1. EEI Conference
C. John Wilder
Chief Executive Officer
November 7, 2006
Safe Harbor Statement
This presentation contains forward-looking statements, which are subject to various risks and uncertainties.
Discussion of risks and uncertainties that could cause actual results to differ materially from management's
current projections, forecasts, estimates and expectations is contained in the company's SEC filings.
Specifically, the company makes reference to the section entitled “Risk Factors” in its annual and quarterly
reports, particularly the risk factor relating to its new build program in Texas. In addition to the risks and
uncertainties set forth in the company's SEC filings, the forward-looking statements in this presentation could
be affected by actions of rating agencies, the ability of the company to attract and retain profitable
customers, changes in demand for electricity, the impact of weather, changes in wholesale electricity prices
or energy commodity prices, the company’s ability to hedge against changes in commodity prices and
market heat rates, the company’s ability to fund certain investments described herein, delays in approval of,
or failure to obtain, air and other environmental permits and the ability of the company to resolve the consent
decree issue regarding the new Sandow 5 unit, changes in competitive market rules, changes in
environmental laws or regulations, changes in electric generation and emissions control technologies,
changes in projected demand for electricity, the ability of the company and its contractors to attract and
retain skilled labor, at projected rates, for planning and building new generating units, changes in the cost
and availability of materials necessary for the planned new generation units, the ability of the company to
negotiate and finalize engineering, procurement and construction contracts for its reference plants in a timely
manner and at projected costs, the ability of the company to manage the significant construction program to
a timely conclusion with limited cost overruns, the ability of the company to implement the initiatives that are
part of its performance improvement program and growth strategy and the terms under which the company
executes those initiatives, and the decisions made and actions taken as a result of the company’s financial
and growth strategies, and with respect to the InfrastruX Energy joint venture, the amount of time the PUC
takes to review the transaction and the results of such review.
1

2. Today’s Agenda
TXU Development/TXU Construction
Business Unit
Business Unit TXU Power
Strategies
Strategies TXU Wholesale
TXU Energy
TXU Electric Delivery
America’s Power Challenge
Generation
Generation The Texas Solution
Growth Plan
Growth Plan A National Solution
Short-term Financial Growth
Financial
Financial Financial Sensitivities
Outlook
Outlook Long-term Sources And Uses Of
Cash
2
TXU’s Long-Term Objectives…
1. Drive 3-5% annual improvement in reliability, efficiency, and
1. Drive 3-5% annual improvement in reliability, efficiency, and
service
service
2. Meet Texas’ growing demand for power with 9 GW of new baseload
2. Meet Texas’ growing demand for power with 9 GW of new baseload
power generation
power generation
3. Maintain Texas residential market share by profitably gaining
3. Maintain Texas residential market share by profitably gaining
customers and providing innovative products and services
customers and providing innovative products and services
4. Leverage superior baseload operations, construction expertise,
4. Leverage superior baseload operations, construction expertise,
and structuring skills to build a 10 GW business in other
and structuring skills to build a 10 GW business in other
competitive US markets
competitive US markets
5. Continue to enhance business through building strong
5. Continue to enhance business through building strong
management and ensuring the financial risk profile is
management and ensuring the financial risk profile is
commensurate with the business risk profile
commensurate with the business risk profile
3

3. …Will Be Executed By Businesses That Compete Across The
Entire Value Chain
Transmission
Generation Wholesale Retail and
Distribution
Power TXU Power TXU Wholesale TXU Energy TXU Electric
Development/ Delivery
Construction
Company
2nd largest 6th largest T&D
9 GW active Access to Large scale
company
development deregulated largest ERCOT competitive
program output generation retailer
Top quartile costs
fleet
Up to 3 GW per Low-cost lignite Loyal and reliability
reserves customers
year phase 2 Access to
High growth region
development largest ERCOT
63 TWh of Strong brand
program retail position Efficient capital
recognition
baseload
recovery
Advantaged production in Incumbent
Superior
construction gas on the regulatory No commodity
service
model margin market advocacy and exposure
market design
Active customer Industry-leading expertise No retail customers
solutions performance
business and reliability 4
TXU Power Development/Construction…
To become the
leading originator
and constructor of
Mission
baseload generation
throughout the US
Originate long-term
Develop steady Construct baseload
off-take agreements
pipeline of baseload generation 35%
and equity sell
opportunities to add cheaper and faster
Objectives downs to ensure 30%
3 GW of new capacity and make 5% yearly
of construction is
annually improvement
sold forward
PJM Development Proprietary Construction Muni/Co-op Solutions
Program Whole System Approach
Industrial Solutions
Incumbent Customer Advantaged Relationships
Equity Partnership
Solutions Strategy With Top Contractors And
Solutions
Manufacturers
Industrial Partnerships
Strategies Low-cost Country, Scaled
National Advocacy
Sourcing Program
Initiative
Learning Curve Codification
Program 5

