1263050--3/6/2006--TXU_ENERGY_CO

related topics

{financial, litigation, operation}

{operation, natural, condition}

{gas, price, oil}

{debt, indebtedness, cash}

{condition, economic, financial}

{cost, operation, labor}

TXU Energy Holdings businesses are subject to ongoing complex governmental regulations and legislation that have impacted, and may in the future impact, TXU Energy Holdings business and/or results of operations. TXU Energy Holdings may be forced to sell power at less than its acquisition cost or lose a significant number of retail customers in its historical service territory and faces competition from incumbent providers outside its historical service territory. TXU Energy Holdings revenues and results of operations may be negatively impacted by decreases in market prices for power, decreases in commodity prices, such as natural gas and decreases in market heat rates. TXU Energy Holdings assets or positions cannot be fully hedged against changes in commodity prices and market heat rates, and its hedging procedures may not work as planned or hedge counterparties may default on their obligations to TXU Energy Holdings. TXU Energy Holdings may suffer material losses, costs and liabilities due to its ownership and operation of the Comanche Peak nuclear power plant. The operation and maintenance of power production facilities involves significant risks that could adversely affect TXU Energy Holdings results of operations and financial condition. TXU Energy Holdings cost of compliance with environmental laws are significant, and the cost of compliance with new environmental laws could materially adversely affect TXU Energy Holdings results of operations and financial condition. TXU Corp. s growth strategy for TXU Energy Holdings businesses 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. TXU Energy Holdings relies on the infrastructure of local utilities or independent transmission system operators to provide electricity to, and to obtain information about, their customers. Any infrastructure failure could negatively impact customer satisfaction and could have a material negative impact on TXU Energy Holdings business and results of operations. TXU Energy Holdings offers bundled services to its retail customers, with some offerings at fixed prices and for fixed terms. If TXU Energy Holdings costs for these bundled services exceed the prices paid by its customers, TXU Energy Holdings results of operations could be materially adversely affected. Changes in technology may reduce the value of TXU Energy Holdings power plants and may significantly impact its business in other ways as well. TXU Energy Holdings future results of operations may be negatively impacted by settlement adjustments determined by ERCOT related to prior periods. TXU Energy Holdings results of operations and financial condition could be negatively impacted by any development or event beyond its control that causes a material weakness in Texas or the ERCOT region. A downgrade in TXU Energy Holdings credit ratings could negatively affect its ability to access capital and could require TXU Energy Holdings to post collateral or repay certain indebtedness. TXU Energy Holdings is a holding company, and its obligations are structurally subordinated to existing and future liabilities of its subsidiaries. In the future, TXU Energy Holdings could have liquidity needs that could be difficult to satisfy under some circumstances.

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1263050--3/6/2006--TXU_ENERGY_CO_LLC