1263050--3/8/2007--TXU_ENERGY_CO

related topics

{financial, litigation, operation}

{operation, natural, condition}

{debt, indebtedness, cash}

{gas, price, oil}

{cost, operation, labor}

{interest, director, officer}

{system, service, information}

{condition, economic, financial}

{personnel, key, retain}

{capital, credit, financial}

Risks Relating to TXU Energy Company s Businesses TXU Energy Company s businesses are subject to ongoing complex governmental regulations and legislation that have impacted, and may in the future impact, TXU Energy Company s business and/or results of operations. The litigation environment in which TXU Energy Company operates poses a significant risk to its businesses. TXU Energy Company may lose a significant number of retail customers in its historical service territory due to competitive REP marketing activity and faces competition from incumbent providers outside its historical service territory. TXU Energy Company s revenues and results of operations may be negatively impacted by decreases in market prices for power, decreases in prices of commodities, such as natural gas, and decreases in market heat rates. TXU Energy Company may suffer material losses, costs and liabilities due to its ownership and operation of the Comanche Peak nuclear generation plant. The operation and maintenance of electricity generation facilities involves significant risks that could adversely affect TXU Energy Company s results of operations and financial condition. TXU Corp. s growth strategy for TXU Energy Company s businesses may not be executed as planned which could adversely impact its financial condition and results of operations. TXU Energy Company s retail business is subject to the risk that sensitive customer data may be compromised, which could result in an adverse impact to its reputation and/or results of operations of the retail business. Ongoing performance improvement initiatives may not achieve desired cost reductions and may instead result in significant additional costs if unsuccessful. TXU Energy Company 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 Company s business and results of operations. TXU Energy Company offers bundled services to its retail customers, with some bundled services offered at fixed prices and for fixed terms. If TXU Energy Company s costs for these bundled services exceed the prices paid by its customers, TXU Energy Company s results of operations could be materially adversely affected. TXU Energy Company s retail business is subject to the risk that it will not be able to profitably serve its customers given the announced price protection and price cuts, which could result in an adverse impact to its reputation and/or results of operations of the retail business. Changes in technology may reduce the value of TXU Energy Company s generation plants and may significantly impact its business in other ways as well. TXU Energy Company s future results of operations may be negatively impacted by settlement adjustments determined by ERCOT related to prior periods. TXU Energy Company s results of operations and financial condition could be negatively impacted by any development or event beyond its control that causes an economic weakness in the ERCOT region. Downgrades in TXU Energy Company s credit ratings could negatively affect its ability to access capital and could require TXU Energy Company to post collateral or repay certain indebtedness. TXU Energy Company is a holding company, and its obligations are structurally subordinated to existing and future liabilities of its subsidiaries. In the future, TXU Energy Company could have liquidity needs that could be difficult to satisfy under some circumstances. Risks Relating to the Proposed Merger TXU Energy Company cannot make any assurance that the proposed merger will be consummated. TXU Energy Company may not be able to attract or retain key management employees. TXU Energy Company will have substantially more debt. Indebtedness incurred in connection with the proposed merger will cause the subordination of existing indebtedness.

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1263050--3/8/2007--TXU_ENERGY_CO_LLC