** |
|--------|-------------------------------------------------------------------------|

| **6****.** | **TRADE                  ACCOUNTS RECEIVABLE AND SALE OF RECEIVABLES                  PROGRAM** |
|------------|-------------------------------------------------------------------------------------------------|

***Sale        of Receivables***

|                                                                                                |   | **Six                  Months Ended June 30,** |   |
|-----------------------------------------------------------------------------------------------------|--------|------------------------------------------------|--------|
|                                                                                                |   | **2006**                                       |   | **2005** |   |
|                                                                                                |   |                                           |   |   |   |
| Cash                  collections on accounts receivable                                       |   | $                                              | 3,705  |   | $ | 3,213 |   |
| Face                  amount of new receivables purchased                                      |   |                                           | (3,763 | ) |   | (3,144 | ) |
| Discount                  from face amount of purchased receivables                            |   |                                           | 20     |   |   | 11 |   |
| Program                  fees paid                                                             |   |                                           | (18    | ) |   | (9 | ) |
| Servicing                  fees paid                                                           |   |                                           | (2     | ) |   | (2 | ) |
| Increase                  (decrease) in subordinated notes payable                             |   |                                           | 29     |   |   | (58 | ) |
| Operating                  cash flows used by (provided to) TXU Corp. under the program   |   | $                                              | (29    | ) | $ | 11 |   |

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

***Trade        Accounts Receivable***

|                                                                                    |   | **June                  30,** |   | **December                  31,** |   |
|-----------------------------------------------------------------------------------------|--------|-------------------------------|--------|-----------------------------------|--------|
|                                                                                    |   | **2006**                      |   | **2005**                          |   |
| Gross                  trade accounts receivable                                   |   | $                             | 1,738  |                              | $      | 2,035 |   |
| Undivided                  interests in accounts receivable sold by TXU                 |   |                          |   |                              |   |   |   |
| Receivables                  Company                                                    |   |                          | (700   | )                                 |   | (671 | ) |
| Allowance                  for uncollectible accounts related to undivided interests in |   |                          |   |                              |   |   |   |
| receivables                  retained                                                   |   |                          | (23    | )                                 |   | (36 | ) |
| Trade                  accounts receivable ― reported in balance sheet       |   | $                             | 1,015  |                              | $      | 1,328 |   |

***Allowance        for Uncollectible Accounts Receivable***

|                                                                                   |   | **2006** |   | **2005** |   |
|----------------------------------------------------------------------------------------|--------|----------|--------|----------|--------|
|                                                                                   |   |     |   |     |   |
| Allowance                  for uncollectible accounts receivable as of January 1  |   | $        | 36     |     | $      | 16 |   |
| Increase                  for bad debt expense                                         |   |     | 30     |     |   | 19 |   |
| Decrease                  for account write-offs                                       |   |     | (41    | )        |   | (31 | ) |
| Changes                  related to receivables sold                                   |   |     | 13     |     |   | 19 |   |
| Other                  (a)                                                             |   |     | (15    | )        |   | 15 |   |
| Allowance                  for uncollectible accounts receivable as of June 30    |   | $        | 23     |     | $      | 38 |   |

| (a)   | Reflects                an allowance established in 2005 for a coal contract dispute that                was                reversed upon settlement in 2006. See Note                14. |
|-----------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| **7.** | **SHORT-TERM                  AND LONG-TERM DEBT** |
|--------|----------------------------------------------------|

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

***Credit        Facilities***
** **

|                                                        |                           | **At                  June 30, 2006** |
|-------------------------------------------------------------|--------------------------------|---------------------------------------|
| **Authorized**                                              | **Maturity**                   | **Facility**                          | **Letters                  of** | **Cash** |   |
| **Borrowers**                                               | **Date**                       | **Limit**                             | **Credit** | **Borrowings** | **Availability** |
| TXU                  Energy Holdings                        | May                  2007      | $1,500                                | $                    ―  | $                    ―  | $1,500 |
| TXU                  Energy Holdings, TXU Electric Delivery | June                  2008     | 1,400                                 | 505 | 180  | 715 |
| TXU                  Energy Holdings, TXU Electric Delivery | August                  2008   | 1,000                                 | ― | 495 | 505 |
| TXU                  Energy Holdings, TXU Electric Delivery | March                  2010    | 1,600                                 | 500 | 280 | 820 |
| TXU                  Energy Holdings, TXU Electric Delivery | June                  2010     | 500                                   | ― | 240 | 260 |
| TXU                  Energy Holdings                        | December                  2009 | 500                                   | 455 | 45 | ― |
|     Total                               |                           | $6,500                                | $1,460 | $1,240 | $3,800 |

***Long-term          debt***

|                                                                                                                                                                              |   | **June                    30,** |    | **December                    31,** |   |
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|---------------------------------|---------|-------------------------------------|--------|
|                                                                                                                                                                              |   | **2006**                        |    | **2005**                            |   |
| TXU                    Energy Holdings                                                                                                                                            |   |                            |    |                                |   |
| 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 |   |
|                        3.980% Floating Series 2001A due October 1, 2030 (d)                                                                                        |   |                            | 71      |                                |   | 71 |   |
|                        4.750% Fixed Series 2001B due May 1, 2029, remarketing date November                    1,                    2006(a)                       |   |                            | 19      |                                |   | 19 |   |
|                        5.750% Fixed Series 2001C due May 1, 2036, remarketing date November                    1,                    2011(a)                       |   |                            | 217     |                                |   | 217 |   |
|                        4.020% Floating Series 2001D due May 1, 2033 (d)                                                                                            |   |                            | 268     |                                |   | 268 |   |
|                        5.350% Floating Taxable Series 2001I due December 1,                    2036(d)                                                             |   |                            | 62      |                                |   | 62 |   |
|                        3.980% Floating Series 2002A due May 1, 2037(d)                                                                                             |   |                            | 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 |   |
|                        5.750% 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 |   |
|                                                                                                                                                                              |   |                            |    |                                |   |   |   |
| 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)                       |   |                            | 37      |                                |   | 37 |   |
|                                                                                                                                                                              |   |                            |    |                                |   |   |   |
|                        Other:                                                                                                                                      |   |                            |    |                                |   |   |   |
|                        6.125% Fixed Senior Notes due March 15, 2008(e)                                                                                             |   |                            | 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                                                                                                                   |   |                            | 101     |                                |   | 103 |   |
|                        Fair value adjustments related to interest rate swaps                                                                                       |   |                            | 8       |                                |   | 9 |   |
| Total                    TXU Energy Holdings                                                                                                                                      |   | $                               | 2,950   |                                | $      | 3,456 |   |

|                                                                                                                                                                                                                                                                                                                                               |   | **June                    30,** |    | **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(e)                                                                                                                                                                                                                                                            |   |                            | 500     |                                |   | 500 |   |
|                        7.250% Fixed Senior Notes due January 15, 2033                                                                                                                                                                                                                                                               |   |                            | 350     |                                |   | 350 |   |
|                        5.000% Fixed Debentures due September 1, 2007(e)                                                                                                                                                                                                                                                             |   |                            | 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:(g)                                                                                                                                                                                                                                                                           |   |                            |    |                                |   |   |   |
|                        2.260% Fixed Series 2003 Bonds due in semiannual installments                    through                    February 15, 2007                                                                                                                                                                                |   |                            | 23      |                                |   | 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                                                                                                                                                                                                   |   |                            | 189     |                                |   | 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                                                                                                                                                                                                                                                                         |   |                            | 1,120   |                                |   | 1,167 |   |
| Total                    TXU Electric Delivery                                                                                                                                                                                                                                                                                                     |   |                            | 4,154   |                                |   | 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                                                                                                                                                                                             |   |                            | 65      |                                |   | 65 |   |
|                        8.254% Fixed Notes due in quarterly installments through December                    31,                    2021                                                                                                                                                                                             |   |                            | 60      |                                |   | 62 |   |
|                        5.949% Floating Rate Junior Subordinated Debentures, Series D                    due January                    30, 2037(f)                                                                                                                                                                                  |   |                            | 1       |                                |   | 1 |   |
|                        8.175% Fixed Junior Subordinated Debentures, Series E due January                    30,                    2037                                                                                                                                                                                             |   |                            | 8       |                                |   | 8 |   |
|                        Unamortized premium                                                                                                                                                                                                                                                                                          |   |                            | 5       |                                |   | 5 |   |
|                       Total US Holdings                                                                                                                                                                                                                                                                                                  |   |                            | 234     |                                |   | 242 |   |
|                                                                                                                                                                                                                                                                                                                                               |   |                            |    |                                |   |   |   |
| TXU                    Corp.                                                                                                                                                                                                                                                                                                                       |   |                            |    |                                |   |   |   |
|                        6.375% Fixed Senior Notes Series C due January 1, 2008(e)                                                                                                                                                                                                                                                    |   |                            | 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      |                                |   | 50 |   |
|                        5.800% Fixed Senior Notes Series M due May 16, 2008 (h)                                                                                                                                                                                                                                                      |   |                            | ― |                                |   | 179 |   |
|                        4.800% Fixed Senior Notes Series O due November 15,                    2009(e)                                                                                                                                                                                                                               |   |                            | 1,000   |                                |   | 1,000 |   |
|                        5.550% Fixed Senior Notes Series P due November 15,                    2014(e)                                                                                                                                                                                                                               |   |                            | 1,000   |                                |   | 1,000 |   |
|                        6.500% Fixed Senior Notes Series Q due November 15,                    2024(e)                                                                                                                                                                                                                               |   |                            | 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                                                                                                                                                                                                                      |   |                            | 104     |                                |   | 109 |   |
|                        6.577% Floating Convertible Senior Notes due July 15,                    2033(f)                                                                                                                                                                                                                             |   |                            | 25      |                                |   | 25 |   |
|                        Fair value adjustments related to interest rate swaps                                                                                                                                                                                                                                                        |   |                            | (167    | )                                   |   | (53 | ) |
|                        Unamortized discount                                                                                                                                                                                                                                                                                         |   |                            | (9      | )                                   |   | (9 | ) |
|                        Total TXU Corp.                                                                                                                                                                                                                                                                                              |   |                            | 3,703   |                                |   | 4,684 |   |
|                                                                                                                                                                                                                                                                                                                                               |   |                            |    |                                |   |   |   |
| Total                    TXU Corp. consolidated                                                                                                                                                                                                                                                                                                    |   |                            | 11,041  |                                |   | 12,582 |   |
| Less                    amount due currently                                                                                                                                                                                                                                                                                                       |   |                            | (169    | )                                   |   | (1,250 | ) |
| Total                    long-term debt                                                                                                                                                                                                                                                                                                            |   | $                               | 10,872  |                                | $      | 11,332 |   |
|                                                                                                                                                                                                                                                                                                                                               |
|                                                                                                                                                                                                                                                                                                                                               |
| (a) These                    series are in the multiannual 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) Interest                    rates in effect at June 30, 2006. These series are in a weekly                    rate mode                    and are classified as long-term as they are supported by long-term                    irrevocable letters of credit.                                                                           |
| (e) Interest                    rates swapped to variable on $2.8 billion of $3.9 billion aggregate                    principal amount.                                                                                                                                                                                                      |
| (f) Interest                    rates in effect at June 30, 2006.                                                                                                                                                                                                                                                                             |
| (g) These                    bonds are nonrecourse to TXU Electric Delivery.                                                                                                                                                                                                                                                                  |
| (h) Equity-linked.                                                                                                                                                                                                                                                                                                                            |

***Debt        Issuances and Retirements in 2006***

***Fair        Value Hedges***
*** ***

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

|                                                                                                                                                                                               |   | **June                  30, 2006** |   |
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|------------------------------------|--------|
| Long-term                  debt fair value adjustments related to interest rate swaps atbeginning                  of period ― net reduction in debt carrying value                          |   | $                                  | (44    | ) |
| Fair                  value adjustments during the period                                                                                                                                     |   |                               | (110   | ) |
| Amortization                  of net gains on settled fair value hedges (a)                                                                                                                        |   |                               | (5     | ) |
| Long-term                  debt fair value adjustments at end of period ― net reduction                  in debt                  carrying value (net out-of-the-money value of swaps)  |   | $                                  | (159   | ) |

| (a)   | Net                value of settled in-the-money fixed-to-variable swaps that is being                amortized as a reduction to interest expense over the remaining life                of                the associated debt. Amount is pretax. |
|-----------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| **8.** | **SHAREHOLDERS’                  EQUITY** |
|--------|-------------------------------------------------|

***Declaration        of dividend***

***Dividend        Restrictions***

***Common        Stock Repurchases and Issuances***
*—        *

|                                                                |   | **Common****Stock** |    | **Additional**** Paid-in****Capital** |   | **Retained****Earnings****(Deficit)** |   | **Accumulated****Other****Comprehensive****Gain                  (Loss)** |    | **Total****Shareholders’****Equity** |   |
|---------------------------------------------------------------------|--------|---------------------|---------|--------------------------------------------|--------|---------------------------------------|--------|---------------------------------------------------------------------------|---------|--------------------------------------------|--------|
|                                                                |   |                |    |                                       |   |                                  |   |                                                                      |    |                                       |   |
| Balance                  at December 31, 2005                  |   | $                   | 5       |                                       | $      | 1,840                                 |   | $                                                                         | (1,168  | )                                          | $      | (202 | ) | $ | 475 |   |
| Common                  stock issuances                             |   |                | ─ |                                       |   | 180                                   |   |                                                                      | ─ |                                       |   | ─ |   |   | 180 |   |
| Common                  stock repurchases                           |   |                | ─ |                                       |   | (865                                  | )      |                                                                      | ─ |                                       |   | ─ |   |   | (865 | ) |
| Net                  effects of cash flow hedges                    |   |                | ─ |                                       |   | ─                               |   |                                                                      | ─ |                                       |   | 41 |   |   | 41 |   |
| Dividends                                                           |   |                | ─ |                                       |   | ─                               |   |                                                                      | (380    | )                                          |   | ─ |   |   | (380 | ) |
| Net                  income                                         |   |                | ─ |                                       |   | ─                               |   |                                                                      | 1,073   |                                       |   | ─ |   |   | 1,073 |   |
| Effects                  of incentive compensation plans            |   |                | ─ |                                       |   | 50                                    |   |                                                                      | ─ |                                       |   | ─ |   |   | 50 |   |
| Special                  allocation to Thrift Plan by LESOP trustee |   |                | ─ |                                       |   | 5                                     |   |                                                                      | ─ |                                       |   | ─ |   |   | 5 |   |
| Other                                                               |   |                | ─ |                                       |   | 7                                     |   |                                                                      | 3       |                                       |   | ─ |   |   | 10 |   |
| Balance                  at June 30, 2006                      |   | $                   | 5       |                                       | $      | 1,217                                 |   | $                                                                         | (472    | )                                          | $      | (161 | ) | $ | 589 |   |

