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**UNITED      STATES**

**SECURITIES      AND EXCHANGE COMMISSION**

**Washington,      D.C.  20549**

**_____________________**

**FORM      10-Q**

**FOR      THE QUARTERLY PERIOD ENDED JUNE 30, 2007**

**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) |

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| **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, 2007 and                2006                                                                                                               | 1 |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |   |
| Condensed                Statements of                Consolidated Comprehensive Income –Three                and Six Months Ended                June 30, 2007 and                2006                                                                                                                                                                                                                                                                                                  | 2 |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |   |
| Condensed                Statements of                Consolidated Cash Flows –Six                Months Ended June 30, 2007                and                2006                                                                                                                                                                                                                                                                                                                      | 3 |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |   |
| Condensed                Consolidated Balance                Sheets –June                30, 2007 and December 31,                2006                                                                                                                                                                                                                                                                                                                                                   | 5 |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |   |
| Notes                to Condensed                Consolidated Financial                Statements                                                                                                                                                                                                                                                                                                                                                                                              | 6 |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |   |
| Report                of Independent                Registered Public Accounting                Firm                                                                                                                                                                                                                                                                                                                                                                                           | 38 |
|  **Item                2.                      Management’s                Discussion and Analysis of Financial Condition****and                Results of                Operations                                                                                                     **                                                                                                                        | 39 |
|  **Item                3.                     Quantitative                and Qualitative Disclosures About Market Risk**                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              | 86 |
|  **Item                4.                      Controls                and                Procedures                                                                                                     **                                                                                                                                                                                                              | 92 |
|  **Part                II.                      Other                Information**                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |   |
|  **Item                1.                                      Legal                Proceedings                                                                                                     **                                                                                                                                                                                                                   | 93 |
|  **Item                1A.                    Risk                Factors                                                                                                **                                                                                                                                                                                                                                                                                 | 93 |
|  **Item                2.                                     Unregistered Sales of Equity Securities and Use of                Proceeds**                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             | 95 |
|  **Item                4.                                     Submission of Matters to a Vote of Security                Holders**                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     | 95 |
|  **Item                6.                      Exhibits**                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         | 96 |
|  **SIGNATURE                                                                                                                          **                                                                                                                                                                                                                                                                                      | 98 |

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**GLOSSARY**

| **1999                Restructuring Legislation** | legislation                that restructured the electric utility industry in Texas to provide                for                retail competition                                                                                                                                                                                               |
|---------------------------------------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| **2006                Form 10-K**                 | TXU                Corp.’s Annual Report on Form 10-K for the year ended December 31,                2006                                                                                                                                                                                                                                   |
| **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                                                                                                                                                                                                                                                                                                 |
| **Competitive                Electric**           | Refers                to the TXU Corp. business segment, formerly referred to as TXU Energy                Holdings, which includes the activities of Texas Competitive Holdings,                TXU                DevCo and a lease trust holding certain combustion                turbines.                                                   |
| **EPA**                                           | US                Environmental Protection Agency                                                                                                                                                                                                                                                                                                 |
| **EPC**                                           | engineering,                procurement and construction                                                                                                                                                                                                                                                                                          |
| **ERCOT**                                         | Electric                Reliability Council of Texas, the Independent System Operator and                the                regional coordinator of various electricity systems within                Texas                                                                                                                                       |
| **ERISA**                                         | Employee                Retirement Income Security Act                                                                                                                                                                                                                                                                                            |
| **FASB**                                          | Financial                Accounting Standards Board, the designated organization in the private                sector for establishing standards for financial accounting and                reporting                                                                                                                                            |
| **FERC**                                          | US                Federal Energy Regulatory Commission                                                                                                                                                                                                                                                                                            |
| **FIN**                                           | Financial                Accounting Standards Board Interpretation                                                                                                                                                                                                                                                                                |
| **FIN                45**                         | FIN                No. 45, “Guarantor’s Accounting and Disclosure Requirements for                Guarantees, Including Indirect Guarantees of Indebtedness of Others– An                Interpretation of FASB Statements No. 5, 57, and 107 and Rescission                of                FASB Interpretation No. 34” |
| **FIN                48**                         | FIN                No. 48, “Accounting for Uncertainty in Income Taxes”                                                                                                                                                                                                                                                               |
| **Fitch**                                         | Fitch                Ratings, Ltd. (a credit rating agency)                                                                                                                                                                                                                                                                                       |
| **FSP**                                           | FASB                Staff Position                                                                                                                                                                                                                                                                                                                |
| **GAAP**                                          | generally                accepted accounting principles                                                                                                                                                                                                                                                                                           |
| **GWh**                                           | gigawatt-hours                                                                                                                                                                                                                                                                                                                                    |

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| **historical                service territory** | the                territory, largely in north Texas, being served by TXU Corp.’s regulated                electric utility subsidiary at the time of entering retail competition                on                January 1, 2002                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |
|-------------------------------------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| **IRS**                                         | US                Internal Revenue Service                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |
| **kWh**                                         | kilowatt-hours                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |
| **market                heat rate**             | Heat                rate is a measure of the efficiency of converting a fuel source to                electricity.  The market heat rate is based on the price offer                of the marginal supplier in Texas (generally natural gas plants)                in                generating electricity and is calculated by dividing the wholesale                market                price of electricity by the market price of natural                gas.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |
| **Merger                Agreement**             | Agreement                and Plan of Merger, dated February 25, 2007, under which an investor                group                led by Kohlberg Kravis Roberts & Co. and Texas Pacific Group would                acquire TXU Corp.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |
| **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                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |
| **Oncor                Electric Delivery**      | Refers                to Oncor Electric Delivery Company, a subsidiary of TXU Corp., and/or                its consolidated bankruptcy remote financing subsidiary, Oncor 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., Texas                Competitive Holdings or Oncor Electric Delivery when describing actions,                rights or obligations of their respective subsidiaries.  These                references reflect the fact that the subsidiaries are consolidated                with                their respective parent companies for financial reporting                purposes.  However, these references should not be interpreted                to imply that the parent company is actually undertaking the action                or has                the rights or obligations of the relevant subsidiary company or that                the                subsidiary company is undertaking an action or has the rights or                obligations of its parent company or of any other                affiliate. |
| **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 was supplied                by                competing REPs, adjusted periodically for changes in fuel costs,                and (ii)                were required to be made available to those customers until January                1,                2007                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |
| **PURA**                                        | Texas Public                Utility Regulatory Act                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |
| **REP**                                         | retail                electric provider                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |

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| **RRC**                                       | Railroad                Commission of Texas, which has oversight of lignite mining                activity                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |
|-----------------------------------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| **S&P**                                   | Standard                & Poor’s Ratings Services, a division of the McGraw Hill Companies                Inc. (a credit rating agency)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |
| **SEC**                                       | US                Securities and Exchange Commission                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |
| **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                144**                   | SFAS                No. 144, "Accounting for the Impairment or Disposal of Long-Lived                Assets"                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |
| **SFAS                146**                   | SFAS                No. 146, "Accounting for Costs Associated with Exit or Disposal                Activities"                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |
| **SFAS                158**                   | SFAS                No. 158, “Accounting for Defined Benefit Pension and Other Postretirement                Plans”                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |
| **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                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |
| **Texas                Competitive Holdings** | Refers                to Texas Competitive Electric Holdings Company LLC (formerly TXU                Energy                Company LLC), a subsidiary of TXU Corp., and/or its subsidiaries,                depending on context, engaged in electricity generation and wholesale                and                retail energy markets activities.  This Form 10-Q and other SEC                filings of TXU Corp. and its subsidiaries occasionally make references                to                TXU Corp., Texas Competitive Holdings or Oncor Electric Delivery when                describing actions, rights or obligations of their respective                subsidiaries.  These references reflect the fact that the                subsidiaries are consolidated with their respective parent companies                for                financial reporting purposes.  However, these references should                not be interpreted to imply that the parent company is actually                undertaking the action or has the rights or obligations of the relevant                subsidiary company or that the subsidiary company is undertaking                an action                or has the rights or obligations of its parent company or of any                other                affiliate. |

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| **TXU                Corp.**                | Refers                to TXU Corp., a holding company, and/or its subsidiaries, depending                on                context.  This Form 10-Q and other SEC filings of TXU Corp. and                its subsidiaries occasionally make references to TXU Corp., Texas                Competitive Holdings or Oncor Electric Delivery when describing                actions, rights or obligations of their respective                subsidiaries.  These references reflect the fact that the                subsidiaries are consolidated with their respective parent companies                for                financial reporting purposes.  However, these references should                not be interpreted to imply that the parent company is actually                undertaking the action or has the rights or obligations of the relevant                subsidiary company or that the subsidiary company is undertaking                an action                or has the rights or obligations of its parent company or of any                other                affiliate. |
|---------------------------------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| **TXU                DevCo**                | Refers                to subsidiaries of TXU Corp. that have been established for the purpose                of                developing new generation facilities.  The TXU DevCo                subsidiaries are currently not subsidiaries of Texas Competitive                Holdings                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |
| **TXU                Energy Retail**        | Refers                to TXU Energy Retail Company LLC, a subsidiary of Texas Competitive                Holdings engaged in the retail sale of power to residential and business                customers                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |
| **TXU                Europe**               | TXU                Europe Limited, a former subsidiary of TXU Corp.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |
| **TXU                Fuel**                 | TXU                Fuel Company, a former subsidiary of Texas Competitive                Holdings                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |
| **TXU                Gas**                  | TXU                Gas Company, a former subsidiary of TXU Corp.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |
| **TXU                Portfolio Management** | TXU                Portfolio Management Company LP, a subsidiary of Texas Competitive                Holdings, currently doing business as Luminant Energy                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |
| **US**                                      | United                States of America                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |
| **US                Holdings**              | TXU                US Holdings Company, a subsidiary of TXU                Corp.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |

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**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,**       |    |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |   | **2007**                                                           |   |   | **2006**                            |    |   | **2007** |   |   | **2006** |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |   | **(millions                of dollars, except per share amounts)** |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |   |                                                               |   |   |                                |    |   |   |   |   |   |   |
| **Operating                revenues                                                                              **                                                     |   | $                                                                  | 2,022  |   |                                | $       | 2,667 |   |   | $ | 3,691 |   |   | $ | 4,971 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |   |                                                               |   |   |                                |    |   |   |   |   |   |   |   |   |   |   |
| Costs                and expenses:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |   |                                                               |   |   |                                |    |   |   |   |   |   |   |   |   |   |   |
| Fuel,                purchased power costs and                delivery                fees                                                                                             |   |                                                               | 739    |   |                                |    | 658 |   |   |   | 1,404 |   |   |   | 1,179 |   |
| Operating                costs                                                                                                                                                         |   |                                                               | 368    |   |                                |    | 341 |   |   |   | 714 |   |   |   | 684 |   |
| Depreciation                and                amortization                                                                                                                            |   |                                                               | 200    |   |                                |    | 207 |   |   |   | 403 |   |   |   | 413 |   |
| Selling,                general and                administrative                expenses                                                                                              |   |                                                               | 227    |   |                                |    | 181 |   |   |   | 447 |   |   |   | 370 |   |
| Franchise                and revenue-based                taxes                                                                                                                        |   |                                                               | 89     |   |                                |    | 87 |   |   |   | 176 |   |   |   | 174 |   |
| Other                income (Note                6)                                                                                                                                    |   |                                                               | (16    | )      |                                |    | (42 | ) |   |   | (45 | ) |   |   | (55 | ) |
| Other                deductions (Note                6)                                                                                                                                |   |                                                               | 122    |   |                                |    | 221 |   |   |   | 891 |   |   |   | 221 |   |
| Interest                income                                                                                                                                                         |   |                                                               | (17    | )      |                                |    | (11 | ) |   |   | (35 | ) |   |   | (20 | ) |
| Interest                expense and related                charges (Note                15)                                                                                            |   |                                                               | 221    |   |                                |    | 218 |   |   |   | 418 |   |   |   | 431 |   |
| Total                costs and                expenses                                                                                                                                                          |   |                                                               | 1,933  |   |                                |    | 1,860 |   |   |   | 4,373 |   |   |   | 3,397 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |   |                                                               |   |   |                                |    |   |   |   |   |   |   |   |   |   |   |
| Income                (loss) from continuing operations before income taxes                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |   |                                                               | 89     |   |                                |    | 807 |   |   |   | (682 | ) |   |   | 1,574 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |   |                                                               |   |   |                                |    |   |   |   |   |   |   |   |   |   |   |
| Income                tax expense                (benefit)                                                                                                              |   |                                                               | (21    | )      |                                |    | 310 |   |   |   | (294 | ) |   |   | 561 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |   |                                                               |   |   |                                |    |   |   |   |   |   |   |   |   |   |   |
| **Income                (loss) from continuing operations**                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |   |                                                               | 110    |   |                                |    | 497 |   |   |   | (388 | ) |   |   | 1,013 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |   |                                                               |   |   |                                |    |   |   |   |   |   |   |   |   |   |   |
| Income from                discontinued operations, net of tax                effect                                                                               |   |                                                               | 11     |   |                                | ─ |   |   |   | 11 |   |   |   | 60 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |   |                                                               |   |   |                                |    |   |   |   |   |   |   |   |   |   |   |
| **Net                income                (loss)                                                                              **                                       |   | $                                                                  | 121    |   |                                | $       | 497 |   |   | $ | (377 | ) |   | $ | 1,073 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |   |                                                               |   |   |                                |    |   |   |   |   |   |   |   |   |   |   |
| Average                shares of common stock outstanding (millions):                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |   |                                                               |   |   |                                |    |   |   |   |   |   |   |   |   |   |   |
| Basic                                                                                                                                                                                  |   |                                                               | 459    |   |                                |    | 458 |   |   |   | 458 |   |   |   | 461 |   |
| Diluted                                                                                                                                                                                |   |                                                               | 464    |   |                                |    | 465 |   |   |   | 458 |   |   |   | 470 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |   |                                                               |   |   |                                |    |   |   |   |   |   |   |   |   |   |   |
| Per                share of common stock - Basic:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |   |                                                               |   |   |                                |    |   |   |   |   |   |   |   |   |   |   |
| Net                income (loss) from continuing                operations                                                                                                                            |   | $                                                                  | 0.24   |   |                                | $       | 1.08 |   |   | $ | (0.85 | ) |   | $ | 2.20 |   |
| Income                from discontinued                operations, net of tax effect                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |   |                                                               | 0.02   |   |                                | ─ |   |   |   | 0.03 |   |   |   | 0.13 |   |
| Net                income                (loss)                                                                                                                                                       |   | $                                                                  | 0.26   |   |                                | $       | 1.08 |   |   | $ | (0.82 | ) |   | $ | 2.33 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |   |                                                               |   |   |                                |    |   |   |   |   |   |   |   |   |   |   |
| Per                share of common stock – Diluted:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |   |                                                               |   |   |                                |    |   |   |   |   |   |   |   |   |   |   |
| Net                income (loss) from continuing                operations                                                                                                                            |   | $                                                                  | 0.24   |   |                                | $       | 1.07 |   |   | $ | (0.85 | ) |   | $ | 2.16 |   |
| Income                from discontinued                operations, net of tax effect                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |   |                                                               | 0.02   |   |                                | ─ |   |   |   | 0.03 |   |   |   | 0.13 |   |
| Net                income                (loss)                                                                                                                                                       |   | $                                                                  | 0.26   |   |                                | $       | 1.07 |   |   | $ | (0.82 | ) |   | $ | 2.29 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |   |                                                               |   |   |                                |    |   |   |   |   |   |   |   |   |   |   |
| Dividends                declared                                                                                                                                                      |   | $                                                                  | 0.433  |   |                                | $       | 0.413 |   |   | $ | 0.865 |   |   | $ | 0.826 |   |

----

**TXU      CORP. AND SUBSIDIARIES**

**CONDENSED      STATEMENTS OF CONSOLIDATED COMPREHENSIVE INCOME**

**(Unaudited)**

|                                                                                                  |   |   | **Three                Months Ended****June                  30,** |   |   | **Six                Months Ended****June                  30,** |    |
|-------------------------------------------------------------------------------------------------------|--------|--------|--------------------------------------------------------------------|--------|--------|------------------------------------------------------------------|---------|
|                                                                                                  |   |   | **2007**                                                           |   |   | **2006**                                                         |    |   | **2007** |   |   | **2006** |   |
|                                                                                                  |   |   | **(millions                of dollars)**                           |   |
|                                                                                                  |   |   |                                                               |   |   |                                                             |    |   |   |   |   |   |   |
| Components                related to continuing operations:                                           |   |   |                                                               |   |   |                                                             |    |   |   |   |   |   |   |
|                                                                                                  |   |   |                                                               |   |   |                                                             |    |   |   |   |   |   |   |
| Income                (loss) from continuing operations                                               |   |   | $                                                                  | 110    |   |                                                             | $       | 497 |   |   | $ | (388 | ) |   | $ | 1,013 |   |
|                                                                                                  |   |   |                                                               |   |   |                                                             |    |   |   |   |   |   |   |   |   |   |   |
| Other                comprehensive income (loss):                                                     |   |   |                                                               |   |   |                                                             |    |   |   |   |   |   |   |   |   |   |   |
|                                                                                                  |   |   |                                                               |   |   |                                                             |    |   |   |   |   |   |   |   |   |   |   |
| Reclassification                of pension and                other retirement benefit costs          |   |   |                                                               |   |   |                                                             |    |   |   |   |   |   |   |   |   |   |   |
| (net                of tax expense of $─, ─, $3                and ─) (Note 13)     |   |   |                                                               | 1      |   |                                                             | ─ |   |   |   | 5 |   |   | ─ |   |
|                                                                                                  |   |   |                                                               |   |   |                                                             |    |   |   |   |   |   |   |   |   |   |   |
| Cash                flow hedges:                                                                      |   |   |                                                               |   |   |                                                             |    |   |   |   |   |   |   |   |   |   |   |
| Net                increase (decrease) in fair                value of derivatives held at end        |   |   |                                                               |   |   |                                                             |    |   |   |   |   |   |   |   |   |   |   |
| of                period (net of tax                (expense) benefit of $(19), $44, $151 and         |   |   |                                                               |   |   |                                                             |    |   |   |   |   |   |   |   |   |   |   |
|                                                                                                  | $(16)) |   |                                                               |   | 35     |                                                             |    |   | (83 | ) |   |   | (281 | ) |   |   | 30 |   |
| Derivative                value net (gains)                losses related to hedged transactions |   |   |                                                               |   |   |                                                             |    |   |   |   |   |   |   |   |   |   |   |
| settled                during the period and reported in net income (net of                           |   |   |                                                               |   |   |                                                             |    |   |   |   |   |   |   |   |   |   |   |
| tax                (expense) benefit of $(9),                $6, $(49) and $6)                        |   |   |                                                               | (17    | )      |                                                             |    | 12 |   |   |   | (91 | ) |   |   | 11 |   |
| Total                effect of cash flow                hedges                                        |   |   |                                                               | 18     |   |                                                             |    | (71 | ) |   |   | (372 | ) |   |   | 41 |   |
|                                                                                                  |   |   |                                                               |   |   |                                                             |    |   |   |   |   |   |   |   |   |   |   |   |
| Total                adjustments to net income                (loss) from continuing operations       |   |   |                                                               | 19     |   |                                                             |    | (71 | ) |   |   | (367 | ) |   |   | 41 |   |
|                                                                                                  |   |   |                                                               |   |   |                                                             |    |   |   |   |   |   |   |   |   |   |   |   |
| Comprehensive                income (loss) from continuing operations                                 |   |   |                                                               | 129    |   |                                                             |    | 426 |   |   |   | (755 | ) |   |   | 1,054 |   |
|                                                                                                  |   |   |                                                               |   |   |                                                             |    |   |   |   |   |   |   |   |   |   |   |   |
| Comprehensive                income from discontinued operations                                 |   |   |                                                               | 11     |   |                                                             | ─ |   |   |   | 11 |   |   |   | 60 |   |
|                                                                                                  |   |   |                                                               |   |   |                                                             |    |   |   |   |   |   |   |   |   |   |   |   |
| Comprehensive                income (loss)                                                            |   |   | $                                                                  | 140    |   |                                                             | $       | 426 |   |   | $ | (744 | ) |   | $ | 1,114 |   |

----

**TXU      CORP. AND SUBSIDIARIES**

**CONDENSED      STATEMENTS OF CONSOLIDATED CASH FLOWS**

**(Unaudited)**

|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |   | **Six                Months Ended**      |   |
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|------------------------------------------|--------|
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |   | **June                  30,**            |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |   | **2007**                                 |   |   | **2006** |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |   | **(millions                of dollars)** |   |
| Cash                flows – operating activities:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |   |                                     |   |   |   |   |
| Net                income                (loss)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |   | $                                        | (377   | ) |   | $ | 1,073 |   |
| Income                from discontinued                operations, net of tax effect                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |   |                                     | (11    | ) |   |   | (60 | ) |
| Income                (loss) from continuing                operations                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |   |                                     | (388   | ) |   |   | 1,013 |   |
| Adjustments                to reconcile income                (loss) from continuing operations to cash provided by                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |   |                                     |   |   |   |   |   |   |
| (used                in) operating                activities:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |   |                                     |   |   |   |   |   |   |
| Depreciation                and                amortization                                                                                                                                                                                 |   |                                     | 433    |   |   |   | 444 |   |
| Deferred                income tax expense                (benefit) –                net                                                                                                                                              |   |                                     | (613   | ) |   |   | 319 |   |
| Impairment                of natural                gas-fueled generation                plants                                                                                                                                             |   | ─                                  |   |   |   | 198 |   |
| Inventory                write-off related to                natural gas-fueled generation                plants                                                                                                                            |   | ─                                  |   |   |   | 3 |   |
| Charges                related to suspended                development of generation facilities (Note                2)                                                                                                                     |   |                                     | 716    |   |   | ─ |   |
| Write-off                of deferred                transaction costs (Note                6)                                                                                                                                               |   |                                     | 38     |   |   | ─ |   |
| Net                gains on sale of                assets                                                                                                                                                                                   |   |                                     | (27    | ) |   |   | (24 | ) |
| Net                effect of unrealized                mark-to-market valuations – losses                (gains)                                                                                                                      |   |                                     | 1,182  |   |   |   | (29 | ) |
| Gain                on contract                settlement                                                                                                                                                                                   |   | ─                                  |   |   |   | (26 | ) |
| Bad                debt                expense                                                                                                                                                                                              |   |                                     | 25     |   |   |   | 30 |   |
| Stock-based                incentive                compensation                expense                                                                                                                                                     |   |                                     | 15     |   |   |   | 9 |   |
| Other,                net                                                                                                                                                                                                                   |   |                                     | 19     |   |   |   | 16 |   |
| Changes                in operating assets and                liabilities                                                                                                                                                    |   |                                     | (1,455 | ) |   |   | (49 | ) |
| Cash                provided by (used in)                operating activities from continuing operations                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |   |                                     | (55    | ) |   |   | 1,904 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |   |                                     |   |   |   |   |   |   |
| Cash                flows – financing activities:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |   |                                     |   |   |   |   |   |   |
| Issuances                of                securities:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |   |                                     |   |   |   |   |   |   |
| Long-term                debt                                                                                                                                                                                                               |   |                                     | 1,800  |   |   |   | 100 |   |
| Common                stock                                                                                                                                                                                                                 |   |                                     | 1      |   |   |   | 180 |   |
| Retirements/repurchases                of                securities:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |   |                                     |   |   |   |   |   |   |
| Equity-linked                debt                                                                                                                                                                                                           |   | ─                                  |   |   |   | (179 | ) |
| Pollution                control revenue                bonds                                                                                                                                                                               |   |                                     | (143   | ) |   |   | (203 | ) |
| Other                long-term                debt                                                                                                                                                                                          |   |                                     | (68    | ) |   |   | (1,143 | ) |
| Common                stock                                                                                                                                                                                                                 |   |                                     | (10    | ) |   |   | (809 | ) |
| Change                in short-term                borrowings:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |   |                                     |   |   |   |   |   |   |
| Commercial                paper                                                                                                                                                                                                             |   |                                     | (1,296 | ) |   |   | 905 |   |
| Bank                borrowings                                                                                                                                                                                                              |   |                                     | 2,155  |   |   |   | 800 |   |
| Common                stock dividends                paid                                                                                                                                                                    |   |                                     | (397   | ) |   |   | (384 | ) |
| Settlements                of minimum                withholding tax liabilities under stock-based compensation                plans                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |   |                                     | (93    | ) |   |   | (56 | ) |
| Debt                premium, discount,                financing and reacquisition expenses –                net                                                                                                        |   |                                     | (15    | ) |   |   | (17 | ) |
| Cash                provided by (used in)                financing activities from continuing operations                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |   |                                     | 1,934  |   |   |   | (806 | ) |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |   |                                     |   |   |   |   |   |   |
| Cash                flows – investing activities:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |   |                                     |   |   |   |   |   |   |
| Capital                expenditures                                                                                                                                                                                          |   |                                     | (1,611 | ) |   |   | (825 | ) |
| Nuclear                fuel                                                                                                                                                                                                  |   |                                     | (30    | ) |   |   | (30 | ) |
| Proceeds                from sale of                assets                                                                                                                                                                   |   |                                     | 4      |   |   | ─ |   |
| Purchase                of lease                trust                                                                                                                                                                        |   | ─                                  |   |   |   | (69 | ) |
| Reduction                of restricted cash                related to the redemption of pollution control revenue                bonds                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |   |                                     | 143    |   |   | ─ |   |
| Proceeds                from sales of nuclear                decommissioning trust fund                securities                                                                                                            |   |                                     | 104    |   |   |   | 144 |   |
| Investments                in nuclear                decommissioning trust fund                securities                                                                                                                    |   |                                     | (111   | ) |   |   | (151 | ) |
| Proceeds                from pollution control                revenue bonds deposited with                trustee                                                                                                            |   | ─                                  |   |   |   | (99 | ) |
| Cost                to remove retired                property                                                                                                                                                                |   |                                     | (16    | ) |   |   | (22 | ) |
| Investment                in unconsolidated                affiliate                                                                                                                                                         |   | ─                                  |   |   |   | (15 | ) |
| Other                                                                                                                                                                                                                        |   |                                     | 11     |   |   |   | 5 |   |
| Cash                used in investing                activities from continuing                operations                                                                                                                                                                 |   |                                     | (1,506 | ) |   |   | (1,062 | ) |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |   |                                     |   |   |   |   |   |   |