4. …Is Focused On Driving Advantages In Construction Costs
And Origination Channels
Leveraging scale to redefine costs… …and construction time…
06E; $/KW 06; Months
2,000
50 50
1,600
32
1,100
Recent US average TXU target
Recent US average TXU target
antecdotes
anecdotes
…following other successful build programs… …and locking up forward Texas power sales
Kerr McGee Deepwater platform costs Incremental Municipal and Cooperative load
96-04; Index=100 05-15E; Percent
100% = 3.6 GW
30% learning
curve factor
100
Demand not
Active
75 targeted 27% 31% negotiations
50
25
0
42%
96 97 98 99 00 01 02 03 04
Targeted demand 6
TXU Power…
To become the safest
and most productive
Mission operator of baseload
generation in the US
Achieve top decile Sustain year-over-
Achieve industry
reliability and year real productivity
leading safety
Objectives operating cost improvements of 5%
performance
performance across all operations
Safety-first Attitude Reliability Centered TXU Operating
Embedded In Culture Maintenance Program System Phase II
Comprehensive Worldwide Supply Chain Industrial
Training Program Management Partnerships/ Global
Best Practices
Strategies Safety Recognition And Reliability Optimization
Incentive Programs Initiative TXU Academy
Power Optimization Center
7
Integration

5. … Is Focused On Delivering Year-Over-Year Generation
Performance Improvement
…combined with superior coal operations…
Industry-leading safety performance…
Baseload plant lost time rate Capacity factor vs non-fuel O&M
05-06; Incidents/200k hrs 03-08E; Percent, $/KW-yr
100
0.07 08E
05
90
03 Top decile
80
70
0.00 0.00
60
EEI top 05 YTD 06
10 20 30 40 50
decile 1
…and a focus on continuous improvement
…a top-performing nuclear operation…
Capacity factor vs non-fuel O&M2 Industry annual productivity improvements
83-03; Percent
03-08E; Percent, $/KW-yr
08E
100 7
Top decile 05
90 03
80 3
2 2
70 1
60
Steel Telecom Refining US Gen- TXU Power
60 70 80 90 100
1
eration (05-08E) 8
Average of EEI top decile fossil & nuclear lost time rate
2 Normalized for outages & non recurring expenses
TXU Wholesale…
Deliver best in class
energy management
services to internal
Mission
and external
customers
Provide proprietary
Optimize value and Develop and expand
commodity insights
manage risk across wholesale market
Objectives and perform market
TXU native assets presence
advocacy
National Commodities Fundamentals And
Retail Risk Mitigation
Expansion Program Quantitative Analysis
Initiative
Center
Ex-Texas Growth
Commodity Hedging
Initiative National Regulatory
Program
Advocacy Program
Strategies Large Customer
Risk Management
Solutions
Culture
Systems/Process
9
Initiative