**9.    **
**COMMITMENTS        AND CONTINGENCIES**

***Generation        Development Program —***

***Guarantees        —***

*Disposed        TXU Gas operations — *

* *

*Letters        of credit*

*Residual        value guarantees in operating leases*

*Indebtedness        guarantee — *
* *
* *

***Income        Tax Contingencies***

*TXU        Corp. 1997-2002 Audit*

*TXU        Corp. 2003-2005 Audit *

*TXU        Gas (formerly ENSERCH Corporation) Audits*

*TXU        Europe*

***Legal        Proceedings***

* *

***Environmental        Contingencies***

| ·   | changes                to** **existing                state or federal regulation by governmental authorities having                jurisdiction over air quality, water quality, control of toxic substances                and hazardous and solid wastes, and other environmental                matters; |
|--------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| ·   | 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. |
|--------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

**10.  **
**PENSION        AND OTHER POSTRETIREMENT BENEFITS**

|                                                                                       |   | **Three                  Months Ended June 30,** |   | **Six                  Months Ended June 30,** |   |
|--------------------------------------------------------------------------------------------|--------|--------------------------------------------------|--------|------------------------------------------------|--------|
|                                                                                       |   |
|                                                                                       |   | **2006**                                         |   | **2005**                                       |   | **2006** |   | **2005** |   |
| Components                  of net pension costs:                                          |   |                                             |   |                                           |   |   |   |   |   |
| Service                  cost                                                         |   | $                                                | 11     |                                           | $      | 8 |   | $ | 21 |   | $ | 19 |   |
| Interest                  cost                                                        |   |                                             | 34     |                                           |   | 25 |   |   | 68 |   |   | 65 |   |
| Expected                  return on assets                                            |   |                                             | (37    | )                                              |   | (28 | ) |   | (73 | ) |   | (73 | ) |
| Amortization                  of unrecognized prior service cost                      |   |                                             | 1      |                                           |   | 1 |   |   | 1 |   |   | 2 |   |
| Amortization                  of net loss                                             |   |                                             | 8      |                                           |   | 5 |   |   | 16 |   |   | 10 |   |
| Net                  pension cost                                                     |   |                                             | 17     |                                           |   | 11 |   |   | 33 |   |   | 23 |   |
| Components                  of net other postretirement benefit costs:                     |   |                                             |   |                                           |   |   |   |   |   |   |   |   |   |
| Service                  cost                                                         |   |                                             | 3      |                                           |   | 4 |   |   | 6 |   |   | 7 |   |
| Interest                  cost                                                        |   |                                             | 15     |                                           |   | 14 |   |   | 30 |   |   | 28 |   |
| Expected                  return on assets                                            |   |                                             | (5     | )                                              |   | (5 | ) |   | (10 | ) |   | (10 | ) |
| Amortization                  of unrecognized net transition asset                    |   |                                             | 1      |                                           |   | ─ |   |   | 1 |   |   | 1 |   |
| Amortization                  of unrecognized prior service cost                      |   |                                             | (1     | )                                              |   | (1 | ) |   | (2 | ) |   | (2 | ) |
| Amortization                  of net loss                                             |   |                                             | 7      |                                           |   | 6 |   |   | 15 |   |   | 12 |   |
| Net                  other postretirement benefit cost                                |   |                                             | 20     |                                           |   | 18 |   |   | 40 |   |   | 36 |   |
|                                                                                       |   |                                             |   |                                           |   |   |   |   |   |   |   |   |   |
| Net                  pension and other postretirement benefit costs                   |   |                                             | 37     |                                           |   | 29 |   |   | 73 |   |   | 59 |   |
| Less                  amounts deferred principally as a regulatory asset or property  |   |                                             | (21    | )                                              |   | (25 | ) |   | (41 | ) |   | (29 | ) |
| Net                  amounts recognized as expense                                    |   | $                                                | 16     |                                           | $      | 4 |   | $ | 32 |   | $ | 30 |   |

***Regulatory        Recovery of Pension and Other Postretirement Benefit        Costs***

**11.  **
**COMMODITY        CONTRACT ASSETS AND LIABILITIES**

**12.  **
**CASH        FLOW HEDGES UNDER SFAS 133**

| **13.** | **SEGMENT                  INFORMATION** |
|---------|------------------------------------------|

**TXU        Energy Holdings segment**

**TXU        Electric Delivery segment**

**Corporate        and Other**

|                                                                 |   | **Three                  Months Ended** |    | **Six                  Months Ended** |   |
|----------------------------------------------------------------------|--------|-----------------------------------------|---------|---------------------------------------|--------|
|                                                                 |   | **June                  30,**           |    | **June                  30,**         |   |
|                                                                 |   | **2006**                                |    | **2005**                              |   | **2006** |   | **2005** |   |
|                                                                 |   |                                    |    |                                  |   |   |   |   |   |
| Operating                  revenues:                                 |   |                                    |    |                                  |   |   |   |   |   |
| TXU                  Energy Holdings                            |   | $                                       | 2,349   |                                  | $      | 2,276 |   | $ | 4,359 |   | $ | 4,097 |   |
| TXU                  Electric Delivery                          |   |                                    | 604     |                                  |   | 564 |   |   | 1,166 |   |   | 1,114 |   |
| Corporate                  and Other                            |   |                                    | 14      |                                  |   | 6 |   |   | 27 |   |   | 12 |   |
| Eliminations                                                    |   |                                    | (300    | )                                     |   | (311 | ) |   | (581 | ) |   | (630 | ) |
| Consolidated                                                         |   | $                                       | 2,667   |                                  | $      | 2,535 |   | $ | 4,971 |   | $ | 4,593 |   |
|                                                                 |   |                                    |    |                                  |   |   |   |   |   |   |   |   |   |
| Regulated                  revenues included in operating revenues:  |   |                                    |    |                                  |   |   |   |   |   |   |   |   |   |
| TXU                  Energy Holdings                            |   | $                                       | ― |                                  | $      | ― |   | $ | ― |   | $ | ― |   |
| TXU                  Electric Delivery                          |   |                                    | 604     |                                  |   | 564 |   |   | 1,166 |   |   | 1,114 |   |
| Corporate                  and Other                            |   |                                    | ― |                                  |   | ― |   |   | ― |   |   | ― |   |
| Eliminations                                                    |   |                                    | (284    | )                                     |   | (304 | ) |   | (551 | ) |   | (615 | ) |
| Consolidated                                                         |   | $                                       | 320     |                                  | $      | 260 |   | $ | 615 |   | $ | 499 |   |
|                                                                 |   |                                    |    |                                  |   |   |   |   |   |   |   |   |   |
| Affiliated                  revenues included in operating revenues: |   |                                    |    |                                  |   |   |   |   |   |   |   |   |   |
| TXU                  Energy Holdings                            |   | $                                       | 3       |                                  | $      | 2 |   | $ | 4 |   | $ | 4 |   |
| TXU                  Electric Delivery                          |   |                                    | 284     |                                  |   | 304 |   |   | 551 |   |   | 615 |   |
| Corporate                  and Other                            |   |                                    | 13      |                                  |   | 5 |   |   | 26 |   |   | 11 |   |
| Eliminations                                                    |   |                                    | (300    | )                                     |   | (311 | ) |   | (581 | ) |   | (630 | ) |
| Consolidated                                                         |   | $                                       | ― |                                  | $      | ― |   | $ | ― |   | $ | ― |   |
|                                                                 |   |                                    |    |                                  |   |   |   |   |   |   |   |   |   |
| Income                  from continuing operations:                  |   |                                    |    |                                  |   |   |   |   |   |   |   |   |   |
| TXU                  Energy Holdings                            |   | $                                       | 461     |                                  | $      | 345 |   | $ | 981 |   | $ | 548 |   |
| TXU                  Electric Delivery                          |   |                                    | 86      |                                  |   | 86 |   |   | 151 |   |   | 157 |   |
| Corporate                  and Other                            |   |                                    | (50     | )                                     |   | (48 | ) |   | (119 | ) |   | 85 |   |
| Consolidated                                                         |   | $                                       | 497     |                                  | $      | 383 |   | $ | 1,013 |   | $ | 790 |   |

**14.  **
**OTHER        INCOME AND DEDUCTIONS**

|                                                                                      |   | **Three                  Months Ended** |    | **Six                  Months Ended** |   |
|-------------------------------------------------------------------------------------------|--------|-----------------------------------------|---------|---------------------------------------|--------|
|                                                                                      |   | **June                  30,**           |    | **June                  30,**         |   |
|                                                                                      |   | **2006**                                |    | **2005**                              |   | **2006** |   | **2005** |   |
| Other                  income:                                                            |   |                                    |    |                                  |   |   |   |   |   |
| Gain                  on contract settlement                                         |   | $                                       | 26      |                                  | $      | ― |   | $ | 26 |   | $ | ― |   |
| Net                  gain on sale of properties and businesses                       |   |                                    | 12      |                                  |   | 11 |   |   | 24 |   |   | 25 |   |
| Power                  services agreement termination fee                            |   |                                    | ― |                                  |   | 4 |   |   | ― |   |   | 4 |   |
| Insurance                  recovery of litigation settlement                         |   |                                    | ― |                                  |   | ― |   |   | ― |   |   | 35 |   |
| Other                                                                                |   |                                    | 4       |                                  |   | 3 |   |   | 5 |   |   | 5 |   |
| Total                  other income                                                       |   | $                                       | 42      |                                  | $      | 18 |   | $ | 55 |   | $ | 69 |   |
| Other                  deductions:                                                        |   |                                    |    |                                  |   |   |   |   |   |   |   |   |   |
| Charge                  for impairment of natural gas-fired generation plants        |   | $                                       | 198     |                                  | $      | ― |   | $ | 198 |   | $ | ― |   |
| Equity                  losses in unconsolidated affiliate                           |   |                                    | 7       |                                  |   | ― |   |   | 7 |   |   | ― |   |
| Charge                  (credit) related to coal contract counterparty claim         |   |                                    | ― |                                  |   | ― |   |   | (12 | ) |   | 12 |   |
| Inventory                  write-off related to natural gas-fired generation plants  |   |                                    | 3       |                                  |   | ― |   |   | 3 |   |   | ― |   |
| Retirement                  benefit costs related to discontinued businesses         |   |                                    | 5       |                                  |   | 6 |   |   | 10 |   |   | 8 |   |
| Capgemini                  outsourcing transition costs                              |   |                                    | ― |                                  |   | 3 |   |   | ― |   |   | 8 |   |
| Employee                  severance                                                  |   |                                    | ― |                                  |   | 3 |   |   | ― |   |   | 2 |   |
| Charge                  (credit) related to impaired leases                          |   |                                    | 1       |                                  |   | 3 |   |   | 2 |   |   | (12 | ) |
| Litigation                  settlements                                              |   |                                    | 1       |                                  |   | 11 |   |   | 1 |   |   | 11 |   |
| Other                                                                                |   |                                    | 6       |                                  |   | 7 |   |   | 12 |   |   | 9 |   |
| Total                  other deductions                                                   |   | $                                       | 221     |                                  | $      | 33 |   | $ | 221 |   | $ | 38 |   |

**15.  **
**SUPPLEMENTARY        FINANCIAL INFORMATION**

***Regulated        Versus Unregulated Operations***

|                                                                                   |   | **Three                  Months Ended** |   | **Six                  Months Ended** |   |
|----------------------------------------------------------------------------------------|--------|-----------------------------------------|--------|---------------------------------------|--------|
|                                                                                   |   | **June                  30,**           |   | **June                  30,**         |   |
|                                                                                   |   | **2006**                                |   | **2005**                              |   | **2006** |   | **2005** |   |
| Operating                  revenues:                                                   |   |                                    |   |                                  |   |   |   |   |   |
| Regulated                                                                         |   | $                                       | 604    |                                  | $      | 564 |   | $ | 1,166 |   | $ | 1,114 |   |
| Unregulated                                                                       |   |                                    | 2,363  |                                  |   | 2,282 |   |   | 4,386 |   |   | 4,109 |   |
| Intercompany                  sales eliminations - regulated                      |   |                                    | (284   | )                                     |   | (304 | ) |   | (551 | ) |   | (615 | ) |
| Intercompany                  sales eliminations - unregulated                    |   |                                    | (16    | )                                     |   | (7 | ) |   | (30 | ) |   | (15 | ) |
| Total                  operating revenues                                              |   |                                    | 2,667  |                                  |   | 2,535 |   |   | 4,971 |   |   | 4,593 |   |
| Costs                  and operating expenses:                                         |   |                                    |   |                                  |   |   |   |   |   |   |   |   |   |
| Fuel,                  purchased power costs and delivery fees - unregulated (a)  |   |                                    | 658    |                                  |   | 960 |   |   | 1,179 |   |   | 1,721 |   |
| Operating                  costs - regulated                                      |   |                                    | 194    |                                  |   | 180 |   |   | 385 |   |   | 362 |   |
| Operating                  costs - unregulated                                    |   |                                    | 147    |                                  |   | 179 |   |   | 299 |   |   | 330 |   |
| Depreciation                  and amortization - regulated                        |   |                                    | 117    |                                  |   | 108 |   |   | 231 |   |   | 213 |   |
| Depreciation                  and amortization - unregulated                      |   |                                    | 90     |                                  |   | 81 |   |   | 182 |   |   | 164 |   |
| Selling,                  general and administrative expenses - regulated         |   |                                    | 43     |                                  |   | 42 |   |   | 90 |   |   | 90 |   |
| Selling,                  general and administrative expenses - unregulated       |   |                                    | 138    |                                  |   | 135 |   |   | 280 |   |   | 269 |   |
| Franchise                  and revenue-based taxes - regulated                    |   |                                    | 59     |                                  |   | 56 |   |   | 119 |   |   | 114 |   |
| Franchise                  and revenue-based taxes - unregulated                  |   |                                    | 28     |                                  |   | 25 |   |   | 55 |   |   | 51 |   |
| Other                  income                                                     |   |                                    | (42    | )                                     |   | (18 | ) |   | (55 | ) |   | (69 | ) |
| Other                  deductions                                                 |   |                                    | 221    |                                  |   | 33 |   |   | 221 |   |   | 38 |   |
| Interest                  income                                                  |   |                                    | (11    | )                                     |   | ― |   |   | (20 | ) |   | (19 | ) |
| Interest                  expense and related charges                             |   |                                    | 218    |                                  |   | 189 |   |   | 431 |   |   | 384 |   |
| Total                  costs and operating expenses                                    |   |                                    | 1,860  |                                  |   | 1,970 |   |   | 3,397 |   |   | 3,648 |   |
| Income                  from continuing operations before income taxes            |   | $                                       | 807    |                                  | $      | 565 |   | $ | 1,574 |   | $ | 945 |   |

| (a)   | Includes                cost of fuel consumed of $250 million and $246 million for the three                months ended June 30, 2006 and 2005, respectively, and $415 million                and                $405 million for the six months ended June 30, 2006 and 2005,                respectively. The balance in each period represents energy purchased                for                resale and delivery fees net of intercompany                eliminations. |
|-----------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