----

**TXU      CORP. AND SUBSIDIARIES**

**CONDENSED      STATEMENTS OF CONSOLIDATED CASH FLOWS (cont.)**

**(Unaudited)**

|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |   | **Six                Months Ended**      |   |
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|------------------------------------------|--------|
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |   | **June                  30,**            |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |   | **2007**                                 |   |   | **2006** |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |   | **(millions                of dollars)** |   |
| Discontinued                operations:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |   |                                     |   |   |   |   |
| Cash                provided by (used in)                operating                activities                                                                                                         |   |                                     | 24     |   |   |   | (1 | ) |
| Cash                used in financing                activities                                                                                                                                      |   | ─                                  |   |   | ─ |   |
| Cash                used in investing                activities                                                                                                                                      |   | ─                                  |   |   | ─ |   |
| Cash                provided by (used in)                discontinued                operations                                                                                                                     |   |                                     | 24     |   |   |   | (1 | ) |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |   |                                     |   |   |   |   |   |   |
| Net                change in cash and cash                equivalents                                                                                                                      |   |                                     | 397    |   |   |   | 35 |   |
| Cash                and cash equivalents – beginning                balance                                                                                                          |   |                                     | 25     |   |   |   | 37 |   |
| Cash                and cash equivalents – ending                balance                                                                                                             |   | $                                        | 422    |   |   | $ | 72 |   |

----

**TXU      CORP. AND SUBSIDIARIES**

**CONDENSED      CONSOLIDATED BALANCE SHEETS**

**(Unaudited)**

|                                                                                                                                |   | **                        June 30,** |   |   | **December                31,**                                            |   |
|-------------------------------------------------------------------------------------------------------------------------------------|--------|------------------------------------------------------------------------------|--------|--------|----------------------------------------------------------------------------|--------|
|                                                                                                                                |   | **                          2007**   |   |   | **                          2006** |   |
| **ASSETS**                                                                                                                          |   | **(millions                of dollars)**                                     |   |
| Current                assets:                                                                                                      |   |                                                                         |   |   |                                                                       |   |
| Cash                and cash                equivalents                                                                             |   | $                                                                            | 422    |   |                                                                       | $      | 25 |   |
| Restricted                cash                                                                                                      |   |                                                                         | 54     |   |                                                                       |   | 58 |   |
| Trade                accounts receivable – net                (Note 7)                                                        |   |                                                                         | 1,016  |   |                                                                       |   | 959 |   |
| Inventories                                                                                                                         |   |                                                                         | 428    |   |                                                                       |   | 383 |   |
| Commodity                and other derivative                contractual assets (Note 12)                                           |   |                                                                         | 299    |   |                                                                       |   | 950 |   |
| Accumulated                deferred income                taxes (Note 3)                                                            |   |                                                                         | 829    |   |                                                                       |   | 253 |   |
| Margin                deposits related to                commodity positions                                                        |   |                                                                         | 448    |   |                                                                       |   | 7 |   |
| Other                current                assets                                                                                  |   |                                                                         | 189    |   |                                                                       |   | 177 |   |
| Total                current                assets                                                                                  |   |                                                                         | 3,685  |   |                                                                       |   | 2,812 |   |
|                                                                                                                                |   |                                                                         |   |   |                                                                       |   |   |   |
| Restricted                cash                                                                                                      |   |                                                                         | 119    |   |                                                                       |   | 258 |   |
| Investments                                                                                                                         |   |                                                                         | 742    |   |                                                                       |   | 712 |   |
| Property,                plant and equipment — net                                                                            |   |                                                                         | 19,387 |   |                                                                       |   | 18,756 |   |
| Goodwill                                                                                                                            |   |                                                                         | 542    |   |                                                                       |   | 542 |   |
| Regulatory                assets — net                                                                                        |   |                                                                         | 1,935  |   |                                                                       |   | 2,028 |   |
| Commodity                and other derivative contractual assets (Note 12)                                                          |   |                                                                         | 216    |   |                                                                       |   | 345 |   |
| Other                noncurrent assets                                                                                              |   |                                                                         | 362    |   |                                                                       |   | 380 |   |
|                                                                                                                                |   |                                                                         |   |   |                                                                       |   |   |   |
| Total                assets                                                                                                         |   | $                                                                            | 26,988 |   |                                                                       | $      | 25,833 |   |
|                                                                                                                                |   |
| **LIABILITIES                AND SHAREHOLDERS’ EQUITY**                                                                       |   |
| Current                liabilities:                                                                                                 |   |                                                                         |   |   |                                                                       |   |   |   |
| Short-term                borrowings (Note                8)                                                                        |   | $                                                                            | 2,350  |   |                                                                       | $      | 1,491 |   |
| Long-term                debt due currently                (Note 9)                                                                 |   |                                                                         | 792    |   |                                                                       |   | 485 |   |
| Trade                accounts                payable                                                                                |   |                                                                         | 1,014  |   |                                                                       |   | 1,093 |   |
| Commodity                and other derivative                contractual liabilities (Note 12)                                      |   |                                                                         | 429    |   |                                                                       |   | 293 |   |
| Margin                deposits related to                commodity positions                                                        |   |                                                                         | 35     |   |                                                                       |   | 681 |   |
| Other                current                liabilities                                                                             |   |                                                                         | 993    |   |                                                                       |   | 1,040 |   |
| Total                current                liabilities                                                                             |   |                                                                         | 5,613  |   |                                                                       |   | 5,083 |   |
|                                                                                                                                |   |                                                                         |   |   |                                                                       |   |   |   |
| Accumulated                deferred income taxes (Note 3)                                                                           |   |                                                                         | 3,121  |   |                                                                       |   | 4,238 |   |
| Investment                tax credits                                                                                               |   |                                                                         | 353    |   |                                                                       |   | 363 |   |
| Commodity                and other derivative contractual liabilities (Note 12)                                                     |   |                                                                         | 876    |   |                                                                       |   | 191 |   |
| Long-term                debt, less amounts due currently (Note 9)                                                                  |   |                                                                         | 11,917 |   |                                                                       |   | 10,631 |   |
| Other                noncurrent liabilities and deferred credits                                                                    |   |                                                                         | 4,063  |   |                                                                       |   | 3,187 |   |
| Total                liabilities                                                                                                    |   |                                                                         | 25,943 |   |                                                                       |   | 23,693 |   |
|                                                                                                                                |   |                                                                         |   |   |                                                                       |   |   |   |
| Commitments                and Contingencies (Note 10)                                                                              |   |                                                                         |   |   |                                                                       |   |   |   |
|                                                                                                                                |   |                                                                         |   |   |                                                                       |   |   |   |
| Shareholders’                equity (Note 11):                                                                                |   |                                                                         |   |   |                                                                       |   |   |   |
| Common                stock without par                value:  Authorized                shares:  1,000,000,000 |   |                                                                         |   |   |                                                                       |   |   |   |
| Outstanding                shares: 461,196,630                and 459,244,523                                                       |   |                                                                         | 5      |   |                                                                       |   | 5 |   |
| Additional                paid-in                capital                                                                            |   |                                                                         | 1,115  |   |                                                                       |   | 1,104 |   |
| Retained                earnings                (deficit)                                                                           |   |                                                                         | (117   | )      |                                                                       |   | 622 |   |
| Accumulated                other comprehensive                income                                                                |   |                                                                         | 42     |   |                                                                       |   | 409 |   |
| Total                shareholders’                equity                                                                      |   |                                                                         | 1,045  |   |                                                                       |   | 2,140 |   |
| Total                liabilities and                shareholders’ equity                                                      |   | $                                                                            | 26,988 |   |                                                                       | $      | 25,833 |   |

----

**TXU      CORP. AND SUBSIDIARIES**

**NOTES      TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**

**(Unaudited)**

**1.           SIGNIFICANT      ACCOUNTING POLICIES AND BUSINESS**

***Description      of Business***

***Basis      of Presentation***

***Discontinued      Businesses***

----

***Use      of Estimates***

***Earnings      Per Share***

***Changes      in Accounting Standards***

----

**2.           CHARGES      RELATED TO SUSPENDED DEVELOPMENT OF COAL-FUELEDGENERATION      FACILITIES**

----

**3.           ADOPTION      OF NEW INCOME TAX ACCOUNTING RULES (FIN 48)**

----

**4.           TEXAS      MARGIN TAX**

----

**5.           EARNINGS      PER SHARE**

|                                                                                                                                                                                                                                                                                                                                                          |   | **For                  the Three Months****Ended                  June 30, 2007**                    |    |   | **For                  the Three Months****Ended                  June 30, 2006** |   |
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|------------------------------------------------------------------------------------------------------|---------|--------|-----------------------------------------------------------------------------------|--------|
|                                                                                                                                                                                                                                                                                                                                                          |   |                                                                                                 |    |   |                                                                              |   |   | **Per** |   |   |   |   |   |   |   |   | **Per** |   |
|                                                                                                                                                                                                                                                                                                                                                          |   | **Income**                                                                                           |    |   |                                                                              |   |   | **Share** |   |   |   |   |   |   |   |   | **Share** |   |
|                                                                                                                                                                                                                                                                                                                                                          |   | **                              (Loss)** |    |   | **Shares**                                                                        |   |   | **                            Amount** |   |   | **Income** |   |   | **Shares** |   |   | **                            Amount** |   |
|                                                                                                                                                                                                                                                                                                                                                          |   |                                                                                                 |    |   |                                                                              |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                                                                                                                                                                                                                                                                                          |   |                                                                                                 |    |   |                                                                              |   |   |   |   |   |   |   |   |   |   |   |   |   |
| **Income                (loss) from continuing operations**                                                                                                                                                                                                                                                                                                   |   |                                                                                                 |    |   |                                                                              |   |   |   |   |   |   |   |   |   |   |   |   |   |
| **-Basic                                           **                                                                                  |   | $                                                                                                    | 110     |   |                                                                              |   | 458.8 |   |   | $ | .24 |   |   | $ | 497 |   |   |   | 458.0 |   |   | $ | 1.08 |   |
|                                                                                                                                                                                                                                                                                                                                                          |   |                                                                                                 |    |   |                                                                              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| **Dilutive                securities/other adjustments:**                                                                                                                                                                                                                                                                                                     |   |                                                                                                 |    |   |                                                                              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                                                                                                                                                                                                                                                                                          |   |                                                                                                 |    |   |                                                                              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Convertible                senior                notes                                                                  |   |                                                                                                 | ― |   |                                                                              |   | 1.5 |   |   |   |   |   |   |   | ― |   |   |   | 1.5 |   |   |   |   |   |
|                                                                                                                                                                                                                                                                                                                                                          |   |                                                                                                 |    |   |                                                                              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                    Equity-linked debt securities                                               |   |                                                                                                 | ― |   |                                                                              |   | ― |   |   |   |   |   |   |   | ― |   |   |   | 1.0 |   |   |   |   |   |
|                                                                                                                                                                                                                                                                                                                                                          |   |                                                                                                 |    |   |                                                                              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Stock-based                incentive compensation plan                                                                                                                                                                                                                                                                                                        |   |                                                                                                 | ― |   |                                                                              |   | 3.4 |   |   |   |   |   |   |   | ― |   |   |   | 5.0 |   |   |   |   |   |
|                                                                                                                                                                                                                                                                                                                                                          |   |                                                                                                 |    |   |                                                                              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| **Income                (loss) from continuing operations**                                                                                                                                                                                                                                                                                                   |   |                                                                                                 |    |   |                                                                              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| **-Diluted                                           **                                                                                |   | $                                                                                                    | 110     |   |                                                                              |   | 463.7 |   |   | $ | .24 |   |   | $ | 497 |   |   |   | 465.5 |   |   | $ | 1.07 |   |

|                                                                                                                                                                                                                                                                                                                                                               |   | **For                  the Six Months****Ended                  June 30, 2007**                      |    |   | **For                  the Six Months****Ended                  June 30, 2006** |   |
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|------------------------------------------------------------------------------------------------------|---------|--------|---------------------------------------------------------------------------------|--------|
|                                                                                                                                                                                                                                                                                                                                                               |   |                                                                                                 |    |   |                                                                            |   |   | **Per** |   |   |   |   |   |   |   |   | **Per** |   |
|                                                                                                                                                                                                                                                                                                                                                               |   | **Income**                                                                                           |    |   |                                                                            |   |   | **Share** |   |   |   |   |   |   |   |   | **Share** |   |
|                                                                                                                                                                                                                                                                                                                                                               |   | **                              (Loss)** |    |   | **Shares**                                                                      |   |   | **                            Amount** |   |   | **Income** |   |   | **Shares** |   |   | **                             Amount** |   |
|                                                                                                                                                                                                                                                                                                                                                               |   |                                                                                                 |    |   |                                                                            |   |   |   |   |   |   |   |   |   |   |   |   |   |
| **Income                (loss) from continuing operations**                                                                                                                                                                                                                                                                                                        |   |                                                                                                 |    |   |                                                                            |   |   |   |   |   |   |   |   |   |   |   |   |   |
| **-Basic                                           **                                                                                       |   | $                                                                                                    | (388    | )      |                                                                            |   | 458.2 |   |   | $ | (.85 | ) |   | $ | 1,013 |   |   |   | 461.0 |   |   | $ | 2.20 |   |
|                                                                                                                                                                                                                                                                                                                                                               |   |                                                                                                 |    |   |                                                                            |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| **Dilutive                securities/other adjustments:**                                                                                                                                                                                                                                                                                                          |   |                                                                                                 |    |   |                                                                            |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                                                                                                                                                                                                                                                                                               |   |                                                                                                 |    |   |                                                                            |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Convertible                senior                notes                                                                       |   |                                                                                                 | ― |   |                                                                            |   | 1.5 |   |   |   |   |   |   |   | 1 |   |   |   | 1.5 |   |   |   |   |   |
|                                                                                                                                                                                                                                                                                                                                                               |   |                                                                                                 |    |   |                                                                            |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                    Equity-linked debt                securities                                               |   |                                                                                                 | ― |   |                                                                            |   | ― |   |   |   |   |   |   |   | ― |   |   |   | 1.6 |   |   |   |   |   |
|                                                                                                                                                                                                                                                                                                                                                               |   |                                                                                                 |    |   |                                                                            |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Stock-based                incentive compensation plan                                                                                                                                                                                                                                                                                                             |   |                                                                                                 | ― |   |                                                                            |   | 4.4 |   |   |   |   |   |   |   | ― |   |   |   | 5.6 |   |   |   |   |   |
|                                                                                                                                                                                                                                                                                                                                                               |   |                                                                                                 |    |   |                                                                            |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| **Income                (loss) from continuing operations**                                                                                                                                                                                                                                                                                                        |   |                                                                                                 |    |   |                                                                            |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| **-Diluted                                           **                                                                                     |   | $                                                                                                    | (388    | )      |                                                                            |   | 458.2 | (a) |   | $ (.85)                (a) |   |   | $ | 1,014 |   |   |   | 469.7 |   |   | $ | 2.16 |   |
| _________________                                                                                                                                                                                                                                                                                                                                                  |   |                                                                                                 |    |   |                                                                            |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                                                                                                                                                                                                                                                                                               |   |                                                                                                 |    |   |                                                                            |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| (a) Diluted                results per share equal basic results per share because of the loss                position and antidilution accounting rules.                                                                                                                                                                                                     |   |

----

**6.      OTHER      INCOME AND DEDUCTIONS**

|                                                                                                     |   | **Three                Months Ended**                                                                                                                                                |   |   | **Six                Months Ended** |                                                                                                                                                                                       |
|----------------------------------------------------------------------------------------------------------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|--------|-------------------------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                                                                                                     |   | **June                  30,**                                                                                                                                                        |   |   | **June                  30,**       |                                                                                                                                                                                       |
|                                                                                                     |   | **2007**                                                                                                                                                                             |   |   | **2006**                            |                                                                                                                                                                                       |   | **2007** |   |   | **2006** |   |
| Other                income:                                                                             |   |                                                                                                                                                                                 |   |   |                                |                                                                                                                                                                                       |   |   |   |   |   |   |
| Gain                on contract settlement                (a)                                            |   | $                                          ─ |   |   | $                                   | 26                                                                                                                                                                                         |   |   | $                                           ─ |   |   | $ | 26 |   |
| Amortization                of gain on sale of                TXU Fuel                                   |   |                                                                                                                                                                                 | 11     |   |                                |                                                                                                                                                                                       | 11 |   |   |   | 23 |   |   |   | 23 |   |
| Net                gain on sale of other                properties                                       |   | ─                                                                                                                                                                              |   |   |                                | 1                                                                                                                                                                                          |   |   |   | 4 |   |   |   | 1 |   |
| Reduction                of insurance reserves                unrelated to ongoing operations            |   |                                                                                                                                                                                 | 2      |   |                                | ─                                                                                                                                                                                    |   |   |   | 7 |   |   | ─ |   |
| Settlement                penalty for coal                tonnage delivery deficiency                    |   | ─                                                                                                                                                                              |   |   | ─                             |                                                                                                                                                                                       |   |   | 3 |   |   | ─ |   |
| Royalty                income from lignite and                natural gas leases                         |   |                                                                                                                                                                                 | 2      |   |                                | ─                                                                                                                                                                                    |   |   |   | 5 |   |   | ─ |   |
| Other                                                                                                    |   |                                                                                                                                                                                 | 1      |   |                                |                                                                                                                                                                                       | 4 |   |   |   | 3 |   |   |   | 5 |   |
| Total                other                income                                                         |   | $                                                                                                                                                                                    | 16     |   |                                | $                                                                                                                                                                                          | 42 |   |   | $ | 45 |   |   | $ | 55 |   |
| Other                deductions:                                                                         |   |                                                                                                                                                                                 |   |   |                                |                                                                                                                                                                                       |   |   |   |   |   |   |   |   |   |   |
| Charges                related to suspended                development of generation facilities (Note 2) |   | $                                                                                                                                                                                    | 82     |   |                                | $                                           ─ |   |   | $ | 795 |   |   | $                                           ─ |   |
| Writeoff                of deferred                transaction costs (b)                                 |   | ─                                                                                                                                                                              |   |   | ─                             |                                                                                                                                                                                       |   |   | 30 |   |   | ─ |   |
| Transaction                costs related to                Proposed Merger                               |   |                                                                                                                                                                                 | 6      |   |                                | ─                                                                                                                                                                                    |   |   |   | 20 |   |   | ─ |   |
| Expenses                related to InfrastruX                Energy Services joint venture (c)           |   |                                                                                                                                                                                 | 11     |   |                                | ─                                                                                                                                                                                    |   |   |   | 12 |   |   | ─ |   |
| Charge                for impairment of                natural gas-fueled generation plants              |   | ─                                                                                                                                                                              |   |   |                                | 198                                                                                                                                                                                        |   |   | ─ |   |   |   | 198 |   |
| Inventory                write-off related to                natural gas-fueled generation plants        |   | ─                                                                                                                                                                              |   |   |                                | 3                                                                                                                                                                                          |   |   | ─ |   |   |   | 3 |   |
| Credit                related to coal contract                counterparty claim (d)                     |   | ─                                                                                                                                                                              |   |   | ─                             |                                                                                                                                                                                       |   | ─ |   |   |   | (12 | ) |
| Costs                related to 2006 cities                rate settlement                               |   |                                                                                                                                                                                 | 7      |   |                                | ─                                                                                                                                                                                    |   |   |   | 13 |   |   | ─ |   |
| Charge                for settlement of retail                matter with the Commission                 |   |                                                                                                                                                                                 | 5      |   |                                | ─                                                                                                                                                                                    |   |   |   | 5 |   |   | ─ |   |
| Pension                and other                postretirement benefit costs related to discontinued     |   |                                                                                                                                                                                 |   |   |                                |                                                                                                                                                                                       |   |   |   |   |   |   |   |   |   |   |
| businesses                                                                                               |   |                                                                                                                                                                                 | 6      |   |                                |                                                                                                                                                                                       | 5 |   |   |   | 9 |   |   |   | 10 |   |
| Equity                losses ─ unconsolidated                affiliates                            |   | ─                                                                                                                                                                              |   |   |                                | 7                                                                                                                                                                                          |   |   |   | 1 |   |   |   | 7 |   |
| Other                                                                                                    |   |                                                                                                                                                                                 | 5      |   |                                |                                                                                                                                                                                       | 8 |   |   |   | 6 |   |   |   | 15 |   |
| Total                other                deductions                                                     |   | $                                                                                                                                                                                    | 122    |   |                                | $                                                                                                                                                                                          | 221 |   |   | $ | 891 |   |   | $ | 221 |   |

|   | (a) | In                the second quarter of 2006, TXU Corp. recorded income of $26 million                upon                the settlement of a contract dispute related to antenna site rentals                by a                telecommunications company.  (Reported in Corporate and Other                nonsegment results.)                                                                                                                                                                    |
|--------|-----|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   | (b) | Represents                previously deferred costs, consisting primarily of professional fees                for                tax, legal and other advisory services, in connection with certain                previously anticipated strategic transactions (including expected                financings) that are no longer expected to be consummated as a result                of                the Merger Agreement.  (Reported in Corporate and Other                nonsegment results.) |
|   | (c) | Consists                of previously deferred costs, consisting primarily of professional                fees                that were written-off due to suspension of the                agreement.  Of these amounts, $8 million was reported in the                Corporate and Other nonsegment results and the balance was reported                in the                Regulated Delivery segment results.                                                                              |
|   | (d) | In                the first quarter of 2006, TXU Corp. recorded income of $12 million                upon                the settlement of a claim against a counterparty for nonperformance                under                a coal contract.  A charge in the same amount was recorded in                the first quarter of 2005 for losses due to the                nonperformance.  (Reported in the Competitive Electric segment                results.)                         |

