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TXU settlement proposal endorsed


DALLAS, June 21, 2002 — The sweeping settlement plan for TXU and its two wholly owned subsidiaries, TXU Energy and Oncor, to resolve all major pending issues related to the company’s transition to competition was approved recently by the Public Utility Commission of Texas.

The settlement, which has the endorsement of major customer groups in the state as well as the PUCT staff, was filed with the Commission in late December following months of negotiation.

Tom Baker, President of Oncor, said, “We’re obviously pleased with the Commission’s decision recently, but more importantly, the Commission recognized that this settlement will benefit consumers, TXU and the market as a whole, so everyone is excited to see those benefits begin to flow as soon as possible.”

Parties to the settlement include the PUCT staff, the Office of Public Utility Counsel, the Coalition of Cities served by Oncor Energy Delivery, Texas Industrial Energy Consumers, Texas Retailers Association, and a new retail electric provider for the state.

Among other things, the agreement resolves transmission and distribution rates, the true-up in 2004 of stranded costs related to generation plant, securitization of regulatory assets, collection of current unrecovered fuel costs, reconciliation of 3 1/2 years of fuel expenses and the retail and wholesale “clawbacks.”

The retail clawback provision was included in the Texas Electric Choice Act of 1999 to serve as an incentive for the affiliated retail electric provider of the utilities to actively compete for customers. The settlement does not remove regulatory oversight of the company’s energy delivery business nor does it eliminate TXU Energy’s Price-to-Beat and related possible fuel factor adjustments.

Baker said that with these issues resolved, it provides all of the market participants a clearer perspective of the competitive landscape within the TXU service territory, eliminating uncertainty. It also eliminates the possibility that consumers could have owed stranded cost charges as a result of the 2004 true-up. Except for adjustments related to the fuel factor, TXU Energy’s residential and small commercial consumer prices will remain constant through the transition period.

TXU provides electric and natural gas services, merchant energy trading, energy marketing, energy delivery, telecommunications, and energy-related services. TXU owns or controls extensive generation around the world and is an energy trader globally. TXU, which sells over 330 million megawatt hours of electricity and 2.8 trillion cubic feet of natural gas annually, serves over 11 million customers worldwide, primarily in the US, Europe and Australia. Visit www.txu.com for more information on TXU.