***Interest        Expense and***
***Related***
***Charges***
* *

|                                                                                                           |   | **Three                  Months Ended** |    | **Six                  Months Ended** |   |
|----------------------------------------------------------------------------------------------------------------|--------|-----------------------------------------|---------|---------------------------------------|--------|
|                                                                                                           |   | **June                  30,**           |    | **June                  30,**         |   |
|                                                                                                           |   | **2006**                                |    | **2005**                              |   | **2006** |   | **2005** |   |
|                                                                                                           |   |                                    |    |                                  |   |   |   |   |   |
| Interest                                                                                             |   | $                                       | 224     |                                  | $      | 188 |   | $ | 438 |   | $ | 379 |   |
| Amortization                  of debt discounts, premiums and issuance costs                              |   |                                    | 4       |                                  |   | 5 |   |   | 8 |   |   | 12 |   |
| Capitalized                  interest, including debt portion of allowance for borrowed                  funds |   |                                    |    |                                  |   |   |   |   |   |   |   |   |   |
| used                  during construction                                                                 |   |                                    | (10     | )                                     |   | (4 | ) |   | (15 | ) |   | (8 | ) |
| Preferred                  stock dividends of subsidiaries                                                |   |                                    | ― |                                  |   | ― |   |   | ― |   |   | 1 |   |
| Total                  interest expense and related charges                                               |   | $                                       | 218     |                                  | $      | 189 |   | $ | 431 |   | $ | 384 |   |

***Restricted        Cash***

|                                                                               |   | **Balance                  Sheet Classification** |    |
|------------------------------------------------------------------------------------|--------|---------------------------------------------------|---------|
|                                                                               |   | **At                  June 30, 2006**             |    | **At                  December 31, 2005** |   |
|                                                                               |   | **Current****Assets**                             |    | **Noncurrent                  Assets** |   | **Current                  Assets** |   | **Noncurrent                  Assets** |   |
|                                                                               |   |                                              |    |   |   |   |   |   |   |
| Pollution                  control revenue bond funds held by trustee (See Note 7) |   | $                                                 | ― |   | $ | 100 |   | $ | ― |   | $ | ― |   |
| Amounts                  related to securitization (transition) bonds              |   |                                              | 40      |   |   | 17 |   |   | 46 |   |   | 13 |   |
| All                  other                                                    |   |                                              | 3       |   |   | 3 |   |   | 8 |   |   | 3 |   |
| Total                  restricted cash                                             |   | $                                                 | 43      |   | $ | 120 |   | $ | 54 |   | $ | 16 |   |

***Inventories        by Major Category***

|                                                                        |   | **June                  30,** |   | **December                  31,** |   |
|-----------------------------------------------------------------------------|--------|-------------------------------|--------|-----------------------------------|--------|
|                                                                        |   | **2006**                      |   | **2005**                          |   |
| Materials                  and supplies                                |   | $                             | 174    |                              | $      | 163 |   |
| Environmental                  energy credits and emission allowances  |   |                          | 12     |                              |   | 21 |   |
| Fuel                  stock                                            |   |                          | 95     |                              |   | 81 |   |
| Gas                  stored underground                                |   |                          | 104    |                              |   | 99 |   |
| Total                  inventories                                          |   | $                             | 385    |                              | $      | 364 |   |

***Investments***

|                                                            |   | **June                  30,** |   | **December                  31,** |   |
|-----------------------------------------------------------------|--------|-------------------------------|--------|-----------------------------------|--------|
|                                                            |   | **2006**                      |   | **2005**                          |   |
|                                                            |   |                          |   |                              |   |
| Nuclear                  decommissioning trust             |   | $                             | 402    |                              | $      | 389 |   |
| Assets                  related to employee benefit plans  |   |                          | 190    |                              |   | 187 |   |
| Land                                                       |   |                          | 35     |                              |   | 35 |   |
| Note                  receivable from Capgemini            |   |                          | 25     |                              |   | 25 |   |
| Investment                  in unconsolidated affiliates   |   |                          | 11     |                              |   | 3 |   |
| Miscellaneous                  other                       |   |                          | 4      |                              |   | 4 |   |
| Total                  investments                              |   | $                             | 667    |                              | $      | 643 |   |

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

***Asset        Retirement Obligations***

| Asset                  retirement liability at December 31, 2005            |   | $      | 558    |   |
|----------------------------------------------------------------------------------|--------|--------|--------|--------|
| Additions:                                                                       |   |   |   |   |
| Accretion                                                                   |   |   | 18     |   |
| Reductions:                                                                      |   |   |   |   |
| Net                  change in mining land reclamation estimated liability  |   |   | (4     | )      |
| Mining                  reclamation payments                                |   |   | (14    | )      |
| Asset                  retirement liability at June 30, 2006                |   | $      | 558    |   |

***Intangible        Assets***

|                                                                |   | **As                  of June 30, 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             |   | $                                        | 403    |                                         | $      | 328 |   | $ | 75 |   | $ | 386 |   | $ | 314 |   | $ | 72 |   |
| Land                  easements                                     |   |                                     | 178    |                                         |   | 64 |   |   | 114 |   |   | 178 |   |   | 63 |   |   | 115 |   |
| Mineral                  rights and other                           |   |                                     | 30     |                                         |   | 23 |   |   | 7 |   |   | 31 |   |   | 24 |   |   | 7 |   |
| Total                                                               |   | $                                        | 611    |                                         | $      | 415 |   | $ | 196 |   | $ | 595 |   | $ | 401 |   | $ | 194 |   |

|   |     |   |    | **Amortization** |   |
|--------|----------|--------|---------|------------------|--------|
|   | **Year** |   |    | **Expense**      |   |
|   |     |   |    |             |   |
|   | 2006     |   |  $ |  24         |   |
|   | 2007     |   |    | 21               |   |
|   | 2008     |   |    | 18               |   |
|   | 2009     |   |    | 10               |   |
|   | 2010     |   |    | 2                |   |

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

|                                                                                        |   | **June                  30,** |    | **December                  31,** |   |
|---------------------------------------------------------------------------------------------|--------|-------------------------------|---------|-----------------------------------|--------|
|                                                                                        |   | **2006**                      |    | **2005**                          |   |
| **Regulatory                  assets:**                                                     |   |                          |    |                              |   |
| Generation-related                  regulatory assets securitized by transition bonds  |   | $                             | 1,391   |                              | $      | 1,461 |   |
| Securities                  reacquisition costs                                        |   |                          | 115     |                              |   | 119 |   |
| Recoverable                  deferred income taxes — net                         |   |                          | 89      |                              |   | 107 |   |
| Storm-related                  costs                                                   |   |                          | 116     |                              |   | 110 |   |
| Employee                  retirement costs                                             |   |                          | 105     |                              |   | 89 |   |
| Nuclear                  decommissioning cost under-recovery                           |   |                          | 12      |                              |   | 8 |   |
| Employee                  severance costs                                              |   |                          | 46      |                              |   | 33 |   |
| Total                  regulatory assets                                               |   |                          | 1,874   |                              |   | 1,927 |   |
|                                                                                        |   |                          |    |                              |   |   |   |
| **Regulatory                  liabilities:**                                                |   |                          |    |                              |   |   |   |
| Investment                  tax credit and protected excess deferred taxes             |   |                          | 68      |                              |   | 71 |   |
| Over-collection                  of securitization (transition) bond revenues          |   |                          | 31      |                              |   | 28 |   |
| Other                  regulatory liabilities                                          |   |                          | ― |                              |   | 2 |   |
| Total                  regulatory liabilities                                          |   |                          | 99      |                              |   | 101 |   |
|                                                                                        |   |                          |    |                              |   |   |   |
| Net                  regulatory assets                                                      |   | $                             | 1,775   |                              | $      | 1,826 |   |

***Severance        Liabilities Related to Strategic Initiatives***

|                                                                         |   | **TXU**      |   | **TXU**      |   |      |   |
|------------------------------------------------------------------------------|--------|--------------|--------|--------------|--------|-----------|--------|
|                                                                         |   | **Energy**   |   | **Electric** |   |      |   |
|                                                                         |   | **Holdings** |   | **Delivery** |   | **Total** |   |
|                                                                         |   |         |   |         |   |      |   |
| Liability                  for severance costs as of December 31, 2005  |   | $            | 18     |         | $      | 4         |   | $ | 22 |   |
| Additions                  to liability (a)                                  |   |         | 8      |         |   | 12        |   |   | 20 |   |
| Payments                  charged against liability                          |   |         | (19    | )            |   | (2        | )      |   | (21 | ) |
| Liability                  for severance costs as of June 30, 2006      |   | $            | 7      |         | $      | 14        |   | $ | 21 |   |

| (a)   | TXU                Energy Holdings 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. |
|-----------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

***Margin        Deposits Related to Commodity Positions***

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

|                                                               |   | **Six                  Months Ended** |    |
|--------------------------------------------------------------------|--------|---------------------------------------|---------|
|                                                               |   | **June                  30,**         |    |
|                                                               |   | **2006**                              |    | **2005** |   |
| Cash                  payments related to continuing operations:   |   |                                  |    |   |   |
| Interest                  (net of amounts capitalized)        |   | $                                     | 434     |   | $ | 366 |   |
| Income                  taxes                            |   | $                                     | 18      |   | $ | 73 |   |
| Cash                  payments related to discontinued operations: |   |                                  |    |   |   |   |   |
| Income                  taxes                                 |   | $                                     | ― |   | $ | 16 |   |

**REPORT        OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM**

**Item        2.  MANAGEMENT’S        DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF        OPERATIONS**

**BUSINESS**

**RECENT        DEVELOPMENTS**

***Update        of New Generation Development Program, Including Financing        Arrangements***

***Impairment        of Natural Gas-fired Generation Plants***

***Update        of Long-term Hedging Program, Including New Collateral Arrangements***

***New        Joint Venture and TXU Electric Delivery Services        Agreement***

**RESULTS        OF OPERATIONS**

**TXU        Corp. Consolidated**

***Three        Months Ended June 30, 2006 Compared to Three Months Ended June 30,        2005***

| ·   | Operating                revenues in the TXU Energy Holdings segment increased $73 million,                or 3%,                to $2.3 billion. The increase was driven by a $282 million increase                in                retail electricity revenues. The increase in retail electricity revenues                reflected higher pricing driven by the effect of higher natural gas                prices                on wholesale power prices, partially offset by the effect of a 7%                decline                in retail sales volumes. The decline in retail sales volumes reflected                a                net loss of customers due to competitive activity, partially offset                by the                effect of warmer weather. |
|--------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| ·   | Operating                revenues in the TXU Electric Delivery segment increased $40 million,                or                7%, to $604 million in 2006. The revenue increase reflected a 7%                increase                in delivered volumes as a result of warmer weather and growth in                points of                delivery as well as higher transmission and distribution                tariffs. |
|--------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| ·   | Consolidated                revenue growth reflected a $19 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*

|                                                           |   |
|----------------------------------------------------------------|--------|
|                                                           |   | **Three                  Months Ended June 30,** |   |
|                                                           |   | **2006** |   | **%                  of Revenue** |   | **2005** |   | **%                  of Revenue** |   |
|                                                           |   |   |   |   |   |   |   |   |   |
| Operating                  revenues                       |   | $ | 2,667 |   |   | 100 | % | $ | 2,535 |   |   | 100 | % |
| Costs                  and expenses:                           |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Fuel,                  purchased power costs and delivery fees |   |   | 658 |   |   | 25 |   |   | 960 |   |   | 38 |   |
| Operating                  costs                               |   |   | 341 |   |   | 13 |   |   | 359 |   |   | 14 |   |
| Depreciation                  and amortization                 |   |   | 202 |   |   | 7 |   |   | 186 |   |   | 7 |   |
| Gross                  margin                             |   | $ | 1,466 |   |   | 55 | % | $ | 1,030 |   |   | 41 | % |

|   |  · | The                TXU Energy Holdings segment’s gross margin increased $413 million, or 54%,                to $1.2 billion, driven by higher pricing, due to the effects of                natural-gas prices on wholesale power market prices, partially offset                by                the effect of lower retail sales volumes. |
|--------|--------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |  · | The                  TXU Electric Delivery segment’s gross margin increased $18 million, or 7%,                  to $294 million in 2006, driven by warmer weather and growth in                  points of                  delivery, partially offset by increased operating                  costs.                                        |

|        |  · | TXU                Energy Holdings’ operating costs decreased $25 million, or 14%, primarily                reflecting lower maintenance costs due largely to the absence in                2006 of                costs incurred in 2005 for the nuclear generation plant refueling                outage. |
|--------|--------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |  · | TXU                Electric Delivery’s operating costs increased $14 million, or 8%, driven                primarily by increased spending for vegetation management and increased                fees paid to third-party transmission                entities.                                            |

|   |  ·  | $9 million in higher bad debt expense                reflecting higher retail accounts receivable balances;                                                   |
|--------|--------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |  ·  | $7                million in costs associated with the new generation development program;                and                                                 |
|   |  ·  | $5                  million in higher fees related to the sale of accounts receivable                  program                  due to higher interest rates, |

|   |  ·  | $10                  million in lower consulting fees related to various strategic initiatives;                  and |
|--------|--------------------|----------------------------------------------------------------------------------------------------------------------|
|   |  ·  | $7                  million in pricing adjustments for outsourcing                  services.                        |

| ·   | Earnings                in the TXU Energy Holdings segment increased $116 million, or 34%,                to $461                million driven by improved gross margin, partially offset by a charge                for                the write-down of the natural gas-fired generation plants (see Note                2 to                Financial Statements). |
|--------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| ·   | Earnings                in the TXU Electric Delivery segment were $86 million in both 2006                and                2005 reflecting higher gross margin offset by increases in income                tax                expense, interest expense and franchise                taxes. |
|--------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| ·   | Corporate                and Other net expenses generally consist of interest expense on debt                at                the TXU Corp. parent, including interest on advances from its                subsidiaries, as well as corporate general and administrative expenses.                These net expenses totaled $50 million in 2006 and $48 million in                2005.                The amount in 2006 includes a contract settlement gain of $17 million                after-tax, and the amount in 2005 includes a $7 million after-tax                litigation settlement charge. The results also reflect $26 million                after-tax in increased net interest expense resulting from higher                advances                from subsidiaries in 2006 and higher interest                rates. |
|--------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| ·   | Diluted                earnings per share in 2005 reflect a $0.07 per share unfavorable                impact                associated with the November 2004 accelerated share repurchase program.                See Note 1 to Financial Statements for further                discussion. |
|--------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| ·   | Diluted                earnings per share in 2006 benefited from a $0.06 per share impact                due to                the repurchase of 28 million shares since June 30, 2005. Basic average                common shares outstanding decreased 4% to 458 million shares reflecting                these share repurchases. Diluted average common shares decreased                4% to 465                million shares. (See Note 1 to Financial                Statements.) |
|--------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