----

**7.           TRADE      ACCOUNTS RECEIVABLE AND SALE OF RECEIVABLES PROGRAM**

***Sale      of Receivables***

----

|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |   | **Six                  Months Ended June 30,** |   |
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|------------------------------------------------|--------|
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |   | **2007**                                       |   |   | **2006** |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |   |                                           |   |   |   |   |
| Cash                collections on accounts                receivable                                                                                     |   | $                                              | 3,964  |   |   | $ | 3,705 |   |
| Face                amount of new receivables                purchased                                                                                    |   |                                           | (4,003 | ) |   |   | (3,763 | ) |
| Discount                from face amount of purchased                receivables                                                                          |   |                                           | 22     |   |   |   | 20 |   |
| Program                fees                paid                                                                                                           |   |                                           | (20    | ) |   |   | (18 | ) |
| Servicing                fees                paid                                                                                                         |   |                                           | (2     | ) |   |   | (2 | ) |
| Increase                in subordinated notes                payable                                                                                      |   |                                           | 139    |   |   |   | 29 |   |
| Operating                cash flows used by (provided to) TXU Corp. under the                program                                                                                                                                                                                                                                                                                                                                                                                                                                   |   | $                                              | 100    |   |   | $ | (29 | ) |

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

|   | 1) | all                of the originators cease to maintain their required fixed charge                coverage                ratio and debt to capital (leverage) ratio;                or |
|--------|----|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 2) | the                delinquency ratio (delinquent for 31 days) for the sold receivables,                the                default ratio (delinquent for 91 days or deemed uncollectible), the                dilution ratio (reductions for discounts, disputes and other allowances)                or the days collection outstanding ratio exceed stated thresholds                and the                financial institutions do not waive such event of                termination.  The thresholds apply to the entire portfolio of                sold receivables, not separately to the receivables of each                originator. |
|--------|----|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

***Trade      Accounts Receivable -***

|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |   | **June                30,**                                          |   |   | **December                31,**                                      |   |
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|----------------------------------------------------------------------|--------|--------|----------------------------------------------------------------------|--------|
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |   | **                         2007** |   |   | **                         2006** |   |
| Gross                trade accounts                receivable                                                                                                    |   | $                                                                    | 1,557  |   |                                                                 | $      | 1,599 |   |
| Undivided                interests in accounts receivable sold by TXUReceivables                Company                                                                                   |   |                                                                 | (527   | )      |                                                                 |   | (627 | ) |
| Allowance                for uncollectible accounts related to undivided interests inreceivables                retained                                                                  |   |                                                                 | (14    | )      |                                                                 |   | (13 | ) |
| Trade                accounts receivable ― reported in balance sheet                                                                                                                                                                                                                                                                                                                                                                                                                                                     |   | $                                                                    | 1,016  |   |                                                                 | $      | 959 |   |

----

***Allowance      for Uncollectible Accounts Receivable -***

|                                                                                                                                                                                                                                                                                                                                                                                                                                                              |   | **2007** |   |   | **2006** |   |
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|----------|--------|--------|----------|--------|
|                                                                                                                                                                                                                                                                                                                                                                                                                                                              |   |     |   |   |     |   |
| Allowance                for uncollectible accounts receivable as of January 1                                                                                                                                                                                                                                                                                                                                                                                    |   | $        | 13     |   |     | $      | 36 |   |
| Increase                for bad debt                expense                                                                       |   |     | 25     |   |     |   | 30 |   |
| Decrease                for account                write-offs                                                                     |   |     | (33    | )      |     |   | (41 | ) |
| Changes                related to receivables                sold                                                                 |   |     | 9      |   |     |   | 13 |   |
| Other                (a)                                                                                                          |   | ─  |   |   |     | (15    | ) |
| Allowance                for uncollectible accounts receivable as of June 30                                                                                                                                                                                                                                                                                                                                                                                      |   | $        | 14     |   |     | $      | 23 |   |

|   | (a) | Represents                an allowance established in 2005 for a coal contract dispute that                was                reversed upon settlement in 2006.  See Note                6. |
|--------|-----|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

**8.           SHORT-TERM      FINANCING**

***Short-term      Borrowings***

|                                                                                                                                                                                                                                                   |   | **At                  June 30, 2007**   |    |   | **At                  December 31, 2006** |   |
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|-----------------------------------------|---------|--------|-------------------------------------------|--------|
|                                                                                                                                                                                                                                                   |   | **Outstanding                  Amount** |    |   | **Interest****Rate                  (a)** |   |   | **Outstanding                  Amount** |   |   | **Interest****Rate                  (a)** |   |
| Bank                borrowings                                     |   | $                                       | 2,350   |   |                                      |   | 6.19 | % |   | $ | 195 |   |   |   | 5.97 | % |
| Commercial                paper                                                                                                                                                                                                                        |   |                                    | ― |   |                                      |   | ― |   |   |   | 1,296 |   |   |   | 5.53 | % |
| Total                                                                                                                                                                                                                                                  |   | $                                       | 2,350   |   |                                      |   |   |   |   | $ | 1,491 |   |   |   |   |   |

|   | (a) | Weighted                average interest rate at the end of the                period. |
|--------|-----|----------------------------------------------------------------------------------------|

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

|                                                                          |                         |   | **At                June 30, 2007** |   |
|-------------------------------------------------------------------------------|------------------------------|--------|-------------------------------------|--------|
| **Authorized**                                                                | **Maturity**                 |   | **Facility**                        |   |   | **Letters                  of** |   |   | **Cash** |   |   |   |   |
| **Borrowers**                                                                 | **Date**                     |   | **Limit**                           |   |   | **Credit** |   |   | **Borrowings** |   |   | **Availability** |   |
| Texas                Competitive Holdings                                     | February                2008 |   | $                                   | 1,500  |   |   | $ | ― |   |   | $ | ― |   |   | $ | 1,500 |   |
| Texas                Competitive Holdings, Oncor  Electric Delivery | June                2008     |   |                                | 1,400  |   |   |   | 512 |   |   |   | 765 |   |   |   | 123 |   |
| Texas                Competitive Holdings, Oncor Electric Delivery            | August                2008   |   |                                | 1,000  |   |   |   | ― |   |   |   | 495 |   |   |   | 505 |   |
| Texas                Competitive Holdings, Oncor Electric Delivery            | March                2010    |   |                                | 1,600  |   |   |   | 248 |   |   |   | 815 |   |   |   | 537 |   |
| Texas                Competitive Holdings, Oncor Electric Delivery            | June                2010     |   |                                | 500    |   |   |   | 5 |   |   |   | 230 |   |   |   | 265 |   |
| Texas                Competitive Holdings                                     | December                2009 |   |                                | 500    |   |   |   | 455 |   |   |   | 45 |   |   |   | ― |   |
| Total                                                                         |                         |   | $                                   | 6,500  |   |   | $ | 1,220 |   |   | $ | 2,350 |   |   | $ | 2,930 |   |

----

----

**9.           LONG-TERM      DEBT**

***Long-term      debt***

|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |   | **June                30,** |    |   | **December                31,** |   |
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|-----------------------------|---------|--------|---------------------------------|--------|
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |   | **2007**                    |    |   | **2006**                        |   |
| Texas                Competitive Holdings                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |   |                        |    |   |                            |   |
|                  Pollution Control Revenue Bonds:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |   |                        |    |   |                            |   |
|                  Brazos River Authority:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |   |                        |    |   |                            |   |
| 5.400%                Fixed Series 1994A due May 1,                2029                                                                                                                            |   | $                           | 39      |   |                            | $      | 39 |   |
| 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 |   |
| 3.830%                Floating Series 2001A due October 1, 2030                (b)                                                                                                                 |   |                        | 71      |   |                            |   | 71 |   |
| 5.750%                Fixed Series 2001C due May 1, 2036, remarketing date November 1,                2011                (a)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |   |                        | 217     |   |                            |   | 217 |   |
| 3.780%                Floating Series 2001D due May 1, 2033                (b)                                                                                                                     |   |                        | 268     |   |                            |   | 268 |   |
| 5.380%                Floating Taxable Series 2001I due December 1, 2036                (b)                                                                                                        |   |                        | 62      |   |                            |   | 62 |   |
| 3.830%                Floating Series 2002A due May 1, 2037                (b)                                                                                                                     |   |                        | 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     |   |                            |   | 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 |   |
| 3.850%                Floating Series 2006A due November 1, 2041 (interest rate in effect                at                March 31, 2007) (c)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |   |                        | ― |   |                            |   | 47 |   |
| 3.850%                Floating Series 2006B due November 1, 2041, (interest rate in effect                at                March 31, 2007) (c)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |   |                        | ― |   |                            |   | 46 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |   |                        |    |   |                            |   |   |   |
|                  Trinity River Authority of Texas:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |   |                        |    |   |                            |   |   |   |
| 6.250%                Fixed Series 2000A due May 1,                2028                                                                                                                            |   |                        | 14      |   |                            |   | 14 |   |
| 3.850%                Floating Series 2006 due November 1, 2041, (interest rate in effect                at                March 31, 2007) (c)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |   |                        | ― |   |                            |   | 50 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |   |                        |    |   |                            |   |   |   |
|                  Other:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |   |                        |    |   |                            |   |   |   |
| 6.125%                Fixed Senior Notes due March 15, 2008                (d)                                                                                                                     |   |                        | 250     |   |                            |   | 250 |   |
| 7.000%                Fixed Senior Notes due March 15,                2013                                                                                                                         |   |                        | 1,000   |   |                            |   | 1,000 |   |
| 5.860%                Floating Senior Notes due September 16, 2008                (e)                                                                                                              |   |                        | 1,000   |   |                            |   | ― |   |
| Capital                lease                obligations                                                                                                                                            |   |                        | 92      |   |                            |   | 98 |   |
| Fair                value adjustments related to interest rate                swaps                                                                                                                |   |                        | 11      |   |                            |   | 10 |   |
| Total                Texas Competitive                Holdings                                                                                                                                                         |   | $                           | 3,888   |   |                            | $      | 3,036 |   |

----

|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |   | **June                30,** |    |   | **December                31,** |   |
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|-----------------------------|---------|--------|---------------------------------|--------|
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |   | **2007**                    |    |   | **2006**                        |   |
| Oncor                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                                                                                                                                    |   |                        | 500     |   |                            |   | 500 |   |
| 7.250%                Fixed Senior Notes due January 15,                2033                                                                                                                                    |   |                        | 350     |   |                            |   | 350 |   |
| 5.000%                Fixed Debentures due September 1, 2007                (d)                                                                                                                                 |   |                        | 200     |   |                            |   | 200 |   |
| 7.000%                Fixed Debentures due September 1,                2022                                                                                                                                     |   |                        | 800     |   |                            |   | 800 |   |
| 5.735%                Floating Senior Notes due September 16, 2008                (e)                                                                                                                           |   |                        | 800     |   |                            |   | ― |   |
| Unamortized                discount                                                                                                                                                                             |   |                        | (16     | )      |                            |   | (16 | ) |
| Total                Oncor Electric                Delivery                                                                                                                                                                         |   |                        | 3,834   |   |                            |   | 3,034 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |   |                        |    |   |                            |   |   |   |
|                  Oncor Electric Delivery Transition Bond Company LLC (f)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |   |                        |    |   |                            |   |   |   |
| 2.260%                Fixed Series 2003 Bonds due in semiannual installments through February                15, 2007                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |   |                        | ― |   |                            |   | 8 |   |
| 4.030%                Fixed Series 2003 Bonds due in semiannual installments through February                15, 2010                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |   |                        | 109     |   |                            |   | 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                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |   |                        | 131     |   |                            |   | 158 |   |
| 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                Oncor Electric Delivery                Transition Bond Company                LLC                                                                                                                              |   |                        | 1,026   |   |                            |   | 1,074 |   |
| Total                Oncor Electric Delivery                Consolidated                                                                                                                                                            |   |                        | 4,860   |   |                            |   | 4,108 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |   |                        |    |   |                            |   |   |   |
| 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                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |   |                        | 78      |   |                            |   | 85 |   |
| 9.580%                Fixed Notes due in semiannual installments through December 4,                2019                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |   |                        | 62      |   |                            |   | 62 |   |
| 8.254%                Fixed Notes due in quarterly installments through December 31,                2021                                                                                                        |   |                        | 58      |   |                            |   | 59 |   |
| 6.156%                Floating Rate Junior Subordinated Debentures, Series D due January                30,                2037 (g)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |   |                        | 1       |   |                            |   | 1 |   |
| 8.175%                Fixed Junior Subordinated Debentures, Series E due January 30,                2037                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |   |                        | 8       |   |                            |   | 8 |   |
| Unamortized                premium                                                                                                                                                                              |   |                        | 4       |   |                            |   | 5 |   |
| Total                US                Holdings                                                                                                                                                                                     |   |                        | 221     |   |                            |   | 230 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |   |                        |    |   |                            |   |   |   |
| TXU                Corp.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |   |                        |    |   |                            |   |   |   |
| 6.375%                Fixed Senior Notes Series C due January 1, 2008                (d)                                                                                                                        |   |                        | 200     |   |                            |   | 200 |   |
| 4.800%                Fixed Senior Notes Series O due November 15,                2009                                                                                                                          |   |                        | 1,000   |   |                            |   | 1,000 |   |
| 5.550%                Fixed Senior Notes Series P due November 15,                2014                                                                                                                          |   |                        | 1,000   |   |                            |   | 1,000 |   |
| 6.500%                Fixed Senior Notes Series Q due November 15,                2024                                                                                                                          |   |                        | 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                (h)                                                                                                          |   |                        | 93      |   |                            |   | 99 |   |
| 6.856%                Floating Convertible Senior Notes due July 15, 2033                (g)                                                                                                                    |   |                        | 25      |   |                            |   | 25 |   |
| Fair                value adjustments related to interest rate                swaps                                                                                                                             |   |                        | (70     | )      |                            |   | (73 | ) |
| Unamortized                discount                                                                                                                                                                             |   |                        | (8      | )      |                            |   | (9 | ) |
| Total                TXU Corp.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |   |                        | 3,740   |   |                            |   | 3,742 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |   |                        |    |   |                            |   |   |   |
| Total                TXU Corp.                consolidated                                                                                                                                                      |   |                        | 12,709  |   |                            |   | 11,116 |   |
| Less                amount due                currently                                                                                                                                                         |   |                        | (792    | )      |                            |   | (485 | ) |
|  Total                long-term                debt                                                                                                                                                        |   | $                           | 11,917  |   |                            | $      | 10,631 |   |

| (a) | These                series are in the multiannual interest rate mode and are subject                to                mandatory tender prior to maturity on the mandatory remarketing                date.  On such date, the interest rate and interest rate period                will be reset for the bonds.   |
|-----|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| (b) | Interest                rates in effect at June 30, 2007.  These series are in a weekly                interest rate mode and are classified as long-term as they are supported                by long-term irrevocable letters of credit.                                                                          |
| (c) | These                series were redeemed on May 8, 2007 as a result of the suspension                of                development of eight coal-fueled generation facilities.                                                                                                                                               |
| (d) | Interest                rates swapped to variable on entire principal amount at June 30,                2007.                                                                                                                                                                                                                 |
| (e) | Interest                rates in effect at June 30, 2007.  These series are subject to                mandatory redemption upon a change in control of TXU Corp., including                the                Proposed Merger and are subject to optional redemption on or after                September 16, 2007. |
| (f) | These                bonds are nonrecourse to Oncor Electric Delivery and were issued                to                securitize a regulatory asset.                                                                                                                                                                         |
| (g) | Interest                rates in effect at June 30, 2007.                                                                                                                                                                                                                                                                     |
| (h) | TXU                Corp. and Texas Competitive Holdings replaced their guarantees of                this                financing with a $144 million letter of credit in June                2007.                                                                                                                           |

----

***Debt-related      Activity in 2007***

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

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

|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |   | **Six                  Months Ended****June                  30, 2007** |   |
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|-------------------------------------------------------------------------|--------|
| Long-term                debt fair value adjustments related to interest rate swaps atbeginning                of period ― net                reduction in debt carrying value                                                                                                                                                                                                                                                                                                                                                                                                                                        |   | $                                                                       | (63    | ) |
| Fair                value adjustments during the                period                                                                                                             |   |                                                                    | 1      |   |
| Recognition                of net gains on settled fair value hedges                (a)                                                                                            |   |                                                                    | (1     | ) |
| Recognition                of net losses on dedesignated fair value hedges                (b)                                                                                      |   |                                                                    | 4      |   |
| Long-term                debt fair value adjustments at end of period ― net reduction                indebt                carrying value (net                out-of-the-money value of swaps)                                                                                                                                                                                                                                                                                                                                                                                                                        |   | $                                                                       | (59    | ) |

| (a) | Net                value of settled in-the-money fixed-to-variable swaps recognized                in net                income when the hedged transactions are recognized.  Amount is                pretax.          |
|-----|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| (b) | Net                value of dedesignated out-of-the money fixed-to-variable swaps recognized                in net income when the hedged transactions are                recognized.  Amount is                pretax. |

----

**10.           COMMITMENTS      AND CONTINGENCIES**

***Generation        Development***

***Litigation***

----

----

----

----

***Regulatory      Investigations***

***Other      Proceedings***

----

***Guarantees***

***Overview      —***

***Disposed      TXU Gas operations***
*— *

* *

***Residual      value guarantees in operating leases***
** **

***Indebtedness      guarantee***
*— *
* *
* *

----

***Letters      of Credit***

***Security      Interest***

----

**11.           SHAREHOLDERS’      EQUITY**

***Declaration      of Dividend***

***Dividend      Restrictions***

***Common      Stock Repurchase***

***Shareholders’      Equity***

|                                                                                                                                                                                                                                                                                                                                                                                                           |   | **Common                    Stock** |   |   | **Additional                    Paid-in Capital** |   |   | **Retained                    Earnings (Deficit)** |    |   | **Accumulated                    Other Comprehensive Income (Loss)** |    |    | **Total                    Shareholders’ Equity** |   |
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|-------------------------------------|--------|--------|---------------------------------------------------|--------|--------|----------------------------------------------------|---------|--------|----------------------------------------------------------------------|---------|---------|---------------------------------------------------------|--------|
|                                                                                                                                                                                                                                                                                                                                                                                                           |   |                                |   |   |                                              |   |   |                                               |    |   |                                                                 |    |    |                                                    |   |
| Balance                  at December 31,                  2006                                                         |   | $                                   | 5      |   |                                              | $      | 1,104  |                                               |    | $      | 622                                                                  |    |    | $                                                       | 409    |   |   | $ | 2,140 |   |
| Common                  stock                  issuances                                                                                                                                                                                                                                                                                                                                                       |   | ─                             |   |   |                                              | 1      |   |                                               | ─ |   |                                                                 | ─ |    |                                                    |   | 1 |   |
| Common                  stock                  repurchases                                                                                                                                                                                                                                                                                                                                                     |   | ─                             |   |   |                                              | (10    | )      |                                               | ─ |   |                                                                 | ─ |    |                                                    |   | (10 | ) |
| Net                  effects of cash flow                  hedges                                                                                                                                                                                                                                                                                                                                              |   | ─                             |   |   | ─                                           |   |   | ─                                            |    |   |                                                                 | (372    | )       |                                                    |   | (372 | ) |
| Reclassification                  of pension and                  other retirement benefit costs                                                                                                                                                                                                                                                                                                               |   | ─                             |   |   | ─                                           |   |   | ─                                            |    |   |                                                                 | 5       |    |                                                    |   | 5 |   |
| Dividends                                                                                                                                                                                                                                                                                                                                                                                                      |   | ─                             |   |   | ─                                           |   |   |                                               | (397    | )      |                                                                 | ─ |    |                                                    |   | (397 | ) |
| Net                  loss                                                                                                                                                                                                                                                                                                                                                                                      |   | ─                             |   |   | ─                                           |   |   |                                               | (377    | )      |                                                                 | ─ |    |                                                    |   | (377 | ) |
| Effect                  of adoption of FIN                  48                                                                                                                                                                                                                                                                                                                                                 |   | ─                             |   |   | ─                                           |   |   |                                               | 33      |   |                                                                 | ─ |    |                                                    |   | 33 |   |
| Effects                  of stock-based                  incentive compensationplans                  (a)                                                                                                                                                                                                                                                                                                      |   | ─                             |   |   |                                              | (77    | )      |                                               | ─ |   |                                                                 | ─ |    |                                                    |   | (77 | ) |
| Excess                  tax benefit on                  stock-based compensation                                                                                                                                                                                                                                                                                                                               |   | ─                             |   |   |                                              | 82     |   |                                               | ─ |   |                                                                 | ─ |    |                                                    |   | 82 |   |
| Cost                  of Thrift Plan shares                  issued by LESOP trustee                                                                                                                                                                                                                                                                                                                           |   | ─                             |   |   |                                              | 6      |   |                                               | ─ |   |                                                                 | ─ |    |                                                    |   | 6 |   |
| Effects                  of executive deferred                  compensation plan                                                                                                                                                                                                                                                                                                                              |   | ─                             |   |   |                                              | 10     |   |                                               | ─ |   |                                                                 | ─ |    |                                                    |   | 10 |   |
| Other                                                                                                                                                                                                                                                                                                                                                                                                          |   | ─                             |   |   |                                              | (1     | )      |                                               |    | 2      |                                                                 |    | ─ |                                                    |   |   | 1 |   |
| Balance                  at June 30, 2007                                                                                                                                                                                                                                                                                                                                                                      |   | $                                   | 5      |   |                                              | $      | 1,115  |                                               |    | $      | (117                                                                 | )       |    | $                                                       | 42     |   |   | $ | 1,045 |   |
| _______________                                                                                                                                                                                                                                                                                                                                                                                                |   |                                |   |   |                                              |   |   |                                               |    |   |                                                                 |    |    |                                                    |   |   |   |   |   |   |

| (a) | Includes                  $93 million in settlements of minimum withholding tax                  liabilities. |
|-----|---------------------------------------------------------------------------------------------------------------|

