1193311--3/3/2009--ONCOR_ELECTRIC_DELIVERY_CO

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{operation, natural, condition}

{condition, economic, financial}

{cost, contract, operation}

{financial, litigation, operation}

{cost, operation, labor}

{cost, regulation, environmental}

{personnel, key, retain}

Risks Relating to Oncor s Businesses Oncor s businesses are subject to ongoing complex governmental regulations and legislation that have impacted, and may in the future impact, its business and/or results of operations. The litigation environment in which Oncor operates poses a significant risk to its businesses. Oncor s revenues are concentrated in a small number of customers, and any delay or default in payment could adversely affect its cash flows, financial condition and results of operations. Disruptions at power generation facilities owned by third parties could interrupt Oncor s sales of transmission and distribution services. Oncor s revenues and results of operations are seasonal. The operation and maintenance of electricity delivery facilities involves significant risks that could adversely affect Oncor s results of operations and financial condition. The rates of Oncor s electric delivery business are subject to regulatory review, and may be reduced below current levels, which could adversely impact Oncor s financial condition and results of operation. Oncor s capital deployment program may not be executed as planned, which could adversely impact its financial condition and results of operations. Ongoing performance improvement initiatives may not achieve desired cost reductions and may instead result in significant additional costs if unsuccessful. In addition, Oncor may incur significant transition costs and/or experience significant operational disruptions in connection with the termination of its outsourcing arrangement with Capgemini. Changes in technology may reduce the value of Oncor s electricity delivery facilities and may significantly impact Oncor s businesses in other ways as well. Oncor s results of operations and financial condition could be negatively impacted by any development or event beyond Oncor s control that causes economic weakness in the ERCOT market. Oncor s credit ratings could negatively affect Oncor s ability to access capital The loss of the services of Oncor s key management and personnel could adversely affect Oncor s ability to operate its businesses. The global financial crisis has caused unprecedented market volatility and may have impacts on Oncor s business and financial condition that Oncor currently cannot predict. In the future, Oncor could have liquidity needs that could be difficult to satisfy under some circumstances, especially in uncertain financial market conditions. The allocated costs of providing pension and other postretirement employee benefits and related funding requirements are subject to changes in pension fund values, changing demographics and fluctuating actuarial assumptions and may have a material adverse effect on Oncor s results of operations and financial condition. As was the case in the fourth quarter 2008 (as discussed in Notes 1 and 3 to Financial Statements), goodwill that Oncor has recorded in connection with the Merger is subject to at least annual impairment evaluations and as a result, Oncor could be required to write off some or all of this goodwill, which may reflect adverse impacts on Oncor s financial condition and results of operations. Oncor s ring-fencing measures may not work as planned.

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1193311--3/3/2009--ONCOR_ELECTRIC_DELIVERY_CO_LLC