Document:

Senior Unsecured Guarantee, dated as of October 10, 2007

 Exhibit 10(aaa) 
 Execution Copy 
 SENIOR UNSECURED GUARANTEE 
 THIS SENIOR UNSECURED GUARANTEE dated as of October 10, 2007, by US Holdings (as identified below), each of the other signatories listed on the
signature pages hereto and each of the other entities that becomes a party hereto pursuant to Section 19 (the “Subsidiary Guarantors” together with US Holdings, the “Guarantors” and individually, a
“Guarantor”), in favor of Morgan Stanley Senior Funding, Inc., as the Administrative Agent for the benefit of the Guaranteed Parties. 
 W I T N E S S E T H: 
 WHEREAS,
reference is made to that certain Senior Unsecured Interim Loan Agreement, dated as of October 10, 2007 (as the same may be amended, restated, supplemented or otherwise modified, refinanced or replaced from time to time, the “Loan
Agreement”) among Energy Future Competitive Holdings Company, a Texas corporation (“US Holdings”), Texas Competitive Electric Holdings Company LLC, a Delaware limited liability company (the “Company”), TCEH
Finance, Inc., a Delaware corporation (“TCEH” together with the Company, the “Borrower”), the lenders or other financial institutions or entities from time to time party thereto (the “Lenders”),
Morgan Stanley Senior Funding, Inc., as Administrative Agent, and the other Agents party thereto, pursuant to which, among other things, the Lenders have severally agreed to make Loans to the Borrower (the “Extensions of Credit”)
upon the terms and subject to the conditions set forth therein; 
 WHEREAS, the Company is a wholly-owned Subsidiary of US Holdings;

 WHEREAS, each Subsidiary Guarantor is a direct or indirect wholly-owned Subsidiary of the Company; 
 WHEREAS, the proceeds of the Extensions of Credit will be used in part to enable the Borrower to make valuable transfers to the Guarantors in connection
with the operation of their respective businesses; 
 WHEREAS, each Guarantor acknowledges that it will derive substantial direct and
indirect benefit from the making of the Extensions of Credit; and 
 WHEREAS, it is a condition precedent to the obligation of the Lenders to
make their respective Extensions of Credit to the Borrower under the Loan Agreement that the Guarantors shall have executed and delivered this Guarantee to the Administrative Agent for the benefit of the Guaranteed Parties; 

 NOW, THEREFORE, in consideration of the premises and to induce the Administrative Agent and the Lenders
to enter into the Loan Agreement and to induce the respective Lenders to make their respective Extensions of Credit to the Borrower under the Loan Agreement, the Guarantors hereby agree with the Administrative Agent, for the benefit of the
Guaranteed Parties, as follows: 
 1. Defined Terms. 
 (a) Unless otherwise defined herein, terms defined in the Loan Agreement and used herein shall have the meanings given to them in the Loan Agreement. 
 (b) The words “hereof”, “herein” and “hereunder” and words of similar import when used in this Guarantee shall refer to
this Guarantee as a whole and not to any particular provision of this Guarantee, and Section references are to Sections of this Guarantee unless otherwise specified. The words “include”, “includes” and “including” shall
be deemed to be followed by the phrase “without limitation”. 
 (c) The meanings given to terms defined herein shall be equally
applicable to both the singular and plural forms of such terms. 
 2. Guarantee. 
 (a) Subject to the provisions of Section 2(b) in the case of the Subsidiary Guarantors, each of the Guarantors hereby, jointly and severally,
unconditionally and irrevocably, guarantees, as primary obligor and not merely as surety, to the Administrative Agent, for the ratable benefit of the Guaranteed Parties, the prompt and complete payment and performance when due (whether at the stated
maturity, by acceleration or otherwise) of the Obligations of anyone other than such Guarantor (including amounts that would become due for operation of the automatic stay under 362(a) of the Bankruptcy Code, 11 U.S.C. § 362(a)). 
 (b) Anything herein or in any other Loan Document to the contrary notwithstanding, the maximum liability of each Subsidiary Guarantor hereunder and under
the other Loan Documents shall in no event exceed the amount that can be guaranteed by such Guarantor under the Bankruptcy Code or any applicable laws relating to fraudulent conveyances, fraudulent transfers or the insolvency of debtors. 

(c) Each Guarantor further agrees to pay any and all expenses (including all reasonable fees and disbursements of counsel) that may be paid or
incurred by the Administrative Agent or any other Guaranteed Party in enforcing, or obtaining advice of counsel in respect of, any rights with respect to, or collecting, any or all of the Obligations and/or enforcing any rights with respect to, or
collecting against, such Guarantor under this Guarantee. 
 (d) Each Guarantor agrees that the Obligations may at any time and from time to
time exceed the amount of the liability of such Guarantor hereunder without impairing this Guarantee or affecting the rights and remedies of the Administrative Agent or any other Guaranteed Party hereunder. 
 (e) No payment or payments made by the Borrower, any of the Guarantors, any other guarantor or any other Person or received or collected by the
Administrative Agent or any other Guaranteed Party from the Borrower, any of the Guarantors, any other guarantor or 

  

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any other Person by virtue of any action or proceeding or any set-off or appropriation or application at any time or from time to time in reduction of or in
payment of the Obligations shall be deemed to modify, reduce, release or otherwise affect the liability of any Guarantor hereunder, which shall, notwithstanding any such payment or payments, other than payments made by such Guarantor in respect of
the Obligations or payments received or collected from such Guarantor in respect of the Obligations, remain liable for the Obligations up to the maximum liability of such Guarantor hereunder until the Obligations under the Loan Documents are paid in
full and the Commitments are terminated. 
 (f) Each Guarantor agrees that whenever, at any time, or from time to time, it shall make any
payment to the Administrative Agent or any other Guaranteed Party on account of its liability hereunder, it will notify the Administrative Agent in writing that such payment is made under this Guarantee for such purpose. 
 3. Right of Contribution. Each Guarantor hereby agrees that to the extent that a Guarantor shall have paid more than its proportionate share of
any payment made hereunder (including by way of set-off rights being exercised against it), such Guarantor shall be entitled to seek and receive contribution from and against any other Guarantor hereunder who has not paid its proportionate share of
such payment. Each Guarantor ‘s right of contribution shall be subject to the terms and conditions of Section 5 hereof. The provisions of this Section 3 shall in no respect limit the obligations and liabilities of any Guarantor to the
Administrative Agent and the other Guaranteed Parties, and each Guarantor shall remain liable to the Administrative Agent and the other Guaranteed Parties up to the maximum liability of such Guarantor hereunder. 
 4. Right of Set-off. In addition to any rights and remedies of the Guaranteed Parties provided by law, each Guarantor hereby irrevocably
authorizes each Guaranteed Party at any time and from time to time following the occurrence and during the continuance of an Event of Default, without notice to such Guarantor or any other Guarantor, any such notice being expressly waived by each
Guarantor, upon any amount becoming due and payable by such Guarantor hereunder (whether at stated maturity, by acceleration or otherwise), to set-off and appropriate and apply against such amount any and all deposits (general or special, time or
demand, provisional or final), in any currency, and any other credits, indebtedness or claims, in any currency, in each case whether direct or indirect, absolute or contingent, matured or unmatured, at any time held or owing by such Guaranteed Party
to or for the credit or the account of such Guarantor. Each Guaranteed Party shall notify such Guarantor promptly of any such set-off and the appropriation and application made by such Guaranteed Party, provided that the failure to give such notice
shall not affect the validity of such set-off and application. 
 5. No Subrogation. Notwithstanding any payment or payments made by
any of the Guarantors hereunder or any set-off or appropriation and application of funds of any of the Guarantors by the Administrative Agent or any other Guaranteed Party, no Guarantor shall be entitled to be subrogated to any of the rights (or if
subrogated by operation of law, such Guarantor hereby waives such rights to the extent permitted by Applicable Law) of the Administrative Agent or any other Guaranteed Party against the Borrower or any Guarantor or other guarantor or any collateral
security or guarantee or right of offset held by the Administrative Agent or any other Guaranteed Party for the payment of any of the Obligations, 

  

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nor shall any Guarantor seek or be entitled to seek any contribution or reimbursement from the Borrower or any Guarantor or other guarantor in respect of
payments made by such Guarantor hereunder, in each case, until all amounts owing to the Administrative Agent and the other Guaranteed Parties on account of the Obligations under the Loan Documents are paid in full and the Commitments are terminated.
If any amount shall be paid to any Guarantor on account of such subrogation rights at any time when all the Obligations shall not have been paid in full, such amount shall be held by such Guarantor in trust for the Administrative Agent and the other
Guaranteed Parties, segregated from other funds of such Guarantor, and shall, forthwith upon receipt by such Guarantor, be turned over to the Administrative Agent in the exact form received by such Guarantor (duly indorsed by such Guarantor to the
Administrative Agent, if required), to be applied against the Obligations, whether due or to become due, in such order as the Administrative Agent may determine. 
 6. Amendments, etc. with Respect to the Obligations; Waiver of Rights. Each Guarantor shall remain obligated hereunder notwithstanding that, without any reservation of rights against any Guarantor and without
notice to or further assent by any Guarantor, (a) any demand for payment of any of the Obligations made by the Administrative Agent or any other Guaranteed Party may be rescinded by such party and any of the Obligations continued, (b) the
Obligations, or the liability of any other party upon or for any part thereof, or any collateral security or guarantee therefor or right of offset with respect thereto, may, from time to time, in whole or in part, be renewed, extended, amended,
modified, accelerated, compromised, waived, surrendered or released by the Administrative Agent or any other Guaranteed Party, (c) the Loan Agreement, the other Loan Documents, and any other documents executed and delivered in connection
therewith may be amended, modified, supplemented or terminated, in whole or in part, as the Administrative Agent (or the Required Lenders, as the case may be) may deem advisable from time to time, and (d) any collateral security, guarantee or
right of offset at any time held by the Administrative Agent or any other Guaranteed Party for the payment of any of the Obligations may be sold, exchanged, waived, surrendered or released. Neither the Administrative Agent nor any other Guaranteed
Party shall have any obligation to protect, secure, perfect or insure any Lien at any time held by it as security for the Obligations or for this Guarantee or any property subject thereto. When making any demand hereunder against any Guarantor, the
Administrative Agent or any other Guaranteed Party may, but shall be under no obligation to, make a similar demand on the Borrower or any Guarantor or any other person, and any failure by the Administrative Agent or any other Guaranteed Party to
make any such demand or to collect any payments from the Borrower or any Guarantor or any other person or any release of the Borrower or any Guarantor or any other person shall not relieve any Guarantor in respect of which a demand or collection is
not made or any Guarantor not so released of its several obligations or liabilities hereunder, and shall not impair or affect the rights and remedies, express or implied, or as a matter of law, of the Administrative Agent or any other Guaranteed
Party against any Guarantor. For the purposes hereof “demand” shall include the commencement and continuance of any legal proceedings. 
 Further, each Guarantor expressly waives each and every right to which it may be entitled by virtue of the suretyship law of the state of Texas, including without limitation, any rights pursuant to Rule 31, Texas Rules of Civil Procedure,
Articles 1986 and 1987, Revised Civil Statutes of Texas and Chapter 34 of the Texas Business and Commerce Code. 
  

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 7. Guarantee Absolute and Unconditional. 
 (a) Each Guarantor waives any and all notice of the creation, contraction, incurrence, renewal, extension, amendment, waiver or accrual of any of the
Obligations, and notice of or proof of reliance by the Administrative Agent or any other Guaranteed Party upon this Guarantee or acceptance of this Guarantee. All Obligations shall conclusively be deemed to have been created, contracted or incurred,
or renewed, extended, amended, waived or accrued, in reliance upon this Guarantee, and all dealings between the Borrower and any of the Guarantors, on the one hand, and the Administrative Agent and the other Guaranteed Parties, on the other hand,
likewise shall be conclusively presumed to have been had or consummated in reliance upon this Guarantee. To the fullest extent permitted by Applicable Law, each Guarantor waives diligence, promptness, presentment, protest and notice of protest,
demand for payment or performance, notice of default or nonpayment, notice of acceptance and any other notice in respect of the Obligations or any part of them, and any defense arising by reason of any disability or other defense of the Borrower or
any of the Guarantors with respect to the Obligations. Each Guarantor understands and agrees that this Guarantee shall be construed as a continuing, absolute and unconditional guarantee of payment without regard to (a) the validity, regularity
or enforceability of the Loan Agreement, any other Loan Document, any of the Obligations or any collateral security therefor or guarantee or right of offset with respect thereto at any time or from time to time held by the Administrative Agent or
any other Guaranteed Party, (b) any defense, set-off or counterclaim (other than a defense of payment or performance) that may at any time be available to or be asserted by the Borrower against the Administrative Agent or any other Guaranteed
Party or (c) any other circumstance whatsoever (with or without notice to or knowledge of the Borrower or such Guarantor) that constitutes, or might be construed to constitute, an equitable or legal discharge of the Borrower for the
Obligations, or of such Guarantor under this Guarantee, in bankruptcy or in any other instance. When pursuing its rights and remedies hereunder against any Guarantor, the Administrative Agent and any other Guaranteed Party may, but shall be under no
obligation to, pursue such rights and remedies as it may have against the Borrower or any other Person or against any collateral security or guarantee for the Obligations or any right of offset with respect thereto, and any failure by the
Administrative Agent or any other Guaranteed Party to pursue such other rights or remedies or to collect any payments from the Borrower or any such other Person or to realize upon any such collateral security or guarantee or to exercise any such
right of offset, or any release of the Borrower or any such other Person or any such collateral security, guarantee or right of offset, shall not relieve such Guarantor of any liability hereunder, and shall not impair or affect the rights and
remedies, whether express, implied or available as a matter of law, of the Administrative Agent and the other Guaranteed Parties against such Guarantor. 
 (b) This Guarantee shall remain in full force and effect and be binding in accordance with and to the extent of its terms upon each Guarantor and the successors and assigns thereof and shall inure to the benefit of
the Administrative Agent and the other Guaranteed Parties and their respective successors, indorsees, transferees and assigns until all Obligations (other than any contingent indemnity obligations not then due) shall have been satisfied by payment
in full and the Commitments thereunder shall be terminated, notwithstanding that from time to time during the term of the Loan Agreement, the Loan Parties may be free from any Obligations. 
  

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 (c) A Guarantor shall automatically be released from its obligations hereunder and the Guarantee of such
Guarantor shall be automatically released under the circumstances described in Section 13.1(d) of the Loan Agreement. 
 8.
Reinstatement. This Guarantee shall continue to be effective, or be reinstated, as the case may be, if at any time payment, or any part thereof, of any of the Obligations is rescinded or must otherwise be restored or returned by the
Administrative Agent or any other Guaranteed Party upon the insolvency, bankruptcy, dissolution, liquidation or reorganization of the Borrower or any Guarantor, or upon or as a result of the appointment of a receiver, intervenor or conservator of,
or trustee or similar officer for, the Borrower or any Guarantor or any substantial part of its property, or otherwise, all as though such payments had not been made. 
 9. Payments. Each Guarantor hereby guarantees that payments hereunder will be paid to the Administrative Agent without set-off or counterclaim in Dollars at the Administrative Agent’s Office. Each
Guarantor agrees that the provisions of Sections 5.4 and 13.20 of the Loan Agreement shall apply to such Guarantor ‘s obligations under this Guarantee. 
 10. Representations and Warranties; Covenants. 
 (a) Each Guarantor hereby represents and warrants
that the representations and warranties set forth in Section 8 of the Loan Agreement as they relate to such Guarantor and in the other Loan Documents to which such Guarantor is a party, each of which is hereby incorporated herein by reference,
are true and correct in all material respects as of the Closing Date (except where such representations and warranties expressly relate to an earlier date, in which case such representations and warranties were true and correct in all material
respects as of such earlier date), and the Administrative Agent and each other Guaranteed Party shall be entitled to rely on each of them as if they were fully set forth herein. 
 (b) Each Guarantor hereby covenants and agrees with the Administrative Agent and each other Guaranteed Party that, from and after the date of this
Guarantee until the Obligations are paid in full and the Commitments are terminated, such Guarantor shall take, or shall refrain from taking, as the case may be, all actions that are necessary to be taken or not taken so that no violation of any
provision, covenant or agreement contained in Section 9 of the Loan Agreement, and no Default or Event of Default, is caused by any act or failure to act of such Guarantor or any of its Subsidiaries. 
 11. Authority of the Administrative Agent. 
 (a) The Administrative Agent enters into this Guarantee in its capacity as agent for the Guaranteed Parties from time to time. The rights and obligations of the Administrative Agent under this Guarantee at any time are the rights and
obligations of the Guaranteed Parties at that time. Each of the Guaranteed Parties has (subject to the terms of the Loan Documents) a several entitlement to each such right, and a several liability in respect of each such obligation, in the
proportions described in the Loan Documents. The rights, remedies and discretions of the Guaranteed Parties, or any of them, under this Guarantee may be exercised by the Administrative Agent. No party to this Guarantee is obliged to inquire whether
an exercise by the Administrative Agent of any such right, remedy or discretion is within the Administrative Agent’s authority as agent for the Guaranteed Parties. 
  