6. …Is Focused On Managing Key Risks To Support TXU’s
Growth Objectives
Ensuring competitive fuel sourcing… …and optimizing asset value…
PRB coal cost
03-06E; $/MMBtu
Generation Wholesale Retail
1.43 1.39
1.24 1.23
Selling excess power forward
Purchasing required shaped power
Dispatching power generation
03 04 05 06E
Executing hedging transactions
Millions 6.4 7.8 9.0 9.4
tons of coal
…while actively managing key risks… …all leveraging proprietary market
fundamental perspectives
TXU Corp Net Natural Gas Economic Position
07-10; Million MMBtu Emissions and Weather
Natural Gas
~95 to Heat Rate
175
150
125
~30 to 90 100
75
50
~0 to 10
~(5) to 5
25
0
07 08 09 10
0 20 40 60 80
Cumulative Capacity (GW)
10
TXU Energy…
To become the
national leader
in competitive
Mission
retail electricity
Enter new
Continue
Achieve Achieve 40%
markets to
developing
industry- market share in
grow $50
innovative
Objectives leading ERCOT
million
customer
customer residential
business ex-
solutions and
service retail market
Texas
offerings
Worry-free Service North Texas Three- Customer Loyalty Long-Term
Positioning year Price Programs Commercial
Protection Contract Strategy
Differential Care, Multi- Predictive Modeling
channel Strategies Value-Added Enhanced
Offering Strategy Hedging Program
Churn Minimization
Self-service
Products Strategies
Strategies Technologies Initiative Proprietary Strategic
Technology Customer
Multi-Channel
Development Acquisition
Partnering Strategy
Initiative Initiative
11

7. …Is Focused On Creating An Industry-Leading Retail Model
Industry-leading customer satisfaction… …with a set of innovative offerings…
Average speed to answer Residential product offerings from AREP
03-08E; seconds Oct 06; Number
268
10
5 5
3
2
11 11
Top decile
TXU RRI CPL WTU FC
03 08E
05
…combine to support Texas load growth… …and provide for growth in new markets
Active competition
ERCOT residential load
Potential competition
06-10E; TWh
33
30
Out of
4 11
territory
In
26 22
territory
06 10E
12
TXU Electric Delivery…
To become the most
economical and
Mission reliable shipper of
electricity in the US
Ensure operating Achieve congestion
Achieve top-decile
performance goals reductions of 50%
reliability with SAIDI
while maintaining through grid
Objectives
of less than 60
top-quartile cost management and
minutes per year
performance investment
Asset Rehabilitation Infrastrux Energy Grid Optimization
And Modernization Services Strategic Though Wide Area
Initiative Partnership Visualization Program
Distributed Smart Self-healing Network Via Transmission Grid
Grid Technologies Smart Switches Capacity Initiative
Strategies
Broadband Over Advanced Technology Processor-based
Power Line Network Development Initiative Protection Systems
13

8. … Is Focused On Cost-Efficient And Reliable Performance
Improving system reliability… …and cost structure…
O&M and SG&A per customer
Non-storm SAIDI
03-08E; $/customer
03-08E; Minutes
186 184
166
77
74 70
Top decile
03 05 08E 03 05 08E
… while focusing on technology… …and capital investment
Automated meter installations Average annual capex investment
05-10E; Cumulative (thousands) 81-11E; $ millions
731
600
2,770
407
293
1,570 283
70
05 08E 10E 81-90 91-95 96-00 01-04 06-11E 14
Today’s Agenda
TXU Development/TXU Construction
Business Unit
Business Unit TXU Power
Strategies
Strategies TXU Wholesale
TXU Energy
TXU Electric Delivery
America’s Power Challenge
Generation
Generation The Texas Solution
Growth Plan
Growth Plan A National Solution
Short-term Financial Growth
Financial
Financial Financial Sensitivities
Outlook
Outlook Long-term Sources And Uses Of
Cash
15

9. Key Challenges Facing United States Power Industry
Decreasing reliability caused by power demand growth and
1 generation permitting and construction challenges
Increasing reliance on imported energy caused by a 300 GW
2 buildout of gas capacity combined with decreasing US
reserves
Increasing electricity prices caused by high-priced natural
3 gas and utilization of less efficient generation capacity
Sub-optimal environmental performance caused by
4 continued use of aging, inefficient existing generation
16
1 Decreasing Reliability…
Sustained US power demand growth... …combined with complex policy issues…
US electricity demand Breakeven power prices
05-10E; TWh 06; $/MWh
8% Not
dispatchable
4,200 180
4,000
86
73
60 50-53
3,800
3,600
Solar Wind Nuclear CCGT Coal
05 06 07E 08E 09E 10E
…and projected low reserve margins
…have created a supply-demand imbalance…
07E-11E; GW
Incremental demand and supply growth
06-15E; GW Incremental
141 19
demand exceeds
supply 2.5x 15 15
14 Minimum
11
reserve
9
57 8
margin
07E 5
11E
Demand Supply
ERCOT MRO RFC WECC
17
Source: NERC
Source: NERC