***Six        Months Ended June 30, 2006 Compared to Six Months Ended June 30,        2005***

| ·   | Operating                revenues in the TXU Energy Holdings segment increased $262 million,                or 6%,                to $4.4 billion. The increase was driven by a $444 million increase                in                retail electricity revenues. The increase in retail electricity revenues                reflected higher pricing driven by the effect of higher natural gas                prices                on wholesale power prices, partially offset by the effect of a 12%                decline                in retail sales volumes. The decline in retail sales volumes reflected                a                net loss of customers due to competitive activity, partially offset                by the                effect of warmer weather. |
|--------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| ·   | Operating                revenues in the TXU Electric Delivery segment increased $52 million,                or                5%, to $1.2 billion in 2006. The revenue increase reflected a 3%                increase                in delivered volumes as a result of warmer weather and growth in                points of                delivery, as well as higher transmission and distribution                tariffs. |
|--------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| ·   | Consolidated                revenue growth reflected a $64 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*

|                                                           |   |
|----------------------------------------------------------------|--------|
|                                                           |   | **Six                  Months Ended June 30,** |   |
|                                                           |   | **2006** |   | **%                  of Revenue** |   | **2005** |   | **%                  of Revenue** |   |
|                                                           |   |   |   |   |   |   |   |   |   |
| Operating                  revenues                       |   | $ | 4,971 |   |   | 100 | % | $ | 4,593 |   |   | 100 | % |
| Costs                  and expenses:                           |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Fuel,                  purchased power costs and delivery fees |   |   | 1,179 |   |   | 24 |   |   | 1,721 |   |   | 38 |   |
| Operating                  costs                               |   |   | 684 |   |   | 14 |   |   | 692 |   |   | 15 |   |
| Depreciation                  and amortization                 |   |   | 404 |   |   | 8 |   |   | 371 |   |   | 8 |   |
| Gross                  margin                             |   | $ | 2,704 |   |   | 54 | % | $ | 1,809 |   |   | 39 | % |

| ·   | The                TXU Energy Holdings segment’s gross margin increased $880 million, or 69%,                to $2.2 billion, driven by higher pricing, due to the effects of                natural-gas prices on wholesale power prices, partially offset by                the                effect of lower retail sales volumes. |
|--------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| ·   | The                TXU Electric Delivery segment’s gross margin increased $12 million, or 2%,                to $551 million in 2006, driven by the effect of warmer weather and                growth                in points of delivery, partially offset by increased operating                costs. |
|--------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| ·   | TXU                Energy Holdings’ operating costs decreased $25 million, or 8%, primarily                reflecting lower maintenance costs due to the absence in 2006 of                costs                incurred in 2005 for the nuclear generation plant refueling outage,                partially offset by costs related to outsourcing of generation engineering                services in 2006. |
|--------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| ·   | TXU                Electric Delivery’s operating costs increased $23 million, or 6%, driven                primarily by increased spending for vegetation management and increased                fees paid to third-party transmission                entities. |
|--------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| ·   | $12                million in executive severance; |
|--------------------|----------------------------------------------------|
| ·   | $10                million in higher bad debt expense reflecting higher retail accounts                receivable balances; |
|--------------------|-----------------------------------------------------------------------------------------------------------------------------|
| ·   | $10                million in higher fees related to the sale of accounts receivable                program                due to higher interest rates; and |
|--------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------|
| ·   | $7                million in costs associated with the new generation development                program, |
|--------------------|-----------------------------------------------------------------------------------------------------------|
| ·   | $14                million in lower expense related to a deferred compensation plan                and lower                executive incentive compensation expense due primarily to fewer                outstanding share awards; |
|--------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| ·   | $7                million in lower consulting fees related to various strategic                initiatives. |
|--------------------|-------------------------------------------------------------------------------------------------------------|
| ·   | Earnings                in the TXU Energy Holdings segment increased $433 million, or 79%,                to $981                million driven primarily by improved gross margin, partially offset                by a                charge for the write-down of the natural gas-fired generation                plants. |
|--------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| ·   | Earnings                in the TXU Electric Delivery segment decreased $6 million, or 4%,                to $151                million driven primarily by higher income tax expense, higher franchise                fees and increased interest expense, partially offset by higher gross                margin. |
|--------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| ·   | Results                from Corporate and Other activities totaled $119 million in net expense                in                2006 and net income of $85 million in 2005. These results                reflect: |
|--------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| o   | a                $17 million after-tax contract settlement gain in                2006; |
|---------------|-----------------------------------------------------------------------------------------|
| o   | a                $138 million tax benefit in 2005 related to TXU Europe (see Note                5 to                Financial Statements); |
|---------------|---------------------------------------------------------------------------------------------------------------------------------------------|
| o   | $23                million after-tax in additional insurance recovery in 2005 related                to the                securities litigation settlement; |
|---------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------|
| o   | a                $7 million after-tax litigation settlement charge in 2005;                and |
|---------------|------------------------------------------------------------------------------------------------|
| o   | a                $51 million after-tax increase in net interest expense resulting                from                higher advances from subsidiaries in 2006 and higher interest                rates. |
|---------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| ·   | Diluted                earnings per share in 2005 reflect a $1.02 per share unfavorable                impact                associated with the November 2004 accelerated share repurchase program.                See Note 1 to Financial Statements for further                discussion. |
|--------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| ·   | Diluted                earnings per share in 2006 benefited from a $0.10 per share impact                due to                the repurchase of 28 million shares since June 30, 2005. Basic average                common shares outstanding decreased 3% to 461 million shares reflecting                these share repurchases. Diluted average common shares decreased                3% to 470                million shares. (See Note 1 to Financial                Statements.) |
|--------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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

* *

|   |                                                                                                          |    | **Six                  Months**    |   |
|--------|---------------------------------------------------------------------------------------------------------------|---------|------------------------------------|--------|
|   |                                                                                                          |    | **Ended**                          |   |
|   |                                                                                                          |    | **June                  30, 2006** |   |
|   |                                                                                                          |    |                               |   |
|   | Net                  commodity contract liability at beginning of period                                      |  $ | (56)                               |   |
|   |                                                                                                          |    |                               |   |
|   | Settlements                  of positions included in the opening balance (1)                                 |    | 22                                 |   |
|   |                                                                                                          |    |                               |   |
|   | Unrealized                  mark-to-market valuations of positions held at end of period                  (2) |    | (137)                              |   |
|   |                                                                                                          |    |                               |   |
|   | Other                  activity (3)                                                                           |    | (8)                                |   |
|   |                                                                                                          |    |                               |   |
|   | Net                  commodity contract liability at end of period                                            | $       | (179)                              |   |
|   |                                                                                                          |    |                               |   |

**__________________________**

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

|   | (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 11 to Financial                  Statements. |
|--------|-----|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | (3) | These                  amounts do not arise from mark-to-market activities. Includes initial                  values of positions involving the receipt or payment of cash or                  other                  consideration such as option premiums paid and received and related                  amortization. Activity for the period includes $20 million of natural                  gas                  received related to physical swap transactions as well as $12 million                  of                  option premium payments. |
|--------|-----|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|                                                                                   |   | **Three                  Months Ended** |   | **Six                  Months Ended** |   |
|----------------------------------------------------------------------------------------|--------|-----------------------------------------|--------|---------------------------------------|--------|
|                                                                                   |   | **June                  30,**           |   | **June                  30,**         |   |
|                                                                                   |   | **2006**                                |   | **2005**                              |   | **2006** |   | **2005** |   |
|                                                                                   |   |                                    |   |                                  |   |   |   |   |   |
| Unrealized                  gains/(losses) related to contracts marked-to-market  |   | $                                       | (121   | )                                     | $      | 39 |   | $ | (115 | ) | $ | 12 |   |
|                                                                                   |   |                                    |   |                                  |   |   |   |   |   |   |   |   |   |
| Ineffectiveness                  gains related to cash flow hedges (a)            |   |                                    | 145    |                                  |   | 3 |   |   | 144 |   |   | 6 |   |
|                                                                                   |   |                                    |   |                                  |   |   |   |   |   |   |   |   |   |
| Total                  unrealized gains related to commodity contracts            |   | $                                       | 24     |                                  | $      | 42 |   | $ | 29 |   | $ | 18 |   |

**__________________________**

|   | (a) | See                  Note 12 to Financial Statements. |
|--------|-----|-------------------------------------------------------|

***Maturity        Table***

|                                                        |   | **Maturity                  dates of unrealized net commodity contract assets (liabilities)                  at June                  30, 2006** |   |
|-------------------------------------------------------------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------|--------|
|   **Source                  of fair value**  |   | **Less                  than****1                  year**                                                                                        |   |  **1-3                  years** |   |  **4-5                  years** |   | **Excess                  of****5                  years** |   |  **Total** |   |
| Prices                  actively quoted                |   | $                                                                                                                                                | 103    |   | $ | 30 |   | $ | 9 |   | $ | ─ |   | $ | 142 |   |
| Prices                  provided by other                   |   |                                                                                                                                             |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| external                  sources(a)                        |   |                                                                                                                                             | (127   | ) |   | 23 |   |   | (129 | ) |   | (5 | ) |   | (238 | ) |
| Prices                  based on models                |   |                                                                                                                                             | 17     |   |   | ─ |   |   | ─ |   |   | ─ |   |   | 17 |   |
| Total                                                       |   | $                                                                                                                                                | (7     | ) | $ | 53 |   | $ | (120 | ) | $ | (5 | ) | $ | (79 | ) |
| Percentage                  of total fair value        |   |                                                                                                                                             | 9      | % |   | (67 | )% |   | 152 | % |   | 6 | % |   | 100 | % |
|                                                        |   |                                                                                                                                             |   |   |   |   |   |   |   |   |   |   |   |   |   |   |

**TXU        Energy Holdings**

***Financial        Results***

|                                                                   |   | **Three                  Months Ended** |   | **Six                  Months Ended** |   |
|------------------------------------------------------------------------|--------|-----------------------------------------|--------|---------------------------------------|--------|
|                                                                   |   | **June                  30,**           |   | **June                  30,**         |   |
|                                                                   |   | **2006**                                |   | **2005**                              |   | **2006** |   | **2005** |   |
|                                                                   |   |                                    |   |                                  |   |   |   |   |   |
| Operating                  revenues                               |   | $                                       | 2,349  |                                  | $      | 2,276 |   | $ | 4,359 |   | $ | 4,097 |   |
|                                                                   |   |                                    |   |                                  |   |   |   |   |   |   |   |   |   |
| Costs                  and expenses:                                   |   |                                    |   |                                  |   |   |   |   |   |   |   |   |   |
|                                                                   |   |                                    |   |                                  |   |   |   |   |   |   |   |   |   |
| Fuel,                  purchased power costs and delivery fees         |   |                                    | 943    |                                  |   | 1,265 |   |   | 1,733 |   |   | 2,338 |   |
|                                                                   |   |                                    |   |                                  |   |   |   |   |   |   |   |   |   |
| Operating                  costs                                       |   |                                    | 152    |                                  |   | 177 |   |   | 306 |   |   | 331 |   |
|                                                                   |   |                                    |   |                                  |   |   |   |   |   |   |   |   |   |
| Depreciation                  and amortization                         |   |                                    | 84     |                                  |   | 77 |   |   | 169 |   |   | 156 |   |
|                                                                   |   |                                    |   |                                  |   |   |   |   |   |   |   |   |   |
| Selling,                  general and administrative expenses          |   |                                    | 128    |                                  |   | 113 |   |   | 249 |   |   | 227 |   |
|                                                                   |   |                                    |   |                                  |   |   |   |   |   |   |   |   |   |
| Franchise                  and revenue-based taxes                     |   |                                    | 27     |                                  |   | 24 |   |   | 54 |   |   | 50 |   |
|                                                                   |   |                                    |   |                                  |   |   |   |   |   |   |   |   |   |
| Other                  income                                          |   |                                    | (1     | )                                     |   | (6 | ) |   | (1 | ) |   | (8 | ) |
|                                                                   |   |                                    |   |                                  |   |   |   |   |   |   |   |   |   |
| Other                  deductions                                      |   |                                    | 205    |                                  |   | 12 |   |   | 195 |   |   | 13 |   |
|                                                                   |   |                                    |   |                                  |   |   |   |   |   |   |   |   |   |
| Interest                  income                                       |   |                                    | (45    | )                                     |   | (11 | ) |   | (76 | ) |   | (21 | ) |
|                                                                   |   |                                    |   |                                  |   |   |   |   |   |   |   |   |   |
| Interest                  expense and related charges                  |   |                                    | 102    |                                  |   | 94 |   |   | 203 |   |   | 185 |   |
|                                                                   |   |                                    |   |                                  |   |   |   |   |   |   |   |   |   |
| Total                  costs and expenses                              |   |                                    | 1,595  |                                  |   | 1,745 |   |   | 2,832 |   |   | 3,271 |   |
|                                                                   |   |                                    |   |                                  |   |   |   |   |   |   |   |   |   |
| Income                  from continuing operations before income taxes |   |                                    | 754    |                                  |   | 531 |   |   | 1,527 |   |   | 826 |   |
|                                                                   |   |                                    |   |                                  |   |   |   |   |   |   |   |   |   |
| Income                  tax expense                               |   |                                    | 293    |                                  |   | 186 |   |   | 546 |   |   | 278 |   |
|                                                                   |   |                                    |   |                                  |   |   |   |   |   |   |   |   |   |
| Income                  from continuing operations                |   | $                                       | 461    |                                  | $      | 345 |   | $ | 981 |   | $ | 548 |   |
|                                                                   |   |                                    |   |                                  |   |   |   |   |   |   |   |   |   |