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 (b) Each party to this Guarantee acknowledges and agrees that any changes (in accordance with the
provisions of the Loan Documents) in the identity of the persons from time to time comprising the Guaranteed Parties gives rise to an equivalent change in the Guaranteed Parties, without any further act. Upon such an occurrence, the persons then
comprising the Guaranteed Parties are vested with the rights, remedies and discretions and assume the obligations of the Guaranteed Parties under this Guarantee. Each party to this Guarantee irrevocably authorizes the Administrative Agent to give
effect to the change in Lenders contemplated in this Section 11(b) by countersigning an Assignment and Acceptance. 
 12.
Notices. All notices, requests and demands pursuant hereto shall be made in accordance with Section 13.2 of the Loan Agreement. All communications and notices hereunder to any Guarantor shall be given to it in care of the Borrower at the
Borrower’s address set forth in Section 13.2 of the Loan Agreement. 
 13. Counterparts. This Guarantee may be executed by
one or more of the parties to this Guarantee on any number of separate counterparts (including by facsimile or other electronic transmission), and all of said counterparts taken together shall be deemed to constitute one and the same instrument. A
set of the copies of this Guarantee signed by all the parties shall be lodged with the Administrative Agent and the Borrower. 
 14.
Severability. Any provision of this Guarantee that is prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining
provisions hereof, and any such prohibition or unenforceability in any jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction. The parties hereto shall endeavor in good-faith negotiations to replace the
invalid, illegal or unenforceable provisions with valid provisions the economic effect of which comes as close as possible to that of the invalid, illegal or unenforceable provisions. 
 15. Integration. THIS GUARANTEE TOGETHER WITH THE OTHER LOAN DOCUMENTS REPRESENT THE AGREEMENT OF EACH GUARANTOR AND THE ADMINISTRATIVE AGENT WITH
RESPECT TO THE SUBJECT MATTER HEREOF, AND THERE ARE NO PROMISES, UNDERTAKINGS, REPRESENTATIONS OR WARRANTIES BY THE ADMINISTRATIVE AGENT OR ANY OTHER GUARANTEED PARTY RELATIVE TO THE SUBJECT MATTER HEREOF NOT EXPRESSLY SET FORTH OR REFERRED TO
HEREIN OR IN THE OTHER LOAN DOCUMENTS. 
 16. Amendments in Writing; No Waiver; Cumulative Remedies. 
 (a) None of the terms or provisions of this Guarantee may be waived, amended, supplemented or otherwise modified except by a written instrument executed
by the affected Guarantors and the Administrative Agent in accordance with Section 13.1 of the Loan Agreement. 
  

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 (b) Neither the Administrative Agent nor any other Guaranteed Party shall by any act (except by a written
instrument pursuant to Section 16(a)), delay, indulgence, omission or otherwise be deemed to have waived any right or remedy hereunder or to have acquiesced in any Default or Event of Default or in any breach of any of the terms and conditions
hereof. No failure to exercise, nor any delay in exercising, on the part of the Administrative Agent or any other Guaranteed Party, any right, power or privilege hereunder shall operate as a waiver thereof. No single or partial exercise of any
right, power or privilege hereunder shall preclude any other or further exercise thereof or the exercise of any other right, power or privilege. A waiver by the Administrative Agent or any other Guaranteed Party of any right or remedy hereunder on
any one occasion shall not be construed as a bar to any right or remedy that the Administrative Agent or any Guaranteed Party would otherwise have on any future occasion. 
 (c) The rights, remedies, powers and privileges herein provided are cumulative, may be exercised singly or concurrently and are not exclusive of any other rights or remedies provided by law. 
 17. Section Headings. The Section headings used in this Guarantee are for convenience of reference only and are not to affect the construction
hereof or be taken into consideration in the interpretation hereof. 
 18. Successors and Assigns. This Guarantee shall be binding
upon the successors and assigns of each Guarantor and shall inure to the benefit of the Administrative Agent and the other Guaranteed Parties and their respective successors and assigns except that no Guarantor may assign, transfer or delegate any
of its rights or obligations under this Guarantee without the prior written consent of the Administrative Agent. 
 19. Additional
Guarantors. Each Subsidiary of the Company that is required to become a party to this Guarantee pursuant to Section 9.13 of the Loan Agreement shall become a Guarantor, with the same force and effect as if originally named as a Guarantor
herein, for all purposes of this Guarantee, upon execution and delivery by such Subsidiary of a written supplement substantially in the form of Annex A hereto or in such other form as is reasonably satisfactory to the Administrative Agent. The
execution and delivery of any instrument adding an additional Guarantor as a party to this Guarantee shall not require the consent of any other Guarantor hereunder. The rights and obligations of each Guarantor hereunder shall remain in full force
and effect notwithstanding the addition of any new Guarantor as a party to this Guarantee. 
 20. WAIVER OF JURY TRIAL. EACH
GUARANTOR HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVES TRIAL BY JURY IN ANY LEGAL ACTION OR PROCEEDING RELATING TO THIS GUARANTEE, ANY OTHER LOAN DOCUMENT AND FOR ANY COUNTERCLAIM THEREIN. 
 21. Submission to Jurisdiction; Waivers; Service of Process. Each Guarantor hereby irrevocably and unconditionally: 
 (a) submits for itself and its property in any legal action or proceeding relating to this Guarantee and the other Loan Documents to which it is a party,
or for recognition and enforcement of any judgment in respect thereof, to the non-exclusive general jurisdiction of the courts of the State of New York, the courts of the United States of America for the Southern District of New York and
appellate courts from any thereof; 
  

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 (b) consents that any such action or proceeding may be brought in such courts and waives any objection
that it may now or hereafter have to the venue of any such action or proceeding in any such court or that such action or proceeding was brought in an inconvenient court and agrees not to plead or claim the same; 
 (c) agrees that service of process in any such action or proceeding may be effected by mailing a copy thereof by registered or certified mail (or any
substantially similar form of mail), postage prepaid, to such Guarantor in care of the Borrower at the Borrower’s address set forth in the Loan Agreement, and such Person hereby irrevocably authorizes and directs the Borrower to accept such
service on its behalf; 
 (d) agrees that nothing herein shall affect the right of the Administrative Agent or any other Guaranteed Party to
effect service of process in any other manner permitted by law or shall limit the right of the Administrative Agent or any other Guaranteed Party to sue in any other jurisdiction; 
 (e) waives, to the maximum extent not prohibited by law, any right it may have to claim or recover in any legal action or proceeding referred to in this
Section 21 any special, exemplary, punitive or consequential damages; and 
 (f) agrees that a final judgment in any action or
proceeding shall be conclusive and may be enforced in other jurisdictions by suit on the judgment or in any other manner provided by Applicable Law. 
 22. GOVERNING LAW. THIS GUARANTEE AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES HEREUNDER SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK.

 23. Oncor Separateness. (a) The Administrative Agent, on behalf of itself and the Guaranteed Parties, hereby acknowledges
(i) the legal separateness of the Borrower and the Guarantors from Oncor Holdings and its Subsidiaries, (ii) that the lenders under the Oncor Electric Delivery Facility and the noteholders under the Existing Oncor Notes and under the
transition bonds have likely advanced funds thereunder in reliance upon the separateness of Oncor and its Subsidiaries from the Borrower and the Guarantors, (iii) that Oncor Holdings and its Subsidiaries have assets and liabilities that are
separate from those of the Borrower and its other Subsidiaries, (iv) that the Obligations are obligations and liabilities of the Borrower and the Guarantors only, and are not the obligations or liabilities of Oncor Holdings or any of its
Subsidiaries, (v) that the Guaranteed Parties shall look solely to the Borrower, the Guarantors and their assets, and not to any assets, or to the pledge of any assets, owned by Oncor Holdings or any of its Subsidiaries, for the repayment of
any amounts payable pursuant to the Loan Documents and for satisfaction of any other Obligations, and (vi) that none of Oncor Holdings or its Subsidiaries shall be personally liable to the Guaranteed Parties for any amounts payable, or any
other Obligation, under the Loan Documents. 
  

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 (b) The Administrative Agent, on behalf of itself and the Guaranteed Parties, hereby acknowledges and
agrees that it and the Guaranteed Parties shall not (i) initiate any legal proceeding to procure the appointment of an administrative receiver, or (ii) institute any bankruptcy, reorganization, insolvency, winding up, liquidation, or any
like proceeding under Applicable Law, against Oncor Holdings, Oncor, or any of their Subsidiaries, or against any of Oncor Holdings’, Oncor’s, or any of their Subsidiaries’ assets. The Administrative Agent, on behalf of itself and the
Guaranteed Parties, further acknowledges and agrees that each of Oncor Holdings, Oncor, and their Subsidiaries is a third party beneficiary of the foregoing covenant and shall have the right to specifically enforce such covenant in any proceeding at
law or in equity. 
 [Signature pages follow] 
  

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	ENERGY FUTURE COMPETITIVE
HOLDINGS COMPANY, as Guarantor
	
	/s/ Anthony R. Horton
	Name:	 	Anthony R. Horton
	Title:	 	Authorized Signatory

 [SIGNATURE PAGE TO TCEH SENIOR UNSECURED GUARANTEE] 

 BIG BROWN 3 POWER COMPANY LLC 
 BIG BROWN LIGNITE COMPANY LLC 
 BIG BROWN POWER COMPANY LLC 
 COLLIN POWER COMPANY LLC 
 DECORDOVA POWER COMPANY LLC 
 GENERATION MT COMPANY LLC 
 GENERATION SVC COMPANY 
 LAKE CREEK 3 POWER COMPANY LLC 
 LUMINANT BIG BROWN MINING COMPANY LLC 
 LUMINANT ENERGY COMPANY LLC 
 LUMINANT ENERGY SERVICES COMPANY 
 LUMINANT GENERATION COMPANY LLC 
 LUMINANT HOLDING COMPANY LLC 
 LUMINANT MINERAL DEVELOPMENT COMPANY LLC 
 LUMINANT MINING COMPANY LLC 
 LUMINANT MINING SERVICES COMPANY 
 LUMINANT POWER SERVICES COMPANY 
 LUMINANT RENEWABLES COMPANY LLC 
 MARTIN LAKE 4 POWER COMPANY LLC 
 MONTICELLO 4 POWER COMPANY LLC 
 MORGAN CREEK 7 POWER COMPANY LLC 
 NCA RESOURCES DEVELOPMENT COMPANY LLC 
 OAK GROVE MANAGEMENT COMPANY LLC 
 OAK GROVE MINING COMPANY LLC 
 OAK GROVE POWER COMPANY LLC 
 SANDOW POWER COMPANY LLC 
 TRADINGHOUSE 3 & 4 POWER COMPANY LLC 
 TRADINGHOUSE POWER COMPANY LLC 
 TXU CHILLED WATER SOLUTIONS COMPANY 
 TXU ENERGY RETAIL COMPANY LLC 
 TXU ENERGY RETAIL MANAGEMENT COMPANY LLC 
 TXU ENERGY SOLUTIONS COMPANY LLC 
 TXU ENERGY TRADING (CALIFORNIA) COMPANY 
 TXU ET SERVICES COMPANY 
 TXU RETAIL SERVICES COMPANY 
 TXU SEM COMPANY 
 TXU SESCO COMPANY LLC 
 TXU SESCO ENERGY SERVICES COMPANY 
 VALLEY NG POWER COMPANY LLC 
 VALLEY POWER COMPANY LLC 
 WICHITA/VICTORY AVE., LLC, 
 each, as Guarantor, 
  

			
	
	/s/ Anthony R. Horton
	Name:	 	Anthony R. Horton
	Title:	 	Authorized Signatory

 [SIGNATURE PAGE TO TCEH SENIOR UNSECURED GUARANTEE] 

			
	MORGAN STANLEY SENIOR
FUNDING, INC., as Administrative Agent
	
	/s/ Henry F. D’Alessandro
	Name:	 	Henry F. D’Alessandro
	Title:	 	Vice President

 [SIGNATURE PAGE TO TCEH SENIOR UNSECURED GUARANTEE] 

 ANNEX A TO 
 THE SENIOR UNSECURED GUARANTEE 
 SUPPLEMENT NO. [ ] dated as of
[            ] to the GUARANTEE dated as of October 10, 2007 (the “Supplement”), among each of the Guarantors listed on the signature pages thereto (each such
signatory individually, a “Guarantor “ and, collectively, the “Guarantors”), and Morgan Stanley Senior Funding, Inc., as Administrative Agent for the Lenders from time to time parties to the Loan Agreement referred
to below. 
 A. Reference is made to that certain Senior Unsecured Interim Loan Agreement, dated as of October 10, 2007 (as the same may
be amended, restated, supplemented or otherwise modified, refinanced or replaced from time to time, the “Loan Agreement”), among Energy Future Competitive Holdings Company, a Texas corporation (“US Holdings”), Texas
Competitive Electric Holdings Company LLC, a Delaware limited liability company (the “Company”), TCEH Finance, Inc., a Delaware corporation (“TCEH” together with the Company, the “Borrower”), the
lenders or other financial institutions or entities from time to time parties thereto (the “Lenders”), Morgan Stanley Senior Funding, Inc., as Administrative Agent and the other Agents party thereto. 
 B. Capitalized terms used herein and not otherwise defined herein shall have the meanings assigned to such terms in the Guarantee. 
 C. The Guarantors have entered into the Guarantee in order to induce the Administrative Agent and the Lenders to enter into the Loan Agreement and to
induce the Lenders to make their respective Extensions of Credit to the Borrower under the Loan Agreement. 
 D. Section 9.13 of the
Loan Agreement and Section 19 of the Guarantee provide that additional Subsidiaries may become Guarantors under the Guarantee by execution and delivery of an instrument in the form of this Supplement. Each undersigned Subsidiary (each a
“New Guarantor “) is executing this Supplement in accordance with the requirements of the Loan Agreement to become a Guarantor under the Guarantee in order to induce the Lenders to make additional Extensions of Credit, and as
consideration for Extensions of Credit previously made. 
 Accordingly, the Administrative Agent and each New Guarantor agrees as follows:

 SECTION 1. In accordance with Section 19 of the Guarantee, each New Guarantor by its signature below becomes a Guarantor under the
Guarantee with the same force and effect as if originally named therein as a Guarantor, and each New Guarantor hereby (a) agrees to all the terms and provisions of the Guarantee applicable to it as a Guarantor thereunder and (b) represents
and warrants that the representations and warranties made by it as a Guarantor thereunder are true and correct on and as of the date hereof (except where such representations 

  

 -1- 

 
and warranties expressly relate to an earlier date, in which case such representations and warranties were true and correct in all material respects as of
such earlier date). Each reference to a Guarantor in the Guarantee shall be deemed to include each New Guarantor. The Guarantee is hereby incorporated herein by reference. 
 SECTION 2. Each New Guarantor represents and warrants to the Administrative Agent and the other Guaranteed Parties that this Supplement has been duly
authorized, executed and delivered by it and constitutes its legal, valid and binding obligation, enforceable against it in accordance with its terms, subject to the effects of bankruptcy, insolvency or other similar laws affecting creditors’
rights generally and general principles of equity (whether considered in a proceeding in equity or law). 
 SECTION 3. This Supplement may be
executed by one or more of the parties to this Supplement on any number of separate counterparts (including by facsimile or other electronic transmission), and all of said counterparts taken together shall be deemed to constitute one and the same
instrument. A set of the copies of this Supplement signed by all the parties shall be lodged with the Borrower and the Administrative Agent. This Supplement shall become effective as to each New Guarantor when the Administrative Agent shall have
received counterparts of this Supplement that, when taken together, bear the signatures of such New Guarantor and the Administrative Agent. 
 SECTION 4. Except as expressly supplemented hereby, the Guarantee shall remain in full force and effect. 
 SECTION 5. THIS
SUPPLEMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES HEREUNDER SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK. 
 SECTION 6. Any provision of this Supplement that is prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the
extent of such prohibition or unenforceability without invalidating the remaining provisions hereof and in the Guarantee, and any such prohibition or unenforceability in any jurisdiction shall not invalidate or render unenforceable such provision in
any other jurisdiction. The parties hereto shall endeavor in good-faith negotiations to replace the invalid, illegal or unenforceable provisions with valid provisions the economic effect of which comes as close as possible to that of the invalid,
illegal or unenforceable provisions. 
 SECTION 7. All notices, requests and demands pursuant hereto shall be made in accordance with
Section 13.2 of the Loan Agreement. All communications and notices hereunder to each New Guarantor shall be given to it in care of the Borrower at the Borrower’s address set forth in Section 13.2 of the Loan Agreement. 
  