----

**12.           COMMODITY      AND OTHER DERIVATIVE CONTRACTUAL ASSETS AND LIABILITIES**

|                                                   |   | **June                  30, 2007**     |   |
|--------------------------------------------------------|--------|----------------------------------------|--------|
|                                                   |   | **Commodity****contracts**             |   |   | **Cash                  flow hedges****and                  other derivatives** |   |   | **Netting****adjustments                  (a)** |   |   | **Total** |   |
|                                                   |   |                                   |   |   |   |   |   |   |   |   |   |   |
| Assets:                                                |   |                                   |   |   |   |   |   |   |   |   |   |   |
| Current                assets                          |   | $                                      | 243    |   |   | $ | 359 |   |   | $ | (303 | ) |   | $ | 299 |   |
| Noncurrent                assets                       |   |                                   | 112    |   |   |   | 172 |   |   |   | (68 | ) |   |   | 216 |   |
| Total                                                  |   | $                                      | 355    |   |   | $ | 531 |   |   | $ | (371 | ) |   | $ | 515 |   |
|                                                   |   |                                   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Liabilities:                                           |   |                                   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Current                liabilities                     |   | $                                      | 701    |   |   | $ | 31 |   |   | $ | (303 | ) |   | $ | 429 |   |
| Noncurrent                liabilities                  |   |                                   | 810    |   |   |   | 134 |   |   |   | (68 | ) |   |   | 876 |   |
| Total                                                  |   | $                                      | 1,511  |   |   | $ | 165 |   |   | $ | (371 | ) |   | $ | 1,305 |   |
|                                                   |   |                                   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net                assets                (liabilities) |   | $                                      | (1,156 | ) |   | $ | 366 |   |   | $                          ─ |   |   | $ | (790 | ) |
|                                                   |   |                                   |   |
|                                                   |   |                                   |   |
|                                                   |   | **December                  31, 2006** |   |
|                                                   |   | **Commodity****contracts**             |   |   | **Cash                  flow hedges****and                  other derivatives** |   |   | **Netting****adjustments                  (a)** |   |   | **Total** |   |
|                                                   |   |                                   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Assets:                                                |   |                                   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Current                assets                          |   | $                                      | 276    |   |   | $ | 698 |   |   | $ | (24 | ) |   | $ | 950 |   |
| Noncurrent                assets                       |   |                                   | 162    |   |   |   | 248 |   |   |   | (65 | ) |   |   | 345 |   |
| Total                                                  |   | $                                      | 438    |   |   | $ | 946 |   |   | $ | (89 | ) |   | $ | 1,295 |   |
|                                                   |   |                                   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Liabilities:                                           |   |                                   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Current                liabilities                     |   | $                                      | 278    |   |   | $ | 39 |   |   | $ | (24 | ) |   | $ | 293 |   |
| Noncurrent                liabilities                  |   |                                   | 183    |   |   |   | 73 |   |   |   | (65 | ) |   |   | 191 |   |
| Total                                                  |   | $                                      | 461    |   |   | $ | 112 |   |   | $ | (89 | ) |   | $ | 484 |   |
|                                                   |   |                                   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net                assets                (liabilities) |   | $                                      | (23    | ) |   | $ | 834 |   |   | $                                          ─ |   |   | $ | 811 |   |

|   | (a) | Represents                the effects of netting assets and liabilities at the counterparty                agreement level. |
|--------|-----|-----------------------------------------------------------------------------------------------------------------------------|

***Commodity      Contract Assets and Liabilities***
* *

----

***Cash      Flow Hedge and Other Derivative Assets and      Liabilities***
* *

|                                                                                                                                                                                                                                                                                                                                                                 |   | **June                30,**                                          |   |   | **December                31,**                                      |   |
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|----------------------------------------------------------------------|--------|--------|----------------------------------------------------------------------|--------|
|                                                                                                                                                                                                                                                                                                                                                                 |   | **                         2007** |   |   | **                         2006** |   |
|                                                                                                                                                                                                                                                                                                                                                                 |   |                                                                 |   |   |                                                                 |   |
| Current                and noncurrent assets:                                                                                                                                                                                                                                                                                                                        |   |                                                                 |   |   |                                                                 |   |
| Commodity-related                cash flow                hedges                                                                                                                                                                                                                                                                                                     |   | $                                                                    | 445    |   |                                                                 | $      | 933 |   |
| Debt-related                interest rate                swaps                                                  |   |                                                                 | 71     |   |                                                                 |   | 4 |   |
| Other                                                                                                           |   |                                                                 | 15     |   |                                                                 |   | 9 |   |
| Total                                                                                                                     |   | $                                                                    | 531    |   |                                                                 | $      | 946 |   |
|                                                                                                                                                                                                                                                                                                                                                                 |   |                                                                 |   |   |                                                                 |   |   |   |
| Current                and noncurrent liabilities:                                                                                                                                                                                                                                                                                                                   |   |                                                                 |   |   |                                                                 |   |   |   |
| Commodity-related                cash flow                hedges                                                                                                                                                                                                                                                                                                     |   | $                                                                    | 20     |   |                                                                 | $      | 23 |   |
| Debt-related                interest rate                swaps                                                  |   |                                                                 | 145    |   |                                                                 |   | 89 |   |
| Total                                                                                                                     |   | $                                                                    | 165    |   |                                                                 | $      | 112 |   |

***Other      Cash Flow Hedge Information***
* *

----

----

**13.           PENSION      AND OTHER POSTRETIREMENT EMPLOYEE BENEFITS (OPEB) COSTS**

|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |   | **Three                  Months Ended June 30,** |    |   | **Six                  Months Ended June 30,** |   |
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|--------------------------------------------------|---------|--------|------------------------------------------------|--------|
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |   | **2007**                                         |    |   | **2006**                                       |   |   | **2007** |   |   | **2006** |   |
| Components                of net pension costs:                                                                                                                                                                                                                                                                                                                                                                                                                                                   |   |                                             |    |   |                                           |   |   |   |   |   |   |   |
| Service                cost                                                                                                    |   | $                                                | 9       |   |                                           | $      | 11 |   |   | $ | 20 |   |   | $ | 21 |   |
| Interest                cost                                                                                                   |   |                                             | 36      |   |                                           |   | 34 |   |   |   | 71 |   |   |   | 68 |   |
| Expected                return on                assets                                                                        |   |                                             | (38     | )      |                                           |   | (37 | ) |   |   | (79 | ) |   |   | (73 | ) |
| Prior                service                cost                                                                               |   |                                             | — |   |                                           |   | 1 |   |   |   | 1 |   |   |   | 1 |   |
| Net                loss                                                                                                        |   |                                             | 6       |   |                                           |   | 8 |   |   |   | 10 |   |   |   | 16 |   |
| Net                pension                cost                                                                                                |   |                                             | 13      |   |                                           |   | 17 |   |   |   | 23 |   |   |   | 33 |   |
| Components                of net OPEB costs:                                                                                                                                                                                                                                                                                                                                                                                                                                                      |   |                                             |    |   |                                           |   |   |   |   |   |   |   |   |   |   |   |
| Service                cost                                                                                                    |   |                                             | 4       |   |                                           |   | 3 |   |   |   | 6 |   |   |   | 6 |   |
| Interest                cost                                                                                                   |   |                                             | 14      |   |                                           |   | 15 |   |   |   | 27 |   |   |   | 30 |   |
| Expected                return on                assets                                                                        |   |                                             | (5      | )      |                                           |   | (5 | ) |   |   | (10 | ) |   |   | (10 | ) |
| Net                transition                obligation                                                                        |   |                                             | 1       |   |                                           |   | 1 |   |   |   | 1 |   |   |   | 1 |   |
| Prior                service                cost                                                                               |   |                                             | (1      | )      |                                           |   | (1 | ) |   |   | (2 | ) |   |   | (2 | ) |
| Net                loss                                                                                                        |   |                                             | 3       |   |                                           |   | 7 |   |   |   | 13 |   |   |   | 15 |   |
| Net                OPEB                costs                                                                                                  |   |                                             | 16      |   |                                           |   | 20 |   |   |   | 35 |   |   |   | 40 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |   |                                             |    |   |                                           |   |   |   |   |   |   |   |   |   |   |   |
| Net                pension and OPEB costs                                                                                                                                                                                                                                                                                                                                                                                                                                                         |   |                                             | 29      |   |                                           |   | 37 |   |   |   | 58 |   |   |   | 73 |   |
| Less                amounts deferred principally as a regulatory asset or                property                                                                                                                                                                                                                                                                                                                                                                                                 |   |                                             | (17     | )      |                                           |   | (21 | ) |   |   | (29 | ) |   |   | (41 | ) |
| Net                amounts recognized as                expense                                                                               |   | $                                                | 12      |   |                                           | $      | 16 |   |   | $ | 29 |   |   | $ | 32 |   |

|                                                      |   | **Three                  Months Ended**** June                  30, 2007** |    |   | **Six                  Months Ended****June                  30, 2007** |   |
|-----------------------------------------------------------|--------|---------------------------------------------------------------------------------|---------|--------|-------------------------------------------------------------------------|--------|
|                                                      |   | **Pension                  Plan**                                               |    |   | **OPEB                  Plan**                                          |   |   | **Total** |   |   | **Pension                  Plan** |   |   | **OPEB                  Plan** |   |   | **Total** |   |
| Net                transition obligation                  |   | $                                                                               | — |   |                                                                    | $      | 1 |   |   | $ | 1 |   |   | $ | — |   |   | $ | 1 |   |   | $ | 1 |   |
| Prior                service cost                         |   |                                                                            | — |   |                                                                    |   | (1 | ) |   |   | (1 | ) |   |   | 1 |   |   |   | (2 | ) |   |   | (1 | ) |
| Net                loss                                   |   |                                                                            | 6       |   |                                                                    |   | 3 |   |   |   | 9 |   |   |   | 10 |   |   |   | 13 |   |   |   | 23 |   |
| Total                                                     |   |                                                                            | 6       |   |                                                                    |   | 3 |   |   |   | 9 |   |   |   | 11 |   |   |   | 12 |   |   |   | 23 |   |
| Less                amounts related to a regulatory asset |   |                                                                            | (4      | )      |                                                                    |   | (4 | ) |   |   | (8 | ) |   |   | (8 | ) |   |   | (7 | ) |   |   | (15 | ) |
| Net                pretax amounts reclassified from AOCI  |   | $                                                                               | 2       |   |                                                                    | $      | (1 | ) |   | $ | 1 |   |   | $ | 3 |   |   | $ | 5 |   |   | $ | 8 |   |

----

**14.           SEGMENT      INFORMATION**

|                                                                 |   | **Three                  Months Ended**                                                                                                                                                            |   |   | **Six                  Months Ended**                                                                                                                                   |   |
|----------------------------------------------------------------------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|
|                                                                 |   | **June                    30,**                                                                                                                                                                    |   |   | **June                    30,**                                                                                                                                         |   |
|                                                                 |   | **2007**                                                                                                                                                                                           |   |   | **2006**                                                                                                                                                                               |   |   | **2007** |   |   | **2006** |   |
| Operating                  revenues:                                 |   |                                                                                                                                                                                               |   |   |                                                                                                                                                                                   |   |   |   |   |   |   |   |
| Competitive                  Electric                                |   | $                                                                                                                                                                                                  | 1,666  |   |                                                                                                                                                                                   | $      | 2,349 |   |   | $ | 2,983 |   |   | $ | 4,359 |   |
| Regulated                  Delivery                                  |   |                                                                                                                                                                                               | 589    |   |                                                                                                                                                                                   |   | 604 |   |   |   | 1,207 |   |   |   | 1,166 |   |
| Corporate                  and                  Other                |   |                                                                                                                                                                                               | 12     |   |                                                                                                                                                                                   |   | 14 |   |   |   | 23 |   |   |   | 27 |   |
| Eliminations                                                         |   |                                                                                                                                                                                               | (245   | )      |                                                                                                                                                                                   |   | (300 | ) |   |   | (522 | ) |   |   | (581 | ) |
| Consolidated                                                         |   | $                                                                                                                                                                                                  | 2,022  |   |                                                                                                                                                                                   | $      | 2,667 |   |   | $ | 3,691 |   |   | $ | 4,971 |   |
|                                                                 |   |                                                                                                                                                                                               |   |   |                                                                                                                                                                                   |   |   |   |   |   |   |   |   |   |   |   |
| Regulated                  revenues included in operating revenues:  |   |                                                                                                                                                                                               |   |   |                                                                                                                                                                                   |   |   |   |   |   |   |   |   |   |   |   |
| Competitive                  Electric                                |   | $                                            ─             |   |   | $                                            ─ |   |   | $                                             ─ |   |   | $                                             ─ |   |
| Regulated                  Delivery                                  |   |                                                                                                                                                                                               | 589    |   |                                                                                                                                                                                   |   | 604 |   |   |   | 1,207 |   |   |   | 1,166 |   |
| Corporate                  and                  Other                |   | ─                                                                                                                                                                                            |   |   | ─                                                                                                                                                                                |   |   | ─ |   |   | ─ |   |
| Eliminations                                                         |   |                                                                                                                                                                                               | (232   | )      |                                                                                                                                                                                   |   | (284 | ) |   |   | (497 | ) |   |   | (551 | ) |
| Consolidated                                                         |   | $                                                                                                                                                                                                  | 357    |   |                                                                                                                                                                                   | $      | 320 |   |   | $ | 710 |   |   | $ | 615 |   |
|                                                                 |   |                                                                                                                                                                                               |   |   |                                                                                                                                                                                   |   |   |   |   |   |   |   |   |   |   |   |
| Affiliated                  revenues included in operating revenues: |   |                                                                                                                                                                                               |   |   |                                                                                                                                                                                   |   |   |   |   |   |   |   |   |   |   |   |
| Competitive                  Electric                                |   | $                                                                                                                                                                                                  | 2      |   |                                                                                                                                                                                   | $      | 3 |   |   | $ | 3 |   |   | $ | 4 |   |
| Regulated                  Delivery                                  |   |                                                                                                                                                                                               | 232    |   |                                                                                                                                                                                   |   | 284 |   |   |   | 497 |   |   |   | 551 |   |
| Corporate                  and                  Other                |   |                                                                                                                                                                                               | 11     |   |                                                                                                                                                                                   |   | 13 |   |   |   | 22 |   |   |   | 26 |   |
| Eliminations                                                         |   |                                                                                                                                                                                               | (245   | )      |                                                                                                                                                                                   |   | (300 | ) |   |   | (522 | ) |   |   | (581 | ) |
| Consolidated                                                         |   | $                                                             ─ |   |   | $                                            ─ |   |   | $                                             ─ |   |   | $                                            ─ |   |
|                                                                 |   |                                                                                                                                                                                               |   |   |                                                                                                                                                                                   |   |   |   |   |   |   |   |   |   |   |   |
| Income                  (loss) from continuing operations:           |   |                                                                                                                                                                                               |   |   |                                                                                                                                                                                   |   |   |   |   |   |   |   |   |   |   |   |
| Competitive                  Electric                                |   | $                                                                                                                                                                                                  | 129    |   |                                                                                                                                                                                   | $      | 461 |   |   | $ | (342 | ) |   | $ | 981 |   |
| Regulated                  Delivery                                  |   |                                                                                                                                                                                               | 54     |   |                                                                                                                                                                                   |   | 86 |   |   |   | 140 |   |   |   | 151 |   |
| Corporate                  and                  Other                |   |                                                                                                                                                                                               | (73    | )      |                                                                                                                                                                                   |   | (50 | ) |   |   | (186 | ) |   |   | (119 | ) |
| Consolidated                                                         |   | $                                                                                                                                                                                                  | 110    |   |                                                                                                                                                                                   | $      | 497 |   |   | $ | (388 | ) |   | $ | 1,013 |   |

----

**15.           SUPPLEMENTARY      FINANCIAL INFORMATION**

***Regulated      Versus Unregulated Operations***

|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |   | **Three                Months Ended** |   |   | **Six                Months Ended** |   |
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|---------------------------------------|--------|--------|-------------------------------------|--------|
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |   | **June                  30,**         |   |   | **June                  30,**       |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |   | **2007**                              |   |   | **2006**                            |   |   | **2007** |   |   | **2006** |   |
| Operating                revenues:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |   |                                  |   |   |                                |   |   |   |   |   |   |   |
| Regulated                                                                                                                                                                  |   | $                                     | 589    |   |                                | $      | 604 |   |   | $ | 1,207 |   |   | $ | 1,166 |   |
| Unregulated                                                                                                                                                                |   |                                  | 1,678  |   |                                |   | 2,363 |   |   |   | 3,006 |   |   |   | 4,386 |   |
| Intercompany                sales                eliminations –                regulated                                                                             |   |                                  | (232   | )      |                                |   | (284 | ) |   |   | (497 | ) |   |   | (551 | ) |
| Intercompany                sales                eliminations –                unregulated                                                                           |   |                                  | (13    | )      |                                |   | (16 | ) |   |   | (25 | ) |   |   | (30 | ) |
| Total                operating                revenues                                                                                                                                                             |   |                                  | 2,022  |   |                                |   | 2,667 |   |   |   | 3,691 |   |   |   | 4,971 |   |
| Costs                and operating expenses:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |   |                                  |   |   |                                |   |   |   |   |   |   |   |   |   |   |   |
| Fuel,                purchased power costs                and delivery fees – unregulated (a)                                                                                                                                                                                                                                                                                                                                                                                                                                                |   |                                  | 739    |   |                                |   | 658 |   |   |   | 1,404 |   |   |   | 1,179 |   |
| Operating                costs –                regulated                                                                                                            |   |                                  | 207    |   |                                |   | 194 |   |   |   | 402 |   |   |   | 385 |   |
| Operating                costs –                unregulated                                                                                                          |   |                                  | 161    |   |                                |   | 147 |   |   |   | 312 |   |   |   | 299 |   |
| Depreciation                and amortization                –                regulated                                                                               |   |                                  | 114    |   |                                |   | 117 |   |   |   | 234 |   |   |   | 231 |   |
| Depreciation                and amortization                –                unregulated                                                                             |   |                                  | 86     |   |                                |   | 90 |   |   |   | 169 |   |   |   | 182 |   |
| Selling,                general and                administrative expenses – regulated                                                                                                                                                                                                                                                                                                                                                                                                                                                       |   |                                  | 49     |   |                                |   | 43 |   |   |   | 90 |   |   |   | 90 |   |
| Selling,                general and                administrative expenses – unregulated                                                                                                                                                                                                                                                                                                                                                                                                                                                     |   |                                  | 178    |   |                                |   | 138 |   |   |   | 357 |   |   |   | 280 |   |
| Franchise                and revenue-based                taxes –                regulated                                                                           |   |                                  | 60     |   |                                |   | 59 |   |   |   | 121 |   |   |   | 119 |   |
| Franchise                and revenue-based                taxes –                unregulated                                                                         |   |                                  | 29     |   |                                |   | 28 |   |   |   | 55 |   |   |   | 55 |   |
| Other                income                                                                                                                                                |   |                                  | (16    | )      |                                |   | (42 | ) |   |   | (45 | ) |   |   | (55 | ) |
| Other                deductions                                                                                                                                            |   |                                  | 122    |   |                                |   | 221 |   |   |   | 891 |   |   |   | 221 |   |
| Interest                income                                                                                                                                             |   |                                  | (17    | )      |                                |   | (11 | ) |   |   | (35 | ) |   |   | (20 | ) |
| Interest                expense and related                charges                                                                                                         |   |                                  | 221    |   |                                |   | 218 |   |   |   | 418 |   |   |   | 431 |   |
| Total                costs and operating                expenses                                                                                                                                                   |   |                                  | 1,933  |   |                                |   | 1,860 |   |   |   | 4,373 |   |   |   | 3,397 |   |
| Income                (loss) from continuing operations before income taxes                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |   | $                                     | 89     |   |                                | $      | 807 |   |   | $ | (682 | ) |   | $ | 1,574 |   |

|   | (a) | Includes                unregulated cost of fuel consumed of $245 million and $250 million                for the                three months ended June 30, 2007 and 2006, respectively, and $477                million                and $415 million for the six months ended June 30, 2007 and 2006,                respectively.  The balance 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,**       |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |   | **2007**                              |   |   | **2006**                            |   |   | **2007** |   |   | **2006** |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |   |                                  |   |   |                                |   |   |   |   |   |   |   |
| Interest                                                                                                                            |   | $                                     | 237    |   |                                | $      | 224 |   |   | $ | 452 |   |   | $ | 438 |   |
| Amortization                of debt discounts, premiums and issuance costs                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |   |                                  | 8      |   |                                |   | 4 |   |   |   | 12 |   |   |   | 8 |   |
| Capitalized                interest, including debt portion of allowance for borrowed                funds                                                                                                                                                                                                                                                                                                                                                                                                                                          |   |                                  |   |   |                                |   |   |   |   |   |   |   |   |   |   |   |
| used                during                construction                                                                                                  |   |                                  | (24    | )      |                                |   | (10 | ) |   |   | (46 | ) |   |   | (15 | ) |
| Total                interest expense and                related                charges                                                                           |   | $                                     | 221    |   |                                | $      | 218 |   |   | $ | 418 |   |   | $ | 431 |   |

***Restricted      Cash***

|                                                                                                                                                                                                                                                                                                                                                                                                                                                                |   | **Balance                  Sheet Classification** |   |
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|---------------------------------------------------|--------|
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                |   | **At                  June 30, 2007**             |   |   | **At                  December 31, 2006** |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                |   | **Current****Assets**                             |   |   | **Noncurrent****Assets** |   |   | **Current****Assets** |   |   | **Noncurrent****Assets** |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                |   |                                              |   |   |   |   |   |   |   |   |   |   |
| Pollution                control revenue bond funds heldby                trustee (See Note                9)                                                          |   | $                                                 | 1      |   |   | $ | 102 |   |   | $                                          ─ |   |   | $ | 241 |   |
| Amounts                related to securitization (transition) bonds                                                                                                                                                                                                                                                                                                                                                                                                 |   |                                              | 52     |   |   |   | 17 |   |   |   | 55 |   |   |   | 17 |   |
| All                other                                                                                                                      |   |                                              | 1      |   |   | ─ |   |   |   | 3 |   |   | ─ |   |
| Total                restricted                cash                                                                                                                              |   | $                                                 | 54     |   |   | $ | 119 |   |   | $ | 58 |   |   | $ | 258 |   |

----

***Inventories      by Major Category***

|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |   | **June                  30,**                                                |   |   | **December                  31,**                                      |   |
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|------------------------------------------------------------------------------|--------|--------|------------------------------------------------------------------------|--------|
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |   | **                            2007** |   |   | **                           2006** |   |
| Materials                  and                  supplies                                                                       |   | $                                                                            | 186    |   |                                                                   | $      | 189 |   |
| Fuel                  stock                                                                                                    |   |                                                                         | 97     |   |                                                                   |   | 94 |   |
| Natural                  gas in                  storage                                                                       |   |                                                                         | 110    |   |                                                                   |   | 75 |   |
| Environmental                  energy credits and emission allowances                                                                                                                                                                                                                                                                                                                                                                                                                        |   |                                                                         | 35     |   |                                                                   |   | 25 |   |
| Total                  inventories                                                                                                                      |   | $                                                                            | 428    |   |                                                                   | $      | 383 |   |

***Investments      ─***

|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |   | **June                30,**                                                |   |   | **December                31,**                                      |   |
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|----------------------------------------------------------------------------|--------|--------|----------------------------------------------------------------------|--------|
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |   | **                          2007** |   |   | **                         2006** |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |   |                                                                       |   |   |                                                                 |   |
| Nuclear                decommissioning                trust                                                                                                    |   | $                                                                          | 474    |   |                                                                 | $      | 447 |   |
| Assets                related to employee benefit plans, principally employee savings                programs                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |   |                                                                       | 200    |   |                                                                 |   | 197 |   |
| Land                                                                                                                                                           |   |                                                                       | 36     |   |                                                                 |   | 36 |   |
| Note                receivable from                Capgemini                                                                                                   |   |                                                                       | 25     |   |                                                                 |   | 25 |   |
| Investment                in unconsolidated                affiliates                                                                                          |   |                                                                       | 2      |   |                                                                 |   | 3 |   |
| Miscellaneous                other                                                                                                                             |   |                                                                       | 5      |   |                                                                 |   | 4 |   |
| Total                investments                                                                                                                                                        |   | $                                                                          | 742    |   |                                                                 | $      | 712 |   |

