1098911--3/14/2008--CENTERPOINT_ENERGY_TRANSITION_BOND_CO

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Future state legislative action could reduce the value of the transition bonds. The Texas Utility Commission might take actions that could reduce the value of the transition bonds. Inaccurate consumption forecasting or unanticipated delinquencies or charge-offs might reduce scheduled payments on the transition bonds. We depend on CenterPoint Houston or its successor or assignee, acting as servicer of the transition property. If we replace CenterPoint Houston as the servicer, we may experience difficulties finding and using a replacement servicer. It might be difficult to collect transition charges from REPs. Competitive metering services might result in unexpected problems in receiving accurate metering data. Changes to billing and collection practices might reduce the value of the transition bonds. Limits on rights to terminate service might make it more difficult to collect the transition charges. Future adjustments to transition charges by customer class might result in insufficient collections. Risks Associated with the Unusual Nature of the Transition Property We will not receive transition charges in respect of electric service provided more than 15 years from the date of issuance of the transition bonds. Foreclosure of the trustee s lien on the transition property might not be practical, and acceleration of the transition bonds before maturity might have little practical effect. Risks Associated with Potential Bankruptcy Proceedings of CenterPoint Houston or a Successor Servicer The servicer will commingle the transition charges with other revenues it collects, which might obstruct access to the transition charges in case of the servicer s bankruptcy and reduce the value of the transition bonds. The bankruptcy of CenterPoint Houston, as seller of the transition property, might result in losses or delays in payments on the transition bonds. The sale of the transition property might be construed as a financing and not a sale in a case of CenterPoint Houston s bankruptcy which might delay or limit payments on the transition bonds. If the servicer enters bankruptcy proceedings, the collections of the transition charges held by the servicer as of the date of bankruptcy might constitute preferences, which means these funds might be unavailable to pay amounts owing on the transition bonds. Claims against CenterPoint Houston might be limited in the event of its bankruptcy. The bankruptcy of CenterPoint Houston might limit the remedies available to the trustee. Risks Associated with Potential Bankruptcy Proceedings of REPs REPs may commingle the transition charges with other revenues they collect. This may cause losses on or reduce the value of the transition bonds in the event a REP enters bankruptcy proceedings. If a REP enters bankruptcy proceedings, any cash deposit of the REP held by the trustee might not be available to cover amounts owed by the REP. If a REP enters bankruptcy proceedings, transition charge payments made by that REP to the servicer might constitute preferences, and the servicer may be required to return such funds to the bankruptcy estate of the REP. Other Risks Associated with an Investment in the Transition Bonds We may incur expenses in excess of caps on such expenses provided in the financing order. CenterPoint Houston s indemnification obligations under the transition property sale and servicing agreements are limited and might not be sufficient to protect the value of the transition bonds.

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1098911--3/14/2008--CENTERPOINT_ENERGY_TRANSITION_BOND_CO_LLC