 -2-Stipulation as approved by the PUC in Docket No. 34077

 Exhibit 10(eee) 
 DOCKET NO. 34077 
  

							
	JOINT REPORT AND APPLICATION	  	§	 	BEFORE THE	 	 
	OF ONCOR ELECTRIC DELIVERY	  	§	 	 	 	 
	COMPANY AND TEXAS ENERGY	  	§	 	PUBLIC UTILITY COMMISSION	 	 
	FUTURE HOLDINGS LIMITED	  	§	 	 	 	 
	PARTNERSHIP PURSUANT TO	  	§	 	OF TEXAS	 	 
	PURA § 14.101	  	§	 	 	 	 

 STIPULATION 
 The following parties have reached a settlement of all issues in this docket concerning the report of the merger of TXU Corp., the parent of Oncor
Electric Delivery Company (“Oncor”), and Texas Energy Future Holdings Limited Partnership (“TEF”) (the “Transaction”): TEF, Oncor, the Staff of the Public Utility Commission of Texas (“Staff”), the Office of
Public Utility Counsel (“OPC”), Texas Industrial Energy Consumers (“TIEC”), the Steering Committee of Cities Served by Oncor Electric Delivery Company (“Cities”), the State of Texas (“State”), the Texas State
Association of Electrical Workers (“IBEW”), Texas Ratepayers’ Organization to Save Energy (“Texas ROSE”) and Texas Legal Services Center (“TLSC”) (hereinafter collectively referred to as “Signatories.”).
The Signatories submit this Stipulation to the Commission as representing a just and reasonable disposition of the issues related to this docket consistent with the public interest. The Signatories request approval of this Stipulation and entry of
findings of fact and conclusions of law consistent with that approval. 
 By this Stipulation, the Signatories resolve all issues between
them related to the Application of TEF and Oncor in Docket No. 34077, and agree as follows: 
 I. 
 TEF and Oncor made the following 22 commitments in their direct and rebuttal testimonies filed in this docket. The Signatories request that the
Commission enter the Proposed Order attached hereto as Exhibit A that reflects these commitments and any modifications to them listed in paragraphs (23) through (53): 
  

	 	(1)	 Name Change Commitment. On or before closing of the Transaction, the name of TXU Electric Delivery Company will be changed to Oncor Electric Delivery
Company. Oncor’s logo will be separate and distinct from the logos of the parent, 

	 	 
TXU Corp.1, the retail electric
provider, which will retain the TXU Energy name (“TXU Energy Retail”), and the power generation company, which we expect to rename with the Luminant Energy brand (“Luminant”). In fact, the name of TXU Electric Delivery Company
was changed to Oncor Electric Delivery Company on April 24, 2007. TXU Corp. commits to maintaining a name and logo for Oncor that is separate and distinct from the names of TXU Corp.’s retail electric provider and wholesale generation
companies. 

  

	 	(2)	Separate Board Commitment. At closing and thereafter, Oncor will have a separate board of directors that will not include any members from the boards of directors of TXU
Energy Retail or Luminant. This commitment is supplemented by paragraphs (32) and (33). 

  

	 	(3)	Separate Headquarters Commitment. Within a reasonable transition period after closing of the Transaction, not to exceed six months, Oncor’s headquarters will be located
in a separate building from the headquarters and operations of TXU Energy Retail and Luminant. 

  

	 	(4)	No Transaction-Related Debt at Oncor Commitment. Oncor will not incur, guaranty, or pledge assets in respect of any incremental new debt related to financing the Transaction
at the closing or thereafter. Oncor’s financial integrity will be protected from the separate operations of TXU Energy Retail and Luminant. This commitment is supplemented by paragraph (28). 

  

	 	(5)	Debt-to-Equity Ratio Commitment. Oncor’s debt will be limited so that its regulatory debt-to-equity ratio is at or below the assumed debt-to-equity ratio established
from time to time by the Commission for ratemaking purposes, which is currently set at 60% debt to 40% equity. For ratemaking purposes, in its scheduled rate cases in 2007 and 2008, Oncor will support a cost of debt that does not exceed Oncor’s
actual cost of debt immediately prior to the announcement of the Transaction. This commitment is supplemented by paragraphs (36), (37), and (38). 

  

	 	(6)	Capital Expenditure Commitment. Following the closing of the Transaction, Oncor will continue to make capital expenditures consistent with the capital expenditures in
Oncor’s business plan. Total capital spending will depend in part on economic and population growth in Texas, as well as permitting and siting outcomes. However, in any event, over the five years following the year in which closing of the
Transaction occurs, Oncor will make capital expenditures in connection with its transmission and distribution business in an aggregate amount of more than $3.0 billion. This commitment has been replaced by the provisions of paragraph (44).

  

	 	(7)	DSM/Energy Efficiency Commitment. Over the five years following the year in which closing occurs, subsidiaries of TXU Corp. will expend an aggregate of at least $200 million
on DSM over the amount included by the Commission in Oncor’s rates. This commitment will approximately double the level of spending on DSM currently 

  

	1	As a result of the closing of the Transaction on October 10, TXU Corp. is now named Energy Future Holdings Corp. (“EFH Corp.”). Any current references to TXU Corp. in
this Stipulation are to EFH Corp. 

  

 2 

	 	 
included in Oncor’s rates. Oncor will not seek to recover in rates any of the $200 million in incremental DSM expenditures. This commitment is
supplemented by paragraphs (41) and (42). 

  

	 	(8)	Service and Safety Commitment. Oncor will support the inclusion of negotiated commitments with appropriate stakeholders regarding reliability, customer service and employee
safety in any final order regarding the Transaction issued pursuant to PURA § 14.101. Those negotiated commitments are reflected in paragraphs (46), (47), and (48). 

  

	 	(9)	Rate Case Commitment. If, for any reason, the Commission has not initiated a general rate proceeding for Oncor or its predecessor prior to July 1, 2008, Oncor will not
later than that date file a general rate case consistent with its currently effective settlement agreement with certain municipalities. 

  

	 	(10)	Continued Ownership Commitment. TEF will hold a majority of its ownership interest in Oncor, in the current regulatory system, for a period of more than five years after the
closing date of the Transaction. 

  

	 	(11)	Holding Company Commitment. A new holding company, Oncor Electric Delivery Holdings, will be formed between TXU Corp. and Oncor. 

  

	 	(12)	Independent Board Commitment. Each of Oncor Electric Delivery Holdings and Oncor will have a board of directors comprised of at least nine persons. A majority of the board
members of each of Oncor Electric Delivery Holdings and Oncor will qualify as “independent” in all material respects in accordance with the rules and regulations of the New York Stock Exchange (“NYSE”) (which are set forth in
Section 303A of the NYSE Listed Company Manual and in Exhibit FMG-2 to the Direct Testimony of Frederick M. Goltz filed in this proceeding), from TXU Corp. and its subsidiaries (including TXU Energy Retail and Luminant), TPG, and KKR.
Consistent with TEF’s commitments, the directors of Oncor and Oncor Electric Delivery Holdings will also not include any members from the boards of directors of TXU Energy Retail or Luminant. This commitment is supplemented by paragraph (32).

  

	 	(13)	Affiliate Asset Transfer Commitment. Neither Oncor Electric Delivery Holdings nor Oncor will transfer any material assets or facilities to any affiliates (other than Oncor
Electric Delivery Holdings, Oncor, and their subsidiaries, which are hereinafter referred to as the “Ring-Fenced Entities”), other than such transfer that is on an arm’s length basis consistent with the Commission’s affiliate
standards applicable to Oncor, regardless of whether such affiliate standards would apply to the particular transaction. 

  

	 	(14)	Arm’s Length Relationship Commitment. Each of the Ring-Fenced Entities will maintain an arm’s length relationship with the TXU Group consistent with the
Commission’s affiliate standards applicable to Oncor. 

  

	 	(15)	 Separate Books and Records Commitment. Each of the Ring-Fenced Entities will 

  

 3 

	 	 
maintain accurate and appropriate detailed books, financial records and accounts, including checking and other bank accounts, and custodial and other
securities safekeeping accounts that are separate and distinct from those of any other entity. 

  

	 	(16)	Oncor Board’s Right to Determine Dividends Commitment. The Oncor Board, comprised of a majority of independent directors, will have the sole right to determine
dividends. This commitment is supplemented by paragraphs (23) and (34). 

  

	 	(17)	Capital Expenditures Within Oncor Service Territory Commitment. The $3 billion minimum commitment for Oncor capital expenditures over the five years following the Transaction
will be spent within the traditional Oncor system, and that amount does not include any transmission projects to be constructed by Oncor as a result of the Commission’s decision in its Docket No. 33672, Commission Staff’s Petition
for Designation of Competitive Renewable Energy Zones. This commitment is modified by paragraphs (44) and (45). 

  

	 	(18)	No Transaction Costs to Oncor Commitment. None of the fees and expenses nor any incremental borrowing costs of TXU Corp. or its subsidiaries related to the Transaction will
be borne by Oncor’s customers. This commitment is supplemented in paragraph (40). 

  

	 	(19)	Exclusion of Goodwill Commitment. The calculations for the debt-to-equity ratio commitment will not include goodwill resulting from the Transaction. This commitment is
supplemented by paragraph (39). 

  

	 	(20)	No Inter-Company Debt Commitment. Oncor will not enter into any inter-company debt transactions with TXU Corp. affiliates following consummation of the Transaction. This
commitment is supplemented by paragraph (26). 

  

	 	(21)	No Shared Credit Facilities Commitment. Oncor will not share any credit facility with any unregulated affiliate. This commitment is supplemented by paragraph (27).

  

	 	(22)	No Recovery of TXU Energy Retail Bad Debt Commitment. So long as TXU Energy Retail is affiliated with Oncor, Oncor will not seek to recover from its customers any costs
incurred as a result of a bankruptcy of TXU Energy Retail. This commitment is supplemented by paragraph (30). 

 In addition to
the commitments made in testimony, the Signatories hereby stipulate and agree as follows and request the Commission to find and enter an order that reflects the following: 
  

	 	(23)	The Oncor LLC agreement shall, and TEF and Oncor will support a Commission finding to, limit the payment of dividends by Oncor through December 31, 2012, to an amount not to
exceed Oncor’s net income (determined in accordance with GAAP) for the period beginning on the date following the closing of the Transaction and ending on December 31, 2012. 

  

 4 

	 	(24)	Oncor will implement a one-time $35 million write-off in 2007 or 2008, at its discretion either prior to or after the closing of the Transaction, to its storm reserve and a one-time
write-off in 2007 or 2008, at its discretion either prior to or after the closing of the Transaction, to the 2002 restructuring expenses held as regulatory assets ($20,927,391.50). These write-off amounts will not be included as a cost item in the
2008 rate case or any other Commission proceeding. Parties reserve the right to challenge claimed expenses included in storm reserve and regulatory assets accounts. These write-offs shall not be included in the calculation of net income for dividend
payment purposes, as described in paragraph (23). 

  

	 	(25)	Oncor will file quarterly earnings monitoring reports with the Commission, including information on dividends paid, for a period of five years beginning in January 2008.

  

	 	(26)	Oncor will not lend money to or borrow money from TXU Corp. or TXU Corp. affiliates. This provision supplements the commitment reflected in paragraph (20). 

 

	 	(27)	Oncor will not share credit facilities with TXU Corp. or TXU Corp. affiliates. This provision supplements the commitment reflected in paragraph (21). 

  

	 	(28)	Oncor’s assets shall not be pledged for any entity other than Oncor. This provision supplements the commitment reflected in paragraph (4). 

  

	 	(29)	Oncor, TXU Corp., and TXU Corp. affiliates will provide advance notice of their corporate separateness to lenders on all new debt and will use commercially reasonable efforts to
seek an acknowledgment representation of that separateness and non-petition covenants in all new debt instruments, including the debt instruments used in connection with financing the Transaction. This commitment will terminate at such time that
Oncor ceases to be affiliated with TXU Corp. 

  

	 	(30)	Oncor will not seek recovery in rates of any expenses related to a bankruptcy or default of TXU Corp. or TXU Corp. affiliates, including bad debt expense, or expenses associated
with the expiration or cancellation of tax and interest reimbursement agreements presently in effect. This provision supplements the commitment reflected in paragraph (22). 

  

	 	 (31)
	 During any period that any two of the Standard & Poor’s, Moody’s, or Fitch rating agencies rate Oncor
as an entity at below investment grade,2 TEF will cause TXU Energy Retail within 15 days to post a letter of credit in favor
of Oncor in the amount of $170 million to secure TXU Energy Retail’s payment obligations to Oncor. The parties agree that TXU Energy Retail may withdraw the letter of credit at such time as two of the three ratings agencies rate Oncor as
investment grade or at such time as TXU Energy Retail and Oncor cease to be affiliated with one another. The cost of any letter of credit required under this provision will not be reflected in Oncor’s rates. 

  

	 2
	 Ratings are below investment grade if they fall below the following ratings: Fitch’s BBB- rating, Standard and
Poor’s BBB- rating, or Moody’s Baa3 rating. 

  

 5 

	 	(32)	For an individual to qualify as an independent director of Oncor, such individual must be independent of each of Oncor, TEF, TXU Corp. and TXU Corp. affiliates, KKR, TPG, Goldman
Sachs, Lehman Brothers, Morgan Stanley, Citigroup, J.P. Morgan, and CSFB in accordance with the applicable criteria set forth in the NYSE Manual for independent directors of NYSE listed companies. This provision supplements the commitment reflected
in paragraph (12). After such time as any of Lehman Brothers, Morgan Stanley, Citigroup, J.P. Morgan, or CSFB has sold all of the debt it underwrote to finance the Transaction, then any such entity that has sold all of the debt it underwrote to
finance the Transaction shall be deemed removed from the list of entities from which an individual must be independent in order to qualify as an independent director of Oncor in this paragraph (32). 

  

	 	(33)	The currently contemplated sale of a minority interest in Oncor, to the extent that such sale occurs, will be made to a party that is not otherwise affiliated with, and is
independent from, TXU Corp., KKR, TPG, and Goldman Sachs. Oncor may dividend the net proceeds from the sales of minority interests in Oncor to its member without regard to the provisions of paragraph (23). 

  

	 	(34)	Oncor’s Board cannot be overruled by the Board of TXU Corp. or any of its subsidiaries on dividend policy, debt issuance, capital expenditures, management and service fees, and
appointment or removal of Board members, provided that such actions may also require the additional approval of Oncor Electric Delivery Holdings’ Board. This provision supplements the commitment reflected in paragraph (16).

  

	 	(35)	 Within 45 days after the Commission dismisses P.U.C. Docket No. 34040, Oncor will provide a one-time credit of $72 million to REPs to be paid or directly
credited to its retail customers. The one-time credit shall be allocated and refunded as reflected on Exhibit B to this Stipulation. Oncor will notify all Retail Electric Providers (REPs) in its service area that the credit will be available only to
those REPs that within 15 days of receiving the notice agree in writing to: (1) pay or otherwise directly credit the one-time credit in full to retail customers by customer class within 35 days of receipt of the credit from Oncor, and
(2) file a report with the Commission within 60 days of receipt of the credit from Oncor listing the amounts the REP credited to customers by customer class. To the extent that certain REPs do not participate in the rate credit, Oncor will
reallocate in the same proportions the remaining portion of the $72 million rate credit to the REPs participating in the rate credit so that the full $72 million rate credit is received by participating REPs and paid or directly credited to retail
customers. Credit amounts that are unclaimed by non-industrial customers after the initial REP allocation and reallocation, such as credits related to retail customers who cannot be readily located, will be directed to that REP’s bill payment
assistance programs and accounted for in the report required to be filed by the REP with the Commission. This $72 million one-time credit to retail customers shall count as a reduction to net income in the calculation of net income for dividend
payment purposes described in paragraph (23). TEF will ensure that TXU Energy Retail passes the entire rate credit that it receives directly through to its retail customers. The parties agree that the one-time rate credit will not be recovered by
Oncor in any future proceedings, and further agree that they will not argue that the rate credit is any 

  

 6 

	 	 
precedent or support for a rate reduction in the 2008 rate case or any future rate proceeding. The Signatories will request the Commission to dismiss P.U.C.
Docket No. 34040, Commission Staff’s Petition for Review of the Rates of TXU Electric Delivery Company, and Oncor will agree to file a system-wide rate case no later than July 1, 2008 based on a test-year ended
December 31, 2007. 