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

***Asset      Retirement Obligations***

| Asset                retirement liability at December 31,                2006                                                                     |   | $      | 585    |   |
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|--------|--------|--------|
| Additions:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |   |   |   |   |
| Accretion                                                                                                                                                        |   |   | 19     |   |
| Reductions:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |   |   |   |   |
| Mining                reclamation cost                adjustments                                                                                                |   |   | (2     | )      |
| Mining                reclamation                payments                                                                                                        |   |   | (13    | )      |
| Asset                retirement liability at June 30,                2007                                                                         |   | $      | 589    |   |

----

***Intangible      Assets***

|                                                                                                                                                                                                                                                                                  |   | **As                    of June 30, 2007** |   |   | **As                    of December 31, 2006** |   |
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|--------------------------------------------|--------|--------|------------------------------------------------|--------|
|                                                                                                                                                                                                                                                                                  |   | **Gross**                                  |   |   |                                           |   |   |   |   |   | **Gross** |   |   |   |   |   |   |   |
|                                                                                                                                                                                                                                                                                  |   | **Carrying**                               |   |   | **Accumulated**                                |   |   |   |   |   | **Carrying** |   |   | **Accumulated** |   |   |   |   |
|                                                                                                                                                                                                                                                                                  |   | **Amount**                                 |   |   | **Amortization**                               |   |   | **Net** |   |   | **Amount** |   |   | **Amortization** |   |   | **Net** |   |
| Intangible                  assets subject to amortization includedin                  property, plant and                  equipment                                                                                                                                                 |   |                                       |   |   |                                           |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Capitalized                  software placed in                  service                                                                                                                                                                                                              |   | $                                          | 435    |   |                                           | $      | 352 |   |   | $ | 83 |   |   | $ | 423 |   |   | $ | 339 |   |   | $ | 84 |   |
| Land                  easements                                          |   |                                       | 180    |   |                                           |   | 67 |   |   |   | 113 |   |   |   | 180 |   |   |   | 65 |   |   |   | 115 |   |
| Total                                                                                                  |   | $                                          | 615    |   |                                           | $      | 419 |   |   | $ | 196 |   |   | $ | 603 |   |   | $ | 404 |   |   | $ | 199 |   |

| **Year**                                                                                                                                                                     |   | **Amortization                  Expense** |   |
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|-------------------------------------------|--------|
|                                                                                                                                                                         |   |                                      |   |
| 2007                             |   | $                                         | 33     |   |
| 2008                             |   |                                      | 28     |   |
| 2009                             |   |                                      | 18     |   |
| 2010                             |   |                                      | 9      |   |
| 2011                             |   |                                      | 6      |   |

----

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

|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |   | **June                  30,****2007** |   |   | **December                  31,****2006** |   |
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|---------------------------------------|--------|--------|-------------------------------------------|--------|
| **Regulatory                assets**                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |   |                                  |   |   |                                      |   |
| Generation-related                regulatory assets securitized by transition                bonds                                                                                               |   | $                                     | 1,246  |   |                                      | $      | 1,316 |   |
| Employee                retirement                costs                                                                                                                                          |   |                                  | 451    |   |                                      |   | 461 |   |
| Storm-related                service recovery                costs                                                                                                                               |   |                                  | 142    |   |                                      |   | 138 |   |
| Securities                reacquisition                costs                                                                                                                                     |   |                                  | 108    |   |                                      |   | 112 |   |
| Recoverable                deferred income taxes —                net                                                                                                                      |   |                                  | 90     |   |                                      |   | 90 |   |
| Employee                severance                costs                                                                                                                                           |   |                                  | 42     |   |                                      |   | 44 |   |
| Total                regulatory                assets                                                                                                                                                           |   |                                  | 2,079  |   |                                      |   | 2,161 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |   |                                  |   |   |                                      |   |   |   |
| **Regulatory                liabilities**                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |   |                                  |   |   |                                      |   |   |   |
| Investment                tax credit and protected excess deferred                taxes                                                                                                          |   |                                  | 61     |   |                                      |   | 63 |   |
| Over-collection                of securitization (transition) bond                revenues                                                                                                       |   |                                  | 34     |   |                                      |   | 34 |   |
| Nuclear                decommissioning cost                over-recovery                                                                                                                         |   |                                  | 26     |   |                                      |   | 17 |   |
| Other                regulatory                liabilities                                                                                                                                       |   |                                  | 23     |   |                                      |   | 19 |   |
| Total                regulatory                liabilities                                                                                                                                                      |   |                                  | 144    |   |                                      |   | 133 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |   |                                  |   |   |                                      |   |   |   |
| **Net                regulatory                assets                                                                                              **                                            |   | $                                     | 1,935  |   |                                      | $      | 2,028 |   |

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

|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |   | **Six                Months Ended** |   |
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|-------------------------------------|--------|
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |   | **June                  30,**       |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |   | **2007**                            |   |   | **2006** |   |
| Cash                payments related to continuing operations:                                                                                                                                                                                                                                                                                                                                                                                                                                                      |   |                                |   |   |   |   |
| Interest                (net of amounts                capitalized)                                                                         |   | $                                   | 386    |   |   | $ | 434 |   |
| Income                taxes                                                                                                                 |   | $                                   | 214    |   |   | $ | 18 |   |
| Noncash                investing and financing activities:                                                                                                                                                                                                                                                                                                                                                                                                                                                          |   |                                |   |   |   |   |   |   |
| Noncash                construction                expenditures                                                                             |   | $                                   | 213    |   |   | $ | 63 |   |

----

**REPORT      OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM**

----

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

**Business**

**Operating      Segments**

**Recent      Developments**

***Proposed      Merger***

----

----

***Texas      Generation Facilities Development Program ─***
** **

***Nuclear      Generation Development***

***Integrated      Gasification Combined Cycle (IGCC) Demonstration Plants***

***Utility      Services Joint Venture***

----

***Long-term      Hedging Program***

----

***Retail      Pricing***
** **

|   | · | a                six percent price discount effective with March 27, 2007 meter reads                to                those existing residential customers in the historical service territory                with month-to-month service plans and a rate equivalent to the former                price-to-beat rate; |
|--------|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | an                additional four percent price discount to the same class of customers                as                above effective with June 8, 2007 meter                reads; |
|--------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | an                additional five percent price discount to such customers upon closing                of                the Proposed Merger; |
|--------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | protection                against price increases above the rates in effect prior to the four                percent discount described above for bills based on meter readings                through                September 30, 2008 (excluding increases in response to a change in                law or                regulatory charges); |
|--------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | protection                against price increases above the rates prior to the six percent                discount                described above for bills based on meter readings ending between                October                1, 2008 and December 31, 2009 (excluding increases in response to                a change                in law or regulatory charges); |
|--------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | upon                closing of the Proposed Merger, protection against price increases                at the                full fifteen percent discounted level through December 2008 (excluding                increases in response to a change in law or regulatory charges);                and |
|--------|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | the                remaining customer appreciation bonus of $25 to be applied to residential                customers' bills in August 2007 under the previously announced customer                appreciation bonus program, in addition to the $25 bonuses provided                in                each of the November 2006, February 2007 and May 2007 bill cycles                (for                residential customers who were receiving service as of October 29,                2006                and living in areas where TXU Energy Retail offered its price-to-beat                rate). |
|--------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

**RESULTS      OF OPERATIONS**

**TXU      Corp. Consolidated**

***Three      Months Ended June 30, 2007 Compared to Three Months Ended June 30,      2006***

|   | · | Operating                revenues in the Competitive Electric segment decreased $683 million,                or                29%, to $1.7 billion.  The decrease was driven by a $396 million                decrease in retail electricity revenues and $370 million in increased                losses from risk management and trading activities.  The                decrease in retail electricity revenues reflected lower volumes driven                by                cooler, below normal weather and a net loss of customers due to                competitive activity.  The retail revenue decrease also                reflected residential price discount actions.  The losses from                risk management and trading activities reflected unrealized mark-to-market                losses on positions in the long-term hedging program due to higher                forward                market prices of natural gas, with higher prices for all hedged future                periods beyond 2008.  Also, see discussion above under                “Long-term Hedging Program”. |
|--------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | Operating                revenues in the Regulated Delivery segment decreased $15 million,                or 2%,                to $589 million.  The revenue decrease reflected lower delivered                volumes primarily reflecting the effects of cooler, below normal                weather,                partially offset by higher transmission and delivery tariffs and                installation revenues in 2007 for equipment installation services                to                support the broadband-over-powerlines                initiative. |
|--------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | A                decline in the net intercompany sales elimination of $53 million                primarily                reflected lower sales by Oncor Electric Delivery to REP subsidiaries                of                Texas Competitive Holdings, while its sales to nonaffiliated REPs                increased. |
|--------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

*Gross      Margin*

|                                                                                                                                                                                                                                                                                                                                                  |   |
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|
|                                                                                                                                                                                                                                                                                                                                                  |   | **Three                  Months Ended June 30,** |   |
|                                                                                                                                                                                                                                                                                                                                                  |   | **2007** |   |   | **%                  of Revenue** |   |   | **2006** |   |   | **%                  of Revenue** |   |
|                                                                                                                                                                                                                                                                                                                                                  |   |   |   |   |   |   |   |   |   |   |   |   |
| Operating                revenues                                                      |   | $ | 2,022 |   |   |   | 100 | % |   | $ | 2,667 |   |   |   | 100 | % |
| Costs                and expenses:                                                                                                                                                                                                                                                                                                                    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Fuel,                purchased power costs and                delivery fees                                                                                                                                                                                                                                                                           |   |   | 739 |   |   |   | 36 |   |   |   | 658 |   |   |   | 25 |   |
| Operating                costs                                                                             |   |   | 368 |   |   |   | 18 |   |   |   | 341 |   |   |   | 13 |   |
| Depreciation                and                amortization                                                |   |   | 196 |   |   |   | 10 |   |   |   | 202 |   |   |   | 7 |   |
| Gross                margin                                                            |   | $ | 719 |   |   |   | 36 | % |   | $ | 1,466 |   |   |   | 55 | % |

|   | · | The                Competitive Electric segment’s gross margin decreased $719 million, or                61%, to $452 million.  The gross margin decrease reflected the                declines in revenues and the combined effect of lower nuclear generation                volumes (due to a planned outage) and increased higher-cost purchased                power volumes. |
|--------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | The                Regulated Delivery segment’s gross margin decreased $26 million, or 9%, to                $268 million driven by the decline in revenues and higher third-party                transmission fees. |
|--------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | The                Competitive Electric segment’s operating costs increased $11 million, or                7%, reflecting higher generation maintenance costs, insurance costs                and                property taxes, partially offset by lower costs resulting from the                outsourcing of certain generation technical support                services. |
|--------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | The                Regulated Delivery segment’s operating costs increased $13 million, or 7%,                reflecting equipment installation costs to support the                broadband-over-powerlines initiative and higher third-party transmission                fees. |
|--------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

|   | · | $12                million in increased retail marketing                expenses; |
|--------|--------|-----------------------------------------------------------------------------------|

|   | · | $11                million in higher professional services costs, due primarily to consulting                fees for marketing/strategic projects and retail billing and customer                care                systems enhancements; |
|--------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | $8                million increase in salary and benefit costs driven largely by an                increase                in staffing in retail operations; |
|--------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | $5                million in higher incentive                compensation; |
|--------|--------|----------------------------------------------------------------------------|

|   | · | $3                million in higher outsourced service provider costs due to contract                adjustments; |
|--------|--------|-------------------------------------------------------------------------------------------------------------------|

|   | · | $3                million for expenses related to rebranding of the Oncor Electric                Delivery                Company name; and |
|--------|--------|---------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | $2                million in increased contributions primarily for the Energy Aid                (low-income customer assistance)                program, |
|--------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------|

----

|   | · | Earnings                in the Competitive Electric segment decreased $332 million to $129                million                driven by the decline in gross margin and higher SG&A expenses,                partially offset by lower other deductions and the Texas margin tax                benefit. |
|--------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | Earnings                in the Regulated Delivery segment decreased $32 million, or 37%,                to $54                million primarily driven by lower operating revenue, higher SG&A                expenses and third-party transmission fees and costs associated with                the                cities rate settlement. |
|--------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | Corporate                and Other net expenses totaled $73 million in 2007 and $50 million                in                2006.  The amounts in 2007 and 2006 consist principally of                recurring interest expense on outstanding debt and affiliate borrowings                at                the TXU Corp. parent, as well as corporate general and administrative                expenses.  The increase of $23 million primarily                reflects: |
|--------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | o | a                $17 million after-tax favorable settlement in 2006 of a telecommunications                contract dispute; |
|--------|---|------------------------------------------------------------------------------------------------------------------------------|

|   | o | $8                million after-tax in higher accrued interest related to uncertain                tax                positions; |
|--------|---|----------------------------------------------------------------------------------------------------------------------------------|

|   | o | $7                million after-tax in increased SG&A expenses driven by higher                compensation and consulting                expenses; |
|--------|---|---------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | o | a                $5 million after-tax write-off in 2007 of deferred costs associated                with                the suspended Infrastrux joint venture;                and |
|--------|---|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | o | $4                million after-tax in financial advisory, legal and other professional                fees                in 2007 directly related to the Proposed                Merger, |
|--------|---|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

**TXU      Corp. Consolidated**

***Six      Months Ended June 30, 2007 Compared to Six Months Ended June 30,      2006***

|   | · | Operating                revenues in the Competitive Electric segment decreased $1.4 billion,                or                32%, to $3.0 billion.  The decrease was driven by $1.0 billion                in increased losses from risk management and trading activities and                a $354                million decrease in retail electricity revenues.  The losses                from risk management and trading activities reflected unrealized                mark-to-market losses on positions in the long-term hedging program                due to                higher forward market prices of natural gas, with higher prices for                all                hedged future periods beyond 2008.  Also, see discussion above                under "Long-term Hedging Program".  The decrease in retail                electricity revenues reflected lower volumes driven by the effects                of a                net loss of customers due to competitive activity and cooler, below                normal                weather.  The retail revenue decrease also reflected residential                price discount actions. |
|--------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | Operating                revenues in the Regulated Delivery segment increased $41 million,                or 4%,                to $1.2 billion.  The revenue increase reflected higher                distribution and transmission tariffs, revenues in 2007 for equipment                installation services to support the broadband-over-powerlines initiative                and growth in points of delivery. |
|--------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | A                decline in the net intercompany sales elimination of $55 million                reflected                lower sales by Oncor Electric Delivery to REP subsidiaries of Texas                Competitive Holdings, while its sales to nonaffiliated REPs                increased. |
|--------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

*Gross      Margin*

|                                                                                                                                                                                                                                                                                                                                                  |   |
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|
|                                                                                                                                                                                                                                                                                                                                                  |   | **Six                  Months Ended June 30,** |   |
|                                                                                                                                                                                                                                                                                                                                                  |   | **2007** |   |   | **%                  of Revenue** |   |   | **2006** |   |   | **%                  of Revenue** |   |
|                                                                                                                                                                                                                                                                                                                                                  |   |   |   |   |   |   |   |   |   |   |   |   |
| Operating                revenues                                                      |   | $ | 3,691 |   |   |   | 100 | % |   | $ | 4,971 |   |   |   | 100 | % |
| Costs                and expenses:                                                                                                                                                                                                                                                                                                                    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Fuel,                purchased power costs and                delivery fees                                                                                                                                                                                                                                                                           |   |   | 1,404 |   |   |   | 38 |   |   |   | 1,179 |   |   |   | 24 |   |
| Operating                costs                                                                             |   |   | 714 |   |   |   | 19 |   |   |   | 684 |   |   |   | 14 |   |
| Depreciation                and                amortization                                                |   |   | 395 |   |   |   | 11 |   |   |   | 404 |   |   |   | 8 |   |
| Gross                margin                                                            |   | $ | 1,178 |   |   |   | 32 | % |   | $ | 2,704 |   |   |   | 54 | % |

|   | · | The                Competitive Electric segment’s gross margin decreased $1.5 billion, or                72%, to $609 million.  The gross margin decrease reflected the                declines in revenues and higher average cost of electricity sold                due                primarily to a decrease in baseload generation volumes (largely reflecting                planned outages) and increased purchased power                volumes. |
|--------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | The                Regulated Delivery segment’s gross margin increased $21 million, or 4%, to                $572 million driven by higher revenues, partially offset by higher                third-party transmission fees. |
|--------|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | The                Competitive Electric segment’s operating costs increased $8 million, or                3%, reflecting $20 million in higher generation maintenance costs                largely                due to the scheduled outage of one of the nuclear generation units,                partially offset by $11 million in lower costs associated with generation                technical support outsourcing service                agreements. |
|--------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | The                Regulated Delivery segment’s operating costs increased $17 million, or 4%,                reflecting equipment installation costs in 2007 to support the                broadband-over-powerlines initiative and higher third-party transmission                fees. |
|--------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

|   | · | $20                million in costs associated with the generation development program                that                was initiated in the second quarter of 2006, principally salaries                and                consulting expenses; |
|--------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | $18                million in increased retail marketing                expenses; |
|--------|--------|-----------------------------------------------------------------------------------|

|   | · | $15                million in higher professional services costs, due primarily to consulting                fees for retail billing and customer care systems enhancements and                marketing/strategic projects; |
|--------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | $10                million in higher outsourced service provider costs due to contract                adjustments; |
|--------|--------|--------------------------------------------------------------------------------------------------------------------|

|   | · | $7                million increase in salary and benefit costs driven largely by an                increase                in staffing in retail operations; |
|--------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | $4                million in higher incentive                compensation; |
|--------|--------|----------------------------------------------------------------------------|

|   | · | $3                million for expenses related to rebranding of the Oncor Electric                Delivery                Company name; and |
|--------|--------|---------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | $3                million in increased contributions primarily for the Energy Aid                (low-income customer assistance)                program, |
|--------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------|

----

|   | · | Results                in the Competitive Electric segment decreased $1.3 billion to a loss                of                $342 million driven by the decline in gross margin and the charges                related                to the suspension of the development of eight coal-fueled generation                units. |
|--------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | Earnings                in the Regulated Delivery segment decreased $11 million, or 7%, to                $140                million primarily driven by costs associated with the cities rate                settlement, higher interest expense and higher third-party transmission                fees, partially offset by higher operating                revenues. |
|--------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | Corporate                and Other net expenses totaled $186 million in 2007 and $119 million                in                2006.  The amounts in 2007 and 2006 consist principally of                recurring interest expense on outstanding debt and affiliate borrowings                at                the TXU Corp. parent, as well as corporate general and administrative                expenses.  The increase of $67 million primarily                reflects: |
|--------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | o | $20                million after-tax in financial advisory, legal and other professional                fees                in 2007 directly related to the Proposed                Merger; |
|--------|---|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | o | a                2007 write-off of $19 million after-tax in previously deferred costs                related to anticipated strategic transactions (including expected                financings) that are no longer expected to be completed as a result                of the                Proposed Merger; |
|--------|---|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | o | a                $17 million after-tax favorable settlement in 2006 of a telecommunications                contract dispute; |
|--------|---|------------------------------------------------------------------------------------------------------------------------------|

|   | o | $16                million after-tax in higher accrued interest related to uncertain                tax                positions; and |
|--------|---|---------------------------------------------------------------------------------------------------------------------------------------|

|   | o | $9                million after-tax in higher SG&A expenses driven by higher                compensation and consulting                expenses, |
|--------|---|------------------------------------------------------------------------------------------------------------------------------------------------------|

----

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

|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |   | **Six                Months**      |   |
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|------------------------------------|--------|
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |   | **Ended**                          |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |   | **June                  30, 2007** |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |   |                               |   |
| Net                commodity contract liability at beginning of                period                                                                             |   | $                                  | (23    | ) |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |   |                               |   |   |
| Settlements                of positions included in the opening balance (1)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |   |                               | 7      |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |   |                               |   |   |
| Unrealized                mark-to-market valuations of positions held at end of period                (2)                                                                                                                                                                                                                                                                                                                                                                                                                                                     |   |                               | (1,283 | ) |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |   |                               |   |   |
| Other                activity                (3)                                                                                                                  |   |                               | 143    |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |   |                               |   |   |
| Net                commodity contract liability at end of                period                                                                                   |   | $                                  | (1,156 | ) |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |   |                               |   |   |

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

|   | (2) | Includes                mark-to-market effects of positions dedesignated as cash flow hedges                (see                discussion above under "Long-term Hedging Program").  Also                includes $164 million in losses and a $30 million gain recorded at                contract inception dates (see Note 12 to Financial                Statements). |
|--------|-----|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | (3) | These                amounts have not been recognized in prior and current year mark-to-market                earnings.  Includes initial values of positions involving the                receipt or payment of cash or other consideration such as option                premiums                paid and received.  Activity in 2007 included payments of $39                million related to natural gas physical swap transactions and a $102                million premium paid in 2007 related to a structured economic hedge                transaction in the long-term hedging                program. |
|--------|-----|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

|                                                                           |   | **Three                Months Ended** |   |   | **Six                Months Ended** |   |
|--------------------------------------------------------------------------------|--------|---------------------------------------|--------|--------|-------------------------------------|--------|
|                                                                           |   | **June                  30,**         |   |   | **June                  30,**       |   |
|                                                                           |   | **2007**                              |   |   | **2006**                            |   |   | **2007** |   |   | **2006** |   |
|                                                                           |   |                                  |   |   |                                |   |   |   |   |   |   |   |
| Unrealized                gains (losses) related to contracts marked-to-market |   | $                                     | (413   | )      |                                | $      | (121 | ) |   | $ | (1,276 | ) |   | $ | (115 | ) |
|                                                                           |   |                                  |   |   |                                |   |   |   |   |   |   |   |   |   |   |   |
| Ineffectiveness                gains related to cash flow hedges (a)           |   |                                  | (5     | )      |                                |   | 145 |   |   |   | 94 |   |   |   | 144 |   |
|                                                                           |   |                                  |   |   |                                |   |   |   |   |   |   |   |   |   |   |   |
| Total                unrealized gains (losses) related to commodity contracts  |   | $                                     | (418   | )      |                                | $      | 24 |   |   | $ | (1,182 | ) |   | $ | 29 |   |

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

----

***Maturity      Table***

|                                                                                                                                                                                                                                                                                                     |   | **Maturity                  dates of unrealized net commodity contract liabilities at June                  30,                  2007** |   |
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|-----------------------------------------------------------------------------------------------------------------------------------------|--------|
|   **Source                of fair value**                                                                                                                                                                                                                                                      |   | **Less                than****1                  year**                                                                                 |   |   | **1-3                  years** |   |   | **4-5                  years** |   |   | **Excess                of****5                  years** |   |   | **Total** |   |
| Prices                actively                quoted                                             |   | $                                                                                                                                       | 16     |   |   | $ | (200 | ) |   | $ | (248 | ) |   | $ | (23 | ) |   | $ | (455 | ) |
| Prices                provided by other                                                                                                                                                                                                                                                                  |   |                                                                                                                                    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| external                sources                (a)                                                         |   |                                                                                                                                    | 6      |   |   |   | (253 | ) |   |   | (353 | ) |   |   | (89 | ) |   |   | (689 | ) |
| Prices                based on models                (b)                                         |   |                                                                                                                                    | (45    | ) |   |   | (18 | ) |   | ─ |   |   | ─ |   |   |   | (63 | ) |
| Total                                                                                            |   | $                                                                                                                                       | (23    | ) |   | $ | (471 | ) |   | $ | (601 | ) |   | $ | (112 | ) |   | $ | (1,207 | ) |
| Percentage                of total fair value                                                                                                                                                                                                                                                            |   |                                                                                                                                    | 2      | % |   |   | 39 | % |   |   | 50 | % |   |   | 9 | % |   |   | 100 | % |

|   | (a) | Includes                “day one” losses of $138 million associated with hedge transactions and a                "day one" gain of $30 million associated with a long-term power purchase                agreement. |
|--------|-----|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | (b) | Includes                "day one" loss of $26 million associated with a hedge                transaction. |
|--------|-----|-----------------------------------------------------------------------------------------------------------|