**TXU        Energy Holdings**

***Sales        Volume Data***

|                                                                                               |   | **Three                  Months Ended** |   | **Six                  Months Ended** |   |
|----------------------------------------------------------------------------------------------------|--------|-----------------------------------------|--------|---------------------------------------|--------|
|                                                                                               |   | **June                  30,**           |   | **June                  30,**         |   |
|                                                                                               |   | **2006**                                |   | **2005**                              |   | **Change                  %** |   | **2006** |   | **2005** |   | **Change                  %** |   |
|                                                                                               |   |                                    |   |                                  |   |   |   |   |   |   |   |   |   |
| **Sales                  volumes:**                                                                |   |                                    |   |                                  |   |   |   |   |   |   |   |   |   |
|                                                                                               |   |                                    |   |                                  |   |   |   |   |   |   |   |   |   |
| Retail                  electricity sales volumes (GWh):                                           |   |                                    |   |                                  |   |   |   |   |   |   |   |   |   |
|                      Historical service territory:                                  |   |                                    |   |                                  |   |   |   |   |   |   |   |   |   |
| Residential                                                                                   |   |                                    | 6,825  |                                  |   | 7,100 |   |   | (3.9 | ) |   | 12,057 |   |   | 13,417 |   |   | (10.1 | ) |
| Small                  business (a)                                                           |   |                                    | 2,068  |                                  |   | 2,289 |   |   | (9.7 | ) |   | 3,795 |   |   | 4,323 |   |   | (12.2 | ) |
| Total                  historical service territory                                                |   |                                    | 8,893  |                                  |   | 9,389 |   |   | (5.3 | ) |   | 15,852 |   |   | 17,740 |   |   | (10.6 | ) |
|                      Other territories:                                             |   |                                    |   |                                  |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Residential                                                                                   |   |                                    | 1,018  |                                  |   | 858 |   |   | 18.6 |   |   | 1,629 |   |   | 1,486 |   |   | 9.6 |   |
| Small                  business (a)                                                           |   |                                    | 169    |                                  |   | 165 |   |   | 2.4 |   |   | 301 |   |   | 304 |   |   | (1.0 | ) |
| Total                  other territories                                                           |   |                                    | 1,187  |                                  |   | 1,023 |   |   | 16.0 |   |   | 1,930 |   |   | 1,790 |   |   | 7.8 |   |
| Large                  business and other customers                                           |   |                                    | 3,552  |                                  |   | 4,172 |   |   | (14.9 | ) |   | 6,785 |   |   | 8,534 |   |   | (20.5 | ) |
| Total                  retail electricity                                                          |   |                                    | 13,632 |                                  |   | 14,584 |   |   | (6.5 | ) |   | 24,567 |   |   | 28,064 |   |   | (12.5 | ) |
| Wholesale                  electricity sales volumes (b)                                      |   |                                    | 7,585  |                                  |   | 12,585 |   |   | (39.7 | ) |   | 16,870 |   |   | 24,824 |   |   | (32.0 | ) |
| Total                  sales volumes                                                               |   |                                    | 21,217 |                                  |   | 27,169 |   |   | (21.9 | ) |   | 41,437 |   |   | 52,888 |   |   | (21.7 | ) |
|                                                                                               |   |                                    |   |                                  |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| **Average                  volume (kWh) per retail customer (c):**                                 |   |                                    |   |                                  |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                               |   |                                    |   |                                  |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Residential                                                                                   |   |                                    | 4,012  |                                  |   | 3,809 |   |   | 5.3 |   |   | 6,975 |   |   | 7,091 |   |   | (1.6 | ) |
| Small                  business                                                               |   |                                    | 7,990  |                                  |   | 8,096 |   |   | (1.3 | ) |   | 14,460 |   |   | 15,028 |   |   | (3.8 | ) |
| Large                  business and other customers                                           |   |                                    | 70,256 |                                  |   | 71,155 |   |   | (1.3 | ) |   | 130,966 |   |   | 129,342 |   |   | 1.3 |   |
|                                                                                               |   |                                    |   |                                  |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| **Weather                  (service territory average) - percent of normal                  (d):** |   |                                    |   |                                  |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                               |   |                                    |   |                                  |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Percent                  of normal:                                                                |   |                                    |   |                                  |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Cooling                  degree days                                                               |   |                                    | 131.0  | %                                     |   | 102.2 | % |   |   |   |   | 135.9 | % |   | 101.3 | % |   |   |   |

| (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. Includes net purchase volumes related                to                ERCOT balancing of 266 GWh in the second quarter of 2006 and 1,253                GWh of                net sales volumes in the second quarter of 2005, and net sales volumes                of                1,166 GWh and 2,012 GWh in the six months ended June 30, 2006 and                2005,                respectively. |
|-----------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| (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**

***Customer        Count Data***

|                                                                                                 |   | **Six                  Months Ended** |   |
|------------------------------------------------------------------------------------------------------|--------|---------------------------------------|--------|
|                                                                                                 |   | **June                  30,**         |   |
|                                                                                                 |   | **2006**                              |   | **2005** |   | **Change                  %** |   |
| **Customer                  counts:**                                                                |   |                                  |   |   |   |   |   |
|                                                                                                 |   |                                  |   |   |   |   |   |
| Retail                  electricity customers (end of period and in thousands)                  (a): |   |                                  |   |   |   |   |   |
|                      Historical service territory:                                    |   |                                  |   |   |   |   |   |
| Residential                                                                                     |   |                                  | 1,716  |   |   | 1,865 |   |   | (8.0 | ) |
| Small                  business (b)                                                             |   |                                  | 271    |   |   | 294 |   |   | (7.8 | ) |
| Total                  historical service territory                                                  |   |                                  | 1,987  |   |   | 2,159 |   |   | (8.0 | ) |
|                                                                                                 |   |                                  |   |   |   |   |   |   |   |   |
| Other                  territories:                                                                  |   |                                  |   |   |   |   |   |   |   |   |
| Residential                                                                                     |   |                                  | 227    |   |   | 193 |   |   | 17.6 |   |
| Small                  business (b)                                                             |   |                                  | 7      |   |   | 7 |   |   | ─ |   |
| Total                  other territories                                                             |   |                                  | 234    |   |   | 200 |   |   | 17.0 |   |
|                                                                                                 |   |                                  |   |   |   |   |   |   |   |   |
| Large                  business and other customers                                             |   |                                  | 49     |   |   | 56 |   |   | (12.5 | ) |
| Total                  retail electricity customers                                                  |   |                                  | 2,270  |   |   | 2,415 |   |   | (6.0 | ) |

| (a)   | Based                on number of meters. |
|-----------------|-------------------------------------------|
| (b)   | Customers                with demand of less than 1MW annually. |
|-----------------|-----------------------------------------------------------------|

**TXU        Energy Holdings**

***Revenue        and Market Share Data***

|                                                                                  |   | **Three                  Months Ended** |   | **Six                  Months Ended** |   |
|---------------------------------------------------------------------------------------|--------|-----------------------------------------|--------|---------------------------------------|--------|
|                                                                                  |   | **June                  30,**           |   | **June                  30,**         |   |
|                                                                                  |   | **2006**                                |   | **2005**                              |   | **Change                  %** |   | **2006** |   | **2005** |   | **Change                  %** |   |
| **Operating                  revenues:**                                              |   |                                    |   |                                  |   |   |   |   |   |   |   |   |   |
|                                                                                  |   |                                    |   |                                  |   |   |   |   |   |   |   |   |   |
| Retail                  electricity revenues:                                         |   |                                    |   |                                  |   |   |   |   |   |   |   |   |   |
| Historical                  service territory:                                        |   |                                    |   |                                  |   |   |   |   |   |   |   |   |   |
| Residential                                                                      |   | $                                       | 1,008  |                                  | $      | 838 |   |   | 20.3 |   | $ | 1,753 |   | $ | 1,474 |   |   | 18.9 |   |
| Small                  business (a)                                              |   |                                    | 309    |                                  |   | 270 |   |   | 14.4 |   |   | 566 |   |   | 498 |   |   | 13.7 |   |
| Total                  historical service territory                                   |   |                                    | 1,317  |                                  |   | 1,108 |   |   | 18.9 |   |   | 2,319 |   |   | 1,972 |   |   | 17.6 |   |
|                                                                                  |   |                                    |   |                                  |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Other                  territories:                                                   |   |                                    |   |                                  |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Residential                                                                      |   |                                    | 160    |                                  |   | 99 |   |   | 61.6 |   |   | 248 |   |   | 156 |   |   | 59.0 |   |
| Small                  business (a)                                              |   |                                    | 20     |                                  |   | 15 |   |   | 33.3 |   |   | 36 |   |   | 27 |   |   | 33.3 |   |
| Total                  other territories                                              |   |                                    | 180    |                                  |   | 114 |   |   | 57.9 |   |   | 284 |   |   | 183 |   |   | 55.2 |   |
|                                                                                  |   |                                    |   |                                  |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Large                  business and other customers                              |   |                                    | 339    |                                  |   | 332 |   |   | 2.1 |   |   | 655 |   |   | 659 |   |   | (0.6 | ) |
| Total                  retail electricity revenues                               |   |                                    | 1,836  |                                  |   | 1,554 |   |   | 18.1 |   |   | 3,258 |   |   | 2,814 |   |   | 15.8 |   |
| Wholesale                  electricity revenues (b)                              |   |                                    | 447    |                                  |   | 598 |   |   | (25.3 | ) |   | 982 |   |   | 1,132 |   |   | (13.3 | ) |
| Net                  gains (losses) from risk management and trading activities  |   |                                    | (13    | )                                     |   | 47 |   |   | ─ |   |   | (57 | ) |   | (6 | ) |   | ─ |   |
| Other                  revenues                                                  |   |                                    | 79     |                                  |   | 77 |   |   | 2.6 |   |   | 176 |   |   | 157 |   |   | 12.1 |   |
| Total                  operating revenues                                             |   | $                                       | 2,349  |                                  | $      | 2,276 |   |   | 3.2 |   | $ | 4,359 |   | $ | 4,097 |   |   | 6.4 |   |
|                                                                                  |   |                                    |   |                                  |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| **Risk                  management and trading activities:**                          |   |                                    |   |                                  |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                  |   |                                    |   |                                  |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net                  realized gains (losses) on settled positions                |   | $                                       | (38    | )                                     | $      | 5 |   |   |   |   | $ | (86 | ) | $ | (24 | ) |   |   |   |
| Reversal                  of prior years’ net unrealized                        |   |                                    |   |                                  |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| (gains)/losses                  on positions settled in current period                |   |                                    | (2     | )                                     |   | (14 | ) |   |   |   |   | 22 |   |   | (23 | ) |   |   |   |
| Other                  net unrealized gains, including ineffectiveness           |   |                                    | 27     |                                  |   | 56 |   |   |   |   |   | 7 |   |   | 41 |   |   |   |   |
| Total                  net gains (losses)                                             |   | $                                       | (13    | )                                     | $      | 47 |   |   |   |   | $ | (57 | ) | $ | (6 | ) |   |   |   |
|                                                                                  |   |                                    |   |                                  |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| **Average                  revenues per MWh:**                                        |   |                                    |   |                                  |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                  |   |                                    |   |                                  |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Residential                                                                      |   | $                                       | 148.85 |                                  | $      | 117.80 |   |   | 26.4 |   | $ | 146.23 |   | $ | 109.39 |   |   | 33.7 |   |
| Small                  business                                                  |   | $                                       | 147.32 |                                  | $      | 116.38 |   |   | 26.6 |   | $ | 146.95 |   | $ | 113.59 |   |   | 29.4 |   |
| Large                  business and other customers                              |   | $                                       | 95.34  |                                  | $      | 79.43 |   |   | 20.0 |   | $ | 96.55 |   | $ | 77.19 |   |   | 25.1 |   |
|                                                                                  |   |                                    |   |                                  |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| **Estimated                  share of ERCOT retail markets (c)(d):**                  |   |                                    |   |                                  |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                  |   |                                    |   |                                  |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Historical                  service territory:                                        |   |                                    |   |                                  |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Residential                                                                      |   |                                    |   |                                  |   |   |   |   |   |   |   | 70 | % |   | 77 | % |   |   |   |
| Small                  business                                                  |   |                                    |   |                                  |   |   |   |   |   |   |   | 68 | % |   | 74 | % |   |   |   |
| Total                  ERCOT:                                                         |   |                                    |   |                                  |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Residential                                                                      |   |                                    |   |                                  |   |   |   |   |   |   |   | 38 | % |   | 42 | % |   |   |   |
| Small                  business                                                  |   |                                    |   |                                  |   |   |   |   |   |   |   | 28 | % |   | 30 | % |   |   |   |
| Large                  business and other customers                              |   |                                    |   |                                  |   |   |   |   |   |   |   | 17 | % |   | 20 | % |   |   |   |

**__________________________**

**TXU        Energy Holdings**

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

|                                                                |   | **Three                  Months Ended** |   | **Six                  Months Ended** |   |
|---------------------------------------------------------------------|--------|-----------------------------------------|--------|---------------------------------------|--------|
|                                                                |   | **June                  30,**           |   | **June                  30,**         |   |
|                                                                |   | **2006**                                |   | **2005**                              |   | **Change                  %** |   | **2006** |   | **2005** |   | **Change                  %** |   |
|                                                                |   |                                    |   |                                  |   |   |   |   |   |   |   |   |   |
| **Fuel,                  purchased power costs and delivery fees**  |   |                                    |   |                                  |   |   |   |   |   |   |   |   |   |
| **($                  millions):**                                  |   |                                    |   |                                  |   |   |   |   |   |   |   |   |   |
|                                                                |   |                                    |   |                                  |   |   |   |   |   |   |   |   |   |
| Nuclear                  fuel                                  |   | $                                       | 22     |                                  | $      | 18 |   |   | 22.2 |   | $ | 43 |   | $ | 38 |   |   | 13.2 |   |
| Lignite/coal                                                   |   |                                    | 113    |                                  |   | 119 |   |   | (5.0 | ) |   | 229 |   |   | 234 |   |   | (2.1 | ) |
| Total                  baseload fuel                                |   |                                    | 135    |                                  |   | 137 |   |   | (1.5 | ) |   | 272 |   |   | 272 |   |   | ─ |   |
| Gas/oil                  fuel and purchased power              |   |                                    | 421    |                                  |   | 720 |   |   | (41.5 | ) |   | 689 |   |   | 1,252 |   |   | (45.0 | ) |
| Other                  costs                                   |   |                                    | 50     |                                  |   | 70 |   |   | (28.6 | ) |   | 122 |   |   | 133 |   |   | (8.3 | ) |
| Fuel                  and purchased power costs (a)                 |   |                                    | 606    |                                  |   | 927 |   |   | (34.6 | ) |   | 1,083 |   |   | 1,657 |   |   | (34.6 | ) |
| Delivery                  fees (b)                             |   |                                    | 337    |                                  |   | 338 |   |   | (0.3 | ) |   | 650 |   |   | 681 |   |   | (4.6 | ) |
| Total                                                               |   | $                                       | 943    |                                  | $      | 1,265 |   |   | (25.5 | ) | $ | 1,733 |   | $ | 2,338 |   |   | (25.9 | ) |
|                                                                |   |                                    |   |                                  |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| **Fuel                  and purchased power costs (which excludes** |   |                                    |   |                                  |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| **generation                  plant operating costs) per MWh:**     |   |                                    |   |                                  |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Nuclear                  generation                            |   | $                                       | 4.25   |                                  | $      | 4.20 |   |   | 1.2 |   | $ | 4.24 |   | $ | 4.19 |   |   | 1.2 |   |
| Lignite/coal                  generation (c)                   |   | $                                       | 12.67  |                                  | $      | 12.02 |   |   | 5.4 |   | $ | 12.33 |   | $ | 11.98 |   |   | 2.9 |   |
| Gas/oil                  generation and purchased power        |   | $                                       | 63.40  |                                  | $      | 54.92 |   |   | 15.4 |   | $ | 61.76 |   | $ | 52.47 |   |   | 17.7 |   |
|                                                                |   |                                    |   |                                  |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| **Delivery                  fee per MWh**                      |   | $                                       | 24.51  |                                  | $      | 22.84 |   |   | 7.3 |   | $ | 26.18 |   | $ | 23.95 |   |   | 9.3 |   |
|                                                                |   |                                    |   |                                  |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| **Production                  and purchased power volumes (GWh):**  |   |                                    |   |                                  |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                |   |                                    |   |                                  |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Nuclear                                                        |   |                                    | 5,098  |                                  |   | 4,250 |   |   | 20.0 |   |   | 10,178 |   |   | 9,047 |   |   | 12.5 |   |
| Lignite/coal                                                   |   |                                    | 10,044 |                                  |   | 10,605 |   |   | (5.3 | ) |   | 20,918 |   |   | 21,125 |   |   | (1.0 | ) |
| Total                  baseload generation                          |   |                                    | 15,142 |                                  |   | 14,855 |   |   | 1.9 |   |   | 31,096 |   |   | 30,172 |   |   | 3.1 |   |
| Gas/oil                  generation                            |   |                                    | 1,350  |                                  |   | 1,005 |   |   | 34.3 |   |   | 1,539 |   |   | 1,265 |   |   | 21.7 |   |
| Purchased                  power (a)                           |   |                                    | 5,291  |                                  |   | 12,034 |   |   | (56.0 | ) |   | 9,616 |   |   | 22,599 |   |   | (57.4 | ) |
| Total                  energy supply                                |   |                                    | 21,783 |                                  |   | 27,894 |   |   | (21.9 | ) |   | 42,251 |   |   | 54,036 |   |   | (21.8 | ) |
| Less                  line loss and power imbalances           |   |                                    | 566    |                                  |   | 725 |   |   | (21.9 | ) |   | 814 |   |   | 1,148 |   |   | (29.1 | ) |
| Net                  energy supply volumes                          |   |                                    | 21,217 |                                  |   | 27,169 |   |   | (21.9 | ) |   | 41,437 |   |   | 52,888 |   |   | (21.7 | ) |
|                                                                |   |                                    |   |                                  |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| **Baseload                  capacity factors (%):**                 |   |                                    |   |                                  |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                |   |                                    |   |                                  |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Nuclear                                                        |   |                                    | 102.0  | %                                     |   | 84.9 | % |   | 20.1 |   |   | 102.3 | % |   | 90.8 | % |   | 12.7 |   |
| Lignite/coal                                                   |   |                                    | 82.4   | %                                     |   | 86.9 | % |   | (5.2 | ) |   | 86.4 | % |   | 87.3 | % |   | (1.0 | ) |
| Total                  baseload                                     |   |                                    | 88.0   | %                                     |   | 86.3 | % |   | 2.0 |   |   | 90.9 | % |   | 88.3 | % |   | 2.9 |   |