  

	 	(36)	Oncor’s debt will be limited so that its debt-to-equity ratio is at or below the assumed debt-to-equity ratio established from time to time by the Commission for ratemaking
purposes, which is currently set at 60% debt to 40% equity. The Commission has authority to determine what types of debt and equity are included in a utility’s debt-to-equity ratio. The purposes to be conducted or promoted by Oncor are those of
an electric transmission and distribution company, including owning and operating equipment or facilities to transmit and distribute electricity, and to engage in any other activities related or incidental thereto or in anticipation thereof. Oncor
will agree to cap its cost of debt for the 2008 rate case at pre-Transaction levels. In addition, Oncor will agree that its cost of debt in future rate proceedings initiated prior to December 31, 2012 will be based on the then-current cost of
debt for electric utilities which have the same investment grade ratings, as established by the Standard & Poor’s, Moody’s and Fitch rating agencies, at the time of such proceedings as Oncor’s ratings as of October 1,
2007. This provision supplements the commitment reflected in paragraph (5). 

  

	 	(37)	If, at any time from the date of closing of the Transaction through December 31, 2012, Oncor’s entity rating is not maintained as investment grade by Standard &
Poor’s, Moody’s, or Fitch credit rating agencies, Oncor will not use its below investment grade ratings to justify an argument in favor of a higher regulatory ROE. This provision supplements the commitment reflected in paragraph (5).

  

	 	(38)	TEF and Oncor will not include goodwill from the acquisition in the calculation of the Debt-to-Equity Ratio commitment to justify increased debt at Oncor. Write-downs or write-offs
of goodwill will not be included in the calculation of net income for dividend payment purposes. This provision supplements the commitment reflected in paragraph (5). 

  

	 	(39)	Oncor will not seek to recover Transaction goodwill or any expense associated with the impairment of goodwill in its rates. This provision supplements the commitment reflected in
paragraph (19). 

  

	 	(40)	Oncor will not seek to include costs related to the Transaction in its rates. This provision supplements the commitment reflected in paragraph (18). 

  

	 	(41)	Oncor will not seek recovery in rates of any portion of the $200 million TEF DSM/Energy Efficiency commitment. This provision supplements the commitment reflected in paragraph (7).

  

	 	(42)	TEF will spend $100 million of the additional $200 million DSM/Energy Efficiency commitment reflected in paragraph (7) at Oncor. 

  

 7 

	 	(a)	From January 1, 2008 through December 31, 2012, Oncor shall spend $100 million of DSM/Energy Efficiency commitment as follows: 

  

	 	i.	Oncor shall spend $16 million for low income customer programs which will be conducted in a manner consistent with P.U.C. energy efficiency rules. To do so, Oncor will negotiate and
execute a contract with the Texas Association of Community Action Agencies (TACAA) to administer $3.2 million annually (for calendar years 2008 through 2012) for weatherization assistance services through local contracts with governmental and
nonprofit agencies that will augment resources from the federal weatherization assistance program. Oncor will use its best efforts to have this agreement in place within 30 days of the final Order in Docket No. 34077. The contract with TACAA
must contain reporting provisions to ensure that the funds are spent efficiently on effective weatherization programs, and provisions that ensure that TACAA makes reasonable progress toward spending the total $16 million over five years. TACAA must
also agree that these additional weatherization funds will be spread equitably across the entire Oncor service area, including through community action agencies that are not members of TACAA. For this $16 million for low income customer programs,
Oncor shall provide the Commission accurate annual reporting of revenues spent, the reduction in demand, and energy savings by customer class. 

  

	 	ii.	After accounting for the low income customers’ share of the $100 million to be spent by Oncor, Oncor shall spend the remaining $84 million for the benefit of industrial,
commercial, residential and municipal, state, and other governmental customers. Oncor will spend the remaining $84 million for DSM/Energy Efficiency in a manner consistent with P.U.C. energy efficiency rules, except that (A) up to $8.4 million
of the remaining $84 million need not meet the cost effectiveness standards set out in such rules; and (B) program cost effectiveness will be measured over the life of the energy efficiency measure, provided that there will be realized savings
in a three year period. For purposes of this Stipulation only, all end-use customers, including industrial, municipal, state and other governmental customers, will be considered “eligible customers.” Oncor shall provide the Commission
accurate annual reporting of revenues spent, the reduction in demand, and energy savings by customer class. 

  

	 	iii.	The $100 million DSM/Energy Efficiency spending described here shall be in addition to amounts Oncor is required to spend under PURA § 39.905, other legislation, or its
preexisting obligations, including those related to Docket Nos. 32103 and 34630. Energy savings achieved through the expenditure of this $100 million shall not count toward meeting or exceeding requirements of PURA § 39.905, related substantive
rules, or for purposes of calculating bonuses. 

  

 8 

	 	iv.	If the $100 million to be expended by Oncor for DSM/Energy Efficiency is funded by Oncor, including through the sale or transfer of Oncor’s assets, the portion of the $100
million spent in any calendar year shall be included in the calculation of net income for dividend payment purposes, as described in paragraph (23), but shall not be recognized as an expense for purposes of calculating Oncor’s rate of return as
reported on any Commission-required filing or in support of any future Oncor rate increase. 

  

	 	(b)	The other $100 million that TEF has committed to spend on DSM/Energy Efficiency will be funded and spent by TEF affiliates other than Oncor for the benefit of industrial,
commercial, residential and municipal, state, and other governmental customers from January 1, 2008 through December 31, 2012. 

  

	 	(c)	These provisions supplement the commitment reflected in paragraph (7). 

  

	 	(43)	Any corporate support services provided by an affiliate shall be acquired by Oncor at cost, but this provision shall not serve as a precedent or factor for determining the validity
of any affiliate expense in future rate cases. Parties in future rate cases may challenge requested affiliate expenses for compliance with PURA § 36.058. The Commission can audit compliance with this provision consistent with existing
substantive rules. Further, in the 2008 rate case, Oncor will not request affiliate expenses relating to corporate support services in an amount that exceeds the amount included in its Docket No. 34040 request. Nothing in this Stipulation shall
be considered precedent as to whether CGE expenses are to be considered affiliate expenses. By agreeing to this provision, parties do not waive their rights to take the position that CGE is an affiliate of Oncor in the 2008 rate case and any future
rate proceedings. 

  

	 	(44)	Oncor shall make minimum capital expenditures equal to a budget of $3.6 billion over the five-year period beginning January 1, 2008, and ending December 31, 2012, subject
to the following adjustments to the extent reported to the Commission in Oncor’s quarterly earnings monitor report: Oncor may reduce capital spending due to conditions not under Oncor’s control, including, without limitation, siting
delays, cancellations of projects by third-parties, or weaker than expected economic conditions. The $3.6 billion budget does not include transmission projects to be constructed by Oncor as a result of the Commission’s decision in its Docket
No. 33672, Commission Staff’s Petition for Designation of Competitive Renewable Energy Zones. This paragraph modifies the commitment reflected in paragraphs (6) and (17). 

  

	 	(45)	The capital expenditures contained in paragraph (44) shall be made solely to support the traditional Oncor system. 

  

	 	(46)	 From January 1, 2008 until December 31, 2012, Oncor will agree to the following system SAIDI and SAIFI Performance Standards, and Worst Performing Feeder
Standards, including a total annual rebate payment ceiling of $2 million. The metrics 

  

 9 

	 	 
for these standards were the subject of proposed legislation in the most recent legislative session; therefore in the event the metrics are changed in
subsequent legislative sessions, the Signatories agree that Oncor shall have the right to file an application to conform the metrics referenced herein to the new metrics established in subsequent legislation. 

  

	 	(a)	General Provisions 

  

	 	i.	The reliability standards contained herein are intended to be consistent with P.U.C. Subst. R. 25.52 - Reliability and Continuity of Service. 

  

	 	ii.	Reporting periods for these reliability standards are intended to be consistent with P.U.C. Subst. R. 25.81 - Service Quality Reports, and will coincide with the reporting periods
in the Oncor Electric System Service Quality Reports to the Commission. Annual evaluations will be for calendar years. 

  

	 	iii.	The initial reporting period for purposes of the rebates provided herein will be the year 2008. 

  

	 	iv.	Reliability indices are calculated for “forced interruptions” as defined by P.U.C. Subst. R. 25.52. 

  

	 	(b)	Reliability Indices 

 The following reliability standards
use the System Average Interruption Frequency Index (“SAIFI”) and System Average Interruption Duration Index (“SAIDI”). The distribution feeder standards will be established for distribution feeders with 10 or more customers.

  

	 	i.	10 Percent Worst Distribution Feeder Performance Standards 

 No distribution feeder will sustain a SAIFI or SAIDI value for a reporting period that is among the highest (worst) 10 percent of the feeders for any two consecutive reporting periods. 
  

	 	ii.	300 Percent Greater than System Average Distribution Feeder Performance Standards 

 No distribution feeder will sustain a SAIFI or SAIDI value for a reporting period that is more than 300 percent greater than the system average of all feeders for any two consecutive reporting periods. 
  

	 	iii.	System-Wide Standards 

 Oncor will not exceed the
system-wide SAIFI or SAIDI standard by more than 5.0 percent beginning in 2008. The system-wide standards are the average SAIFI and the average SAIDI for 1998, 1999, and 2000. 
  

	 	(c)	Maximum Amount of Rebates and Rebate Priorities 

  

 10 

	 	i.	The rebates for violations of the reliability standards will not exceed a total of $2 million in a calendar year. 

  

	 	ii.	The rebates will be credited to customers based upon the following priorities: 

  

	 	1.	10 Percent Worst Distribution Feeder Performance Standards 

  

	 	2.	300 Percent Greater than System Average Distribution Feeder Performance Standards 

  

	 	3.	System-Wide Standards 

 To the extent that the $2 million
rebate cap is reached, the rebate money will be prorated to customers in the last group, under subsections (c)(ii)(1), (c)(ii)(2) and (c)(ii)(3) above, eligible for rebates. Customers in higher priority groups will receive full rebates. 

 

	 	(d)	Determination of Rebates 

  

	 	i.	10 Percent Worst Distribution Feeder Performance Standards 

  

	 	1.	A rebate of $20 will be made to each customer on all feeders violating one of the 10 Percent Worst Distribution Feeder Performance Standards. A separate rebate will be made for each
violated standard (SAIFI or SAIDI) such that a customer on a feeder violating both standards would be credited $40. 

  

	 	2.	If Oncor has no distribution feeder that violates one of the 10 Percent Worst Distribution Feeder Performance Standards for a reporting period, the total amount of money for rebates
will be reduced 10 percent ($200,000) for the standard achieved. This reduction of money for rebates will decrease the total amount of rebates available for a calendar year for violations of any of the remaining standards. The amount of reduction
will be 20 percent ($400,000) if both standards are achieved. 

  

	 	ii.	300 Percent Greater than System Average Distribution Feeder Performance Standards 

  

	 	1.	A service reliability credit of $50 will be made to each customer on all feeders violating either standard. A separate credit will be made for each standard violated (SAIFI or
SAIDI) such that a customer on a feeder violating both standards would be credited $100. 

  

	 	2.	 If Oncor has no distribution feeder that violates a 300 Percent Greater than System Average Distribution Feeder Performance 

  

 11 

	 	 
Standard for a reporting period, the total amount of money for rebates will be reduced 10 percent ($200,000) for the standard achieved. The amount of
reduction will be 20 percent ($400,000) if both standards are achieved. This reduction of money for rebates will decrease the total amount of rebates available for a calendar year for violations of any remaining 300 Percent Greater than Average
Distribution Feeder Performance Standard, or the System-Wide Standards, but not the 10 Percent Worst Distribution Feeder Performance Standards. 

  

	 	iii.	System-Wide Standards 

  

	 	1.	If the SAIFI or SAIDI System-Wide Standard is violated, Oncor will distribute the total rebate on a per capita basis among all distribution customers. 

  

	 	2.	SAIFI: The total rebate will be the numerical difference between the actual and the allowable SAIFI values multiplied by $1 million, up to a maximum of one-half of the total amount
of money available for rebates for violations of the System-Wide Standards. 

  

	 	3.	SAIDI: The total rebate will be the numerical difference between the actual and the allowable SAIDI values multiplied by $10,000, up to a maximum of one-half of the total amount of
money available for rebates for violations of the System-Wide Standards. 

  

	 	iv.	Payment 

 Oncor will make rebates to the current customer
at the affected consuming facility by June 1 of the year following the reporting period. 
  

	 	v.	Term of Standards 

  

	 	1.	The electric reliability standards established under this Stipulation will remain in effect from January 1, 2008 through December 31, 2012. 

  

	 	(e)	Any interested person will have the right to petition the Commission to revise the commitments in this paragraph (46). In the event the Commission’s service reliability rule,
P.U.C. SUBST. R. 25.52, is amended, such amendments will automatically be incorporated in these reliability commitments. Additionally, the signatories agree that they will revisit these standards and penalties in the future in the
context of any performance-based ratemaking plans or rules for Oncor and/or the electric industry. 

  

	 	(f)	Within 45 days of the date of the Order in Docket No. 34077, Oncor shall file with the Commission a compliance plan with an agreement to pass through service quality credits
similar in form to Phase Two of the plan and the agreement adopted in Project No. 30848, Compliance Filings by Texas-New Mexico Power Company from the Order in Docket No. 30172. 

  

 12 

	 	(47)	From January 1, 2008 until December 31, 2012, to the extent not inconsistent with existing agreements with Cities, Oncor agrees to annual street light performance
standards as follows: 

  

	 	(a)	Routine repairs (bulbs, photocells, ballasts) - 90% complete in 5 calendar days; 

  

	 	(b)	Circuit repairs (overhead/underground cable repairs) - 80% complete in 15 calendar days; 

  

	 	(c)	Knockdowns (not repairs, require the replacement of the entire light) - 80% complete in 30 calendar days 

 These metrics will be exempt from force majeure events, including, but not limited to, major storms, cities whose ordinances or approvals impact Oncor's
ability to meet these metrics, and mutual assistance to other utilities. Examples of qualifying City ordinances include - lane closures, pre-determined work schedules, and noise ordinances. All non-standard lights, such as antique or historical
lights are exempt from this requirement since they are not readily available in Oncor’s stock or from the manufacturer. Oncor agrees to a maximum payment of $1 million per year if the standards are not achieved, to be paid to the customers
affected as contained in a plan filed by Oncor with the Commission for approval. Oncor shall file such a plan within 60 days of the date of the final order in Docket No. 34077. Notwithstanding this agreement, this issue may be addressed in
subsequent rate proceedings. 
  

	 	(48)	From January 1, 2008 until December 31, 2012, Oncor will agree to the Customer Service metric proposed by Cities Witness Norwood (annual average response time for customer
calls to Oncor’s telephone call center shall not exceed 60 seconds), with a total payment not to exceed $2 million per calendar year, to be paid in accordance with a plan filed by Oncor with the Commission for approval. Oncor shall file such a
plan within 60 days of the date of the final order in Docket No. 34077. 

  

	 	(49)	Oncor will file its advanced metering deployment plan with the Commission before July 1, 2008; provided, however, that should the Commission take action to materially alter the
existing requirements for advanced metering deployment, Oncor reserves its rights to delay the filing for a reasonable time as may be necessary to address any such requirements. The advanced meters deployed will support DSM programs to the extent
required by the Commission’s rules. 

  

	 	(50)	TEF, Oncor, TXU Corp. and its subsidiaries, and any legislative advocacy group to which any of the parties are members, and the other Signatories will agree not to pursue, support
or propose legislation that would change or abrogate any of the terms of this Stipulation except that this Stipulation is not intended to impair the ability of the Staff, OPC or the State to communicate with or respond to a request of a member of
the Texas Legislature; provided that if legislation discussed in paragraph (46) is considered in future sessions, Oncor reserves the right to participate in that legislative process. 

  

 13 

	 	(51)	Oncor will comply with the commitments identified in the direct and rebuttal testimonies of Frederick M. Goltz and Robert S. Shapard (“the “Oncor Commitments”), which
are reflected in paragraphs (1) through (22) and as replaced or supplemented as described herein. Oncor will make annual reports to the Commission regarding its compliance with the Oncor Commitments. 

  

	 	(52)	Oncor will agree to make an exception to the standard transformer loss adjustment of 0.8% for high-voltage customers that are metered on the low side of the transformer, provided
that the customer can provide third-party verification of the actual loss level. 

  

	 	(53)	Oncor will propose and support a cost-based retail transformation tariff applicable to industrial customers in its 2008 rate filing. Parties are free to take any position with
respect to the proposed tariff. 