10. … With An Increasing Reliance On Natural Gas…
2
A massive natural gas generation buildout… …has increased US demand for natural gas…
US generation development US natural gas demand
95 - 06; GW 95-05; TCF
296
22 22
4 29%
Power 5 29%
13 9 Other
7 18 17
2 7%
7%
Nat Gas Renew Coal Hydro Other
95 05
Source: Energy Velocity
…causing a growing supply deficit… …and increasing reliance on foreign reserves…
US Natural gas supply and demand World natural gas reserves (100% = 6,338 TCF)
95-10E; TCF 05; Percent
Russia
Other
25
27
Demand
23
41
21
Supply
19
15
Iran
17 3 14
95 97 99 01 03 05 07E 09E U.S. 18
Qatar
3 …Has Caused Increased Prices…
Higher natural gas costs… …and growing demand across the US…
95-10E; $/MMBtu Increase in year over year peak demand by
NERC region
12 343% 06; Percent
343%
10 4.5
8
3.5
3.1
6
2.5
4 2.0
1.7
2
0
95 97 99 01 03 05 07 09
PJM ERCOT SPP CAISO ISO-NE NY-ISO
…is increasing heat rates… …with the expectation of higher prices
ERCOT supply curve example Impact on residential rates
06; $/MWh @ $8/MMBtu gas 06-07E; Percent increase
Peak demand
72
06 10E
59
150
33
100
19
50
0
0 20 40 60 80
IL
MD DE PA
Cumulative Capacity (GW) 19

11. 4 …And Less Than Optimal Environmental Performance
Environmental performance has improved… ...but construction cycles remain long based
on permitting uncertainty…
Electric demand vs. key emissions
06E; Months
80-05; Indexed to 1980 levels
Electric 120
200
usage
150
72
100 45
24
SO2
50 NOX
0
80 85 90 95 00 05 CCGT PC IGCC Nuclear
…causing the US to rely on an aging fleet… …resulting in higher emissions
Age of US coal fleet NOX emission rate
06; Percent 06; lb/MMBtu
100% = 313 GW
>50yrs 0.33
41-50yrs Increasing usage
8% <10yrs
with decreasing
16% 1% 10-20yrs
9% reserve margins 0.13
0.05
0.03
34% 32%
CCGT New coal Peaker Old coal
21-30yrs
31-40yrs
unit
20
TXU Started By Meeting These Challenges In Texas
Ensuring reliability and reducing reliance of natural gas
through a plan to bring on 9 GW of new capacity by 2010,
5 rebalancing the Texas supply stack and helping to maintain
adequate reserve margins through 2014
Lowering prices by leveraging a scale power generation
6 program to displace high cost generation and share savings
with our customers
Improving the environment through the largest ever
7 voluntary offset program and displacement of less efficient
generation capacity
21

12. TXU’s Program Will Help Ensure Reliability And Reduce
5 Reliance On Natural Gas In Texas…
Historical and projected ERCOT Generation capacity by fuel type
reserve margins 06-10E; Percent
00-11E; Percent
40
100%= 1,070 GW 77 GW 90 GW
Impact of TXU Power
Generation Program
30
29
30
26 35 42
Other
23 58
19
20 17 16 17
16
15
11 12
12
65
12
3
10 58
Gas
42
9 7 5
0
US Texas 06E Texas 10E
00 03 06E 09E
2000 –– 2004
2000 2004 2005 –– 2007
2005 2007 2008 –– 2011+
2008 2011+ Reduction in gas
Reduction in gas
22 GW of natural gas fired Rapid Dangerously reliance and
22 GW of natural gas fired Rapid Dangerously reliance and
generation added; demand low supplies volatility by shifting
generation added; demand low supplies volatility by shifting
adequate supplies growth require 1.5 GW the stack away from
adequate supplies growth require 1.5 GW the stack away from
eliminates per year gas towards solid
eliminates per year gas towards solid
reserve fuel
reserve fuel
22
Source: ERCOT, 10/1/05 and 6/19/06
6 …Allowing TXU To Deliver Lower Cost Power To Its
Customers…
Breakeven power prices for TXU’s Power Generation Program Total annual ERCOT market
savings
06E; $/MWh
11E; $ billions
Forward power price
76-79 17
1.7
5 4
50-53
Market savings
Expectations Decreased Decreased Operational TXU
for subscale capital costs fuel costs advantages target
builder
Without scale, it would be virtually impossible for TXU
Without scale, it would be virtually impossible for TXU
to deliver needed cost savings to its customers
to deliver needed cost savings to its customers
23