| (a)   | See                Note 1 to Financial Statements for discussion of reporting of trading                and                ERCOT balancing activity in 2006. |
|-----------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------|
| (b)   | Includes                primarily delivery fee charges from TXU Electric Delivery that are                eliminated in consolidation ($285 million and $554 million for the                three                and six months ended June 30, 2006, respectively, and $305 million                and                $618 million for the three and six months ended June 30,                2005). |
|-----------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| (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**

***Three        Months Ended June 30, 2006 Compared to Three Months Ended June 30,        2005***

| ·   | The                retail revenue increase reflected $383 million in higher pricing                due to                increased price-to-beat rates, reflecting regulatory-approved fuel                factor                increases in May and October 2005, and higher pricing in the competitive                business market, both resulting from the effects of higher natural                gas                prices. |
|--------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| ·   | The                effect of higher pricing due to increased price-to-beat rates was                partially offset by $101 million in lower retail volumes. Total retail                sales volumes declined 7% primarily reflecting a net loss of customers                due                to competitive activity partially offset by the effect of warmer                weather.                Excluding the estimated effect of warmer weather, average consumption                per                customer declined somewhat. Large business market volumes declined                15%,                while residential and small business volumes fell 3%. The large business                market decline reflected a continuing strategy to improve                margins. |
|--------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| ·   | Retail                electricity customer counts at June 30, 2006 declined 6% from June                30,                2005. Total residential and small business customer counts in the                historical service territory declined 8% and in all combined territories                declined 6%. |
|--------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| ·   | $109                million in a net unrealized “day one” loss on a related series of                commodity price hedges entered into in June 2006 at below-market                prices; |
|--------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| ·   | $145                million in net unrealized cash flow hedge ineffectiveness gains associated                with positions in the long-term hedging                program; |
|--------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| ·   | $15                million in net realized gains associated with positions in the long-term                hedging program accounted for as cash flow hedges, the offsetting                effects                of which are reflected in electricity                revenues; |
|--------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| ·   | $16                million in net realized losses associated with hedges entered into                in                prior years (largely 2003), the offsetting effects of which are reflected                in electricity revenues and fuel and purchased power. This amount                includes                $11 million in losses related to positions that had been accounted                for as                cash flow hedges; |
|--------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| ·   | $20                million in reversals of previously recorded net unrealized gains                on hedge                positions (marked-to-market) that were settled in the current period,                the                offsetting effects of which are reflected in electricity revenues                and fuel                and purchased power costs; and |
|--------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| ·   | $31                million in net unrealized losses primarily relating to hedge positions                that are marked-to-market. |
|--------------------|-------------------------------------------------------------------------------------------------------------------------------------|

|                                                           |   |
|----------------------------------------------------------------|--------|
|                                                           |   | **Three                  Months Ended June 30,** |   |
|                                                           |   | **2006** |   | **%                  of Revenue** |   | **2005** |   | **%                  of Revenue** |   |
|                                                           |   |   |   |   |   |   |   |   |   |
| Operating                  revenues                       |   | $ | 2,349 |   |   | 100 | % | $ | 2,276 |   |   | 100 | % |
| Costs                  and expenses:                           |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Fuel,                  purchased power costs and delivery fees |   |   | 943 |   |   | 40 |   |   | 1,265 |   |   | 56 |   |
| Generation                  plant operating costs              |   |   | 152 |   |   | 6 |   |   | 177 |   |   | 8 |   |
| Depreciation                  and amortization                 |   |   | 83 |   |   | 4 |   |   | 76 |   |   | 3 |   |
| Gross                  margin                             |   | $ | 1,171 |   |   | 50 | % | $ | 758 |   |   | 33 | % |

| ·   | higher                pricing, as the average wholesale sales price per MWh rose 24% and                the                average retail sales price per MWh rose 26% (13 percentage point                margin                increase); and |
|--------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| ·   | the                effect of reporting wholesale power trading activity on a net basis                (five                percentage point margin increase), |
|--------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------|
| ·   | a                15% increase in combined per MWh purchase power costs and fuel costs                in                gas/oil-fired generation, due to rising natural gas prices (two percentage                point margin decrease). |
|--------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| ·   | $20                million in lower maintenance costs due largely to the absence in                2006 of                costs incurred in 2005 for the nuclear generation plant refueling                outage;                and |
|--------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| ·   | $3                million in lower property taxes due to lower overall property valuation                estimates, |
|--------------------|---------------------------------------------------------------------------------------------------------------------|
| ·   | $9                million in higher bad debt expense reflecting higher retail accounts                receivable balances; |
|--------------------|----------------------------------------------------------------------------------------------------------------------------|
| ·   | $7                million in costs associated with the new generation development program;                and |
|--------------------|---------------------------------------------------------------------------------------------------------------|
| ·   | $4                million in higher fees related to the sale of accounts receivable                program                due to higher interest rates, |
|--------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------|
| ·   | $3                million to reduce estimated sublease proceeds included in the net                liability recorded in 2004 for the leased gas-fired combustion turbines                no                longer operated for TXU Energy Holdings’                benefit; |
|--------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| ·   | $2                million in equity losses (representing amortization expense) related                to                the ownership interest in the TXU Corp. entity holding the capitalized                software licensed to Capgemini; and |
|--------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| ·   | $2                million in transition costs associated with the Capgemini outsourcing                agreement. |
|--------------------|-------------------------------------------------------------------------------------------------------------------|

***Six        Months Ended June 30, 2006 Compared to Six Months Ended June 30,        2005***

| ·   | The                retail revenue increase reflected $795 million in higher pricing                due to                increased price-to-beat rates, reflecting regulatory-approved fuel                factor                increases in May and October 2005, and higher pricing in the competitive                business market, both resulting from the effects of higher natural                gas                prices. |
|--------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| ·   | The                effect of higher pricing due to increased price-to-beat rates was                partially offset by $351 million in lower retail volumes. Total retail                sales volumes declined 12% reflecting a net loss of customers due                to                competitive activity and lower average consumption per customer in                residential and small business markets. Large business market volumes                declined 20% and residential and small business volumes fell by 9%.                The                large business market decline reflected a continuing strategy to                improve                margins. |
|--------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| ·   | Retail                electricity customer counts at June 30, 2006 declined 6% from June                30,                2005. Total residential and small business customer counts in the                historical service territory declined 8% and in all combined territories                declined 6%. |
|--------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| ·   | $109                million in a net unrealized “day one” loss on a related series of                commodity price hedges entered into in June 2006 at below-market                prices; |
|--------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| ·   | $144                million in net unrealized cash flow hedge ineffectiveness gains largely                associated with positions in the long-term hedging                program; |
|--------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| ·   | $22                million in net realized gains associated with positions in the long-term                hedging program accounted for as cash flow hedges, the offsetting                effects                of which are reflected in electricity                revenues; |
|--------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| ·   | $30                million in net realized losses associated with hedges entered into                in                prior years (largely 2003), the offsetting effects of which are reflected                in electricity revenues and fuel and purchased power. This amount                includes                $19 million in losses related to positions that had been accounted                for as                cash flow hedges; |
|--------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| ·   | $31                million in reversals of previously recorded net unrealized gains                on hedge                positions (marked-to-market) that were settled in the current period,                the                offsetting effects of which are reflected in electricity revenues                and fuel                and purchased power costs; |
|--------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| ·   | $30                million in net unrealized losses primarily relating to hedge positions                that are marked-to-market; and |
|--------------------|-----------------------------------------------------------------------------------------------------------------------------------------|
| ·   | $20                million in net realized losses on settlement of various commodity                trading                positions. |
|--------------------|---------------------------------------------------------------------------------------------------------------------------------------|

|                                                           |   |
|----------------------------------------------------------------|--------|
|                                                           |   | **Six                  Months Ended June 30,** |   |
|                                                           |   | **2006** |   | **%                  of Revenue** |   | **2005** |   | **%                  of Revenue** |   |
|                                                           |   |   |   |   |   |   |   |   |   |
| Operating                  revenues                       |   | $ | 4,359 |   |   | 100 | % | $ | 4,097 |   |   | 100 | % |
| Costs                  and expenses:                           |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Fuel,                  purchased power costs and delivery fees |   |   | 1,733 |   |   | 40 |   |   | 2,338 |   |   | 57 |   |
| Generation                  plant operating costs              |   |   | 306 |   |   | 7 |   |   | 331 |   |   | 8 |   |
| Depreciation                  and amortization                 |   |   | 166 |   |   | 4 |   |   | 154 |   |   | 4 |   |
| Gross                  margin                             |   | $ | 2,154 |   |   | 49 | % | $ | 1,274 |   |   | 31 | % |

| ·   | higher                pricing, as the average wholesale sales price per MWh rose 28% and                the                average retail sales price per MWh rose 32% (15 percentage point                margin                increase); and |
|--------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| ·   | the                effect of reporting wholesale power trading activity on a net basis                (six                percentage point margin increase), |
|--------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------|
| ·   | a                18% increase in combined per MWh purchase power costs and fuel costs                in                gas/oil-fired generation, due to rising natural gas prices (three                percentage point margin decrease). |
|--------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| ·   | $10                million in higher bad debt expense reflecting higher retail accounts                receivable balances; |
|--------------------|-----------------------------------------------------------------------------------------------------------------------------|
| ·   | $8                million in higher fees related to the sale of accounts receivable                program                due to higher interest rates; |
|--------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------|
| ·   | $7                million in costs associated with the new generation development program;                and |
|--------------------|---------------------------------------------------------------------------------------------------------------|
| ·   | $6                million in executive severance expense (including amounts allocated                from                parent), |
|--------------------|-----------------------------------------------------------------------------------------------------------------------------------|
| ·   | a                $198 million charge related to the write-down of the natural gas-fired                generation plants to fair value (see Note 2 to Financial                Statements); |
|--------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| ·   | $5                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 in accretion expense related to the combustion turbine lease                liability, |
|--------------------|------------------------------------------------------------------------------------------------------------------|
| ·   | a                $12 million charge related to a counterparty default under a coal                contract; |
|--------------------|-------------------------------------------------------------------------------------------------------------|
| ·   | $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; |
|--------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| ·   | $4                million in transition costs associated with the Capgemini outsourcing                agreement; and |
|--------------------|-----------------------------------------------------------------------------------------------------------------------|
| ·   | a                $12 million net credit arising from a change in estimated sublease                proceeds related to leased gas-fired combustion turbines no longer                operated for TXU Energy Holdings’ benefit. As the original charge                associated with this liability was recorded in this line item, the                related                credit was similarly reported. |
|--------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

**TXU        Electric Delivery**

***Financial        Results***

|                                                          |   | **Three                  Months Ended** |    | **Six                  Months Ended** |   |
|---------------------------------------------------------------|--------|-----------------------------------------|---------|---------------------------------------|--------|
|                                                          |   | **June                  30,**           |    | **June                  30,**         |   |
|                                                          |   | **2006**                                |    | **2005**                              |   | **2006** |   | **2005** |   |
|                                                          |   |                                    |    |                                  |   |   |   |   |   |
| Operating                  revenues                      |   | $                                       | 604     |                                  | $      | 564 |   | $ | 1,166 |   | $ | 1,114 |   |
|                                                          |   |                                    |    |                                  |   |   |   |   |   |   |   |   |   |
| Costs                  and expenses:                          |   |                                    |    |                                  |   |   |   |   |   |   |   |   |   |
|                                                          |   |                                    |    |                                  |   |   |   |   |   |   |   |   |   |
| Operating                  costs                              |   |                                    | 194     |                                  |   | 180 |   |   | 385 |   |   | 362 |   |
|                                                          |   |                                    |    |                                  |   |   |   |   |   |   |   |   |   |
| Depreciation                  and amortization                |   |                                    | 117     |                                  |   | 108 |   |   | 231 |   |   | 213 |   |
|                                                          |   |                                    |    |                                  |   |   |   |   |   |   |   |   |   |
| Selling,                  general and administrative expenses |   |                                    | 43      |                                  |   | 43 |   |   | 93 |   |   | 91 |   |
|                                                          |   |                                    |    |                                  |   |   |   |   |   |   |   |   |   |
| Franchise                  and revenue-based taxes            |   |                                    | 59      |                                  |   | 56 |   |   | 119 |   |   | 114 |   |
|                                                          |   |                                    |    |                                  |   |   |   |   |   |   |   |   |   |
| Other                  income                                 |   |                                    | ― |                                  |   | ― |   |   | (1 | ) |   | (2 | ) |
|                                                          |   |                                    |    |                                  |   |   |   |   |   |   |   |   |   |
| Other                  deductions                             |   |                                    | 1       |                                  |   | 2 |   |   | 2 |   |   | 6 |   |
|                                                          |   |                                    |    |                                  |   |   |   |   |   |   |   |   |   |
| Interest                  income                              |   |                                    | (14     | )                                     |   | (14 | ) |   | (29 | ) |   | (29 | ) |
|                                                          |   |                                    |    |                                  |   |   |   |   |   |   |   |   |   |
| Interest                  expense and related charges         |   |                                    | 72      |                                  |   | 68 |   |   | 140 |   |   | 136 |   |
|                                                          |   |                                    |    |                                  |   |   |   |   |   |   |   |   |   |
| Total                  costs and expenses                     |   |                                    | 472     |                                  |   | 443 |   |   | 940 |   |   | 891 |   |
|                                                          |   |                                    |    |                                  |   |   |   |   |   |   |   |   |   |
| Income                  before income taxes                   |   |                                    | 132     |                                  |   | 121 |   |   | 226 |   |   | 223 |   |
|                                                          |   |                                    |    |                                  |   |   |   |   |   |   |   |   |   |
| Income                  tax expense                      |   |                                    | 46      |                                  |   | 35 |   |   | 75 |   |   | 66 |   |
|                                                          |   |                                    |    |                                  |   |   |   |   |   |   |   |   |   |
| Net                  income                              |   | $                                       | 86      |                                  | $      | 86 |   | $ | 151 |   | $ | 157 |   |
|                                                          |   |                                    |    |                                  |   |   |   |   |   |   |   |   |   |