----

**Competitive      Electric Segment**

***Financial      Results***

|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |   | **Three                Months Ended** |   |   | **Six                Months Ended** |   |
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|---------------------------------------|--------|--------|-------------------------------------|--------|
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |   | **June                  30,**         |   |   | **June                  30,**       |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |   | **2007**                              |   |   | **2006**                            |   |   | **2007** |   |   | **2006** |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |   |                                  |   |   |                                |   |   |   |   |   |   |   |
| Operating                revenues                                                                                                    |   | $                                     | 1,666  |   |                                | $      | 2,349 |   |   | $ | 2,983 |   |   | $ | 4,359 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |   |                                  |   |   |                                |   |   |   |   |   |   |   |   |   |   |   |
| Costs                and expenses:                                                                                                                                                                                                                                                                                                                                                                                                                                                            |   |                                  |   |   |                                |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |   |                                  |   |   |                                |   |   |   |   |   |   |   |   |   |   |   |
| Fuel,                purchased power costs and                delivery                fees                                                                    |   |                                  | 971    |   |                                |   | 943 |   |   |   | 1,902 |   |   |   | 1,733 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |   |                                  |   |   |                                |   |   |   |   |   |   |   |   |   |   |   |
| Operating                costs                                                                                                                                |   |                                  | 163    |   |                                |   | 152 |   |   |   | 314 |   |   |   | 306 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |   |                                  |   |   |                                |   |   |   |   |   |   |   |   |   |   |   |
| Depreciation                and                amortization                                                                                                   |   |                                  | 82     |   |                                |   | 84 |   |   |   | 161 |   |   |   | 169 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |   |                                  |   |   |                                |   |   |   |   |   |   |   |   |   |   |   |
| Selling,                general and                administrative                expenses                                                                     |   |                                  | 155    |   |                                |   | 128 |   |   |   | 312 |   |   |   | 249 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |   |                                  |   |   |                                |   |   |   |   |   |   |   |   |   |   |   |
| Franchise                and revenue-based                taxes                                                                                               |   |                                  | 27     |   |                                |   | 27 |   |   |   | 53 |   |   |   | 54 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |   |                                  |   |   |                                |   |   |   |   |   |   |   |   |   |   |   |
| Other                income                                                                                                                                   |   | ─                               |   |   |                                | (1     | ) |   |   | (9 | ) |   |   | (1 | ) |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |   |                                  |   |   |                                |   |   |   |   |   |   |   |   |   |   |   |
| Other                deductions                                                                                                                               |   |                                  | 93     |   |                                |   | 205 |   |   |   | 808 |   |   |   | 195 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |   |                                  |   |   |                                |   |   |   |   |   |   |   |   |   |   |   |
| Interest                income                                                                                                                                |   |                                  | (85    | )      |                                |   | (45 | ) |   |   | (162 | ) |   |   | (76 | ) |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |   |                                  |   |   |                                |   |   |   |   |   |   |   |   |   |   |   |
| Interest                expense and related                charges                                                                                            |   |                                  | 123    |   |                                |   | 102 |   |   |   | 212 |   |   |   | 203 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |   |                                  |   |   |                                |   |   |   |   |   |   |   |   |   |   |   |
| Total                costs and                expenses                                                                                                                                 |   |                                  | 1,529  |   |                                |   | 1,595 |   |   |   | 3,591 |   |   |   | 2,832 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |   |                                  |   |   |                                |   |   |   |   |   |   |   |   |   |   |   |
| Income                (loss) before income                taxes                                                                      |   |                                  | 137    |   |                                |   | 754 |   |   |   | (608 | ) |   |   | 1,527 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |   |                                  |   |   |                                |   |   |   |   |   |   |   |   |   |   |   |
| Income                tax expense                (benefit)                                                                           |   |                                  | 8      |   |                                |   | 293 |   |   |   | (266 | ) |   |   | 546 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |   |                                  |   |   |                                |   |   |   |   |   |   |   |   |   |   |   |
| Net                income                (loss)                                                                                      |   | $                                     | 129    |   |                                | $      | 461 |   |   | $ | (342 | ) |   | $ | 981 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |   |                                  |   |   |                                |   |   |   |   |   |   |   |   |   |   |   |

----

**Competitive      Electric Segment**

***Sales      Volume Data***

|                                                                                                                                                                                                                                                                                                                                                                                            |   | **Three                Months Ended** |    |   | **Six                Months Ended** |   |
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|---------------------------------------|---------|--------|-------------------------------------|--------|
|                                                                                                                                                                                                                                                                                                                                                                                            |   | **June                  30,**         |    |   | **June                  30,**       |   |
|                                                                                                                                                                                                                                                                                                                                                                                            |   | **2007**                              |    |   | **2006**                            |   |   | **Change                  %** |   |   | **2007** |   |   | **2006** |   |   | **Change                  %** |   |
|                                                                                                                                                                                                                                                                                                                                                                                            |   |                                  |    |   |                                |   |   |   |   |   |   |   |   |   |   |   |   |   |
| **Sales                volumes:**                                                                                                                                                                                                                                                                                                                                                               |   |                                  |    |   |                                |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                                                                                                                                                                                                                                                                                                                            |   |                                  |    |   |                                |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Retail                electricity sales volumes (GWh):                                                                                                                                                                                                                                                                                                                                          |   |                                  |    |   |                                |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Historical                service                territory:                                                                                                                                                                                                                                                                                                                                     |   |                                  |    |   |                                |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Residential                                                                                                                           |   |                                  | 5,072   |   |                                |   | 6,825 |   |   |   | (25.7 | ) |   |   | 10,719 |   |   |   | 12,057 |   |   |   | (11.1 | ) |
| Small                business                (a)                                                                                      |   |                                  | 1,537   |   |                                |   | 2,068 |   |   |   | (25.7 | ) |   |   | 3,180 |   |   |   | 3,795 |   |   |   | (16.2 | ) |
| Total                historical service                territory                                                                                |   |                                  | 6,609   |   |                                |   | 8,893 |   |   |   | (25.7 | ) |   |   | 13,899 |   |   |   | 15,852 |   |   |   | (12.3 | ) |
| Other                territories:                                                                                                                                                                                                                                                                                                                                                               |   |                                  |    |   |                                |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Residential                                                                                                                           |   |                                  | 1,010   |   |                                |   | 1,018 |   |   |   | (0.8 | ) |   |   | 1,748 |   |   |   | 1,629 |   |   |   | 7.3 |   |
| Small                business                (a)                                                                                      |   |                                  | 204     |   |                                |   | 169 |   |   |   | 20.7 |   |   |   | 368 |   |   |   | 301 |   |   |   | 22.3 |   |
| Total                other                territories                                                                                           |   |                                  | 1,214   |   |                                |   | 1,187 |   |   |   | 2.3 |   |   |   | 2,116 |   |   |   | 1,930 |   |   |   | 9.6 |   |
| Large                business and other                customers                                                                      |   |                                  | 3,653   |   |                                |   | 3,552 |   |   |   | 2.8 |   |   |   | 7,043 |   |   |   | 6,785 |   |   |   | 3.8 |   |
| Total                retail                electricity                                                                                          |   |                                  | 11,476  |   |                                |   | 13,632 |   |   |   | (15.8 | ) |   |   | 23,058 |   |   |   | 24,567 |   |   |   | (6.1 | ) |
| Wholesale                electricity sales                volumes                                                      |   |                                  | 9,290   |   |                                |   | 7,852 |   |   |   | 18.3 |   |   |   | 17,977 |   |   |   | 15,705 |   |   |   | 14.5 |   |
| Net                sales (purchases) of balancing electricity                                                                                                                                                                                                                                                                                                                                   |   |                                  |    |   |                                |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| to/from                ERCOT                                                                                                          |   |                                  | 302     |   |                                |   | (267 | ) |   | ─ |   |   |   | 626 |   |   |   | 1,165 |   |   |   | (46.3 | ) |
| Total                sales                volumes                                                                                               |   |                                  | 21,068  |   |                                |   | 21,217 |   |   |   | (0.7 | ) |   |   | 41,661 |   |   |   | 41,437 |   |   |   | 0.5 |   |
|                                                                                                                                                                                                                                                                                                                                                                                            |   |                                  |    |   |                                |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| **Average                volume (kWh) per retail customer (b):**                                                                                                                                                                                                                                                                                                                                |   |                                  |    |   |                                |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                                                                                                                                                                                                                                                                                                                            |   |                                  |    |   |                                |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Residential                                                                                                                           |   |                                  | 3,299   |   |                                |   | 4,012 |   |   |   | (17.8 | ) |   |   | 6,731 |   |   |   | 6,975 |   |   |   | (3.5 | ) |
| Small                business                                                                                                         |   |                                  | 6,676   |   |                                |   | 7,990 |   |   |   | (16.4 | ) |   |   | 13,476 |   |   |   | 14,460 |   |   |   | (6.8 | ) |
| Large                business and other                customers                                                                      |   |                                  | 100,336 |   |                                |   | 70,256 |   |   |   | 42.8 |   |   |   | 175,727 |   |   |   | 130,966 |   |   |   | 34.2 |   |
|                                                                                                                                                                                                                                                                                                                                                                                            |   |                                  |    |   |                                |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| **Weather                (service territory average) – percent of normal                (c):**                                                                                                                                                                                                                                                                                            |   |                                  |    |   |                                |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                                                                                                                                                                                                                                                                                                                            |   |                                  |    |   |                                |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Percent                of normal:                                                                                                                                                                                                                                                                                                                                                               |   |                                  |    |   |                                |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Cooling                degree                days                                                                                               |   |                                  | 85.3    | %      |                                |   | 131.0 | % |   |   |   |   |   |   | 88.8 | % |   |   | 135.9 | % |   |   |   |   |

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

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

|   | (c) | 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). |
|--------|-----|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

**Competitive      Electric Segment**

***Customer      Count Data***

|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |   | **June                  30,** |   |
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|-------------------------------|--------|
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |   | **2007**                      |   |   | **2006** |   |   | **Change                  %** |   |
| **Customer                counts:**                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |   |                          |   |   |   |   |   |   |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |   |                          |   |   |   |   |   |   |   |
| Retail                electricity customers (end of period and in thousands)                (a):                                                                                                                                                                                                                                                                                                                                                                                                                 |   |                          |   |   |   |   |   |   |   |
| Historical                service territory:                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |   |                          |   |   |   |   |   |   |   |
| Residential                                                                                                                                        |   |                          | 1,560  |   |   |   | 1,716 |   |   |   | (9.1 | ) |
| Small                business                (b)                                                                                                   |   |                          | 248    |   |   |   | 271 |   |   |   | (8.5 | ) |
| Total                historical service                territory                                                                                                  |   |                          | 1,808  |   |   |   | 1,987 |   |   |   | (9.0 | ) |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |   |                          |   |   |   |   |   |   |   |   |   |   |
| Other                territories:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |   |                          |   |   |   |   |   |   |   |   |   |   |
| Residential                                                                                                                                        |   |                          | 273    |   |   |   | 227 |   |   |   | 20.3 |   |
| Small                business                (b)                                                                                                   |   |                          | 11     |   |   |   | 7 |   |   |   | 57.1 |   |
| Total                other                territories                                                                                                             |   |                          | 284    |   |   |   | 234 |   |   |   | 21.4 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |   |                          |   |   |   |   |   |   |   |   |   |   |
| All                territories:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |   |                          |   |   |   |   |   |   |   |   |   |   |
| Residential                                                                                                                                        |   |                          | 1,833  |   |   |   | 1,943 |   |   |   | (5.7 | ) |
| Small                business                (b)                                                                                                   |   |                          | 259    |   |   |   | 278 |   |   |   | (6.8 | ) |
| Total                all                territories                                                                                                               |   |                          | 2,092  |   |   |   | 2,221 |   |   |   | (5.8 | ) |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |   |                          |   |   |   |   |   |   |   |   |   |   |
| Large                business and other                customers                                                                         |   |                          | 36     |   |   |   | 49 |   |   |   | (26.5 | ) |
| Total                retail electricity                customers                                                                                                  |   |                          | 2,128  |   |   |   | 2,270 |   |   |   | (6.3 | ) |

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

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

----

**Competitive      Electric Segment**

***Revenue      and Market Share Data***

|                                                                                                                                                                                                                                                                                                                                                                                                                        |   | **Three                Months Ended** |   |   | **Six                Months Ended** |   |
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|---------------------------------------|--------|--------|-------------------------------------|--------|
|                                                                                                                                                                                                                                                                                                                                                                                                                        |   | **June                  30,**         |   |   | **June                  30,**       |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                        |   | **2007**                              |   |   | **2006**                            |   |   | **Change                  %** |   |   | **2007** |   |   | **2006** |   |   | **Change                  %** |   |
| **Operating                revenues:**                                                                                                                                                                                                                                                                                                                                                                                      |   |                                  |   |   |                                |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Retail                electricity revenues:                                                                                                                                                                                                                                                                                                                                                                                 |   |                                  |   |   |                                |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Historical                service                territory:                                                                                                                                                                                                                                                                                                                                                                 |   |                                  |   |   |                                |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Residential                                                                                                                         |   | $                                     | 700    |   |                                | $      | 1,008 |   |   |   | (30.6 | ) |   | $ | 1,484 |   |   | $ | 1,753 |   |   |   | (15.3 | ) |
| Small                business                (a)                                                                                    |   |                                  | 230    |   |                                |   | 309 |   |   |   | (25.6 | ) |   |   | 468 |   |   |   | 566 |   |   |   | (17.3 | ) |
| Total                historical service                territory                                                                                   |   |                                  | 930    |   |                                |   | 1,317 |   |   |   | (29.4 | ) |   |   | 1,952 |   |   |   | 2,319 |   |   |   | (15.8 | ) |
|                                                                                                                                                                                                                                                                                                                                                                                                                        |   |                                  |   |   |                                |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Other                territories:                                                                                                                                                                                                                                                                                                                                                                                           |   |                                  |   |   |                                |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Residential                                                                                                                         |   |                                  | 141    |   |                                |   | 160 |   |   |   | (11.9 | ) |   |   | 249 |   |   |   | 248 |   |   |   | 0.4 |   |
| Small                business                (a)                                                                                    |   |                                  | 26     |   |                                |   | 20 |   |   |   | 30.0 |   |   |   | 46 |   |   |   | 36 |   |   |   | 27.8 |   |
| Total                other                territories                                                                                              |   |                                  | 167    |   |                                |   | 180 |   |   |   | (7.2 | ) |   |   | 295 |   |   |   | 284 |   |   |   | 3.9 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                        |   |                                  |   |   |                                |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Large                business and other                customers                                                                    |   |                                  | 343    |   |                                |   | 339 |   |   |   | 1.2 |   |   |   | 657 |   |   |   | 655 |   |   |   | 0.3 |   |
| Total                retail electricity                revenues                                                           |   |                                  | 1,440  |   |                                |   | 1,836 |   |   |   | (21.6 | ) |   |   | 2,904 |   |   |   | 3,258 |   |   |   | (10.9 | ) |
| Wholesale                electricity                revenues                                                              |   |                                  | 535    |   |                                |   | 479 |   |   |   | 11.7 |   |   |   | 982 |   |   |   | 956 |   |   |   | 2.7 |   |
| Net                sales (purchases) of balancing electricity                                                                                                                                                                                                                                                                                                                                                               |   |                                  |   |   |                                |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| to/from                ERCOT                                                                                                        |   | ─                               |   |   |                                | (32    | ) |   | ─ |   |   |   | 9 |   |   |   | 26 |   |   |   | (65.4 | ) |
| Net                losses from risk management and trading activities                                                                                                                                                                                                                                                                                                                                                       |   |                                  | (383   | )      |                                |   | (13 | ) |   | ─ |   |   |   | (1,069 | ) |   |   | (57 | ) |   | ─ |   |
| Other                operating                revenues                                                                    |   |                                  | 74     |   |                                |   | 79 |   |   |   | (6.3 | ) |   |   | 157 |   |   |   | 176 |   |   |   | (10.8 | ) |
| Total                operating                revenues                                                                                             |   | $                                     | 1,666  |   |                                | $      | 2,349 |   |   |   | (29.1 | ) |   | $ | 2,983 |   |   | $ | 4,359 |   |   |   | (31.6 | ) |
|                                                                                                                                                                                                                                                                                                                                                                                                                        |   |                                  |   |   |                                |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| **Risk                management and trading activities:**                                                                                                                                                                                                                                                                                                                                                                  |   |                                  |   |   |                                |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Realized                net gains (losses) on                settled positions (b)                                                                                                                                                                                                                                                                                                                                          |   | $                                     | 35     |   |                                | $      | (38 | ) |   |   |   |   |   | $ | 113 |   |   | $ | (86 | ) |   |   |   |   |
| Reversal                of prior periods’                unrealized net                                                                                                                                                                                                                                                                                                                                               |   |                                  |   |   |                                |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| (gains)                losses on positions                settled in current period                                                                                                                                                                                                                                                                                                                                         |   |                                  | (21    | )      |                                |   | 2 |   |   |   |   |   |   |   | (13 | ) |   |   | 38 |   |   |   |   |   |
| Other                unrealized net gains                (losses), including cash flow                                                                                                                                                                                                                                                                                                                                      |   |                                  |   |   |                                |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| hedge                ineffectiveness                                                                                                               |   |                                  | (397   | )      |                                |   | 23 |   |   |   |   |   |   |   | (1,169 | ) |   |   | (9 | ) |   |   |   |   |
| Total                net                losses                                                                                                     |   | $                                     | (383   | )      |                                | $      | (13 | ) |   |   |   |   |   | $ | (1,069 | ) |   | $ | (57 | ) |   |   |   |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                        |   |                                  |   |   |                                |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| **Average                revenues per MWh:**                                                                                                                                                                                                                                                                                                                                                                                |   |                                  |   |   |                                |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Residential                                                                                                                         |   | $                                     | 138.36 |   |                                | $      | 148.85 |   |   |   | (7.0 | ) |   | $ | 139.01 |   |   | $ | 146.23 |   |   |   | (4.9 | ) |
|                                                                                                                                                                                                                                                                                                                                                                                                                        |   |                                  |   |   |                                |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| **Estimated                share of ERCOT retail markets (c):**                                                                                                                                                                                                                                                                                                                                                             |   |                                  |   |   |                                |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Historical                service territory:                                                                                                                                                                                                                                                                                                                                                                                |   |                                  |   |   |                                |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Residential                                                                                                                                                                                                                                                                                                                                                                                                                 |   |                                  |   | 62     | %                                   |   |   | 69 | % |   |   |   |   |
| Small                business                                                                                                                                                                                                                                                                                                                                                                                               |   |                                  |   | 61     | %                                   |   |   | 68 | % |   |   |   |   |
| Total                ERCOT:                                                                                                                                                                                                                                                                                                                                                                                                 |   |                                  |   |   |                                |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Residential                                                                                                                                                                                                                                                                                                                                                                                                                 |   |                                  |   | 35     | %                                   |   |   | 38 | % |   |   |   |   |
| Small                business                                                                                                                                                                                                                                                                                                                                                                                               |   |                                  |   | 25     | %                                   |   |   | 28 | % |   |   |   |   |
| Large                business and other                customers                                                                                                                                                                                                                                                                                                                                                            |   |                                  |   | 11     | %                                   |   |   | 17 | % |   |   |   |   |

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

|   | (b) | Includes                physical commodity trading activity not subject to mark-to-market                accounting of $5 million in net losses in the second quarter of both                2007                and 2006, and $6 million and $15 million in net losses in the six                months                ended June 30, 2007 and 2006,                respectively. |
|--------|-----|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | (c) | Based                on number of meters.  Estimated market share is based on the                number of customers that have                choice. |
|--------|-----|-----------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

**Competitive      Electric Segment**

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

|                                                               |   | **Three                Months Ended** |   |   | **Six                Months Ended** |   |
|--------------------------------------------------------------------|--------|---------------------------------------|--------|--------|-------------------------------------|--------|
|                                                               |   | **June                  30,**         |   |   | **June                  30,**       |   |
|                                                               |   | **2007**                              |   |   | **2006**                            |   |   | **Change                  %** |   |   | **2007** |   |   | **2006** |   |   | **Change                  %** |   |
|                                                               |   |                                  |   |   |                                |   |   |   |   |   |   |   |   |   |   |   |   |   |
| **Fuel,                purchased power costs and delivery fees**   |   |                                  |   |   |                                |   |   |   |   |   |   |   |   |   |   |   |   |   |
| **($                millions):**                                   |   |                                  |   |   |                                |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                               |   |                                  |   |   |                                |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Nuclear                fuel                                        |   | $                                     | 21     |   |                                | $      | 22 |   |   |   | (4.5 | ) |   | $ | 39 |   |   | $ | 43 |   |   |   | (9.3 | ) |
| Lignite/coal                                                       |   |                                  | 152    |   |                                |   | 113 |   |   |   | 34.5 |   |   |   | 290 |   |   |   | 229 |   |   |   | 26.6 |   |
| Total                baseload                fuel                  |   |                                  | 173    |   |                                |   | 135 |   |   |   | 28.1 |   |   |   | 329 |   |   |   | 272 |   |   |   | 21.0 |   |
| Natural                gas fuel and purchased                power |   |                                  | 435    |   |                                |   | 421 |   |   |   | 3.3 |   |   |   | 818 |   |   |   | 689 |   |   |   | 18.7 |   |
| Other                costs                                         |   |                                  | 72     |   |                                |   | 50 |   |   |   | 44.0 |   |   |   | 146 |   |   |   | 122 |   |   |   | 19.7 |   |
| Fuel                and purchased power                costs       |   |                                  | 680    |   |                                |   | 606 |   |   |   | 12.2 |   |   |   | 1,293 |   |   |   | 1,083 |   |   |   | 19.4 |   |
| Delivery                fees (a)                                   |   |                                  | 291    |   |                                |   | 337 |   |   |   | (13.6 | ) |   |   | 609 |   |   |   | 650 |   |   |   | (6.3 | ) |
| Total                                                              |   | $                                     | 971    |   |                                | $      | 943 |   |   |   | 3.0 |   |   | $ | 1,902 |   |   | $ | 1,733 |   |   |   | 9.8 |   |
|                                                               |   |                                  |   |   |                                |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| **Fuel                and purchased power costs (which excludes**  |   |                                  |   |   |                                |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| **generation                plant operating costs) per MWh:**      |   |                                  |   |   |                                |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Nuclear                fuel                                        |   | $                                     | 4.64   |   |                                | $      | 4.25 |   |   |   | 9.2 |   |   | $ | 4.55 |   |   | $ | 4.24 |   |   |   | 7.3 |   |
| Lignite/coal                (b)                                    |   | $                                     | 16.14  |   |                                | $      | 12.67 |   |   |   | 27.4 |   |   | $ | 15.62 |   |   | $ | 12.33 |   |   |   | 26.7 |   |
| Natural                gas fuel and purchased                power |   | $                                     | 62.86  |   |                                | $      | 63.40 |   |   |   | (0.9 | ) |   | $ | 61.37 |   |   | $ | 61.76 |   |   |   | (0.6 | ) |
|                                                               |   |                                  |   |   |                                |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| **Delivery                fees per MWh**                           |   | $                                     | 24.90  |   |                                | $      | 24.51 |   |   |   | 1.6 |   |   | $ | 25.94 |   |   | $ | 26.18 |   |   |   | (0.9 | ) |
|                                                               |   |                                  |   |   |                                |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| **Production                and purchased power volumes (GWh):**   |   |                                  |   |   |                                |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                               |   |                                  |   |   |                                |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Nuclear                                                            |   |                                  | 4,492  |   |                                |   | 5,098 |   |   |   | (11.9 | ) |   |   | 8,555 |   |   |   | 10,178 |   |   |   | (15.9 | ) |
| Lignite/coal                                                       |   |                                  | 10,211 |   |                                |   | 10,044 |   |   |   | 1.7 |   |   |   | 20,197 |   |   |   | 20,918 |   |   |   | (3.4 | ) |
| Total                baseload                generation            |   |                                  | 14,703 |   |                                |   | 15,142 |   |   |   | (2.9 | ) |   |   | 28,752 |   |   |   | 31,096 |   |   |   | (7.5 | ) |
| Natural                gas-fueled                generation        |   |                                  | 633    |   |                                |   | 1,350 |   |   |   | (53.1 | ) |   |   | 1,382 |   |   |   | 1,539 |   |   |   | (10.2 | ) |
| Purchased                power                                     |   |                                  | 6,287  |   |                                |   | 5,291 |   |   |   | 18.8 |   |   |   | 11,957 |   |   |   | 9,616 |   |   |   | 24.3 |   |
| Total                energy                supply                  |   |                                  | 21,623 |   |                                |   | 21,783 |   |   |   | (0.7 | ) |   |   | 42,091 |   |   |   | 42,251 |   |   |   | (0.4 | ) |
| Less                line loss and power                imbalances  |   |                                  | 555    |   |                                |   | 566 |   |   |   | (1.9 | ) |   |   | 430 |   |   |   | 814 |   |   |   | (47.2 | ) |
| Net                energy supply                volumes            |   |                                  | 21,068 |   |                                |   | 21,217 |   |   |   | (0.7 | ) |   |   | 41,661 |   |   |   | 41,437 |   |   |   | 0.5 |   |
|                                                               |   |                                  |   |   |                                |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| **Baseload                capacity factors (%):**                  |   |                                  |   |   |                                |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                               |   |                                  |   |   |                                |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Nuclear                                                            |   |                                  | 89.6   | %      |                                |   | 102.0 | % |   |   | (12.2 | ) |   |   | 85.8 | % |   |   | 102.3 | % |   |   | (16.1 | ) |
| Lignite/coal                                                       |   |                                  | 85.9   | %      |                                |   | 82.4 | % |   |   | 4.2 |   |   |   | 86.6 | % |   |   | 86.4 | % |   |   | 0.2 |   |
| Total                baseload                                      |   |                                  | 87.0   | %      |                                |   | 88.0 | % |   |   | (1.1 | ) |   |   | 86.3 | % |   |   | 90.9 | % |   |   | (5.1 | ) |

|   | (a) | Includes                delivery fee charges from Oncor Electric Delivery that are eliminated                in                consolidation. |
|--------|-----|-----------------------------------------------------------------------------------------------------------------------------------------------|

|   | (b) | 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. |
|--------|-----|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