13. 7 …While Continuing To Improve The Texas Environment…
Estimated key emissions
SO2 NOX Hg
Thousands of tons
2005 emissions (nine existing facilities) 273.1 42.1 .0025
Emissions after new development and
218.5 33.7 .0020
voluntary reductions
Total TXU reductions 54.6 8.4 .0005
Reduction relative to 05 TXU emissions (20%) (20%) (20%)
Additional reductions from displacement of 3rd
0.0 12.1 0.0
party units
US ranking1 among 20 largest coal generators 1st 1st 2nd
TXU emissions rates1 relative to US average (63%) (82%) (30%)
TXU has committed to the largest voluntary emissions reduction in U.S. history
TXU has committed to the largest voluntary emissions reduction in U.S. history
TXU’s plan will more than double its capacity in Texas while cutting key
TXU’s plan will more than double its capacity in Texas while cutting key
emissions by 20% and its emission rates by 70%
emissions by 20% and its emission rates by 70%
1 TXU after new power generation development program and retrofits; relative to average US coal plant
24
7 …And Investing To Ensure The Plants Are Ready For
Potential Future Regulations
Building the most efficient plants in the country… …and being designed for potential future
carbon capture
Coal plant steam outlet temperatures for plants
under construction
06E; Degrees Fahrenheit
IEA1 requirements to be
Meet EPRI
considered carbon TXU
1,085 1,085 advanced
capture ready status
supercritical
standard
Sufficient space in
critical access locations
1,050 1,050
1,050 Options for CO2 storage
Design studies on
potential separation
methodologies
Pre-investments
TXU Plant Plant Plant Plant
including plant siting
reference A B C D
plant
TXU is commercializing the most efficient coal plants and continues to ensure the plants
TXU is commercializing the most efficient coal plants and continues to ensure the plants
will be able to be retrofitted with carbon capture technology in the future
will be able to be retrofitted with carbon capture technology in the future
25
1 International Energy Agency

14. TXU’s Texas Program Is Progressing Well, Despite Market
Low
Shifts In Cost And Regulatory Delay
High
Category Grade Remarks
Reference plant draft permits issued - final permits expected 2Q07
Permitting Oak Grove delayed to January but no impact on critical path
Sandow consent decree pending resolution
Leveraged Kaizen events to design most economical advanced supercritical boiler
Plant design
that is carbon capture and sequestration ready
Open book process continuing on schedule
Construction
Some labor pressure, but plants coming in on schedule
Supply chain Uncovering opportunities for improvements to be used in next phase
Successfully executed significant hedging transactions to support ability to project
Hedging
finance
Active negotiations with over 1 GW of long-term demand
PPA’s
In discussions to sign up majority of long-term Texas demand
Obtained commitment for $11 billion non-recourse project financing
Financing
Continuing to evaluate optimal capital structure
LOI’s signed or in approval process for sale of 600 MW of Oak Grove and 50% of
Equity another facility
partnerships
Sell down process for equity participation in program underway
Gas weakened slightly
Market
environment Reserve margin expectations continue to tighten
Rail and fuel Constructive negotiations with shippers based on size and dual rail access
26
TXU Is Now Focusing On Its National Plan
Establishing profitable market entry strategies across
8 markets to help customers meet their energy challenges
Redefining the performance potential of new build baseload
9 generation by taking advantage of the global supply
learning curve to drive down prices and increase returns
Advocating for tougher environmental standards and
10 investing in technologies to redefine the environmental
performance of new generation
27