 II. 
 The Signatories agree that consideration of the following issues identified in the Preliminary Order in this proceeding is not necessary to a public interest definition given the type of transaction involved in this
docket, which does not involve the sale of the utility’s assets or a merger of operating utilities: 
  

	 	a.	The reasonable value of the property, facilities, or securities to be acquired, disposed of, merged, transferred, or consolidated (Preliminary Order Issue No. 1, at 3).

  

	 	b.	Will the public utility receive consideration equal to the reasonable value of the assets when it sells, leases, or transfers assets? (Preliminary Order Issue No. 1, at 5).

 III. 
 The Signatories stipulate to the facts contained in the attached Proposed Order. Signatories agree to participate in this proceeding and actively urge the Commission to approve the Stipulation and an order consistent with the attached
Proposed Order. Furthermore, if the Stipulation is approved, the Signatories will seek the dismissal of Docket No. 34040, Commission Staff’s Petition for Review of the Rates of TXU Electric Delivery Company. 
  

 14 

 IV. 
 This Stipulation has been drafted by all Signatories and is the result of negotiation, compromise, settlement and accommodation. The Signatories agree that this settlement is in the public interest. The Signatories
agree that the terms and conditions herein are independent. The various provisions of this Stipulation are not severable. None of the provisions of this Stipulation shall become fully operative unless the Commission shall have entered a final order
approving this Stipulation. If the Commission issues a final order inconsistent with the terms of this Stipulation, the Signatories agree that any Signatory adversely affected by that material alteration has the right to withdraw from this
Stipulation thereby becoming released from its obligations arising hereunder, and to proceed as otherwise permitted by law to exercise all rights available under the law. The right to withdraw must be exercised by providing the other Signatories
written notice within twenty (20) calendar days of the date the Commission files the order acting on this Agreement. Failure to provide such notice within the specified time-period shall constitute a waiver of the right to withdraw and
acceptance of the changes to this Stipulation made by the Commission. 
 V. 
 This Stipulation is binding on each of the Signatories only for the purpose of settling the issues as set forth herein in this jurisdiction and for no
other purposes. The matters resolved herein are resolved on the basis of a compromise and settlement. Except to the extent that this Stipulation expressly governs a Signatory’s rights and obligations for future periods, this Stipulation shall
not be binding or precedential on a Signatory outside of this proceeding except for a proceeding to enforce the terms of this Stipulation. The Signatories agree that a Signatory’s support of the resolution of this docket in accordance with this
Stipulation may differ from its position or testimony regarding contested issues of law, policy, or fact in other proceedings before the Commission or other forum. Because this is a Stipulation, a Signatory is under no obligation to take the same
position as set out in this Stipulation in other proceedings not referenced in this Stipulation whether those dockets present the same or a different set of circumstances. A Signatory’s agreement to entry of a final order of the Commission
consistent with this Stipulation should not be regarded as an agreement to the appropriateness or correctness of any assumptions, methodology, or legal or regulatory principle that may have been employed in reaching this Stipulation. 
  

 15 

 VI. 
 This Agreement contains the entire agreement between the Signatories. Moreover, this Agreement supersedes all other written and oral exchanges or negotiations among the Signatories or their representatives with regard
to the subjects contained herein. 
 VII. 
 Each person executing this Stipulation represents that he or she is authorized to sign this Stipulation on behalf of the party represented. Facsimile copies of signatures are valid for purposes of evidencing this
Stipulation, and this Stipulation may be executed in multiple counterparts. 
 VIII. 
 Oncor will provide notice of this Stipulation and this proceeding to all parties in Docket Nos. 34077 and 34040. 
 WHEREFORE, PREMISES CONSIDERED, the Signatories respectfully pray this Honorable Commission to enter an order as set forth in Exhibit A granting the
relief requested in this Stipulation and to grant them such additional relief not inconsistent therewith to which they are entitled. 
 STIPULATED AND AGREED TO AS OF OCTOBER 24, 2007, AND RESPECTFULLY SUBMITTED: 
  

 16 

			
	By:	 	 /s/ Michael J. Tomsu

	 	 	VINSON & ELKINS L.L.P.
	 	 	Michael J. Tomsu
	 	 	Texas Bar No. 20125875
	 	 	Michael D. Marin
	 	 	Texas Bar No. 00791174
	 	 	The Terrace 7
	 	 	2801 Via Fortuna, Suite 100
	 	 	Austin, TX 78746
	 	 	Tel: (512) 542-8400
	 	 	Fax: (512) 542-8612
		
	 	 	John C. Wander
	 	 	Texas Bar No. 00791877
	 	 	Elizabeth C. Brandon
	 	 	Texas Bar No. 24049580
	 	 	3700 Trammell Crow Center
	 	 	2001 Ross Avenue
	 	 	Dallas, TX 75201-2975
	 	 	Tel: (214) 220-7770
	 	 	Fax: (214) 999-7770
		
	 	 	HUNTON & WILLIAMS
	 	 	Richard L. Adams
	 	 	Texas Bar No. 00874950
	 	 	Jo Ann Biggs
	 	 	State Bar No. 02312400
	 	 	1445 Ross Avenue, Suite 3700
	 	 	Dallas, Texas 75202
	 	 	Tel. (214) 979-3000
	 	 	Fax. (214) 979-3901
	
	ATTORNEYS FOR TEXAS ENERGY FUTURE
	HOLDINGS LIMITED PARTNERSHIP

  

 17 

			
	By:	 	 /s/ Matthew C. Henry

	 	 	HUNTON & WILLIAMS
	 	 	Matthew C. Henry
	 	 	Texas Bar No. 00790870
	 	 	1445 Ross Avenue, Suite 3700
	 	 	Dallas, Texas 75202
	 	 	Tel. (214) 979-3000
	 	 	Fax. (214) 979-3901
		
	 	 	Howard V. Fisher
	 	 	State Bar No. 07051500
	 	 	Oncor Electric Delivery Company
	 	 	1601 Bryan Street, 23rd Floor
	 	 	Dallas, Texas 75201
	 	 	214.486.3026 Office
	 	 	214.486.3221 Fax
	
	 ATTORNEYS FOR ONCOR ELECTRIC
 DELIVERY
COMPANY

	
	TEXAS INDUSTRIAL ELECTRIC
	CONSUMERS
		
	By:	 	  

	 	 	ANDREWS KURTH LLP
	 	 	Jonathan Day
	 	 	State Bar No. 05610000
	 	 	Lino Mendiola
	 	 	State Bar No. 00791248
	 	 	Tammy Cooper
	 	 	State Bar No. 00796401
	 	 	111 Congress Avenue, Suite 1700
	 	 	Austin, Texas 78701
	 	 	Telephone: (512) 320-9200
	 	 	Fax: (512) 320-9292

  

 18 

			
	By:	 	  

	 	 	HUNTON & WILLIAMS
	 	 	Matthew C. Henry
	 	 	Texas Bar No. 00790870
	 	 	1445 Ross Avenue, Suite 3700
	 	 	Dallas, Texas 75202
	 	 	Tel. (214) 979-3000
	 	 	Fax. (214) 979-3901
		
	 	 	Howard V. Fisher
	 	 	State Bar No. 07051500
	 	 	Oncor Electric Delivery Company
	 	 	1601 Bryan Street, 23rd Floor
	 	 	Dallas, Texas 75201
	 	 	214.486.3026 Office
	 	 	214.486.3221 Fax
	
	 ATTORNEYS FOR ONCOR ELECTRIC
 DELIVERY
COMPANY

	
	TEXAS INDUSTRIAL ELECTRIC
	CONSUMERS
		
	By:	 	 /s/ Lino Mendiola

	 	 	ANDREWS KURTH LLP
	 	 	Jonathan Day
	 	 	State Bar No. 05610000
	 	 	Lino Mendiola
	 	 	State Bar No. 00791248
	 	 	Tammy Cooper
	 	 	State Bar No. 00796401
	 	 	111 Congress Avenue, Suite 1700
	 	 	Austin, Texas 78701
	 	 	Telephone: (512) 320-9200
	 	 	Fax: (512) 320-9292

  

 19 

			
	 STEERING COMMITTEE OF CITIES
 SERVED BY ONCOR

		
	By:	 	 /s/ Thomas L. Brocato

	 	 	LLOYD GOSSELINK BLEVINS
	 	 	ROCHELLE & TOWNSEND, P.C.
	 	 	Geoffrey Gay
	 	 	State Bar No. 07774300
	 	 	Thomas L. Brocato
	 	 	State Bar No. 03039030
	 	 	Kristen Pauling Doyle
	 	 	State Bar No. 00797225
	 	 	816 Congress Avenue, Suite 1900
	 	 	Austin, Texas 78701
	 	 	Telephone: (512) 322-5800
	 	 	Fax: (512) 472-0532

 The Office of Public Utility Counsel does not agree to Paragraph (53) regarding a
proposal for a transformation tariff, but otherwise agrees to the terms of the Stipulation. 
  

			
	OFFICE OF PUBLIC UTILITY COUNSEL
		
	By:	 	  

	 	 	Suzi Ray McClellan
	 	 	Public Counsel
	 	 	State Bar No. 16607620
	 	 	James K. Rourke, Jr.
	 	 	Assistant Public Counsel
	 	 	State Bar No. 17323700
	 	 	1701 N. Congress Avenue, Suite 9-180
	 	 	P.O. Box 12397
	 	 	Austin, Texas 78711-2397
	 	 	Telephone: (512) 936-7500
	 	 	Fax: (512) 936-7525

  

 20 

			
	 STEERING COMMITTEE OF CITIES
 SERVED BY ONCOR

		
	By:	 	  

	 	 	LLOYD GOSSELINK BLEVINS
	 	 	ROCHELLE & TOWNSEND, P.C.
	 	 	Geoffrey Gay
	 	 	State Bar No. 07774300
	 	 	Thomas L. Brocato
	 	 	State Bar No. 03039030
	 	 	Kristen Pauling Doyle
	 	 	State Bar No. 00797225
	 	 	816 Congress Avenue, Suite 1900
	 	 	Austin, Texas 78701
	 	 	Telephone: (512) 322-5800
	 	 	Fax: (512) 472-0532

 The Office of Public Utility Counsel does not agree to Paragraph (53) regarding a
proposal for a transformation tariff, but otherwise agrees to the terms of the Stipulation. 
  

			
	OFFICE OF PUBLIC UTILITY COUNSEL
		
	By:	 	 /s/ James K. Rourke, Jr.

	 	 	Suzi Ray McClellan
	 	 	Public Counsel
	 	 	State Bar No. 16607620
	 	 	James K. Rourke, Jr.
	 	 	Assistant Public Counsel
	 	 	State Bar No. 17323700
	 	 	1701 N. Congress Avenue, Suite 9-180
	 	 	P.O. Box 12397
	 	 	Austin, Texas 78711-2397
	 	 	Telephone: (512) 936-7500
	 	 	Fax: (512) 936-7525

  

 21 

			
	STAFF OF THE PUBLIC UTILITY
	COMMISSION OF TEXAS
	
	Thomas S. Hunter
	Division Director
	Legal Division
	
	Keith Rogas
	Deputy Division Director
	Legal Division
	
	 /s/ Paul A. Curtis

	Paul A. Curtis
	Senior Attorney – Legal Division
	State Bar No. 24047627
	Public Utility Commission of Texas
	1701 N. Congress Avenue
	P.O. Box 13326
	Austin, Texas 78711-3326
	Telephone: (512) 936-7297
	Facsimile: (512) 936-7268

  

 22 

			
	STATE OF TEXAS
	
	GREG ABBOTT
	Attorney General of Texas
	
	KENT C. SULLIVAN
	First Assistant Attorney General
	
	DAVID S. MORALES
	Deputy Attorney General for Civil Litigation
	
	PAUL D. CARMONA
	Chief, Consumer Protection and Public Health
Division
	
	MARION TAYLOR DREW
	Public Agency Representation Section Chief
		
	By:	 	 /s/ Susan M. Kelley

	 	 	Bryan L. Baker
	 	 	State Bar No. 00790256
	 	 	Susan Kelley
	 	 	State Bar No. 11205700
	 	 	Assistant Attorneys General
	 	 	Office of the Attorney General
	 	 	P.O. Box 12548
	 	 	Austin, Texas 78711
	 	 	Voice: (512) 475-4171
	 	 	Fax: (512) 322-9114
	 	 	E-mail: bryan.baker@oag.state.tx.us
	 	 	             susan.kelley@oag.state.tx.us

  

 23 

			
	TEXAS STATE ASSOCIATION
	OF ELECTRICAL WORKERS
		
	By:	 	 /s/ Richard Levy

	 	 	DEATS, DURST, OWEN & LEVY, P.L.L.C.
	 	 	Richard Levy
	 	 	State Bar No. 12268650
	 	 	Philip Durst
	 	 	State Bar No. 06287850
	 	 	Elaine F. Edwards
	 	 	State Bar No. 34049829
	 	 	1204 San Antonio Street, Suite 203
	 	 	Austin, Texas 78701
	 	 	Telephone: (512) 474-6200
	 	 	Fax: (512) 474-7896

  

 24 

			
	TEXAS LEGAL SERVICES CENTER
		
	By:	 	 /s/ Neish A. Carroll

	 	 	Randall Chapman, Bar No. 04129800
	 	 	Neish A. Carroll, Bar No. 00795282
	 	 	Texas Legal Services Center
	 	 	815 Brazos, Suite 1100
	 	 	Austin, Texas 78701
	 	 	Telephone: (512) 477-6000
	 	 	Facsimile: (512) 477-6576

  

 25 

			
	 TEXAS RATEPAYERS’ ORGANIZATION
 TO SAVE ENERGY

		
	By:	 	 /s/ Carol J. Biedrzycki

	 	 	Carol J. Biedrzycki, Executive Director
	 	 	Texas Ratepayers’ Organization to Save Energy
	 	 	815 Brazos, Ste. 1100
	 	 	Austin, Texas 78701
	 	 	Telephone: (512) 472-52330
	 	 	Facsimile: (512) 472-5310

  

 26 

 PUC DOCKET NO. 34077 
  

							
	JOINT REPORT AND APPLICATION	  	§	 	BEFORE THE	 	 
	OF ONCOR ELECTRIC DELIVERY	  	§	 	 	 	 
	COMPANY AND TEXAS ENERGY	  	§	 	PUBLIC UTILITY COMMISSION	 	 
	FUTURE HOLDINGS LIMITED	  	§	 	 	 	 
	PARTNERSHIP PURSUANT TO	  	§	 	OF TEXAS	 	 
	PURA § 14.101	  	§	 	 	 	 

 ORDER 
 This Order approves the Joint Report and Application filed by Texas Energy Future Holdings Limited
Partnership (“TEF”) and Oncor Electric Delivery Company (“Oncor”) pursuant to PURA § 14.101 requesting a public interest finding on the merger of TEF with Oncor’s parent, TXU Corp. (“Transaction”). The docket
was processed in accordance with the applicable statutes and Commission rules by an Administrative Law Judge (ALJ). Several parties entered into a non-unanimous Stipulation (“Stipulation”).3 The remaining parties [requested a hearing on the Stipulation]. This Order is consistent with the Stipulation. The Commission concludes that adoption of the
Stipulation is reasonable and that the Transaction is in the public interest. The Stipulation ensures that the matters addressed therein are resolved without the need for lengthy and costly litigation. 
 I. Findings of Fact 
 Procedural History

  

	1.	On April 25, 2007, TEF and Oncor filed their Joint Report and Application of Oncor Electric Delivery Company and Texas Energy Future Holdings Limited Partnership Pursuant to
Public Utility Regulatory Act Section 14.101 in this proceeding requesting a determination that the Transaction as it relates to Oncor is consistent with the standards set out in PURA § 14.101(b). 

  

	2.	The following parties intervened in this proceeding: AARP, Alliance for Retail Markets, Alliance of TXU/Oncor Customers, Chaparral Steel Company, Cities Served by Oncor

  

	3	Signatories to the Stipulation include: TEF; Oncor; Commission Staff; the Office of Public Utility Counsel (“OPC”); Texas Industrial Energy Consumers (“TIEC”);
the Cities Served by Oncor Electric Delivery (“Cities”); the Texas State Association of Electrical Workers (“IBEW”); the State of Texas; Texas Ratepayers Organization to Save Energy (“Texas ROSE”); and Texas Legal
Services Center (“TLSC”). 

  

 27 

	 	 
Electric Delivery Company, Nucor Steel, Office of Public Utility Counsel, Office of the Attorney General, Reliant Energy Retail Services LLC, Sharyland
Utilities LP, TEX-LA Electric Cooperative of Texas Inc., Texas Industrial Energy Consumers, Texas Legal Services Center & Texas Ratepayers’ Organization to Save Energy, and Texas State Association of Electrical Workers.