**Competitive      Electric Segment**

***Three      Months Ended June 30, 2007 Compared to Three Months Ended June 30,      2006***

|                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |   | **Three                  Months Ended June 30,** |   |   |     |   |
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|--------------------------------------------------|--------|--------|----------|--------|
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |   | **2007**                                         |   |   | **2006** |   |   | **Increase****(Decrease)** |   |
| Retail                electricity                revenues                                                                       |   | $                                                | 1,440  |   |     | $      | 1,836 |   |   | $ | (396 | ) |
| Wholesale                electricity                revenues                                                                    |   |                                             | 535    |   |     |   | 479 |   |   |   | 56 |   |
| Wholesale                balancing                activities                                                                    |   | ─                                          |   |   |     | (32    | ) |   |   | 32 |   |
| Net                losses from risk management                and trading activities                                                                                                                                                                                                                                                                                                                                                                                           |   |                                             | (383   | )      |     |   | (13 | ) |   |   | (370 | ) |
| Other                operating                revenues                                                                          |   |                                             | 74     |   |     |   | 79 |   |   |   | (5 | ) |
| Total                operating                revenues                                                                                         |   | $                                                | 1,666  |   |     | $      | 2,349 |   |   | $ | (683 | ) |

|   | · | Lower                retail volumes contributed $290 million to the revenue                decrease.  Residential and small business volumes in the                historical service territory decreased 26% reflecting cooler, below                normal                weather that drove an 18% decrease in average consumption per customer                and                the effects of a net loss of customers due to competitive                activity. |
|--------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | Lower                average pricing (including customer mix effects) contributed $106                million                to the revenue decrease.  Lower average retail pricing reflected                new competitive product offerings, the effect of a six percent price                discount, effective with meter reads on March 27, 2007, and an additional                four percent price discount, effective with meter reads on June 8,                2007,                to those residential customers in the historical service territory                with                month-to-month service plans and a rate equivalent to the former                price-to-beat rate.  Average prices in the large business market                decreased 2% primarily reflecting a change in customer                mix. |
|--------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | Total                retail electricity customer counts at June 30, 2007 declined 6% from                June                30, 2006.  Total residential and small business customer counts                in the historical service territory declined 9% and in all combined                territories declined 6%. |
|--------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

|   | · | $400                million in unrealized mark-to-market net losses, which includes $386                million in net losses on unsettled positions and $14 million in net                losses                that represent reversals of previously recorded unrealized net gains                on                positions settled in the current                period; |
|--------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | $63                million in unrealized "day one" losses on a related series of commodity                price hedges entered into at below-market                prices; |
|--------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | $3                million in unrealized cash flow hedge ineffectiveness net losses                that                represent reversals of previously recorded unrealized net gains on                positions settled in the current period;                and |
|--------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | $34                million in realized net gains that offset hedged electricity revenues                recognized in the current period. |
|--------|--------|-------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | $33                million in unrealized net gains on economic hedge positions, which                includes $40 million in net gains on unsettled positions and $7 million                in                net losses that represent reversals of previously recorded unrealized                net                gains on positions settled in the current                period; |
|--------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | $30                million "day one" gain on a long-term power purchase agreement;                and |
|--------|--------|-------------------------------------------------------------------------------------------------------|

|   | · | $14                million in other net losses, including unrealized losses on commodity                trading positions. |
|--------|--------|----------------------------------------------------------------------------------------------------------------------------|

----

*Gross      Margin*

|                                                                                                                                                                                                                                                                                                                                                      |   |
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|
|                                                                                                                                                                                                                                                                                                                                                      |   | **Three                  Months Ended June 30,** |   |
|                                                                                                                                                                                                                                                                                                                                                      |   | **2007** |   |   | **%                  of Revenue** |   |   | **2006** |   |   | **%                  of Revenue** |   |
|                                                                                                                                                                                                                                                                                                                                                      |   |   |   |   |   |   |   |   |   |   |   |   |
| Operating                revenues                                                     |   | $ | 1,666 |   |   |   | 100 | % |   | $ | 2,349 |   |   |   | 100 | % |
| Costs                and expenses:                                                                                                                                                                                                                                                                                                                        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Fuel,                purchased power costs and                delivery fees                                                                                                                                                                                                                                                                               |   |   | 971 |   |   |   | 58 |   |   |   | 943 |   |   |   | 40 |   |
| Generation                plant operating                costs                                                 |   |   | 163 |   |   |   | 10 |   |   |   | 152 |   |   |   | 6 |   |
| Depreciation                and                amortization                                                    |   |   | 80 |   |   |   | 5 |   |   |   | 83 |   |   |   | 4 |   |
| Gross                margin                                                           |   | $ | 452 |   |   |   | 27 | % |   | $ | 1,171 |   |   |   | 50 | % |

|   | · | the                effect of results from risk management and trading activities, including                unrealized mark-to-market losses on positions in the long-term hedging                program (12 percentage point margin                decrease); |
|--------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | the                effect of a decrease in residential and small business sales volumes                and                an increase in wholesale sales volumes (six percentage point margin                decrease); |
|--------|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | the                effect of lower average retail electricity pricing (two percentage                point                margin decrease); and |
|--------|--------|-------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | the                effect of lower generation volumes and higher purchased power volumes                (one                percentage point margin decrease). |
|--------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | $6                million in higher generation maintenance costs largely due to the                scheduled outage of one of the nuclear generation                units; |
|--------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | $6                million in higher insurance costs, principally property-related;                and |
|--------|--------|-------------------------------------------------------------------------------------------------------|

|   | · | $5                million in higher property taxes reflecting higher valuations for                2007, |
|--------|--------|----------------------------------------------------------------------------------------------------------|

----

|   | · | $12                million in increased retail marketing                expenses; |
|--------|--------|-----------------------------------------------------------------------------------|

|   | · | $8                million in higher salary and benefit costs primarily driven by an                increase                in staffing in retail operations; |
|--------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | $6                million in higher professional fees primarily for marketing/strategic                projects and retail billing and customer care systems                enhancements; |
|--------|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | $2                million in higher incentive compensation expense;                and |
|--------|--------|----------------------------------------------------------------------------------------|

|   | · | $2                million in increased contributions primarily for the Energy Aid                (low-income customer assistance)                program, |
|--------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------|

----

**Competitive      Electric Segment**

***Six      Months Ended June 30, 2007 Compared to Six Months Ended June 30,      2006***

|                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |   | **Six                  Months Ended June 30,** |   |   |     |   |
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|------------------------------------------------|--------|--------|----------|--------|
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |   | **2007**                                       |   |   | **2006** |   |   | **Increase****(Decrease)** |   |
| Retail                electricity                revenues                                                                       |   | $                                              | 2,904  |   |     | $      | 3,258 |   |   | $ | (354 | ) |
| Wholesale                electricity                revenues                                                                    |   |                                           | 982    |   |     |   | 956 |   |   |   | 26 |   |
| Wholesale                balancing                activities                                                                    |   |                                           | 9      |   |     |   | 26 |   |   |   | (17 | ) |
| Net                losses from risk management                and trading activities                                                                                                                                                                                                                                                                                                                                                                                           |   |                                           | (1,069 | )      |     |   | (57 | ) |   |   | (1,012 | ) |
| Other                operating                revenues                                                                          |   |                                           | 157    |   |     |   | 176 |   |   |   | (19 | ) |
| Total                operating                revenues                                                                                         |   | $                                              | 2,983  |   |     | $      | 4,359 |   |   | $ | (1,376 | ) |

|   | · | Lower                retail volumes contributed $200 million to the revenue                decrease.  Residential and small business volumes in the                historical service territory decreased 12% reflecting the effects                of a net                loss of customers due to competitive activity and lower average                consumption per customer of 4% reflecting the cooler, below normal                weather                in the second quarter of 2007.  Large business market volumes                increased 4% reflecting a change in customer                mix. |
|--------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | Lower                average pricing (including customer mix effects) contributed $154                million                to the revenue decrease.  Lower average retail pricing reflected                new competitive product offerings, the effect of a six percent price                discount, effective with meter reads on March 27, 2007, and an additional                four percent price discount, effective with meter reads on June 8,                2007,                to those residential customers in the historical service territory                with                month-to-month service plans and a rate equivalent to the former                price-to-beat rate.  Average prices in the large business market                decreased 3% primarily reflecting a change in customer                mix. |
|--------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | Total                retail electricity customer counts at June 30, 2007 declined 6% from                June                30, 2006.  Total residential and small business customer counts                in the historical service territory declined 9% and in all combined                territories declined 6%. |
|--------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

|   | · | $1.099                billion in unrealized mark-to-market net losses, which includes $1.130                billion in net losses on unsettled positions and $31 million in net                gains                that represent reversals of previously recorded unrealized net losses                on                positions settled in the current                period; |
|--------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | $96                million in unrealized cash flow hedge ineffectiveness net gains,                which                includes $114 million in net gains on unsettled positions and $18                million                in net losses that represent reversals of previously recorded unrealized                net gains on positions settled in the current                period; |
|--------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | $160                million in unrealized "day one" losses on large positions entered                into at                below-market prices; and |
|--------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | $93                million in realized net gains that offset hedged electricity revenues                recognized in the current period. |
|--------|--------|-------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | $50                million in unrealized net losses on commodity trading positions,                which                includes $22 million in net losses on unsettled positions and $28                million                in net losses that represent reversals of previously recorded unrealized                net gains on positions settled in the current                period; |
|--------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | $30                million "day one" gain on a long-term power purchase agreement;                and |
|--------|--------|-------------------------------------------------------------------------------------------------------|

|   | · | $18                million in other gains, driven by realized net gains on settlement                of                trading positions. |
|--------|--------|-------------------------------------------------------------------------------------------------------------------------------------------|

----

*Gross      Margin*

|                                                                                                                                                                                                                                                                                                                                                      |   |
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|
|                                                                                                                                                                                                                                                                                                                                                      |   | **Six                  Months Ended June 30,** |   |
|                                                                                                                                                                                                                                                                                                                                                      |   | **2007** |   |   | **%                  of Revenue** |   |   | **2006** |   |   | **%                  of Revenue** |   |
|                                                                                                                                                                                                                                                                                                                                                      |   |   |   |   |   |   |   |   |   |   |   |   |
| Operating                revenues                                                     |   | $ | 2,983 |   |   |   | 100 | % |   | $ | 4,359 |   |   |   | 100 | % |
| Costs                and expenses:                                                                                                                                                                                                                                                                                                                        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Fuel,                purchased power costs and                delivery fees                                                                                                                                                                                                                                                                               |   |   | 1,902 |   |   |   | 64 |   |   |   | 1,733 |   |   |   | 40 |   |
| Generation                plant operating                costs                                                 |   |   | 314 |   |   |   | 11 |   |   |   | 306 |   |   |   | 7 |   |
| Depreciation                and                amortization                                                    |   |   | 158 |   |   |   | 5 |   |   |   | 166 |   |   |   | 4 |   |
| Gross                margin                                                           |   | $ | 609 |   |   |   | 20 | % |   | $ | 2,154 |   |   |   | 49 | % |

|   | · | the                effect of results from risk management and trading activities, including                net unrealized mark-to-market losses on positions in the long-term                hedging                program (19 percentage point margin                decrease); |
|--------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | the                effect of a decrease in residential and small business sales volumes                and                an increase in wholesale sales volumes (three percentage point margin                decrease); |
|--------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | the                effect of lower average retail electricity pricing (two percentage                point                margin decrease); |
|--------|--------|---------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | the                effect of lower generation volumes and higher purchased power volumes                (two                percentage point margin decrease);                and |
|--------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | the                effect of higher average fuel costs (one percentage point margin                decrease). |
|--------|--------|---------------------------------------------------------------------------------------------------------------|

----

|   | · | $20                million in costs associated with the generation development program,                principally salaries and consulting                expenses; |
|--------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | $18                million in increased retail marketing                expenses; |
|--------|--------|-----------------------------------------------------------------------------------|

|   | · | $12                million in higher professional fees primarily for retail billing                and                customer care systems enhancements and marketing/strategic                projects; |
|--------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | $10                million in higher salary and benefit costs primarily driven by an                increase                in staffing in retail operations; |
|--------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | $7                million in higher costs due to reallocation of Capgemini outsourcing                fees;                and |
|--------|--------|--------------------------------------------------------------------------------------------------------------------------------|

|   | · | $3                million in increased contributions primarily for the Energy Aid                (low-income customer assistance)                program, |
|--------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | a                $198 million charge related to the write-down of the natural gas-fueled                generation plants to fair value; |
|--------|--------|------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | $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, |
|--------|--------|------------------------------------------------------------------------------------------------------------------|

----

----

**Regulated      Delivery Segment**

***Financial      Results***

|                                                                       |   | **Three                Months Ended** |   |   | **Six                Months Ended** |   |
|----------------------------------------------------------------------------|--------|---------------------------------------|--------|--------|-------------------------------------|--------|
|                                                                       |   | **June                  30,**         |   |   | **June                  30,**       |   |
|                                                                       |   | **2007**                              |   |   | **2006**                            |   |   | **2007** |   |   | **2006** |   |
|                                                                       |   |                                  |   |   |                                |   |   |   |   |   |   |   |
| Operating                revenues                                          |   | $                                     | 589    |   |                                | $      | 604 |   |   | $ | 1,207 |   |   | $ | 1,166 |   |
|                                                                       |   |                                  |   |   |                                |   |   |   |   |   |   |   |   |   |   |   |
| Costs                and expenses:                                         |   |                                  |   |   |                                |   |   |   |   |   |   |   |   |   |   |   |
|                                                                       |   |                                  |   |   |                                |   |   |   |   |   |   |   |   |   |   |   |
| Operating                costs                                             |   |                                  | 207    |   |                                |   | 194 |   |   |   | 402 |   |   |   | 385 |   |
|                                                                       |   |                                  |   |   |                                |   |   |   |   |   |   |   |   |   |   |   |
| Depreciation                and                amortization                |   |                                  | 114    |   |                                |   | 117 |   |   |   | 234 |   |   |   | 231 |   |
|                                                                       |   |                                  |   |   |                                |   |   |   |   |   |   |   |   |   |   |   |
| Selling,                general and                administrative expenses |   |                                  | 51     |   |                                |   | 43 |   |   |   | 93 |   |   |   | 93 |   |
|                                                                       |   |                                  |   |   |                                |   |   |   |   |   |   |   |   |   |   |   |
| Franchise                and revenue-based                taxes            |   |                                  | 60     |   |                                |   | 59 |   |   |   | 121 |   |   |   | 119 |   |
|                                                                       |   |                                  |   |   |                                |   |   |   |   |   |   |   |   |   |   |   |
| Other                income                                                |   |                                  | (1     | )      |                                |   | ― |   |   |   | (3 | ) |   |   | (1 | ) |
|                                                                       |   |                                  |   |   |                                |   |   |   |   |   |   |   |   |   |   |   |
| Other                deductions                                            |   |                                  | 10     |   |                                |   | 1 |   |   |   | 19 |   |   |   | 2 |   |
|                                                                       |   |                                  |   |   |                                |   |   |   |   |   |   |   |   |   |   |   |
| Interest                income                                             |   |                                  | (14    | )      |                                |   | (14 | ) |   |   | (29 | ) |   |   | (29 | ) |
|                                                                       |   |                                  |   |   |                                |   |   |   |   |   |   |   |   |   |   |   |
| Interest                expense and related                charges         |   |                                  | 78     |   |                                |   | 72 |   |   |   | 154 |   |   |   | 140 |   |
|                                                                       |   |                                  |   |   |                                |   |   |   |   |   |   |   |   |   |   |   |
| Total                costs and                expenses                     |   |                                  | 505    |   |                                |   | 472 |   |   |   | 991 |   |   |   | 940 |   |
|                                                                       |   |                                  |   |   |                                |   |   |   |   |   |   |   |   |   |   |   |
| Income                before income taxes                                  |   |                                  | 84     |   |                                |   | 132 |   |   |   | 216 |   |   |   | 226 |   |
|                                                                       |   |                                  |   |   |                                |   |   |   |   |   |   |   |   |   |   |   |
| Income                tax expense                                          |   |                                  | 30     |   |                                |   | 46 |   |   |   | 76 |   |   |   | 75 |   |
|                                                                       |   |                                  |   |   |                                |   |   |   |   |   |   |   |   |   |   |   |
| Net                income                                                  |   | $                                     | 54     |   |                                | $      | 86 |   |   | $ | 140 |   |   | $ | 151 |   |
|                                                                       |   |                                  |   |   |                                |   |   |   |   |   |   |   |   |   |   |   |

----

**Regulated      Delivery Segment**

***Operating      Data***

|                                                                                                      |   | **Three                Months Ended** |   |   | **Six                Months Ended** |   |
|-----------------------------------------------------------------------------------------------------------|--------|---------------------------------------|--------|--------|-------------------------------------|--------|
|                                                                                                      |   | **June                  30,**         |   |   | **June                  30,**       |   |
|                                                                                                      |   | **2007**                              |   |   | **2006**                            |   |   | **Change                  %** |   |   | **2007** |   |   | **2006** |   |   | **Change                  %** |   |
| **Operating                statistics – volumes:**                                                  |   |                                  |   |   |                                |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Electric                energy delivered (GWh)                                                            |   |                                  | 24,972 |   |                                |   | 27,244 |   |   |   | (8.3 | ) |   |   | 49,966 |   |   |   | 50,376 |   |   |   | (0.8 | ) |
|                                                                                                      |   |                                  |   |   |                                |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| **Reliability                statistics (a):**                                                            |   |                                  |   |   |                                |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| System                Average Interruption Duration Index (SAIDI) (nonstorm)                              |   |                                  |   | 77.92  |                                |   |   | 73.54 |   |   |   | 6.0 |   |
| System                Average Interruption Frequency Index (SAIFI) (nonstorm)                             |   |                                  |   | 1.15   |                                |   |   | 1.11 |   |   |   | 3.6 |   |
| Customer                Average Interruption Duration Index (CAIDI) (nonstorm)                            |   |                                  |   | 67.78  |                                |   |   | 66.11 |   |   |   | 2.5 |   |
|                                                                                                      |   |                                  |   |   |                                |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| **Electricity                points of delivery (end of period and in                thousands):**        |   |                                  |   |   |                                |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Electricity                distribution points of delivery (based on number of meters)                (b) |   |                                  |   | 3,077  |                                |   |   | 3,038 |   |   |   | 1.3 |   |
|                                                                                                      |   |                                  |   |   |                                |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| **Operating                revenues:**                                                                    |   |                                  |   |   |                                |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Electricity                distribution revenues (c):                                                     |   |                                  |   |   |                                |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Affiliated                (Texas Competitive                Holdings)                                     |   | $                                     | 230    |   |                                | $      | 283 |   |   |   | (18.7 | ) |   | $ | 494 |   |   | $ | 550 |   |   |   | (10.2 | ) |
| Nonaffiliated                                                                                             |   |                                  | 278    |   |                                |   | 254 |   |   |   | 9.4 |   |   |   | 558 |   |   |   | 485 |   |   |   | 15.1 |   |
| Total                distribution                revenues                                                 |   |                                  | 508    |   |                                |   | 537 |   |   |   | (5.4 | ) |   |   | 1,052 |   |   |   | 1,035 |   |   |   | 1.6 |   |
| Third-party                transmission revenues                                                          |   |                                  | 65     |   |                                |   | 59 |   |   |   | 10.2 |   |   |   | 126 |   |   |   | 116 |   |   |   | 8.6 |   |
| Other                miscellaneous revenues                                                               |   |                                  | 16     |   |                                |   | 8 |   |   |   | 100.0 |   |   |   | 29 |   |   |   | 15 |   |   |   | 93.3 |   |
| Total                operating revenues                                                                   |   | $                                     | 589    |   |                                | $      | 604 |   |   |   | (2.5 | ) |   | $ | 1,207 |   |   | $ | 1,166 |   |   |   | 3.5 |   |

**__________________________**

|   | (a) | SAIDI                is the average number of electric service interruption minutes per                consumer in a year.  SAIFI is the average number of electric                service interruptions per consumer in a year.  CAIDI is the                average duration in minutes per electric service interruption in                a                year.  The statistics presented are based on the preceding                twelve months’ data.                                             |
|--------|-----|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   | (b) | Includes                lighting sites, primarily guard lights, for which TXU Energy Retail                is the                REP but are not included in TXU Energy Retail’s customer                count.  Such sites totaled 79,856 and 84,362 at June 30, 2007                and 2006, respectively.                                                                                                                                                                                                                      |
|   | (c) | Includes                transition charge revenue associated with the issuance of securitization                bonds totaling $33 million and $37 million for the three months ended                June                30, 2007 and 2006, respectively, and $70 million and $73 million                for the                six months ended June 30, 2007 and 2006, respectively.  Also                includes disconnect/reconnect fees and other discretionary revenues                for                services requested by REPs. |