15. 8 Expanding The Portfolio Outside Of Texas…
Working to build a business in PJM… …originating up to 10 GW of new generation…
Completed Outstanding Status Units GW
3 GW of sites Final fuel plan
Preliminary discussions 5 4
identified/secured Key stakeholder
Preliminary transmission agreements Advanced discussions 4 3.5
studies complete completed by end
of 06
Site engineering complete Letters of intent1 3 2.5
Geo-technical
Preliminary air modeling
evaluation Definitive agreements 0 0
complete
Permit levels identified
Total 12 10
and discussed with states
1 Letter of intent signed or in approval process.
…exploring the potential for long term …and designing a model for new coal to
energy intensive industrial demand… economically replace existing coal
Potential incremental demand
20E; GW
Designing a
35 model for
new coal to
compete in
7X24
14 coal on the
prices
7
margin
High
markets
Oil shale Tar sands Aluminum
28
Low
9 …Redefining Performance To Deliver Lower Cost Power
And Open Up New Market Opportunities…
Sourcing in Low Cost Countries (LCC)… …implying a $300/KW advantage in the US…
Coal plant component costs Normalized LCC construction cost
06; $/KW 06E; $/KW
40% 26% 335 42%
40% 26% 42%
850
Sourced 230
in US 80
195 540
98 77 57
58 Sourced
in LCC
Incremental US US
Boilers Turbines Balance of LCC coal
env. capital labor normalized
plant plant
…that could help TXU deliver lower costs… …potentially creating a new market opportunity
Power prices Breakeven conditions to displace generation
06; $/MWh 06; $/KW of capital cost
2,200 Displace existing gas
59
50 1,800
40
32
1,400 Today
Displace old coal
1,000
TXU vision
600
US average TXU today TXU future Average
7.5 8.0 8.5 9.0 9.5
target LCC 29
Plant heat rate (MMBtu/MWh)

16. 10 …AdvocatingImprove Performance…
For Tougher Environmental Standards And
Investing To
TXU is redefining environmental standards for …and CO2 emissions over the long term…
regulated emissions... CO2 emissions rate
20E; Tons/ MWh
0.96 0.54
For every incremental 11ton of emissions of 0.80
For every incremental ton of emissions of
SO2, ,NOX, ,and Hg from new generation,
SO NO and Hg from new generation, 0.42
2 X
existing emissions in Texas must be
existing emissions in Texas must be
reduced by at least 1.2 tons
reduced by at least 1.2 tons
Peaking Coal Reduction Long-term
gas today levers vision -
(11 HR) CCGT
…while working to commercialize …and starting an environmental ventures
technologies across the entire value chain… fund to spur investment in this area
Generation Demand
TXU
Combustion Flue gas Customer
Fuel Efficiency
Gasification removal initiatives $200
Bank
Advisory
million
Board
fund
Equipment
• Coal • Waste to • R&D • Solid CO2 • Time of
cleaning energy partnership capture use retail
supplier
products
• Oxy- • Chilled
firing NH3 • CO2 free Venture
products
• MEA
capital
• Efficiency
• Storage
30
solutions
study
TXU Is Positioning Itself To Be A Leader Over The Low
Long Term… High
Key capability TXU Description
Internal group of professionals with global
Development expertise
experience in multiple technology developments
Internal group with development and nodal
Transmission expertise
modeling capabilities across multiple regions
Valuation and risk Proven track record of value creation, capital
management allocation, and risk management
Proprietary Whole System Approach to
Construction expertise
construction
Global supply chain Successfully implemented global sourcing effort to
management reduce construction cost and time
Baseload operational and Track record of best in class performance and
fuel handling expertise experience in fuel handling and blending
Developing national capabilities to augment strong
National advocacy
Texas skill base
National regulatory Developing national capabilities to augment strong
expertise Texas skill base
31

17. …And Has Line Of Sight Around 17 GW Of New Generation
Development
There is potentially an enormous …and TXU has line of sight around 17 GW of
opportunity to add new generation… development
06-20E; GW 06-20E; GW
283
16-23
Incremental 5-10
160
growth
2-4
9
Advanced
coal replacing
78
existing coal
Advanced coal
replacing 45
existing gas
Total US growth ERCOT Merchant Customer Total
opportunity (06-20) PJM business
TXU is in substantive negotiations to develop 8 GW outside of ERCOT
TXU is in substantive negotiations to develop 8 GW outside of ERCOT
32
Today’s Agenda
TXU Development/TXU Construction
Business Unit
Business Unit TXU Power
Strategies
Strategies TXU Wholesale
TXU Energy
TXU Electric Delivery
America’s Power Challenge
Generation
Generation The Texas Solution
Growth Plan
Growth Plan A National Solution
Short-term Financial Growth
Financial Financial Sensitivities
Financial
Outlook Long-term Sources And Uses Of
Outlook
Cash
33