***Operating        Data***

|                                                                                                                |   | **Three                  Months Ended** |   | **Six                  Months Ended** |   |
|---------------------------------------------------------------------------------------------------------------------|--------|-----------------------------------------|--------|---------------------------------------|--------|
|                                                                                                                |   | **June                  30,**           |   | **June                  30,**         |   |
|                                                                                                                |   | **2006**                                |   | **2005**                              |   | **Change                  %** |   | **2006** |   | **2005** |   | **Change                  %** |   |
| **Operating                  statistics - volumes:**                                                                |   |                                    |   |                                  |   |   |   |   |   |   |   |   |   |
| Electric                  energy delivered (GWh)                                                               |   |  27,244                            |   |  25,459                          |   |  7.0 |   |  50,376 |   |  48,907 |   |  3.0 |   |
|                                                                                                                |   |                               |   |                             |   |    |   |    |   |    |   |    |   |
| **Reliability                  statistics (a):**                                                                    |   |                               |   |                             |   |    |   |    |   |    |   |    |   |
| System                  Average Interruption Duration Index (SAIDI) (nonstorm)                                 |   |  73.54                             |   |  74.52                           |   |  (1.3) |   |
| System                  Average Interruption Frequency Index (SAIFI) (nonstorm)                                |   |  1.11                              |   |  1.15                            |   |  (3.5) |   |
| Customer                  Average Interruption Duration Index (CAIDI) (nonstorm)                               |   |  66.11                             |   |  64.71                           |   |  2.2 |   |
|                                                                                                                |   |                               |   |                             |   |    |   |    |   |    |   |    |   |
| **Electricity                  points of delivery (end of period and in                  thousands):**              |   |                               |   |                             |   |    |   |    |   |    |   |    |   |
| Electricity                  distribution points of delivery (based on number of meters)                  (b)  |   |  3,038                             |   |  2,996                           |   |  1.4 |   |
|                                                                                                                |   |                               |   |                             |   |    |   |    |   |    |   |    |   |
| **Operating                  revenues:**                                                                            |   |                               |   |                             |   |    |   |    |   |    |   |    |   |
| Electricity                  distribution revenues (c):                                                             |   |                               |   |                             |   |    |   |    |   |    |   |    |   |
| Affiliated                  (TXU Energy Holdings)                                                              |   | $283                                    |   | $304                                  |   |  (6.9) |   | $550 |   | $615 |   |  (10.6) |   |
| Nonaffiliated                                                                                                  |   |  254                               |   |  201                             |   |  26.4 |   |  485 |   |  383 |   |  26.6 |   |
| Total                  distribution revenues                                                                        |   |                                    | 537    |                                  |   | 505 |   |   | 6.3 |   |   | 1,035 |   |   | 998 |   |   | 3.7 |   |
| Third-party                  transmission revenues                                                             |   |                                    | 59     |                                  |   | 53 |   |   | 11.3 |   |   | 116 |   |   | 104 |   |   | 11.5 |   |
| Other                  miscellaneous revenues                                                                  |   |                                    | 8      |                                  |   | 6 |   |   | 33.3 |   |   | 15 |   |   | 12 |   |   | 25.0 |   |
| Total                  operating revenues                                                                           |   | $                                       | 604    |                                  | $      | 564 |   |   | 7.1 |   | $ | 1,166 |   | $ | 1,114 |   |   | 4.7 |   |

**__________________________**

**TXU        Electric Delivery**

***Three        Months Ended June 30, 2006 Compared to Three Months Ended June 30,        2005***

| ·   | an                estimated $22 million in higher revenues from the effect of warmer                weather; |
|--------------------|--------------------------------------------------------------------------------------------------------------|
| ·   | $6                million in higher transmission revenues primarily due to rate increases                approved in 2005 and 2006 to recover ongoing investment in the                transmission system; |
|--------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| ·   | $4                million due to growth in points of                delivery; |
|--------------------|-------------------------------------------------------------------------------|
| ·   | $3                million from increased distribution tariffs to recover higher transmission                costs; and |
|--------------------|------------------------------------------------------------------------------------------------------------------------|
| ·   | $2                million in higher transition charges due to interim rate updates                (offset                by higher amortization of the related regulatory                asset). |
|--------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

*Gross        Margin*

|                                                                  |   |
|-----------------------------------------------------------------------|--------|
|                                                                  |   | **Three                  Months Ended** |   |
|                                                                  |   | **June                  30,** |   |
|                                                                  |   | **2006** |   | **%                  of Revenue** |   | **2005** |   | **%                  of Revenue** |   |
|                                                                  |   |   |   |   |   |   |   |   |   |
| Operating                  revenues                              |   | $ | 604 |   |   | 100 | % | $ | 564 |   |   | 100 | % |
| Costs                  and expenses:                                  |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Transmission                  and distribution system operating costs |   |   | 194 |   |   | 32 |   |   | 180 |   |   | 32 |   |
| Depreciation                  and amortization                        |   |   | 116 |   |   | 19 |   |   | 108 |   |   | 19 |   |
| Gross                  margin                                    |   | $ | 294 |   |   | 49 | % | $ | 276 |   |   | 49 | % |

***Six        Months Ended June 30, 2006 Compared to Six Months Ended June 30,        2005***

| ·   | an                estimated $18 million in higher revenues from the effect of warmer                weather; |
|--------------------|--------------------------------------------------------------------------------------------------------------|
| ·   | $12                million in higher transmission revenues primarily due to rate increases                approved in 2005 and 2006 to recover ongoing investment in the                transmission system; |
|--------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| ·   | $8                million due to growth in points of                delivery; |
|--------------------|-------------------------------------------------------------------------------|
| ·   | $5                million in higher transition charges due to interim rate updates                (offset                by higher amortization of the related regulatory asset);                and |
|--------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| ·   | $4                million from increased distribution tariffs to recover higher transmission                costs. |
|--------------------|--------------------------------------------------------------------------------------------------------------------|

*Gross        Margin*

|                                                                  |   |
|-----------------------------------------------------------------------|--------|
|                                                                  |   | **Six                  Months Ended** |   |
|                                                                  |   | **June                  30,** |   |
|                                                                  |   | **2006** |   | **%                  of Revenue** |   | **2005** |   | **%                  of Revenue** |   |
|                                                                  |   |   |   |   |   |   |   |   |   |
| Operating                  revenues                              |   | $ | 1,166 |   |   | 100 | % | $ | 1,114 |   |   | 100 | % |
| Costs                  and expenses:                                  |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Transmission                  and distribution system operating costs |   |   | 385 |   |   | 33 |   |   | 362 |   |   | 32 |   |
| Depreciation                  and amortization                        |   |   | 230 |   |   | 20 |   |   | 213 |   |   | 19 |   |
| Gross                  margin                                    |   | $ | 551 |   |   | 47 | % | $ | 539 |   |   | 49 | % |

| ·   | $2                million of severance-related charges related to the 2004 restructuring                actions; |
|--------------------|------------------------------------------------------------------------------------------------------------------|
| ·   | $2                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 in costs associated with transitioning the outsourced activities                to Capgemini. |
|--------------------|-------------------------------------------------------------------------------------------------------------------------|

**COMPREHENSIVE        INCOME - Continuing Operations**

|                                                                                                                                                     |   | **Three                  Months Ended** |   | **Six                  Months Ended** |   |
|----------------------------------------------------------------------------------------------------------------------------------------------------------|--------|-----------------------------------------|--------|---------------------------------------|--------|
|                                                                                                                                                     |   | **June                  30,**           |   | **June                  30,**         |   |
|                                                                                                                                                     |   | **2006**                                |   | **2005**                              |   | **2006** |   | **2005** |   |
|                                                                                                                                                     |   |                                    |   |                                  |   |   |   |   |   |
| Net                  increase (decrease) in fair value of cash flow hedges (all commodity)                  held                  at end of period  |   | $                                       | (83    | )                                     | $      | (2 | ) | $ | 30 |   | $ | 13 |   |
| Derivative                  value net losses related to hedged transactions settled during                  the period                  and              |   |                                    |   |                                  |   |   |   |   |   |   |   |   |   |
| reported                  in net income:                                                                                                                 |   |                                    |   |                                  |   |   |   |   |   |   |   |   |   |
| Commodities                                                                                                                                         |   |                                    | 10     |                                  |   | 17 |   |   | 7 |   |   | 33 |   |
| Financing                  - interest rate swaps                                                                                                    |   |                                    | 2      |                                  |   | 4 |   |   | 4 |   |   | 8 |   |
|                                                                                                                                                     |   |                                    | 12     |                                  |   | 21 |   |   | 11 |   |   | 41 |   |
| Total                  income (loss) effect of cash flow hedges reported in other comprehensive                  income from                             |   |                                    |   |                                  |   |   |   |   |   |   |   |   |   |
| continuing                  operations                                                                                                              |   | $                                       | (71    | )                                     | $      | 19 |   | $ | 41 |   | $ | 54 |   |

**FINANCIAL        CONDITION**

***LIQUIDITY        AND CAPITAL RESOURCES***

| ·   | higher                operating earnings after taking into account noncash items, such                as the                impairment charge, and income tax benefits of approximately $375                million                from utilization of net operating loss carryforwards (reducing cash                tax                payments in 2006); |
|--------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| ·   | a                favorable change of $253 million in working capital (accounts receivable,                accounts payable and inventories) principally reflecting higher wholesale                gas receivables in 2005, due to higher natural gas prices and sales                volumes, as well as increased proceeds from the accounts receivable                sales                program in 2006; and |
|--------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| ·   | an                $84 million payment in 2005, net of insurance recoveries, to settle                the                consolidated amended securities class action                lawsuit. |
|--------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| ·   | issuances,                repurchases and repayments of borrowings resulting in net cash inflows                of                $263 million in 2006 and $1.0 billion in                2005; |
|--------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| ·   | repurchases                and issuances of common stock resulting in net cash outflows of $685                million in 2006 and $526 million in 2005; |
|--------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------|
| ·   | repurchases                of preference stock used funds totaling $300 million in                2005; |
|--------------------|---------------------------------------------------------------------------------------------------------|
| ·   | common                stock dividends paid totaling $384 million in 2006 and $274 million                in                2005; and |
|--------------------|--------------------------------------------------------------------------------------------------------------------------------------|
| ·   | preference                stock dividends paid totaling $11 million in                2005. |
|--------------------|---------------------------------------------------------------------------------------------|
| ·   | capital                expenditures, including nuclear fuel, totaling $855 million in 2006                and                $533 million in 2005. The increase in capital expenditures in 2006                includes $190 million of investment in the generation development                program                as well as spending for systems to automate distribution system metering                and transmission projects to relieve                congestion; |
|--------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| ·   | deposit                into a trust of $99 million of funds restricted for funding of generation                pollution control expenditures; and |
|--------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------|
| ·   | payment                of $69 million to purchase the owner participant interest in a trust                established to lease combustion turbines to TXU Energy                Holdings. |
|--------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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

|                                             |   | **Issuances** |    | **Retirements** |   |
|--------------------------------------------------|--------|---------------|---------|-----------------|--------|
| TXU                  Corp.:                      |   |          |    |            |   |
| Senior                  notes                    |   | $             | ― |            | $      | 683 |   |
| Equity-linked                  senior notes      |   |          | ― |            |   | 179 |   |
| Other                  long-term debt            |   |          | ― |            |   | 5 |   |
|                                             |   |          |    |            |   |   |   |
| TXU                  Energy Holdings:            |   |          |    |            |   |   |   |
| Pollution                  control revenue bonds |   |          | 100     |            |   | 203 |   |
| Senior                  notes                    |   |          | ― |            |   | 400 |   |
|                                             |   |          |    |            |   |   |   |
| TXU                  Electric Delivery:          |   |          |    |            |   |   |   |
| Transition                  bonds                |   |          | ― |            |   | 47 |   |
|                                             |   |          |    |            |   |   |   |
| US                  Holdings                |   |          | ― |            |   | 8 |   |
|                                             |   |          |    |            |   |   |   |
| Total                                            |   | $             | 100     |            | $      | 1,525 |   |
|                                             |   |          |    |            |   |   |   |

***Credit        Facilities***
*—*

***Capital Expenditures        —***

***Financing        for New Generation Development Program***
*—        *

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

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

***Sales        of Accounts Receivable***

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

| ·   | $54                million in cash has been received from counterparties as                collateral; |
|--------------------|--------------------------------------------------------------------------------------------------------|
| ·   | $70                million in cash has been posted with counterparties as collateral;                and |
|--------------------|----------------------------------------------------------------------------------------------------------|
| ·   | $971                million in letters of credit have been posted as collateral by TXU                Energy                Holdings including $500 million to support a related series of hedge                transactions in June 2006. (See discussion above under “Recent                Developments”.) |
|--------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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

*Credit        Ratings*

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

*Material        Credit Rating Covenants*

*Material        Cross Default Provisions *

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

***Increases        in Contractual Cash Obligations since December 31,        2005***
* *

|                                                                           |   | **Less**** Than**** One                  Year** |    | **One                  to****Three****Years** |   | **Three                  to****Five****Years** |   | **More****Than****Five****Years** |    | **Total** |   |
|--------------------------------------------------------------------------------|--------|-----------------------------------------------------------|---------|-----------------------------------------------|--------|------------------------------------------------|--------|-----------------------------------|---------|-----------|--------|
|                                                                           |   |                                                      |    |                                          |   |                                           |   |                              |    |      |   |
| Contracts                  related to generation development program (a)  |   | $                                                         | 766     |                                          | $      | 2,724                                          |   | $                                 | 474     |      | $      | — |   | $ | 3,964 |   |
| Obligations                  under commodity purchase agreements          |   | $                                                         | — |                                          | $      | 470                                            |   | $                                 | — |      | $      | 326 |   | $ | 796 |   |

| (a)   | Amounts                represent scheduled payments under the contracts. Cancellation costs                are                estimated to be $750 million as of September 30, 2006 and $1.2 billion                as                of December 31, 2006. Recovery values upon cancellation related to                assets                acquired and owned assets that are intended to be utilized in the                program                are estimated at 50% to 80% of the cancellation                costs. |
|-----------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

