TXU Txu Corp

Original price reduction increased and accelerated for customers DALLAS, May 29 /PRNewswire-FirstCall/ -- Texas Energy Future Holdings Limited Partnership (TEF) -- the holding company formed by Kohlberg Kravis Roberts & Co. (KKR), Texas Pacific Group (TPG) and other investors to acquire TXU Corp. -- and TXU Corp. (NYSE:TXU), today announced that upon close of the transaction, TXU Energy, the retail subsidiary of TXU Corp., will deliver an unprecedented price cut totaling 15 percent for most residential customers compared to the prices in effect when the merger was announced. This price cut will lead to a combined savings of approximately $400 million annually or $395 per typical single-family household. "This issue was debated during the 80th session of the Texas legislature that ended yesterday. We listened closely and we understand that the driving force behind the legislation was the desire of elected officials to lower prices for residential customers," said Michael MacDougall, a partner with Texas Pacific Group. As a result of the transaction, TXU Energy will provide most customers in its traditional service area, over one million customers, a 15 percent price reduction as compared to prices in effect when the merger was announced. This unprecedented price reduction applies to residential customers in TXU Energy's traditional service area who have not already selected one of TXU Energy's other retail plans. In addition to this price cut, TXU Energy customers who were eligible to receive the $100 appreciation bonus will still receive the final $25 installment of the bonus. TEF and TXU Energy had previously announced a total price cut of 10 percent. Of that rate cut, six percent was delivered in March and four percent was to be delivered upon the close of the merger, which is expected late this year. Instead, these residential customers will now receive the full 10 percent price cut in early June and receive an additional 5 percent when the transaction closes, bringing the total price cut to 15 percent. "This is another way that we plan to strengthen TXU's commitment to providing customer value," MacDougall said. In addition to the price cut, upon the merger closing, these customers will receive price protection at the 15 percent discounted level through December 2008 -- protection against price increases due to changing energy market conditions. In addition, TEF confirmed today its commitment to hold a majority of its ownership stake in the company for a minimum of five years from closing, and that Oncor will not incur any new debt to finance the merger transaction at closing or thereafter. TEF is also committing to establish a separate board of directors for each of TXU Corp.'s three operating companies. These, among a number of TEF's other commitments, were part of the 14.101 filing TEF and TXU made with the Public Utility Commission (PUC) on April 25, 2007, as part of the regulatory process associated with the transaction. TEF and TXU have asked the PUC to hold them accountable for these commitments. With the 15 percent price cut, residential customers using an average of 1,500 kilowatt-hours of electricity a month will pay approximately 12.4 cents per kWh and save an average of approximately $395 annually on their electric bills. The price reduction affects existing customers on the company's most popular month-to-month pricing plans, making those plans lower than all other incumbents' Price-to-Beat rollover prices. TXU SESCO Energy residential customers who have not selected a different plan will also receive a price discount that will result in the same 12.4 cents per kWh price, based on average monthly usage of 1,500 kilowatt-hours of electricity. "This 15 percent price cut will provide our customers with lower prices, price protection and an appreciation bonus payment unmatched by any competitor," said Jim Burke, chief executive officer, TXU Energy. The entire list of TEF's commitments, as filed with the PUC in its 14.101 filing, includes the following: -- No Transaction-Related Debt at Oncor Commitment -- Oncor will not incur, guaranty or pledge assets in respect of any incremental new debt related to financing the transaction at the closing or thereafter. Oncor's financial integrity will be protected from the separate operations of TXU Energy and Luminant. -- Debt-to-Equity Ratio Commitment -- Oncor's debt will be limited so that its regulatory debt-to-equity ratio is at or below the assumed debt-to-equity ratio established from time to time by the PUC for ratemaking purposes, which is currently set at 60 percent debt to 40 percent equity. For ratemaking purposes, in its scheduled rate cases in 2007 and 2008, Oncor will support a cost of debt that does not exceed Oncor's actual cost of debt immediately prior to the announcement of the transaction. -- Name Change Commitment -- TEF committed to changing the name of TXU Electric Delivery Company to Oncor Electric Delivery Company on or before closing of the transaction. And, in fact, the name of TXU Electric Delivery Company was changed to Oncor Electric Delivery Company on April 24, 2007. Oncor's logo will be separate and distinct from the logos of the parent, TXU Corp., the retail electric provider, which will retain the TXU Energy name (TXU Energy), and the power generation company, which announced on May 3, 2007, that it will rebrand as Luminant Energy. -- Separate Board Commitment -- At closing and thereafter, Oncor will have a separate board of directors that will not include any members from the boards of directors of TXU Energy or Luminant. -- Separate Headquarters Commitment -- Within a reasonable transition period after closing of the transaction, not to exceed 6 months, Oncor's headquarters will be located in a separate building from the headquarters and operations of TXU Energy and Luminant. -- Capital Expenditure Commitment -- Following the closing of the transaction, Oncor will continue to make capital expenditures consistent with the capital expenditures in Oncor's business plan. Total capital spending will depend in part on economic and population growth in Texas, as well as permitting and siting outcomes. However, in any event, over the five years following the year in which closing of the transaction occurs, Oncor will make capital expenditures in connection with its transmission and distribution business in an aggregate amount of more than $3.0 billion. -- DSM/Energy Efficiency Commitment -- Over the five years following the year in which closing occurs, subsidiaries of TXU Corp. will expend an aggregate of at least $200 million on demand-side management/energy efficiency programs (DSM) over the amount included by the PUC in Oncor's rates. This commitment is expected to double the level of spending on DSM currently included in Oncor's rates. Oncor will not seek to recover in rates any of the $200 million in incremental DSM expenditures. -- Service and Safety Commitment -- Oncor will support the inclusion of negotiated commitments with appropriate stakeholders regarding reliability, customer service and employee safety in any final order regarding the transaction issued pursuant to PURA Section 14.101. -- Rate Case Commitment -- If, for any reason, the PUC has not initiated a general rate proceeding for Oncor or its predecessor prior to July 1, 2008, Oncor will not later than that date file a general rate case at the PUC, consistent with its currently effective settlement agreement with certain municipalities. -- Continued Ownership Commitment -- TEF will hold a majority of its ownership interest in Oncor, in the current regulatory system, for a period of more than five years after the closing date of the transaction. In addition to the commitments listed above, TEF and Oncor have made additional commitments in the 14.101 filing to support the separation of Oncor from the rest of TXU Corp. and its subsidiaries. These commitments are as follows: -- Holding Company Commitment -- A new holding company, Oncor Electric Delivery Holdings, will be formed between TXU Corp. and Oncor. -- Independent Board Commitment -- Each of Oncor Electric Delivery Holdings and Oncor will have a board of directors comprised of at least nine persons. A majority of the board members of each of Oncor Electric Delivery Holdings and Oncor will qualify as "independent" in all material respects in accordance with the rules and regulations of the New York Stock Exchange, from TXU Corp. and its subsidiaries (including TXU Energy and Luminant), TPG and KKR. Consistent with TEF's commitments, the directors of Oncor and Oncor Electric Delivery Holdings will also not include any members from the boards of directors of TXU Energy or Luminant. -- Affiliate Asset Transfer Commitment -- Neither Oncor Electric Delivery Holdings nor Oncor will transfer any material assets or facilities to any affiliates (other than Oncor Electric Delivery Holdings, Oncor and their subsidiaries), other than such transfer that is on an arm's length basis consistent with the PUC's affiliate standards applicable to Oncor, regardless of whether such affiliate standards would apply to the particular transaction. -- Arm's Length Relationship Commitment -- Oncor Electric Delivery Holdings and Oncor will maintain an arm's length relationship with TXU Corp. and its subsidiaries (other than Oncor Electric Delivery Holdings, Oncor and their subsidiaries) consistent with the PUC's affiliate standards applicable to Oncor. -- Separate Books and Records Commitment -- Oncor Electric Delivery Holdings and Oncor will maintain accurate and appropriate detailed books, financial records and accounts, including checking and other bank accounts, and custodial and other securities safekeeping accounts that are separate and distinct from those of any other entity. TEF has also made other commitments unrelated to Oncor's business and the 14.101 proceeding. These commitments are as follows: -- 15 Percent Price Cut -- Upon closing the transaction, TXU Energy will provide a 15 percent price reduction (applicable to certain residential prices that were in effect on December 31, 2006) for residential customers in its traditional service area who have not already selected one of TXU Energy's competitive retail offers. Additionally, TXU Energy customers entitled to receive the $100 customer appreciation bonus payments will receive the final $25 installment of that bonus. -- Increased Low Income Support Commitment -- TEF and TXU Energy have made an unparalleled commitment of more than $30 million per year to providing relief for low-income residents. In addition to the $150 million commitment, the TXU Energy Access program will include new demand side management initiatives in conservation, energy efficiency and weatherization. -- Five Year TXU Corp. Investment Commitment -- In the current regulatory system, the investor group will commit to hold a majority of its ownership in TXU Corp. for more than five years after the transaction closes. -- Coal Unit Commitment -- The planned coal-fueled generation units will be reduced from 11 to three. Plans to build the other eight coal-fueled units have been suspended and will be cancelled when the transaction is closed. -- Emerging Technologies Commitment -- Significant resources will be invested in emerging energy technologies, such as integrated gasification combined cycle coal plants, including an increased commitment to renewable energy. About TXU TXU Corp., (NYSE:TXU) a Dallas-based energy company, manages a portfolio of competitive and regulated energy businesses primarily in Texas. In the competitive TXU Energy Holdings segment (electricity generation, wholesale marketing and retailing), TXU Energy provides electricity and related services to more than 2.1 million competitive electricity customers in Texas. TXU Power has over 18,100 MW of generation in Texas, including 2,300 MW of nuclear and 5,800 MW of coal-fueled generation capacity. TXU Wholesale optimizes the purchases and sales of energy for TXU Energy and TXU Power and provides related services to other market participants. TXU Wholesale is the largest purchaser of wind-generated electricity in Texas and fifth largest in the United States. Power generation and related businesses, such as TXU Power and TXU Wholesale, plan to transition toward the new Luminant Energy brand. Visit http://www.txucorp.com/ for more information about TXU Corp. About Texas Energy Future Holdings Texas Energy Future Holdings Limited Partnership is the holding company formed by Kohlberg Kravis Roberts & Co., Texas Pacific Group and other investors to acquire TXU Corp. TXU Corp., a Dallas-based energy company, manages a portfolio of competitive and regulated energy businesses primarily in Texas. For more information, visit http://www.texasenergyfuture.com/. DATASOURCE: TXU Corp.; Texas Energy Future Holdings Limited Partnership CONTACT: Jeff Eller, of Texas Energy Future Holdings Limited Partnership, +1-512-432-1760, , or ; or Corporate Communications, Lisa Singleton, +1-214-812-5049, , or Sophia Stoller, +1-214-875-8336, , or Investor Relations, Tim Hogan, +1-214-812-4641, or Bill Huber, +1-214-812-2480, or Steve Oakley, +1-214-812-2220, all of TXU Corp. Web site: http://www.txu.com/ http://www.texasenergyfuture.com/

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