18. Commodity and Capital Allocation Impacts Have Reshaped
The Earnings Power
Earning Power Impact 07 11
May 06 business plan 5.75 9.75-10.001
Lower wholesale power prices reduce
gross margins for TXU Power and
Commodities
Commodities reduce TXU Energy’s gross margin
when they are passed on to customers;
PRB increases ~(.20) ~(1.20)
Increased growth investment, reduced
Capital
Capital
OCF, and higher share prices reduce the
Allocation
Allocation
# of share repurchased
~(.15) ~(.50)
Sell-down reduces risk and improves
Sell-downs
Sell-downs capital returns but reduces EPS
0 ~(.45)
Current business plan2 5.25-5.55 7.55-7.85
TXU’s new build strategy enables a 5-year growth trajectory of 8-10%
TXU’s new build strategy enables a 5-year growth trajectory of 8-10%
1 2010 indicative earnings as of May 2006
2 Indicative pro forma for 2007 and 2011 reflects current targets for the 11 new generation units currently planned in Texas. 2007E operational earnings
estimate excludes fees, expenses, and interest associated with debt that is part of the expected TXU Power Development nonrecourse financing
package.
34
Through 2011 TXU Is Generating Significant Free Cash Flow
And Planning Very Significant Investments
Sources of cash1 Uses of cash1
07E-11E (indicative); $ billions 07E-11E (indicative); $ billions
19-22 19-22
New plant equity
1.0-2.0
sell-down
1.5-2.0
Cash for investment/
8.5-9.5
Electric distribution
Delivery debt
De-levering
1.5-2.0
16.5-18.0
OCF Dividends
3.5-4.0
Core portfolio capex
5.5-6.5
07E-11E
07E-11E
TXU is investing in its core business while returning aasignificant amount of capital to
TXU is investing in its core business while returning significant amount of capital to
shareholders. Over 06-11, > $1 bn is earmarked for additional growth investments
shareholders. Over 06-11, > $1 bn is earmarked for additional growth investments
1 Excludes capital expenditures and operating cash flows for the 11 new ERCOT development units expected to be reimbursed from TXU
Power Development Company’s non-recourse financing.
35