  

	3.	On October 5, 2007 Signatories (Oncor, Staff, OPC, Cities, TIEC, IBEW, and the State of Texas) filed a Notice of Settlement. Oncor provided notice of the settlement to all
parties in this docket. On October 10, 2007, the Transaction closed. On October 24, 2007, the Stipulation was executed. 

  

	4.	The hearing on the merits was convened on             . At that time, the following items were admitted into
evidence: 

  

	 	a.	Direct Testimony of Robert S. Shapard (Oncor Ex.     ) 

  

	 	b.	Direct Testimony of Brenda Pulis (Oncor Ex.     ) 

  

	 	c.	Direct Testimony of John M. Casey (Oncor Ex.     ) 

  

	 	d.	Direct Testimony of Richard C. Hays (Oncor Ex.     ) 

  

	 	e.	Direct Testimony of Frederick M. Goltz (TEF Ex.     ) 

  

	 	f.	Direct Testimony of Steve M. Fetter (TEF Ex.     ) 

  

	 	g.	Direct Testimony of William E. Avera (TEF Ex.     ) 

  

	 	h.	Rebuttal Testimony of Frederick M. Goltz (TEF Ex.     ) 

  

	 	i.	Rebuttal Testimony of William E. Avera, PH.D., (TEF Ex.     ) 

  

	 	j.	Rebuttal Testimony of Steven L. Schwarcz, (TEF Ex.     ) 

  

	 	k.	Rebuttal Testimony of Steven M. Fetter (TEF Ex.     ) 

  

	 	l.	Rebuttal Testimony of Robert S. Shapard (Oncor Ex.     ) 

  

	 	m.	Rebuttal Testimony of Brenda J. Pulis (Oncor Ex.     ) 

  

	 	n.	Direct Testimony of Carol Szerszen (OPC Ex.     ) 

  

	 	o.	Direct Testimony of Scott Norwood (Cities Ex.    ) 

  

	 	p.	Direct Testimony of Mark T. Williams (Cities and TIEC Ex.    ) 

  

	 	q.	Direct Testimony of Clarence Johnson (OPC Ex.     ) 

  

	 	r.	Direct Testimony of Dr. Dennis W. Goins (Nucor Ex.     ) (except for certain portions that were stricken by the Administrative Law Judge)

  

 28 

	 	s.	Direct Testimony of Jeffrey Pollock (TIEC Ex.     ) (except for certain portions that were stricken by the Administrative Law Judge)

  

	 	t.	Direct Testimony in Support of Stipulation of T. Brian Almon, P.E. (P.U.C Legal Ex.     ) 

  

	 	u.	Workpapers of T. Brian Almon, P.E. (P.U.C Legal Ex.     ) 

  

	 	v.	Direct Testimony in Support of Stipulation of Darryl Tietjen (P.U.C Legal Ex.     ) 

  

	 	w.	Direct Testimony in Support of Stipulation of Frederick M. Goltz (TEF Ex.    ) 

  

	 	x.	Direct Testimony in Support of Stipulation of William E. Avera (TEF Ex.    ) 

  

	 	y.	Direct Testimony in Support of Stipulation of Robert S. Shapard (Oncor Ex.     ) 

 No other parties offered testimony or other evidence. 
  

	5.	All parties [except             ] waived cross-examination at the hearing. 

 Notice 
  

	6.	Notice of the Transaction and the proceedings in this docket was provided by first class mail to: (1) all municipalities in Oncor’s service area; (2) all entities
listed in the Commission’s transmission matrix in Docket No. 33550, Commission Staff’s Application to Set 2007 Wholesale Transmission Service Rates for the Electric Reliability Council of Texas; (3) all electric
cooperatives and municipally-owned utilities with dually certified areas with Oncor; (4) all REPs currently certificated by this Commission; and (5) all authorized representatives for parties in Docket No. 22350, Application of TXU
Electric Company for Approval of Unbundled Cost of Service Rate pursuant to PURA § 39.201 and Commission Substantive Rule 25.344. Further notice of this docket was provided by publication of an approved notice in local newspapers of general
circulation in Oncor’s service territory once a week for two consecutive weeks in accordance with P.U.C. PROC. R. 22.55. 

  

	7.	Notice of the Stipulation was provided to all parties in this proceeding and in Docket No. 34040, Commission Staff’s Petition for Review of the Rates of TXU Electric
Delivery Company. 

 Description of the Parties to the Transaction 
  

	8.	 Oncor is a Delaware limited liability company and is a direct wholly-owned subsidiary of TXU Corp. Oncor is an electric distribution and transmission utility that
delivers power pursuant to rates approved by municipalities in which it provides service that have retained original jurisdiction and by the Commission. Oncor operates more than 115,000 miles of 

  

 29 

	 	 
distribution and transmission lines within the Electric Reliability Council of Texas (“ERCOT”) region of Texas. Oncor also provides limited open
access wholesale transmission service under tariffs on file with the Federal Energy Regulatory Commission (“FERC”) for certain transactions that are subject to the jurisdiction of the FERC under Sections 210, 211, and 212 of the Federal
Power Act. 

  

	9.	TEF is a Delaware limited partnership formed for the purpose of effectuating the Transaction. TEF is not a public utility. TEF is controlled by its sole general partner, Texas
Energy Future Capital Holdings LLC, and is owned by its sole general partner and its limited partners. Upon consummation of the Transaction, which became effective on October 10, 2007, TEF became the owner of all or substantially all of the
outstanding common shares of TXU Corp. 

  

	 10.
	 Pursuant to the Merger Agreement governing the Transaction, Texas Energy Future Merger Sub Corp., a Texas corporation
and wholly owned subsidiary of TEF, was merged with and into TXU Corp., with TXU Corp. 4 continuing as the surviving
corporation. Upon the closing of the Transaction, each outstanding share of common stock of TXU Corp. was converted into the right to receive $69.25 in cash, without interest and less any applicable withholding taxes. After the closing of the
Transaction, TEF now owns all or substantially all of the outstanding shares of TXU Corp., and Oncor remains a direct or indirect wholly-owned subsidiary of TXU Corp. 

  

	11.	Because this is a change in ownership of TXU Corp.’s stock, none of Oncor’s assets, franchises, or certificates of convenience and necessity were transferred as a result
of the Transaction. 

  

	12.	No utility operations were combined or modified as a result of the Transaction. 

 The Stipulation 
  

	13.	TEF and Oncor made numerous commitments in their direct and rebuttal testimonies. Those commitments are included as part of the Stipulation and are listed below:

  

	 	a.	Name Change Commitment. On or before closing of the Transaction, the name of TXU Electric Delivery Company will be changed to Oncor Electric Delivery Company. Oncor’s
logo will be separate and distinct from the logos of the parent, 

  

	 4
	 As a result of the closing of the Transaction on October 10, TXU Corp. is now named Energy Future Holdings Corp.
(“EFH Corp.”). Any current references to TXU Corp. in this Order are to EFH Corp. 

  

 30 

	 	 
TXU Corp., the retail electric provider, which will retain the TXU Energy name (“TXU Energy Retail”), and the power generation company, which we
expect to rename with the Luminant Energy brand (“Luminant”). In fact, the name of TXU Electric Delivery Company was changed to Oncor Electric Delivery Company on April 24, 2007. TXU Corp. commits to maintaining a name and logo for
Oncor that is separate and distinct from the names of TXU Corp.’s retail electric provider and wholesale generation companies. 

  

	 	b.	Separate Board Commitment. At closing and thereafter, Oncor will have a separate board of directors that will not include any members from the boards of directors of TXU
Energy Retail or Luminant. This Finding of Fact is supplemented by Finding of Fact Nos. 14.j and 14.k. 

  

	 	c.	Separate Headquarters Commitment. Within a reasonable transition period after closing of the Transaction, not to exceed six months, Oncor’s headquarters will be located
in a separate building from the headquarters and operations of TXU Energy Retail and Luminant. 

  

	 	d.	No Transaction Related Debt at Oncor Commitment. Oncor will not incur, guaranty, or pledge assets in respect of any incremental new debt related to financing the Transaction
at the closing or thereafter. Oncor’s financial integrity will be protected from the separate operations of TXU Energy Retail and Luminant. This provision is supplemented by Finding of Fact No. 14.r. 

  

	 	e.	Debt-to-Equity Ratio Commitment. Oncor’s debt will be limited so that its regulatory debt-to-equity ratio (as determined by the Commission) is at or below the assumed
debt-to-equity ratio established from time to time by the Commission for ratemaking purposes, which is currently set at 60% debt to 40% equity. For ratemaking purposes, in its scheduled rate cases in 2007 and 2008, Oncor will support a cost of debt
that does not exceed Oncor’s actual cost of debt immediately prior to the announcement of the Transaction. This Finding of Fact is supplemented by Finding of Fact Nos. 14.n, 14.o and 14.p. 

  

	 	f.	 Capital Expenditure Commitment. Following the closing of the Transaction, Oncor will continue to make capital expenditures consistent with the capital
expenditures in Oncor’s business plan. Total capital spending will depend in part on 

  

 31 

	 	 
economic and population growth in Texas, as well as permitting and siting outcomes. However, in any event, over the five years following the year in which
closing of the Transaction occurs, Oncor will make capital expenditures in connection with its transmission and distribution business in an aggregate amount of more than $3.0 billion. This commitment has been replaced by the provisions of Finding of
Fact No. 14.v. 

  

	 	g.	DSM/Energy Efficiency Commitment. Over the five years following the year in which closing occurs, subsidiaries of TXU Corp. will expend an aggregate of at least $200 million
on DSM over the amount included by the Commission in Oncor’s rates. This commitment will approximately double the level of spending on DSM currently included in Oncor’s rates. Oncor will not seek to recover in rates any of the $200 million
in incremental DSM expenditures. This provision is supplemented by Finding of Fact Nos. 14.s and 14.t. 

  

	 	h.	Service and Safety Commitment. Oncor will support the inclusion of negotiated commitments with appropriate stakeholders regarding reliability, customer service and employee
safety in any final order regarding the Transaction issued pursuant to PURA § 14.101. Those negotiated commitments are reflected in Finding of Fact Nos. 14.x, 14.y, and 14.z. 

  

	 	i.	Rate Case Commitment. If, for any reason, the Commission has not initiated a general rate proceeding for Oncor or its predecessor prior to July 1, 2008, Oncor will not
later than that date file a general rate case consistent with its currently effective settlement agreement with certain municipalities. 

  

	 	j.	Continued Ownership Commitment. TEF will hold a majority of its ownership interest in Oncor, in the current regulatory system, for a period of more than five years after the
closing date of the Transaction. 

  

	 	k.	Holding Company Commitment. A new holding company, Oncor Electric Delivery Holdings, will be formed between TXU Corp. and Oncor. 

  

	 	l.	 Independent Board Commitment. Each of Oncor Electric Delivery Holdings and Oncor will have a board of directors comprised of at least nine persons. A
majority of the board members of each of Oncor Electric Delivery Holdings and Oncor will qualify as “independent” in all material respects in accordance with the rules and 

  

 32 

	 	 
regulations of the New York Stock Exchange (“NYSE”) (which are set forth in Section 303A of the NYSE Listed Company Manual and in Exhibit
FMG-2), from TXU Corp. and its subsidiaries (including TXU Energy Retail and Luminant), TPG, and KKR. Consistent with TEF’s commitments, the directors of Oncor and Oncor Electric Delivery Holdings will also not include any members from the
boards of directors of TXU Energy Retail or Luminant. This provision is supplemented by Finding of Fact No. 14.j. 

  

	 	m.	Affiliate Asset Transfer Commitment. Neither Oncor Electric Delivery Holdings nor Oncor will transfer any material assets or facilities to any affiliates (other than Oncor
Electric Delivery Holdings, Oncor, and their subsidiaries, which are hereinafter referred to as the “Ring-Fenced Entities”), other than such transfer that is on an arm’s length basis consistent with the Commission’s affiliate
standards applicable to Oncor, regardless of whether such affiliate standards would apply to the particular transaction. 

  

	 	n.	Arm’s Length Relationship Commitment. Each of the Ring-Fenced Entities will maintain an arm’s length relationship with the TXU Group consistent with the
Commission’s affiliate standards applicable to Oncor. This provision is supplemented by Finding of Fact No. 14.u. 

  

	 	o.	Separate Books and Records Commitment. Each of the Ring-Fenced Entities will maintain accurate and appropriate detailed books, financial records and accounts, including
checking and other bank accounts, and custodial and other securities safekeeping accounts that are separate and distinct from those of any other entity. 

  

	 	p.	Oncor Board’s Right to Determine Dividends Commitment. The Oncor Board, comprised of a majority of independent directors, will have the sole right to determine
dividends. This provision is supplemented by Finding of Fact Nos. 14.a and 14.j. 

  

	 	q.	Capital Expenditures Within Oncor Service Territory Commitment. The $3 billion minimum commitment for Oncor capital expenditures over the five years following the Transaction
will be spent within the traditional Oncor system, and that amount does not include any transmission projects to be constructed by Oncor as a result of the Commission’s decision in its Docket No. 33672, Commission Staff’s Petition
for Designation of Competitive Renewable Energy Zones. This commitment is replaced by Finding of Fact Nos. 14.v and 14.w. 

  

 33 

	 	r.	No Transaction Costs to Oncor Commitment. None of the fees and expenses nor any incremental borrowing costs of TXU Corp. or its subsidiaries related to the Transaction will
be borne by Oncor’s customers. This commitment is supplemented in Finding of Fact No. 14.r. 

  

	 	s.	Exclusion of Goodwill Commitment. The calculations for the debt-to-equity ratio commitment will not include goodwill resulting from the Transaction. This commitment is
supplemented by Finding of Fact No. 14.q. 

  

	 	t.	No Intercompany Debt Commitment. Oncor will not enter into any inter-company debt transactions with TXU Corp. affiliates following consummation of the Transaction. This
commitment is supplemented by Finding of Fact No. 14.d. 

  

	 	u.	No Shared Credit Facilities Commitment. Oncor will not share any credit facility with any unregulated affiliate. This commitment is supplemented by Finding of Fact
No. 14.e. 

  

	 	v.	No Recovery of TXU Energy Retail Bad Debt Commitment. So long as TXU Energy Retail is affiliated with Oncor, Oncor will not seek to recover from its customers any costs
incurred as a result of a bankruptcy of TXU Energy Retail. This commitment is supplemented by Finding of Fact No. 14.h. 

  

	14.	In addition to the commitments made in testimony, the Signatories have also stipulated and agreed to the following: 

  

	 	a.	The Oncor LLC agreement shall, and TEF and Oncor will support a Commission finding to, limit the payment of dividends by Oncor through December 31, 2012, to an amount not to
exceed Oncor’s net income (determined in accordance with GAAP) for the period beginning on the date following the closing of the Transaction and ending on December 31, 2012. 

  

	 	b.	 Oncor will implement a one-time $35 million write-off in 2007 or 2008, at its discretion either prior to or after the closing of the Transaction, to its storm
reserve and a one-time write-off in 2007 or 2008, at its discretion either prior to or after the closing of the Transaction, to the 2002 restructuring expenses held as regulatory assets ($20,927,391.50). These write-off amounts will not be included
as a cost item 

  

 34 

	 	 
in the 2008 rate case or any other Commission proceeding. Parties reserve the right to challenge claimed expenses included in storm reserve and regulatory
assets accounts. These write-offs shall not be included in the calculation of net income for dividend payment purposes, as described in Finding of Fact No. 14.a. 

  

	 	c.	Oncor will file quarterly earnings monitoring reports with the Commission, including information on dividends paid, for a period of five years beginning in January 2008.

  

	 	d.	Oncor will not lend money to or borrow money from TXU Corp. and TXU Corp. affiliates. 

  

	 	e.	Oncor will not share credit facilities with TXU Corp. and TXU Corp. affiliates. 

  

	 	f.	Oncor’s assets shall not be pledged for any entity other than Oncor. 

  

	 	g.	Oncor, TXU Corp. and TXU Corp. affiliates will provide advance notice of their corporate separateness to lenders on all new debt and will use commercially reasonable efforts to seek
an acknowledgment representation of that separateness and non-petition covenants in all new debt instruments, including the debt instruments used in connection with financing the Transaction. 

  

	 	h.	Oncor will not seek recovery in rates of any expenses related to a bankruptcy or default of TXU Corp. or TXU Corp. affiliates, including bad debt expense, or expenses associated
with the expiration or cancellation of tax and interest reimbursement agreements presently in effect. 

  

	 	 i.
	 During any period that any two of the Standard & Poor’s, Moody’s, or Fitch rating agencies rate Oncor
as an entity at below investment grade,5 TEF will cause TXU Energy Retail within 15 days to post a letter of credit in favor
of Oncor in the amount of $170 million to secure TXU Energy Retail’s payment obligations to Oncor. The parties agree that TXU Energy Retail may withdraw the letter of credit at such time as two of the three ratings agencies rate Oncor as
investment grade or at such time as TXU Energy Retail and Oncor cease to be affiliated with one another. The cost of any letter of credit required under this provision will not be reflected in Oncor’s rates. 