----

**Regulated      Delivery Segment**

***Three      Months Ended June 30, 2007 Compared to Three Months Ended June 30,      2006***

|   | · | an                estimated $33 million in lower revenues due to decreased delivered                volumes                primarily reflecting the effects of cooler, below normal weather;                and |
|--------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | $4                million in lower charges to REPs related to securitization bonds                (offset by lower amortization of the related regulatory                asset), |
|--------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | $7                million for installation services related to equipment to support                the                broadband-over-powerlines                initiative; |
|--------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | $6                million in higher transmission revenues primarily due to rate increases                approved in 2006 and 2007 to recover ongoing investment in the                transmission system; |
|--------|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | $4                million from increased distribution tariffs to recover higher transmission                costs; and |
|--------|--------|------------------------------------------------------------------------------------------------------------------------|

|   | · | $3                million due to increased growth in points of                delivery. |
|--------|--------|-----------------------------------------------------------------------------------------|

*Gross      Margin*

|                                                                                                                                                                                                                                                                                                                                                                                                                                                |   |
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|
|                                                                                                                                                                                                                                                                                                                                                                                                                                                |   | **Three                Months Ended** |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                |   | **June                  30,** |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                |   | **2007** |   |   | **%                  of Revenue** |   |   | **2006** |   |   | **%                  of Revenue** |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                |   |   |   |   |   |   |   |   |   |   |   |   |
| Operating                revenues                                                                    |   | $ | 589 |   |   |   | 100 | % |   | $ | 604 |   |   |   | 100 | % |
| Costs                and expenses:                                                                                                                                                                                                                                                                                                                                                                                                                  |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Operating                costs                                                                                                |   |   | 207 |   |   |   | 35 |   |   |   | 194 |   |   |   | 32 |   |
| Depreciation                and                amortization                                                                   |   |   | 114 |   |   |   | 19 |   |   |   | 116 |   |   |   | 19 |   |
| Gross                margin                                                                          |   | $ | 268 |   |   |   | 46 | % |   | $ | 294 |   |   |   | 49 | % |

----

----

**Regulated      Delivery Segment**

***Six      Months Ended June 30, 2007 Compared to Six Months Ended June 30,      2006***

|   | · | $13                million for installation services related to equipment to support                the                broadband-over-powerlines                initiative; |
|--------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | $10                million from increased distribution tariffs to recover higher transmission                costs; |
|--------|--------|---------------------------------------------------------------------------------------------------------------------|

|   | · | $9                million in higher transmission revenues primarily due to rate increases                approved in 2006 and 2007 to recover ongoing investment in the                transmission system; and |
|--------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | $8                million due to growth in points of                delivery, |
|--------|--------|-------------------------------------------------------------------------------|

|   | · | $3                million in lower charges to REPs related to securitization bonds                (offset by lower amortization of the related regulatory                asset). |
|--------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

*Gross      Margin*

|                                                                                                                                                                                                                                                                                                                                                                                                                                                |   |
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|
|                                                                                                                                                                                                                                                                                                                                                                                                                                                |   | **Six                Months Ended** |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                |   | **June                  30,** |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                |   | **2007** |   |   | **%                  of Revenue** |   |   | **2006** |   |   | **%                  of Revenue** |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                |   |   |   |   |   |   |   |   |   |   |   |   |
| Operating                revenues                                                                    |   | $ | 1,207 |   |   |   | 100 | % |   | $ | 1,166 |   |   |   | 100 | % |
| Costs                and expenses:                                                                                                                                                                                                                                                                                                                                                                                                                  |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Operating                costs                                                                                                |   |   | 402 |   |   |   | 33 |   |   |   | 385 |   |   |   | 33 |   |
| Depreciation                and                amortization                                                                   |   |   | 233 |   |   |   | 20 |   |   |   | 230 |   |   |   | 20 |   |
| Gross                margin                                                                          |   | $ | 572 |   |   |   | 47 | % |   | $ | 551 |   |   |   | 47 | % |

----

**COMPREHENSIVE      INCOME – Continuing Operations**

|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |   | **Three                  Months Ended** |   |   | **Six                  Months Ended** |   |
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|-----------------------------------------|--------|--------|---------------------------------------|--------|
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |   | **June                    30,**         |   |   | **June                    30,**       |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |   | **2007**                                |   |   | **2006**                              |   |   | **2007** |   |   | **2006** |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |   |                                    |   |   |                                  |   |   |   |   |   |   |   |
| Net                  increase (decrease) in fair value of cash flow hedges (allcommodity-related)                  held at end                  of                  period                                                                        |   | $                                       | 35     |   |                                  | $      | (83 | ) |   | $ | (281 | ) |   | $ | 30 |   |
| Derivative                  value net losses (gains) reported in net income that relate to                  hedged                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |   |                                    |   |   |                                  |   |   |   |   |   |   |   |   |   |   |   |
| transactions                  recognized in the                  period:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |   |                                    |   |   |                                  |   |   |   |   |   |   |   |   |   |   |   |
| Commodities                                                                                                                                                                                                                                                      |   |                                    | (19    | )      |                                  |   | 10 |   |   |   | (95 | ) |   |   | 7 |   |
| Financing–interest                  rate                  swaps                  (a)                                                                                                                                                                       |   |                                    | 2      |   |                                  |   | 2 |   |   |   | 4 |   |   |   | 4 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |   |                                    | (17    | )      |                                  |   | 12 |   |   |   | (91 | ) |   |   | 11 |   |
| Total                  income (loss) effect of cash flow hedges reported in other                  comprehensive                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |   |                                    |   |   |                                  |   |   |   |   |   |   |   |   |   |   |   |
| income                  from continuing                  operations                                                                                                                                                                               |   | $                                       | 18     |   |                                  | $      | (71 | ) |   | $ | (372 | ) |   | $ | 41 |   |

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

----

**FINANCIAL      CONDITION**

***LIQUIDITY      AND CAPITAL RESOURCES***

***Cash      Flows —***

|   | · | lower                operating earnings after taking into account noncash items such as                deferred federal income taxes, unrealized mark-to-market valuations                and                charges related to suspended development of generation                facilities; |
|--------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | an                unfavorable change of $959 million in net margin deposits due to                the                effect of higher forward natural gas prices on hedge                positions; |
|--------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | an                unfavorable change in working capital (accounts receivable, accounts                payable and inventories) balances of $252 million primarily due to                the                effects of lower natural gas prices, as cash flows in 2006 included                the                collection of higher wholesale natural gas and electricity receivables                that resulted from higher prices in late 2005;                and |
|--------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | a                $102 million premium paid in 2007 related to a structured natural                gas-related option transaction entered into as part of the long-term                hedging program. |
|--------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |   | **Six                  Months Ended June 30,** |   |
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|------------------------------------------------|--------|
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |   | **2007**                                       |   |   | **2006** |   |
| Net                issuances, repayments and                repurchases of borrowings                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |   | $                                              | 2,433  |   |   | $ | 263 |   |
| Net                issuances and repurchases                of common                stock                                                                                                                        |   |                                           | (9     | ) |   |   | (629 | ) |
| Common                stock dividends                paid                                                                                                                                                         |   |                                           | (397   | ) |   |   | (384 | ) |
| Settlements                of minimum                withholding tax liabilities under stock-basedincentive                compensation                plans                                                                     |   |                                           | (93    | ) |   |   | (56 | ) |
| Total                                                                                                                                                                                                                                                |   | $                                              | 1,934  |   |   | $ | (806 | ) |

|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |   | **Six                  Months Ended June 30,** |    |
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|------------------------------------------------|---------|
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |   | **2007**                                       |    |   | **2006** |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |   |                                           |    |   |   |   |
| Capital                expenditures, including                nuclear                fuel                                                                        |   | $                                              | (1,641  | ) |   | $ | (855 | ) |
| Reduction                of restricted cash                related to the redemption of pollutioncontrol                revenue                bonds                                                                                                                                                                                                                                                                                                                                                                                |   |                                           | 143     |   |   |   | ― |   |
| Purchase                of lease                trust                                                                                                            |   |                                           | ― |   |   |   | (69 | ) |
| Proceeds                from pollution control                revenue bonds deposited with trustee                                                                                                                                                                                                                                                                                                                                                                                                                                  |   |                                           | ― |   |   |   | (99 | ) |
| Net                investments in nuclear                decommissioning trust fund securities                                                                                                                                                                                                                                                                                                                                                                                                                                      |   |                                           | (7      | ) |   |   | (7 | ) |
| Investment                in unconsolidated                affiliate                                                                                             |   |                                           | ― |   |   |   | (15 | ) |
| Costs                to remove retired                property                                                                                                   |   |                                           | (16     | ) |   |   | (22 | ) |
| Other                                                                                                                                                            |   |                                           | 15      |   |   |   | 5 |   |
| Total                                                                                                                                                                                               |   | $                                              | (1,506  | ) |   | $ | (1,062 | ) |

----

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

|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |   | **Issuances** |    |   | **Repayments                  and Repurchases** |   |
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|---------------|---------|--------|------------------------------------------------------|--------|
| TXU                Corp.:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |   |          |    |   |                                                 |   |
| Other                long-term                debt                                                                                                   |   | $             | ― |   |                                                 | $      | (6 | ) |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |   |          |    |   |                                                 |   |   |   |
| Texas                Competitive Holdings:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |   |          |    |   |                                                 |   |   |   |
| Floating                rate senior                notes                                                                                             |   |          | 1,000   |   |                                                 |   | ― |   |
| Pollution                control revenue                bonds                                                                                        |   |          | ― |   |                                                 |   | (143 | ) |
| Other                long-term                debt                                                                                                   |   |          | ― |   |                                                 |   | (6 | ) |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |   |          |    |   |                                                 |   |   |   |
| Oncor                Electric Delivery:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |   |          |    |   |                                                 |   |   |   |
| Floating                rate senior                notes                                                                                             |   |          | 800     |   |                                                 |   | ― |   |
| Transition                bonds                                                                                                                      |   |          | ― |   |                                                 |   | (48 | ) |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |   |          |    |   |                                                 |   |   |   |
| US                Holdings                                                                                                       |   |          | ― |   |                                                 |   | (8 | ) |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |   |          |    |   |                                                 |   |   |   |
| Total                                                                                                                                                |   | $             | 1,800   |   |                                                 | $      | (211 | ) |

***Credit      Facilities/Commercial Paper***
*—*

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

----

***Pension      Plan Funding***
*—*
*** ***

***Income      Tax Payments***
*—*
*** ***

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

***Sales      of Accounts Receivable***

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

|   | · | $459                million in cash has been posted with counterparties for exchange                cleared                transactions (including initial margin), as compared to $672 million                received as of December 31, 2006; |
|--------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | $102                million in cash has been posted with counterparties for over-the-counter                and other non-exchanged cleared transactions, as compared to $2 million                received as of December 31, 2006;                and |
|--------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | $499                million in letters of credit have been posted with counterparties,                as                compared to $455 million posted as of December 31,                2006. |
|--------|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

----

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

*Financial      Covenants*

*Credit      Ratings*

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

----

*Material      Credit Rating Covenants*

----

*Material      Cross Default Provisions*

** **

***Guarantees***
* *
***—***
** **

----

**OFF      BALANCE SHEET ARRANGEMENTS**

*.*

**COMMITMENTS      AND CONTINGENCIES**

**CHANGES      IN ACCOUNTING STANDARDS**

----

**REGULATION      AND RATES**

***Regulatory      Investigations***

***2007      Texas Legislative Session***

***Report      Filed with the Commission Regarding Proposed Merger***

----

***Commission      Request for Oncor Electric Delivery Rate Filing***

***Transmission      Rates***

*** ***

----

***Competitive      Renewable Energy Zones***

***Summary***

----

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

***RISK      OVERSIGHT***

***COMMODITY      PRICE RISK***

----

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

***VaR      Methodology***

***Trading      VaR***

|                                                                                                                                                                                                                                                                                                                                                                                                   |   | **Six                Months Ended** |   |   | **Year                Ended**          |   |
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|-------------------------------------|--------|--------|----------------------------------------|--------|
|                                                                                                                                                                                                                                                                                                                                                                                                   |   | **June                  30, 2007**  |   |   | **December                  31, 2006** |   |
| Month-end                average Trading                VaR:                                                        |   | $                                   | 9      |   |                                   | $      | 12 |   |
| Month-end                high Trading                VaR:                                                           |   | $                                   | 11     |   |                                   | $      | 30 |   |
| Month-end                low Trading                VaR:                                                            |   | $                                   | 6      |   |                                   | $      | 5 |   |

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

|                                                                                                                                                                                                                                                                                                                                                                                               |   | **Six                Months Ended** |   |   | **Year                Ended**          |   |
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|-------------------------------------|--------|--------|----------------------------------------|--------|
|                                                                                                                                                                                                                                                                                                                                                                                               |   | **June                  30, 2007**  |   |   | **December                  31, 2006** |   |
| Month-end                average MtM                VaR:                                                        |   | $                                   | 714    |   |                                   | $      | 149 |   |
| Month-end                high MtM                VaR:                                                           |   | $                                   | 1,013  |   |                                   | $      | 391 |   |
| Month-end                low MtM                VaR:                                                            |   | $                                   | 322    |   |                                   | $      | 5 |   |

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

|                                                                                                                                                                                                                                                                                                                                                                                           |   | **Six                Months Ended** |   |   | **Year                Ended**          |   |
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|-------------------------------------|--------|--------|----------------------------------------|--------|
|                                                                                                                                                                                                                                                                                                                                                                                           |   | **June                  30, 2007**  |   |   | **December                  31, 2006** |   |
| Month-end                average                EaR:                                                        |   | $                                   | 707    |   |                                   | $      | 156 |   |
| Month-end                high                EaR:                                                           |   | $                                   | 991    |   |                                   | $      | 387 |   |
| Month-end                low                EaR:                                                            |   | $                                   | 318    |   |                                   | $      | 21 |   |

----

***CREDIT      RISK***

***Credit      Risk***
** **

***Credit      Exposure***

----

|                                                                                                                                                                                              |   |                                                   |   |   |                                   |   |   |                              |   |   | **Net                  Exposure byMaturity** |   |
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|--------------------------------------------------------|--------|--------|----------------------------------------|--------|--------|-----------------------------------|--------|--------|----------------------------------------------|--------|
|                                                                                                                                                                                              |   | **Exposure                  before Credit Collateral** |   |   | **Credit                  Collateral** |   |   | **Net                  Exposure** |   |   | **2                  years or less**         |   |   | **Between****2-5                  years** |   |   | **Greater                  than 5 years** |   |   | **Total** |   |
|                                                                                                                                                                                              |   |                                                   |   |   |                                   |   |   |                              |   |   |                                         |   |   |   |   |   |   |   |   |   |   |
|                                                                                                                                                                                              |   |                                                   |   |   |                                   |   |   |                              |   |   |                                         |   |   |   |   |   |   |   |   |   |   |
| Investment                grade                            |   | $                                                      | 1,004  |   |                                   | $      | 16     |                              |   | $      | 988                                          |   |   | $ | 596 |   |   | $ | 140 |   |   | $ | 252 |   |   | $ | 988 |   |
| Noninvestment                grade                                                                                                                                                                |   |                                                   | 301    |   |                                   |   | 7      |                              |   |   | 294                                          |   |   |   | 168 |   |   |   | 72 |   |   |   | 54 |   |   |   | 294 |   |
| Totals                                                                              |   | $                                                      | 1,305  |   |                                   | $      | 23     |                              |   | $      | 1,282                                        |   |   | $ | 764 |   |   | $ | 212 |   |   | $ | 306 |   |   | $ | 1,282 |   |
|                                                                                                                                                                                              |   |                                                   |   |   |                                   |   |   |                              |   |   |                                         |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Investment                grade                            |   |                                                   | 77     | %      |                                   |   | 70     | %                                 |   |   | 77                                           | %      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Noninvestment                grade                                                                                                                                                                |   |                                                   | 23     | %      |                                   |   | 30     | %                                 |   |   | 23                                           | %      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |

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**FORWARD-LOOKING      STATEMENTS**

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

|   | · | TXU                Corp.’s ability to attract and retain profitable                customers; |
|--------|--------|-----------------------------------------------------------------------------------------------------|

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

|   | · | with                respect to TXU Corp.’s lignite/coal generation development program, more                specifically, TXU Corp.’s ability to fund such investments, delays in the                approval of, or failure to obtain, air and other environmental permits                for                the program and the ability to satisfactorily resolve issues relating                to                any appeal to the final judgement issued with respect to the Sandow                consent decree, changes in competitive market rules, changes in                environmental laws or regulations, changes in electric generation                and                emissions control technologies, changes in projected demand for                electricity, the ability of TXU Corp. and its contractors to attract                and                retain, at projected rates, skilled labor for constructing the new                generating units, changes in wholesale electricity prices or energy                commodity prices, transmission capacity and constraints, supplier                performance risk, changes in the cost and availability of materials                necessary for the construction program and the ability of TXU Corp.                to                manage the significant construction program to a timely conclusion                with                limited cost overruns; and |
|--------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | with                respect to the Proposed Merger: the occurrence of any event, change                or                other circumstances, including the enactment of any new applicable                legislation, that could give rise to the termination of the Merger                Agreement or the Proposed Merger; the outcome of any legal proceedings                that may be instituted against TXU Corp. and others related to the                Merger                Agreement; failure to obtain shareholder approval or any other failure                to                satisfy other conditions required to complete the Proposed Merger,                including required regulatory approvals; risks that the proposed                transaction disrupts current plans and operations and the potential                difficulties in employee retention as a result of the Proposed Merger;                the                amount of the costs, fees, expenses and charges related to the Proposed                Merger and the execution of certain financings that will be obtained                to                consummate the Proposed Merger; and the impact of the substantial                indebtedness incurred to finance the consummation of the Proposed                Merger. |
|--------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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**Item      4.  CONTROLS AND PROCEDURES.**

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**PART      II.  OTHER INFORMATION**

**Item      1.  LEGAL PROCEEDINGS.**

**Item      1A.  RISK FACTORS.**

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

**The      liquidity needs of TXU Corp. and its subsidiaries could be difficult to satisfy      under some circumstances, particularly during times of uncertainty in the      financial markets and/or during times when there are significant increases      in      natural gas prices.  The inability to access liquidity, particularly      on favorable terms, could materially adversely affect TXU Corp.’s results of      operations and/or financial condition.**

|   | · | the                announcement of the Proposed                Merger; |
|--------|--------|------------------------------------------------------------------------|

|   | · | changes                in financial markets that reduce available credit or the ability                to obtain                or renew liquidity facilities on acceptable                terms; |
|--------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | changes                in interest rates; |
|--------|--------|-------------------------------------------|

|   | · | a                deterioration of TXU Corp.’s credit or the credit of its subsidiaries or a                reduction in TXU Corp.’s credit ratings or the credit ratings of its                subsidiaries; |
|--------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | volatility                in commodity prices that increases margin or credit                requirements; |
|--------|--------|------------------------------------------------------------------------------------------------------------|

|   | · | a                material breakdown in TXU Corp.’s risk management procedures;                and |
|--------|--------|---------------------------------------------------------------------------------------------------------|

|   | · | a                material adverse change in one or more of TXU Corp.’s businesses that                restricts access to liquidity                facilities. |
|--------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

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

**TXU      Corp. cannot guarantee that the Proposed Merger will be consummated. Any failure      to consummate the Proposed Merger could have a material adverse impact on TXU      Corp.’s results of operations, financial condition and stock      price.**

|   | · | management’s                attention from TXU Corp.’s day-to-day business may be                diverted; |
|--------|--------|------------------------------------------------------------------------------------------------------------------------|

|   | · | TXU                Corp. may lose key employees; |
|--------|--------|--------------------------------------------------|

|   | · | TXU                Corp.’s relationships with customers and vendors may be disrupted as a                result of uncertainties with regard to its business and                prospects; |
|--------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | TXU                Corp. may be required to pay significant transaction costs related                to the                Proposed Merger, such as a transaction termination (break-up) fee                of up to                $1.0 billion; and |
|--------|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | the                market price of shares of TXU Corp. common stock may decline to the                extent                that the current market price of those shares reflects a market assumption                that the Proposed Merger will be                completed. |
|--------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

**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, 2007 – April 30, 2007 |   |                                                                  | 152,836 |   |                                              | $      | 63.95  |                                                                                                                                    |   |                                                                                                                                          | 152,836 |   | ─ |
| May                1, 2007 – May 31, 2007     |   | ─                                                               |    |   | ─                                           |   |   | ─                                                                                                                                 |   | ─                                                                                                                                       |
| June                1, 2007 – June 30, 2007   |   | ─                                                               |    |   | ─                                           |   |   | ─                                                                                                                                 |   | ─                                                                                                                                       |
| Total                as of June 30, 2007            |   |                                                                  | 152,836 |   |                                              | $      | 63.95  |                                                                                                                                    |   |                                                                                                                                          | 152,836 |   | 23,296,153 |

|   | (a) | From                July 1, 2007 to July 24, 2007, TXU Corp. purchased an additional                45                thousand shares at an average price of $67.70 per share.  All of                these share purchases were under TXU Corp.’s board of directors’ authority                to repurchase up to 23 million shares of TXU Corp. common stock through                the end of 2007.  At July 24, 2007, the maximum number of shares                that can yet be repurchased under the two Board authorizations is                approximately 23 million shares.  The Merger Agreement prohibits                TXU Corp. from repurchasing shares of its common stock without the                prior                written consent of the Sponsors, and TXU Corp. has no intent to repurchase                a significant number of shares prior to closing of the Proposed                Merger. |
|--------|-----|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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

----

**Item      6.                                                                                                       Exhibits**

|   **Exhibits** | **Previously                Filed With File****Number*** |  **As****Exhibit** |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |
|--------------------------|----------------------------------------------------------|-------------------------|---------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| **(10)**                 | **Material                Contracts.**                   |
| 10.1                     |                                                     |                    | ― | First                Amendment to Lease Agreement, dated as of June 1, 2007, between U.S.                Bank,                N.A. (as successor-in-interest to State Street Bank and Trust Company                of                Connecticut, National Association), as owner trustee of ZSF/Dallas                Tower                Trust, a Delaware grantor trust, as Lessor, and TXU Properties Company,                a                Texas corporation, as Lessee (Energy Plaza Property)                                  |
| 10.2                     |                                                     |                    | ― | Amended                and Restated Engineering, Procurement and Construction Agreement,                dated as                of June 8, 2007, between Oak Grove Management Company LLC, a Delaware                limited liability company and a wholly-owned, direct subsidiary of                Texas                Competitive Holdings Company LLC, and Fluor Enterprises, Inc., a                California corporation (confidential treatment has been requested                for                portions of this exhibit) |

----

|   **Exhibits** | **Previously                Filed With File****Number***                     |  **As****Exhibit** |    |                                                                                                                                                                                                                                                                                                                                                                           |
|--------------------------|------------------------------------------------------------------------------|-------------------------|---------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| **(15)**                 | **Letter                re: Unaudited Interim Financial Information.**       |
| 15                       |                                                                         |                    | ─ | Letter                from independent registered public accounting firm as to unaudited                interim                financial information.                                                                                                                                                                                                                          |
| **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 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 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,                2007.                                                                                                                                                                                                                                                           |

----

**SIGNATURE**

|   |   | **TXU                CORP.**                   |   |
|--------|--------|--------------------------------------------------------------------|--------|
|   | By:    | /s/   Stan                Szlauderbach              |   |
|   | Name:  | Stan                Szlauderbach                                   |   |
|   | Title: | Senior                Vice President and                Controller |   |
|   |   |                                                               |   |

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