19. TXU’s Risk Strategy Will Lock-In Substantial Value For The
New Build Projects…
New build program NPV distribution
06; Number of trials
1 2 3 4
Merchant coal plant Impact: Hedges/PPA’s Impact: Sell downs Impact: Continued
build and performance
P(NPV<0)= 13% P(NPV<0)= 7% P(NPV<0)= 3% P(NPV<0)= 1.5%
1000 -1000 0 1000
-1000 0 1000 1000 -1000 0
-1000 0
Hedge volumes for debt Sell down up to 49% equity Continue to construct
financing and sell forward at prices at or above hold capacity and ride down
volumes above hold case case learning curve
New GW 1.0 1.0 0.5 1.0
PV/I 1.6 1.6 2.4 4.2
Gas exp. Base exposure 30% reduction 65% reduction 30% reduction
Carbon exp. Base exposure 0% reduction 49% reduction 0% reduction
Earnings (GW) $0.20-$0.25 $0.19-$0.24 $0.15-$0.20 $0.35-$0.45
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…While Helping To Build The Option To Capture Upside
Developing the option to
Value of new build strategy to TXU build allows TXU to capture
06 significant upside in high
commodity environments
A merchant model is
The combination of hedges,
completely levered to gas
and sell downs reduces gas
Option to
prices with the potential to
exposure and helps to
destroy value at low gas
ensure value capture even in build
prices
downside cases comes in
the
money
3.0 4.0 5.0 6.0 7.0 8.0
Levelized natural gas price
$/MMBtu
The combination of locking in value today through hedging, PPA’s and sell
The combination of locking in value today through hedging, PPA’s and sell
downs and building the option to add capacity creates a robust business model
downs and building the option to add capacity creates a robust business model
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20. Expansion Opportunities Give TXU The Ability To Grow
Under Different Scenarios…
GW added
Scenario by 2015 Description
Backwardated gas prices, severe greenhouse
gas regulations, slow technology
Texas only ~9
improvements, and/or regulatory barriers limit
the potential for coal outside of Texas
The backwardated gas curve, combined with
slow technology advances provides a limited
Advanced window over the next 10 years for coal to be
coal on gas ~20 the winning new build technology
opportunity
New coal is not advantaged enough to fully
displace existing coal
Improvements in new coal technology, costs,
efficiency, and environmental performance
Advanced
allow it to displace existing, inefficient, high
coal on
~30 emission generation
old coal
opportunity The 280 GW opportunity for new development
becomes economically available
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… And The Ability To Grow EBITDA In A Backwardated
Commodity Environment
Potential EBITDA 7-14%
7-14%
11E-15E; $ billions CAGR
CAGR
11.2
2.5
2.5
1.0 6.2
~6.7
0.5
TXU Backwar- Core business TXU 2015E Advanced Advanced 2015E
2011E dated performance in Texas coal on gas coal on coal potential
(including commodity improvements only opportunity opportunity
ERCOT environment scenario
new build)
Successful execution of the build strategy could provide a solid long-term
Successful execution of the build strategy could provide a solid long-term
EBITDA growth strategy overcoming the backwardated commodity environment
EBITDA growth strategy overcoming the backwardated commodity environment
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21. TXU: Competitively Positioned To Meet America’s Energy
Challenges
1. Competitively advantaged businesses across the value chain positioned for long-
1. Competitively advantaged businesses across the value chain positioned for long-
term success
term success
–– Structurally advantaged low cost position difficult to replicate
Structurally advantaged low cost position difficult to replicate
–– Industrial skill set focused on top decile operations
Industrial skill set focused on top decile operations
–– Scale to drive waste out of the value chain
Scale to drive waste out of the value chain
2. Business model to profitably meet America’s energy challenges
2. Business model to profitably meet America’s energy challenges
–– Advantaged build model to help improve reliability, lower prices and improve the
Advantaged build model to help improve reliability, lower prices and improve the
environment
environment
–– Focus on driving new build construction costs to worldwide low cost levels
Focus on driving new build construction costs to worldwide low cost levels
–– Advocacy for tougher environmental standards to help remove inefficient existing
Advocacy for tougher environmental standards to help remove inefficient existing
generation from service
generation from service
–– Investment in the next generation of technology to improve the environment
Investment in the next generation of technology to improve the environment
3. Balanced focus on rigorous capital allocation and organic growth that will overcome
3. Balanced focus on rigorous capital allocation and organic growth that will overcome
the backwardated commodity environment
the backwardated commodity environment
–– Reduced 07E earnings based on aafunctioning competitive market and value
Reduced 07E earnings based on functioning competitive market and value
being returned to the customer
being returned to the customer
–– 5-year earnings growth of ~8% to 10% based on the Texas new build program
5-year earnings growth of ~8% to 10% based on the Texas new build program
–– Continued long term EBITDA growth based on success of Ex-ERCOT strategy
Continued long term EBITDA growth based on success of Ex-ERCOT strategy
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Appendix –
Regulation G Definitions

22. Financial Definitions
Measure Definition
Capex Capital expenditures.
EBITDA (non-GAAP) Income from continuing operations before interest income, interest expense and
related charges, and income tax plus depreciation and amortization and special
items. EBITDA is a measure used by TXU to assess performance.
Operating Cash Flow Cash provided by operating activities.
(GAAP)
Operational Earnings per Operational Earnings Per Share (a non-GAAP measure) is defined as per share
Share (non-GAAP) (diluted) income from continuing operations, excluding special items. Beginning in
the fourth quarter of 2006, TXU also plans to exclude all effects of unrealized cash
flow hedging ineffectiveness and market-to-market gains or/and losses on positions
in its long- term hedging program from operational earnings because management
believes such presentation will more appropriately reflect the ongoing earnings of
the business. The effect is that only realized gains and losses on positions in the
long-term hedging program are reflected in operational earnings. TXU forecasts
earnings on such operational earnings basis and is unable to reconcile forecasted
operational earnings to a GAAP financial measure because forecasts of special
items and material non-recurring items or ineffectiveness or market-to-market gains
or losses on its long term hedging program are not practical. TXU relies on
operational earnings for evaluation of performance and believes that analysis of the
business by external users is enhanced by visibility to both reported GAAP earnings
and operational earnings.
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