  

	 	j.	For an individual to qualify as an independent director of Oncor, such individual must be independent of each of Oncor, TEF, TXU Corp. and TXU Corp. affiliates, KKR,

  

	 5
	 Ratings are below investment grade if they fall below the following ratings: Fitch’s BBB- rating, Standard and
Poor’s BBB- rating, or Moody’s Baa3 rating. 

  

 35 

	 	 
TPG, Goldman Sachs, Lehman Brothers, Morgan Stanley, Citigroup, J.P. Morgan, and CSFB in accordance with the applicable criteria set forth in the NYSE Manual
for independent directors of NYSE listed companies. After such time as any of Lehman Brothers, Morgan Stanley, Citigroup, J.P. Morgan, or CSFB has sold all of the debt it underwrote to finance the Transaction, then any such entity that has sold all
of the debt it underwrote to finance the Transaction shall be deemed removed from the list of entities from which an individual must be independent in order to qualify as an independent director of Oncor in this Finding of Fact No. 14.j.

  

	 	k.	The currently contemplated sale of a minority interest in Oncor, to the extent that such sale occurs, will be made to a party that is not otherwise affiliated with, and is
independent from, TXU Corp., KKR, TPG, and Goldman Sachs. Oncor may dividend the net proceeds from the sale of minority interests in Oncor to its member without regard to the provisions of Finding of Fact No. 14.a. 

  

	 	l.	Oncor’s Board cannot be overruled by the Board of TXU Corp. or any of its subsidiaries on dividend policy, debt issuance, capital expenditures, management and service fees, and
appointment or removal of Board members, provided that such actions may also require the additional approval of Oncor Electric Delivery Holdings’ Board. 

  

	 	m.	 Within 45 days after the Commission dismisses P.U.C. Docket No. 34040, Oncor will provide a one-time credit of $72 million to REPs to be paid or directly
credited to its retail customers. Oncor will notify all Retail Electric Providers (REPs) in its service area that the credit will be available only to those REPs that within 15 days of receiving the notice agree in writing to: (1) pay or
otherwise directly credit the one-time credit in full to retail customers by customer class within 35 days of receipt of the credit from Oncor, and (2) file a report with the Commission within 60 days of receipt of the credit from Oncor listing
the amounts the REP credited to customers by customer class. To the extent that certain REPs do not participate in the rate credit, Oncor will reallocate in the same proportions the remaining portion of the $72 million rate credit to the REPs
participating in the rate credit so that the full $72 million rate credit is received by participating REPs and paid or directly credited to retail customers. Credit amounts that are unclaimed by non-industrial customers after the 

  

 36 

	 	 
initial REP allocation and reallocation, such as credits related to retail customers who cannot be readily located, will be directed to that REP’s bill
payment assistance programs and accounted for in the report required to be filed by the REP with the Commission. This $72 million one-time credit to retail customers shall count as a reduction to net income in the calculation of net income for
dividend payment purposes described in Finding of Fact No. 14.a. TEF will ensure that TXU Energy Retail passes the entire rate credit that it receives directly through to its customers. The parties agree that the one-time rate credit will not
be recovered by Oncor in any future proceedings, and further agree that they will not argue that the rate credit is any precedent or support for a rate reduction in the 2008 rate case or any future rate proceeding. The Signatories will request the
Commission to dismiss P.U.C Docket No. 34040, Commission Staff’s Petition for Review of the Rates of TXU Electric Delivery Company, and Oncor will agree to file a system-wide rate case no later than July 1, 2008 based on a
test-year ended December 31, 2007. The one-time credit shall be allocated and refunded as follows: 

  

				
	 Customer Class
	  	Amount Allocated to Class
	 Residential
	  	$	32,983,398.59
		
	 Sec<=10 kW
	  	$	790,769.48
		
	 Sec>10kW
	  	$	26,427,614.56
		
	 Pri<=10kW
	  	$	11,163.78
		
	 Pri>10kW
	  	$	5,279,308.63
		
	 Transmission
	  	$	5,401,089.92
		
	 Lighting
	  	$	1,106,655.05

  

 37 

 Credit Methodology 
 General 
 The credit will be calculated on a spreadsheet basis based on a combination of 2006 Test
Year information and December 31, 2007 information. The credit amount will be sent to the participating REP with supporting documentation. The credit will be calculated and credited outside of the normal Oncor billing process and will not be
part of the standard 810 transaction. 
 Residential Service ($32,983,398.59) 
 The Residential Rate Class credit will be based on a fixed $ amount per Residential Customer that will be calculated as follows: $32,983,398.59/ Total
Number of participating REP Residential Customers as of December 31, 2007. 
 The fixed $ amount per Residential Customer will be applied
to the number of Residential Customers for each participating REP as of December 31, 2007. The amount calculated will be the Residential Rate Class credit for that participating REP. 
 Secondary Service Less Than or Equal to 10 kW ($790,769.48) 
 Same process used for Residential Service. 
 Secondary Service Greater Than 10 kW ($26,427,614.56)

 The Secondary Service Greater Than 10 kW credit will be determined based on each customer’s 2007 annual kWh consumption as a
percentage of the total 2007 participating REP’s annual Secondary Service Greater Than 10 kW class kWh. 
 Each individual
customer’s percentage will be multiplied by the total class credit of $26,427,614.56. The credit for each customer will be totaled for each participating REP based on the participating REP’s customers as of December 31, 2007.

 Primary Service Less Than or Equal to 10 kW ($11,163.78) 
 Same process used for Residential Service. 
  

 38 

 Primary Service Greater Than 10 kW ($5,279,308.63) 
 Same process used for Secondary Service Greater Than 10 kW. 
 Transmission Service ($5,401,089.92) 
 Same process used for Secondary Service Greater Than 10 kW.

 Lighting Service ($1,106,655.05) 
 The Lighting Service Refund of $1,106,655.05 will be allocated to the various types of lights based on the light type’s percentage of the total revenue for the 2006 test year. 
  

							
	 Light Type
	  	% of 2006 Test Year
Lighting
Revenue	 	 	Refund
	 Schedule A
	  	58.88	%	 	$	651,750.58
	 Schedule B
	  	8.66	%	 	$	95,811.58
	 Schedule C
	  	0.03	%	 	$	386.34
	 Schedule D
	  	2.23	%	 	$	24,725.58
	 Metered (Non-Company)
	  	1.7	%	 	 	18,622.17
	 Metered (Company)
	  	0.4	%	 	 	4,420.61
	 Outdoor Lights
	  	28.1	%	 	 	310,938.20
		  	 	 	 	 	 
	 Total
	  	100.0	%	 	$	1,106,655.06

 For Street Light Schedules A, B, C, D, and Outdoor Lights, the credit will be based on a fixed $
amount per light type calculated by dividing the allocated amount for each light type by each participating REP’s number of lights in that type as of December 31, 2007. 
 For metered streetlight service, the refund will be calculated for each metered premise based on each participating REP’s metered premises’ 2007
annual revenue as a percentage of the total 2007 revenue for metered Street Light Service. 
  

	 	n.	 Oncor’s debt will be limited so that its debt-to-equity ratio is at or below the assumed debt-to-equity ratio established from time to time by the Commission
for ratemaking purposes, which is currently set at 60% debt to 40% equity. The Commission has authority to determine what types of debt and equity are included in a utility’s debt- 

  

 39 

	 	 
to-equity ratio. The purposes to be conducted or promoted by Oncor are those of an electric transmission and distribution company, including owning and
operating equipment or facilities to transmit and distribute electricity, and to engage in any other activities related or incidental thereto or in anticipation thereof. Oncor will cap its cost of debt for the 2008 rate case at pre-Transaction
levels. In addition, Oncor will agree that its cost of debt in future rate proceedings initiated prior to December 31, 2012 will be based on the then-current cost of debt for electric utilities which have the same investment grade ratings, as
established by the Standard & Poor’s. Moody’s and Fitch rating agencies, at the time of such proceedings as Oncor’s ratings as of October 1, 2007. 

  

	 	o.	If, at any time from the date of closing of the Transaction through December 31, 2012, Oncor’s entity rating is not maintained as investment grade by Standard and
Poor’s, Moody’s or Fitch credit rating agencies, Oncor will not use its below investment grade ratings to justify an argument in favor of a higher regulatory ROE. 

  

	 	p.	TEF and Oncor will not include goodwill from the acquisition in the calculation of the Debt-to-Equity Ratio commitment to justify increased debt at Oncor. Write-downs or write-offs
of goodwill will not be included in the calculation of net income for dividend payment purposes, as described in Finding of Fact No. 14.a. 

  

	 	q.	Oncor will not seek to recover Transaction goodwill or any expense associated with the impairment of goodwill in its rates. 

  

	 	r.	Oncor will not seek to include costs related to the Transaction in its rates. 

  

	 	s.	Oncor will not seek recovery in rates of any portion of the $200 million TEF DSM/Energy Efficiency commitment. 

  

	 	t.	TEF will spend $100 million of the additional $200 million DSM/Energy Efficiency commitment reflected in Finding of Fact No. 13.g at Oncor. 

  

	 	i.	From January 1, 2008 through December 31, 2012, Oncor shall spend $100 million of DSM/Energy Efficiency commitment as follows: 

  

	 	1.	 Oncor shall spend $16 million for low income customer programs which will be conducted in a manner consistent with P.U.C. energy efficiency rules. To do so, Oncor
will negotiate and execute a contract with the Texas Association of Community Action Agencies (TACAA) to administer $3.2 million annually (for calendar years 2008 through 2012) for weatherization assistance services through local contracts 

  

 40 

	 	 
with governmental and nonprofit agencies that will augment resources from the federal weatherization assistance program. Oncor will use its best efforts to
have this agreement in place within 30 days of the final Order in Docket No. 34077. The contract with TACAA must contain reporting provisions to ensure that the funds are spent efficiently on effective weatherization programs, and provisions
that ensure that TACAA makes reasonable progress toward spending the total $16 million over five years. TACAA must also agree that these additional weatherization funds will be spread equitably across the entire Oncor service area, including through
community action agencies that are not members of TACAA. For this $16 million for low income customer programs, Oncor shall provide the Commission accurate annual reporting of revenues spent, the reduction in demand, and energy savings by customer
class. 

  

	 	2.	After accounting for the low income customers’ share of the $100 million to be spent by Oncor, Oncor shall spend the remaining $84 million for the benefit of industrial,
commercial, residential and municipal, state, and other governmental customers. Oncor will spend the remaining $84 million for DSM/Energy Efficiency in a manner consistent with P.U.C. energy efficiency rules, except that (A) up to $8.4 million
of the remaining $84 million need not meet the cost effectiveness standards set out in such rules; and (B) program cost effectiveness will be measured over the life of the energy efficiency measure, provided that there will be realized savings
in a three year period. For purposes of the remaining $84 million to be spent by Oncor, all end-use customers, including industrial, municipal, state and other governmental customers, will be considered “eligible customers.” Oncor shall
provide the Commission accurate annual reporting of revenues spent, the reduction in demand, and energy savings by customer class. 

  

	 	3.	The $100 million DSM/Energy Efficiency spending described here shall be in addition to amounts Oncor is required to spend under PURA § 39.905, other legislation, or its
preexisting obligations, including those related to Docket Nos. 32103 and 34630. Energy savings achieved through the expenditure of this $100 million shall not count toward meeting or exceeding requirements of PURA § 39.905, related substantive
rules, or for purposes of calculating bonuses. 

  

	 	4.	If the $100 million to be expended by Oncor for DSM/Energy Efficiency is funded by Oncor, including through the sale or transfer of Oncor’s assets, the portion of the $100
million spent in any calendar year shall be included in the calculation of net income for dividend payment purposes, as described in Finding of Fact No. 14.a, but shall not be recognized as an expense for purposes of calculating Oncor’s
rate of return as reported on any Commission-required filing or in support of any future Oncor rate increase. 

  

 41 

	 	ii.	The other $100 million that TEF has committed to spend on DSM/Energy Efficiency will be funded and spent by TEF affiliates other than Oncor for the benefit of industrial,
commercial, residential and municipal, state, and other governmental customers from January 1, 2008 through December 31, 2012. 

  

	 	u.	Any corporate support services provided by an affiliate shall be acquired by Oncor at cost, but this provision shall not serve as a precedent or factor for determining the validity
of any affiliate expense in future rate cases. Parties in future rate cases may challenge requested affiliate expenses for compliance with PURA § 36.058. The Commission can audit compliance with this provision consistent with existing
substantive rules. Further, in the 2008 rate case, Oncor will not request affiliate expenses relating to corporate support services in an amount that exceeds the amount included in its Docket No. 34040 request. Nothing in the Stipulation shall
be considered precedent as to whether CGE expenses are to be considered affiliate expenses. By agreeing to this provision, parties do not waive their rights to take the position that CGE is an affiliate of Oncor in the 2008 rate case and any future
rate proceedings. 

  

	 	v.	Oncor shall make minimum capital expenditures equal to a budget of $3.6 billion over the five-year period beginning January 1, 2008, and ending December 31, 2012, subject
to the following adjustments to the extent reported to the Commission in Oncor’s quarterly earnings monitor report: Oncor may reduce capital spending due to conditions not under Oncor’s control, including, without limitation, siting
delays, cancellations of projects by third-parties, or weaker than expected economic conditions. The $3.6 billion budget does not include transmission projects to be constructed by Oncor as a result of the Commission’s decision in its Docket
No. 33672, Commission Staff’s Petition for Designation of Competitive Renewable Energy Zones. This Finding of Fact modifies the commitment reflected in Finding of Fact No. 13.q. 

  

	 	w.	The capital expenditures contained in Finding of Fact No. 14.v shall be made solely to support the traditional Oncor system. 

  

 42 

	 	x.	From January 1, 2008 until December 31, 2012, Oncor will agree to the following system SAIDI and SAIFI Performance Standards, and Worst Performing Feeder Standards,
including a total annual rebate payment ceiling of $2 million. The metrics for these standards were the subject of proposed legislation in the most recent legislative session; therefore in the event the metrics are changed in subsequent legislative
sessions, the Signatories agree that Oncor shall have the right to file an application to conform the metrics referenced herein to the new metrics established in subsequent legislation. 

  

	 	i.	General Provisions 

  

	 	1.	The reliability standards contained herein are intended to be consistent with P.U.C. Subst. R. 25.52 - Reliability and Continuity of Service. 

  

	 	2.	Reporting periods for these reliability standards are intended to be consistent with P.U.C. Subst. R. 25.81 - Service Quality Reports, and will coincide with the reporting periods
in the Oncor Electric System Service Quality Reports to the Commission. Annual evaluations will be for calendar years. 

  

	 	3.	The initial reporting period for purposes of the rebates provided herein will be the year 2008. 

  

	 	4.	Reliability indices are calculated for “forced interruptions” as defined by P.U.C. Subst. R. 25.52. 

  

	 	ii.	Reliability Indices 

 The following reliability standards
use the System Average Interruption Frequency Index (“SAIFI”) and System Average Interruption Duration Index (“SAIDI”). The distribution feeder standards will be established for distribution feeders with 10 or more customers.

  

	 	1.	10 Percent Worst Distribution Feeder Performance Standards 

 No distribution feeder will sustain a SAIFI or SAIDI value for a reporting period that is among the highest (worst) 10 percent of the feeders for any two consecutive reporting periods. 
  

	 	2.	300 Percent Greater than System Average Distribution Feeder Performance Standards 

 No distribution feeder will sustain a SAIFI or SAIDI value for a reporting period that is more than 300 percent greater than the system average of all feeders for any two consecutive reporting periods. 
  

 43 

	 	3.	System-Wide Standards 

 Oncor will not exceed the
system-wide SAIFI or SAIDI standard by more than 5.0 percent beginning in 2008. The system-wide standards are the average SAIFI and the average SAIDI for 1998, 1999, and 2000. 
  

	 	iii.	Maximum Amount of Rebates and Rebate Priorities 

  

	 	1.	The rebates for violations of the reliability standards will not exceed a total of $2 million in a calendar year. 

  

	 	2.	The rebates will be credited to customers based upon the following priorities: 

  

	 	a.	10 Percent Worst Distribution Feeder Performance Standards 

  

	 	b.	300 Percent Greater than System Average Distribution Feeder Performance Standards 

  

	 	c.	System-Wide Standards 

 To the extent that the $2 million
rebate cap is reached, the rebate money will be prorated to customers in the last group, under subsections (iii)(2)(a), (iii)(2)(b), or (iii)(2)(c) above, eligible for rebates. Customers in higher priority groups will receive full rebates.