**OFF        BALANCE SHEET ARRANGEMENTS, INCLUDING VARIABLE INTEREST        ENTITIES**

**COMMITMENTS        AND CONTINGENCIES**

**REGULATION        AND RATES**

| ·   | For                customers who have been designated as “critical care” because interruption                or suspension of electric service will create a dangerous or                life-threatening condition, there shall be no disconnection through                September 30, 2006, regardless of whether the customer makes payments                for                electricity use this summer; |
|--------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| ·   | Elderly                low-income customers who contact their electric provider will also                not be                disconnected through September 30, 2006, regardless of whether the                customer makes payments for electricity use, though the Commissioners                encouraged customers to pay as much as they can to avoid building                up                significant unpaid balances. These customers will be entitled to                enter                into a deferred payment arrangement with 25% of their balance due                in                October and the balance of the deferred bills paid over the next                five                months; |
|--------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| ·   | All                other low-income customers can avoid disconnection through September                30,                2006 by paying 25% of their current month’s bill and entering into a                deferred payment arrangement that spreads remaining amounts over                the next                five months. In July, August and September 2006, the customer can                avoid                disconnection by paying 25% of that month’s bill and also paying the                deferral installment that is due for that                month. |
|--------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

***Texas        Legislative Special Session***

***Transmission        Rates***
* *

***Automated        Meter Reading***

***Cities        Rate Settlement***

***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). |
|--------------------|-----------------------------------------------------------------------------------------------|

***Summary***

**CHANGES        IN ACCOUNTING STANDARDS**

**Item        3.  QUANTITATIVE AND        QUALITATIVE DISCLOSURES ABOUT MARKET RISK.**

***RISK        OVERSIGHT***

***COMMODITY        PRICE RISK***

***Long-term        Hedging Program***
** **

***VaR        Methodology***

***VaR        for Energy Contracts Subject to Mark-to-Market        Accounting***

|   |                                        |    | **June                  30,** |   |    | **December                  31,** |   |
|--------|---------------------------------------------|---------|-------------------------------|--------|---------|-----------------------------------|--------|
|   |                                        |    | **2006**                      |   |    | **2005**                          |   |
|   | Period-end                  MtM VaR:        | $       | 140                           |   | $       | 19                                |   |
|   | Average                  Month-end MtM VaR: | $  | 32                            |   | $  | 20                                |   |

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

|   |          |   | **June                  30,** |   |   | **December                  31,** |   |
|--------|---------------|--------|-------------------------------|--------|--------|-----------------------------------|--------|
|   |          |   | **2006**                      |   |   | **2005**                          |   |
|   | **EaR**  | $      | $147                          |   | $      | $32                               |   |

***INTEREST        RATE RISK***

***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     |   | $                                                      | 946    |                                               | $      | 154                                           |   | $                                                          | 792    |   | $ | 521 |   | $ | 125 |   | $ | 146 |   | $ | 792 |   |
| Noninvestment                  grade  |   |                                                   | 246    |                                               |   | 55                                            |   |                                                       | 191    |   |   | 159 |   |   | 22 |   |   | 10 |   |   | 191 |   |
| Totals                                     |   | $                                                      | 1,192  |                                               | $      | 209                                           |   | $                                                          | 983    |   | $ | 680 |   | $ | 147 |   | $ | 156 |   | $ | 983 |   |
|                                       |   |                                                   |   |                                               |   |                                          |   |                                                       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Investment                  grade     |   |                                                   | 79     | %                                                  |   | 74                                            | %      |                                                       | 81     | % |   |   |   |   |   |   |   |   |   |   |   |   |
| Noninvestment                  grade  |   |                                                   | 21     | %                                                  |   | 26                                            | %      |                                                       | 19     | % |   |   |   |   |   |   |   |   |   |   |   |   |

**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; |
|--------------------|----------------------------------------------------------------------------------------------------------|
| ·   | 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; |
|--------------------|-----------------------------------------------------------------------------------------------------|
| ·   | delays                in implementing any future price-to-beat fuel factor                adjustments; |
|--------------------|--------------------------------------------------------------------------------------------------------|
| ·   | 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; |
|--------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| ·   | 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; and |
|--------------------|--------------------------------------------------------------------------------------|
| ·   | with                respect to TXU Corp.’s new publicly announced lignite/coal generation                capacity development program, more specifically, TXU Corp.’s ability to                fund such investments, delays in approval of, or failure to obtain,                air                and other environmental permits, 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 in Texas, the ability of TXU Corp. to attract and                retain                skilled labor for planning and constructing new generating units,                changes                in wholesale electricity prices or energy commodity prices, 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. |
|--------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

**Item        4. CONTROLS AND PROCEDURES.**

**PART        II. OTHER INFORMATION**

**Item        1.     Legal Proceedings.**

**Item        1A.  Risk Factors.**

**TXU        Corp.’s growth strategy, including its investment in lignite/coal-fired        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.**

**Item        2. Unregistered Sales of Equity Securities and Use of        Proceeds**

**Issuer        Purchases of Equity Securities**

|        **Period** |   |       **Total                  Number of** **Shares                  Purchased** |      |       **Average                  Price****Paid                  per Share** |   |   **Total                  Number of Shares Purchased****as                  Part of****Publicly****Announced                  Plans or Programs** |   | **Maximum****Number                  of****Shares                  That May****Yet                  be Purchased Under the****Plans                  or****Programs                  (a)** |      |
|------------------------------------------------------|--------|---------------------------------------------------------------------------------------------------------------------|-----------|-----------------------------------------------------------------------------------------------------------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|-----------|
|                                                 |   |                                                                                                                |      |                                                                                                      |   |                                                                                                                                                         |   |                                                                                                                                                                                       |      |
| April                  1, 2006 - April 30, 2006      |   |                                                                                                                | 4,239,589 |                                                                                                      | $      | 47.25                                                                                                                                                        |   |                                                                                                                                                                                       | 4,239,589 |   |   | ─ |   |
| May                  1, 2006 - May 31, 2006          |   |                                                                                                                | 1,963,000 |                                                                                                      |   | 55.18                                                                                                                                                        |   |                                                                                                                                                                                       | 1,963,000 |   |   | ─ |   |
| June                  1, 2006 - June 30, 2006        |   |                                                                                                                | ─   |                                                                                                      |   | ─                                                                                                                                                      |   |                                                                                                                                                                                       | ─   |   |   | ─ |   |
| Total                  as of June 30, 2006           |   |                                                                                                                | 6,202,589 |                                                                                                      | $      | 49.76                                                                                                                                                        |   |                                                                                                                                                                                       | 6,202,589 |   |   | 5,689,785 |   |

|   | (a) | From                  July 1, 2006 to July 25, 2006, TXU Corp. purchased an additional                  241,000                  shares at an average price of $59.93 per share. All of these share                  purchases were under a November 2005 authorization by TXU Corp.’s board of                  directors for the purchase of up to 34 million shares between November                  2005 and year end 2006. At July 25, 2006, the maximum number of                  shares                  that may yet be repurchased under the Board authorization is 5,448,989                  shares. |
|--------|-----|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

**Item        4. Submission of Matters to a Vote of Security Holders**

|                                                                                 |        |   | Votes                        |   |        |   |
|--------------------------------------------------------------------------------------|-------------|--------|------------------------------|--------|-------------|--------|
|                                                                                 | Votes       |   | Withheld                  or |   |        |   |
|                                                                                 | For         |   | Against                      |   | Abstentions |   |
|                                                                                 |        |   |                         |   |        |   |
| Election                  of Directors                                               |        |   |                         |   |        |   |
|     E.                  Gail                  de Planque         | 389,936,692 |   | 9,137,726                    |   | None        |   |
|     Leldon                  E. Echols                            | 391,803,632 |   | 7,270,786                    |   | None        |   |
|     Kerney                  Laday                                | 383,426,915 |   | 15,647,502                   |   | None        |   |
|     Jack                  E.                  Little             | 391,883,308 |   | 7,191,109                    |   | None        |   |
|     Gerardo                  I. Lopez                            | 391,690,260 |   | 7,384,158                    |   | None        |   |
|     J.                  E.                  Oesterreicher        | 391,546,005 |   | 7,528,413                    |   | None        |   |
|     Michael                  W. Ranger                           | 391,875,815 |   | 7,198,602                    |   | None        |   |
|     Leonard                  H. Roberts                          | 391,708,434 |   | 7,365,984                    |   | None        |   |
|     Glenn                  F. Tilton                             | 391,124,023 |   | 7,950,394                    |   | None        |   |
|     C.                  John                  Wilder             | 383,915,348 |   | 15,159,070                   |   | None        |   |
|                                                                                 |        |   |                         |   |        |   |
| Selection                  of Deloitte & Touche LLP                              |        |   |                         |   |        |   |
|     as                  Independent Auditor                      | 387,418,256 |   | 6,381,689                    |   | 5,274,473   |   |
|                                                                                 |        |   |                         |   |        |   |
| Approval                  of amendment to the                                        |        |   |                         |   |        |   |
|     Company’s                  restated bylaws             | 314,324,025 |   | 3,992,910                    |   | 6,301,578   |   |
|                                                                                 |        |   |                         |   |        |   |
| Approval                  of the Company’s                                     |        |   |                         |   |        |   |
|     restated                  certificate of formation           | 307,637,163 |   | 10,649,564                   |   | 6,331,787   |   |
|                                                                                 |        |   |                         |   |        |   |
| Shareholder                  proposal to elect                                       |        |   |                         |   |        |   |
|     directors                  by                  majority vote | 140,452,653 |   | 176,447,857                  |   | 7,718,004   |   |

**Item      6. Exhibits**

|   **Exhibits** | **Previously                Filed With File** **Number***                       |  **As****Exhibit** |   |                                                                                                                                                                                                           |
|--------------------------|--------------------------------------------------------------------------------------|-------------------------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| **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 May                19, 2006)        |  3.2               |   | Restated                Bylaws of TXU Corp., effective May 19, 2006.                                                                                                                                 |
| **(10)**            | **Material                Contracts.**                                          |
|                     | **Management                Contracts.**                                        |
| 10(a)               | Form                8-K (filed April                6, 2006)                    |  10.1              |   | Form                of Non-Disclosure, Non-Solicitation and Non-Competition                Agreement.                                                                                                     |
|                     | **Benefit                Plans**                                                |
| 10(b)               | 1-12833 Form                8-K (filed May                19, 2006)        |  10.1              |   | TXU                Corp. Non-employee Director Compensation Arrangements.                                                                                                                                 |
| 10(c)               | 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(d)               | 1-12833 Form                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(e)               | 1-12833 Form                8-K (filed June                16, 2006)  |  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(f)               | 1-12833 Form                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(g)               | 1-12833 Form                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(h)               | 1-12833 Form                8-K (filed June                16, 2006)       |  10.5              |   | Form                of Performance Unit Award Agreement, by and between TXU Corp. and                Participant (Unit III Award).                                                                        |

|   **Exhibits** | **Previously                Filed With File** **Number***                 |  **As****Exhibit** |          |                                                                                                                                                                                                                                                                                                                                                                               |
|--------------------------|--------------------------------------------------------------------------------|-------------------------|---------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                     | **Credit                Agreements.**                                     |
| 10(i)               | 1-12833 Form                8-K (filed June                2, 2006)  |  10.1              |          | $1.5                Billion Revolving Credit Agreement, dated May 26, 2006, by and among                TXU                Energy Company LLC, certain lenders parties thereto, Credit Suisse,                Cayman                Islands Branch, as administrative agent, and as fronting bank, and                Lehman                Brothers Bank, as fronting bank.  |
|                     | **Other                Material Contracts.**                              |
| 10(j)               |                                                                           |                    |          | Master                Framework Agreement by and between TXU Electric Delivery Company                and                InfrastruX Energy Services Group LP, dated June 25, 2006 (confidential                treatment has been requested for portions of this exhibit).                                                                                                    |
| 10(k)               |                                                                           |                    |          | Confirmation                Agreement by TXU Generation Development Company LLC, dated June 6,                2006                (confidential treatment has been requested for portions of this                exhibit).                                                                                                                                                    |
| 10(l)               |                                                                           |                    |          | Field                Services Agreement by TXU Electric Delivery and InfrastruX Energy                Services                Group LP, dated June 24, 2006 (confidential treatment has been requested                for portions of this exhibit).                                                                                                                          |
| **(15)**            | **Letter                re: Unaudited Interim Financial Information.**    |
| 15                  |                                                                           |                    | ─  | Letter                from independent registered public accounting firm as to unaudited                interim                financial information.                                                                                                                                                                                                                         |

|   **Exhibits** | **Previously                Filed With File** **Number***        |  **As****Exhibit** |          |                                                                                                                                                                                                                                                                                                                                                                 |
|--------------------------|-----------------------------------------------------------------------|-------------------------|---------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| **(31)**            | **Rule                13a - 14(a)/15d - 14(a) Certifications.**  |
| 31(a)               |                                                                  |                    | ─  | Certification                of C. John Wilder, President and Chief Executive of TXU Corp., pursuant                to                Rule 13a-14(a)/15d - 14(a) of the Securities Exchange Act of 1934,                as                adopted pursuant to Section 302 of the Sarbanes-Oxley Act of                2002.                                     |
| 31(b)               |                                                                  |                    | ─  | Certification                of David A. Campbell, Executive Vice President and Acting Chief Financial                Officer of TXU Corp., pursuant to Rule 13a - 14(a)/15d - 14(a) of                the                Securities Exchange Act of 1934, as adopted pursuant to Section 302                of the                Sarbanes-Oxley Act of 2002.  |
| **(32)**            | **Section                1350 Certifications.**                  |
| 32(a)               |                                                                  |                    | ─  | Certification                of C. John Wilder, President and Chief Executive of TXU Corp., pursuant                to                18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the                Sarbanes-Oxley Act of 2002.                                                                                                              |
| 32(b)               |                                                                  |                    | ─  | Certification                of David A. Campbell, Executive Vice President and Acting Chief Financial                Officer of TXU Corp., pursuant to 18 U.S.C. Section 1350, as adopted                pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.                                                                                            |
| **(99)**            | **Additional                Exhibits.**                          |
| 99                  |                                                                  |                    | ─  | Condensed                Statements of Consolidated Income - Twelve Months Ended June 30,                2006.                                                                                                                                                                                                                                                  |

**SIGNATURE**

**TXU      CORP.**