  

	 	iv.	Determination of Rebates 

  

	 	1.	10 Percent Worst Distribution Feeder Performance Standards 

  

	 	a.	A rebate of $20 will be made to each customer on all feeders violating one of the 10 Percent Worst Distribution Feeder Performance Standards. A separate rebate will be made for each
violated standard (SAIFI or SAIDI) such that a customer on a feeder violating both standards would be credited $40. 

  

	 	b.	If Oncor has no distribution feeder that violates one of the 10 Percent Worst Distribution Feeder Performance Standards for a reporting period, the total amount of money for rebates
will be reduced 10 percent ($200,000) for the standard achieved. This reduction of money for rebates will decrease the total amount of rebates available for a calendar year for violations of any of the remaining standards. The amount of reduction
will be 20 percent ($400,000) if both standards are achieved. 

  

	 	2.	300 Percent Greater than System Average Distribution Feeder Performance Standards 

  

 44 

	 	a.	A service reliability credit of $50 will be made to each customer on all feeders violating either standard. A separate credit will be made for each standard violated (SAIFI or
SAIDI) such that a customer on a feeder violating both standards would be credited $100. 

  

	 	b.	If Oncor has no distribution feeder that violates a 300 Percent Greater than System Average Distribution Feeder Performance Standard for a reporting period, the total amount of
money for rebates will be reduced 10 percent ($200,000) for the standard achieved. The amount of reduction will be 20 percent ($400,000) if both standards are achieved. This reduction of money for rebates will decrease the total amount of rebates
available for a calendar year for violations of any remaining 300 Percent Greater than Average Distribution Feeder Performance Standard, or the System-Wide Standards, but not the 10 Percent Worst Distribution Feeder Performance Standards.

  

	 	3.	System-Wide Standards 

  

	 	a.	If the SAIFI or SAIDI System-Wide Standard is violated, Oncor will distribute the total rebate on a per capita basis among all distribution customers. 

  

	 	b.	SAIFI: The total rebate will be the numerical difference between the actual and the allowable SAIFI values multiplied by $1 million, up to a maximum of one-half of the total amount
of money available for rebates for violations of the System-Wide Standards. 

  

	 	c.	SAIDI: The total rebate will be the numerical difference between the actual and the allowable SAIDI values multiplied by $10,000, up to a maximum of one-half of the total amount of
money available for rebates for violations of the System-Wide Standards. 

  

	 	4.	Payment 

 Oncor will make rebates to the current customer
at the affected consuming facility by June 1 of the year following the reporting period. 
  

	 	5.	Term of Standards 

  

	 	a.	The electric reliability standards established under this Stipulation will remain in effect from January 1, 2008 through December 31, 2012. 

  

 45 

	 	v.	Any interested person will have the right to petition the Commission to revise the commitments in this Finding of Fact No. 14.x. In the event the Commission’s service
reliability rule, P.U.C. SUBST. R. 25.52, is amended, such amendments will automatically be incorporated in these reliability commitments. Additionally, the signatories agree that they will revisit these standards and penalties in the
future in the context of any performance-based ratemaking plans or rules for Oncor and/or the electric industry. 

  

	 	vi.	Within 45 days of the date of the Order in Docket No. 34077, Oncor shall file with the Commission a compliance plan with an agreement to pass through service quality credits
similar in form to Phase Two of the plan and the agreement adopted in Project No. 30848, Compliance Filings by Texas-New Mexico Power Company from the Order in Docket No. 30172. 

  

	 	y.	From January 1, 2008 until December 31, 2012, to the extent not inconsistent with existing agreements with Cities, Oncor agrees to annual street light performance
standards as follows: 

 (i) Routine repairs (bulbs, photocells, ballasts) - 90% complete in 5 calendar days; 
 (ii) Circuit repairs (overhead/underground cable repairs) - 80% complete in 15 calendar days; 
 (iii) Knockdowns (not repairs, require the replacement of the entire light) - 80% complete in 30 calendar days 
 These metrics will be exempt from force majeure events, including, but not limited to, major storms, cities whose ordinances or approvals impact Oncor's
ability to meet these metrics, and mutual assistance to other utilities. Examples of qualifying City ordinances include - lane closures, pre-determined work schedules, and noise ordinances. All non-standard lights, such as antique or historical
lights are exempt from this requirement since they are not readily available in Oncor’s stock or from the manufacturer. Oncor agrees to a maximum payment of $1 million per year if the standards are not achieved, to be paid to the customers
affected as contained in a plan filed by Oncor with the Commission for approval. Oncor shall file such a plan within 60 days of the date of the final order in Docket No. 34077. Notwithstanding this agreement, this issue may be addressed in
subsequent rate proceedings. 
  

	 	z.	 From January 1, 2008 until December 31, 2012, Oncor will agree to the Customer Service metric proposed by Cities Witness Norwood (annual average response
time for customer calls to Oncor’s telephone call center shall not exceed 60 seconds), with 

  

 46 

	 	 
a total payment not to exceed $2 million on an annual basis, to be paid in accordance with a plan filed by Oncor with the Commission for approval. Oncor
shall file such a plan within 60 days of the date of the final order in Docket No. 34077. 

  

	 	aa.	Oncor will file its advanced metering deployment plan with the Commission before July 1, 2008; provided, however, that should the Commission take action to materially alter the
existing requirements for advanced metering deployment, Oncor reserves its rights to delay the filing for a reasonable time as may be necessary to address any such requirements. The advanced meters deployed will support DSM programs to the extent
required by the Commission’s rules. 

  

	 	bb.	TEF, Oncor, TXU Corp. and its subsidiaries, and any legislative advocacy group to which any of the parties are members, and the other Signatories will agree not to pursue, support
or propose legislation that would change or abrogate any of the terms of this Stipulation except that this Stipulation is not intended to impair the ability of the Staff, OPC or the State to communicate with or respond to a request of a member of
the Texas Legislature; provided that if legislation discussed in Finding of Fact No. 14.x is considered in future sessions, Oncor reserves the right to participate in that legislative process. 

  

	 	cc.	Oncor will comply with the commitments identified in the direct and rebuttal testimonies of Frederick M. Goltz and Robert S. Shapard (“the “Oncor Commitments”), which
are reflected in Finding of Fact Nos. 13.a through 13.v and as replaced or supplemented as described herein. Oncor will make annual reports to the Commission regarding its compliance with the Oncor Commitments. 

  

	 	dd.	Oncor will agree to make an exception to the standard transformer loss adjustment of 0.8% for high-voltage customers that are metered on the low side of the transformer, provided
that the customer can provide third-party verification of the actual loss level. 

  

	 	ee.	Oncor will propose and support a cost-based retail transformation tariff applicable to industrial customers in its 2008 rate filing. Parties are free to take any position with
respect to the proposed tariff. 

  

	15.	The Stipulation is reasonable, supported by the evidence, and in the public interest. 

  

	16.	The Transaction is in the public interest. 

  

 47 

 Findings in Accordance with Preliminary Order 
  

	17.	On August 23, 2007, the Commission issued its Preliminary Order in this docket, identifying the issues to be considered in determining whether the Transaction is consistent
with the public interest. The Commission also identified the criteria it will evaluate in making the public interest determination. 

  

	18.	Given the issues identified in the Preliminary Order, the following facts favor a finding that the Transaction is consistent with the public interest: 

  

	 	a.	The Transaction will not adversely affect the health or safety of Oncor’s customers or employees. (Preliminary Order, Issue No. 2, at 3). Oncor’s quality of service
and customer service commitments, as contained in the Stipulation, support this finding. (Stipulation, paragraphs I.(46), (47), and (48)). 

  

	 	b.	The Transaction will not result in the transfer of jobs of citizens of this state to workers domiciled outside this state. (Preliminary Order, Issue No. 3, at 3). TEF witness
Goltz testified that the Transaction would not result in the transfer of jobs to workers located outside Texas. (TEF Ex.     , p. 21). 

  

	 	c.	The Transaction will not result in a decline in service. (Preliminary Order, Issue No. 4, at 3). Oncor’s and TEF’s commitments to specific system SAIDI and SAIFI
Performance Standards, a Worst Performance Feeder Standard, Street Lighting Performance Standard, and a Customer Service metric support this finding. (Stipulation, paragraphs I.(46), (47), and (48)). 

  

	 	d.	The Transaction will not result in Texas ratepayers bearing any Transaction-related costs unrelated to the corresponding benefits to Texas ratepayers. (Preliminary Order, Criterion
No. 1, at 3). The commitment by TEF and Oncor in the Stipulation that Oncor will not seek to include Transaction costs in its rates supports this finding. (Stipulation, paragraph I.(18) and (40)). 

  

	 	e.	No additional guarantees should be required to ensure that the service quality and customer relations are commensurate with the requirements of PURA. (Preliminary Order, Criterion
No. 2, at 3). The Stipulation imposes specific system SAIDI and SAIFI Performance Standards, a Worst Performance Feeder Standard, Street Lighting Performance Standards, and a Customer Service metric that make additional guarantees unnecessary.
(Stipulation, paragraphs I.(46), (47), and (48)). 

  

 48 

	 	f.	No additional guarantees or commitments are required to ensure that no cost-shifting, cross subsidies, or discriminatory behavior occurs among Oncor’s affiliates. (Preliminary
Order, Criterion No. 3, at 3). TEF witness Goltz described ring-fencing provisions to be implemented that, in conjunction with the Commission’s Substantive Rules, provide adequate protection against cost-shifting, cross-subsidies, or
discriminatory behavior among Oncor’s affiliates. (TEF Ex.     , pp. 14-16; Stipulation, paragraphs I.13-15). 

  

	 	g.	The ring-fencing proposed by TEF and Oncor will separate and help protect Oncor from bankruptcy or financial distress of an unregulated affiliate. (Preliminary Order, Criterion
No. 4, at 4). TEF’s and Oncor’s commitments to implement the proposed ring-fencing mechanisms in conjunction with their agreements in the Stipulation support this finding. (TEF Ex.     , pp. 8-15;
Stipulation, paragraphs I.1-5, 11-16, 20-22, 26-30, 32, 34-37). 

  

	 	h.	Additional guarantees or commitments are not required to ensure that Oncor’s debt ratings as a result of this Transaction have no negative effect on ratepayers. (Preliminary
Order, Criterion No. 5, at 4). Commitments made by TEF and Oncor in the Stipulation ensure that Oncor’s cost of debt shall not increase for five years as a result of the Transaction. (Stipulation, paragraphs I.5, 19, 36-38).

  

	 	i.	Oncor will make annual reports to the Commission regarding its compliance with the Oncor commitments. (Preliminary Order, Criterion 6, at 4). 

  

	 	j.	Given the Stipulation, the commitments made by the Oncor and TEF are consistent with the public interest. (Preliminary Order, Criterion No. 7, at 4). 

II. Conclusions of Law 
  

	1.	Oncor is an electric utility as that term is defined in Section 31.002(6) of the Public Utility Regulatory Act, Title II, Texas Utilities Code (“PURA”) and is a
wholly owned subsidiary of TXU Corp. 

  

	2.	The Commission asserts jurisdiction over the parties and the subject matter of the Stipulation by virtue of § 14.101 of PURA. 

  

	3.	Notice has been given to all affected persons as required by P.U.C. Proc. R. 22.55. 

  

 49 

	4.	Consideration of the following issues identified in the Preliminary order is not necessary to a public interest definition given the type of transaction involved in this docket,
which does not involve the sale of the utility’s assets or a merger of operating utilities: 

 a. The reasonable value of
the property, facilities, or securities to be acquired, disposed of, merged, transferred, or consolidated (Preliminary Order Issue No. 1, at 3). 
 b. Will the public utility receive consideration equal to the reasonable value of the assets when it sells, leases, or transfers assets? (Preliminary Order Issue No. 1, at 5). 
  

	5.	The Signatories’ application was processed in accordance with the requirements of PURA and the Texas Administrative Procedure Act, Tex. Gov’t Code Ann. §§
2001.001-.902. 

  

	6.	The Commission’s consideration of the Stipulation complies with PURA § 14.054 and P.U.C. Proc. R. 22.206. 

  

	7.	The terms of the Stipulation are supported by a preponderance of the evidence. 

  

	8.	The Transaction, in light of the provisions of the Stipulation, is consistent with the public interest within the meaning of PURA § 14.101. 

 III. ORDERING PARAGRAPHS 
 Based on
the foregoing Findings of Fact and Conclusions of Law, the Commission issues the following orders: 
  

	1.	The Transaction is consistent with the public interest within the meaning of PURA § 14.101. 

  

	2.	TEF and Oncor are hereby ordered to comply with the terms of the Stipulation, as set forth in this Order. 

  

	3.	All motions, applications, and requests for entry of specific findings of fact and conclusions of law, and other requests for relief, general and specific, if not expressly granted
herein are denied for lack of merit. 

 SIGNED AT AUSTIN, Texas on the      day of
                , 2007. 
  

 50 

	
	PUBLIC UTILITY COMMISSION OF TEXAS
	
	  

	PAUL HUDSON, CHAIRMAN
	
	  

	JULIE C. PARSLEY, COMMISSIONER
	
	  

	BARRY T. SMITHERMAN, COMMISSIONER

  

 51 

 Exhibit B 
 Allocation of One-Time Credit Provided in Paragraph IV(35) of Stipulation 
  

				
	 Customer Class
	  	Amount Allocated to Class
	 Residential
	  	$	32,983,398.59
		
	 Sec<=10 kW
	  	$	790,769.48
		
	 Sec>10kW
	  	$	26,427,614.56
		
	 Pri<=10kW
	  	$	11,163.78
		
	 Pri>10kW
	  	$	5,279,308.63
		
	 Transmission
	  	$	5,401,089.92
		
	 Lighting
	  	$	1,106,655.05

 Credit Methodology 
 General 
 The credit will be calculated on a spreadsheet basis based on a combination of 2006 Test Year information
and December 31, 2007 information. The credit amount will be sent to the participating REP with supporting documentation. The credit will be calculated and credited outside of the normal Oncor billing process and will not be part of the
standard 810 transaction. 
 Residential Service ($32,983,398.59) 
 The Residential Rate Class credit will be based on a fixed $ amount per Residential Customer that will be calculated as follows: $32,983,398.59/ Total Number of participating REP Residential Customers as of December 31, 2007.

 The fixed $ amount per Residential Customer will be applied to the number of Residential Customers for each participating REP as of December 31,
2007. The amount calculated will be the Residential Rate Class credit for that participating REP. 
 Secondary Service Less Than or Equal to 10 kW
($790,769.48) 
 Same process used for Residential Service. 

 Secondary Service Greater Than 10 kW ($26,427,614.56) 
 The Secondary Service Greater Than 10 kW credit will be determined based on each customer’s 2007 annual kWh consumption as a percentage of the total 2007
participating REP’s annual Secondary Service Greater Than 10 kW class kWh. 
 Each individual customer’s percentage will be multiplied by the total
class credit of $26,427,614.56. The credit for each customer will be totaled for each participating REP based on the participating REP’s customers as of December 31, 2007. 
 Primary Service Less Than or Equal to 10 kW ($11,163.78) 
 Same process used for Residential Service. 
 Primary Service Greater Than 10 kW ($5,279,308.63) 
 Same process used
for Secondary Service Greater Than 10 kW. 
 Transmission Service ($5,401,089.92) 
 Same process used for Secondary Service Greater Than 10 kW. 
 Lighting Service ($1,106,655.05) 
 The Lighting Service credit of $1,106,655.05 will be allocated to the various types of lights based on the light type’s percentage of the total revenue for the 2006
test year. 
  

							
	 Light Type
	  	% of 2006 Test Year
Lighting
Revenue	 	 	Refund
	 Schedule A
	  	58.88	%	 	$	651,750.58
	 Schedule B
	  	8.66	%	 	$	95,811.58
	 Schedule C
	  	0.03	%	 	$	386.34
	 Schedule D
	  	2.23	%	 	$	24,725.58
	 Metered (Non-Company)
	  	1.7	%	 	 	18,622.17
	 Metered (Company)
	  	0.4	%	 	 	4,420.61
	 Outdoor Lights
	  	28.1	%	 	 	310,938.20
		  	 	 	 	 	 
	 Total
	  	100.0	%	 	$	1,106,655.06

 For Street Light Schedules A, B, C, D, and Outdoor Lights, the credit will be based on a fixed $ amount per light
type calculated by dividing the allocated amount for each light type by each participating REP’s number of lights in that type as of December 31, 2007. 
 For metered streetlight service, the credit will be calculated for each metered premise based on each participating REP’s metered premises’ 2007 annual revenue as a percentage of the total 2007 revenue for metered Street Light
Service. 
  

 2

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