UNITED STATES ~~SECURITIES AND EXCHANGE COMMISSION~~

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-K

x ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

~~For~~FOR ~~the~~THE ~~fiscal~~FISCAL ~~year~~YEAR ~~ended~~ENDED ~~December~~ DECEMBER 31, ~~2012~~ 2014

— OR —

o TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Commission File Number 1-34544

Energy Future Intermediate Holding Company LLC

(Exact name of registrant as specified in its charter)

Delaware		26-1191638
(State of organization)		(I.R.S. Employer Identification No.)
1601 Bryan Street, Dallas, TX 75201		(214) 812-4600
1601 Bryan Street, Dallas, TX 75201-3411		(214) 812-4600
(Address of principal executive offices) (Zip Code)		(Registrant's telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act: None

Title of each class		Name of each exchange on which registered
9.75% Senior Notes due 2019		New York Stock Exchange

Securities registered pursuant to Section 12(g) of the Act: None

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ¨ No x

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes ¨ No x

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No ¨o

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes x No ¨o

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (229.405 of this chapter) is not contained herein, and will not be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. x

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See definitions of "large accelerated filer"," "accelerated filer" and "smaller reporting company" in Rule 12b-2 of the Exchange Act.

Large accelerated filer ¨ o Accelerated filer ¨ o Non-Accelerated filer x (Do not check if a smaller reporting company)

Smaller reporting company ¨ o

Indicate by check mark ~~whether~~if the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ¨ o No x

At ~~February~~March 1931, ~~2013~~2015, the outstanding membership interest in Energy Future Intermediate Holding Company LLC was directly held by Energy Future Holdings Corp.

~~Energy~~DOCUMENTS ~~Future~~INCORPORATED ~~Intermediate~~BY ~~Holding~~REFERENCE ~~Company LLC meets the conditions set forth in General Instructions (I)(1)(a) and (b) of Form 10~~-K ~~and is therefore filing this report with the reduced disclosure format.~~None

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TABLE OF CONTENTS

		PAGE
Glossary		ii
	PART I
Items 1. and 2.	BUSINESS AND PROPERTIES	1
Item 1A.	RISK FACTORS	6
Item1A.	RISK FACTORS	6
Item 1B.	UNRESOLVED STAFF COMMENTS	18
Item1B.	UNRESOLVED STAFF COMMENTS	18
Item 3.	LEGAL PROCEEDINGS	18
Item 4.	MINE SAFETY DISCLOSURES	18
	PART II
Item 5.	MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED EQUITY HOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES	19
Item 6.	SELECTED FINANCIAL DATA	19
Item 7.	MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS	21
Item 7A.	QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK	3233
Item 8.	FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA	3536
Item 9.	CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE	6067
Item 9A.	CONTROLS AND PROCEDURES	6067
Item 9B.	OTHER INFORMATION	6271
	PART III
Item 10.	~~DIRECTORS~~MANAGERS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE	6372
Item 11.	EXECUTIVE COMPENSATION	6376
Item 12.	SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS	6378
Item 13.	CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND ~~DIRECTOR~~MANAGER INDEPENDENCE	6379
Item 14.	PRINCIPAL ACCOUNTING FEES AND SERVICES	6382
	PART IV
Item 15.	EXHIBITS, FINANCIAL STATEMENT SCHEDULES	6584

Energy Future Intermediate Holding Company LLC's (EFIH) annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and any amendments to those reports are made available to the public, free of charge, on the Energy Future Holdings Corp. (EFH Corp.) website at http://www.energyfutureholdings.com as soon as reasonably practicable after they have been filed with or furnished to the Securities and Exchange Commission. The information on EFH Corp.'s website shall not be deemed a part of, or incorporated by reference into, this annual report on Form 10-K. The representations and warranties contained in any agreement that weEFIH ~~have~~has filed as an exhibit to this annual report on Form 10-K or that weEFIH ~~have~~has or may publicly file in the future may contain representations and warranties made by and to the parties thereto at specific dates. Such representations and warranties may be subject to exceptions and qualifications contained in separate disclosure schedules, may represent the parties' risk allocation in the particular transaction, or may be qualified by materiality standards that differ from what may be viewed as material for securities law purposes.

This annual report on Form 10-K and other Securities and Exchange Commission filings of EFIH and its subsidiaries occasionally make references to EFIH (or "~~we," "our," "us" or "~~the company"), EFH Corp., Oncor Holdings or Oncor when describing actions, rights or obligations of their respective subsidiaries. These references reflect the fact that the subsidiaries are consolidated with, or otherwise reflected in, their respective parent company's financial statements for financial reporting purposes. However, these references should not be interpreted to imply that the relevant parent company is actually undertaking the action or has the rights or obligations of the relevant subsidiary company or vice versa.

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GLOSSARY

When the following terms and abbreviations appear in the text of this report, they have the meanings indicated below.

2011 Form 10-K		EFIH's Annual Report on Form 10-K for the year ended December 31, 2011
Bankruptcy Filing		Voluntary petitions for relief under Chapter 11 of the US Bankruptcy Code (Bankruptcy Code) in the US Bankruptcy Court for the District of Delaware (Bankruptcy Court) filed on April 29, 2014 by the Debtors
Adjusted EBITDA		Adjusted EBITDA means EBITDA adjusted to exclude noncash items, unusual items and other adjustments allowable under the EFIH Notes and certain debt arrangements of EFH Corp. (as applicable). See the definition of EBITDA below. Adjusted EBITDA and EBITDA are not recognized terms under US GAAP and, thus, are non-GAAP financial measures. We are providing our and EFH Corp.'s Adjusted EBITDA in this Form 10-K (see reconciliations in Exhibits 99(a) and 99(b)) solely because of the important role that Adjusted EBITDA plays in respect of certain covenants contained in the indentures for the EFIH Notes and EFH Corp. debt pushed down to EFIH as discussed in Note 5 to Financial Statements. We do not intend for Adjusted EBITDA (or EBITDA) to be an alternative to net income as a measure of operating performance or an alternative to cash flows from operating activities as a measure of liquidity or an alternative to any other measure of financial performance presented in accordance with US GAAP. Additionally, we do not intend for Adjusted EBITDA (or EBITDA) to be used as a measure of free cash flow available for management's discretionary use, as the measure excludes certain cash requirements such as interest payments, tax payments and other debt service requirements. Because not all companies use identical calculations, our presentation of Adjusted EBITDA (and EBITDA) may not be comparable to similarly titled measures of other companies.
CREZ		Competitive Renewable Energy Zone
DIP Facilities		Refers, collectively, to EFIH's debtor-in-possession financing (see Note 6 to the Financial Statements) and TCEH's debtor-in-possession financing (TCEH DIP Facility).
Debtors		EFH Corp. and the substantial majority of its direct and indirect subsidiaries, including EFIH, EFCH and TCEH but excluding the Oncor Ring-Fenced Entities
EBITDA		earnings (net income) before interest expense, income taxes, depreciation and amortization
EFCH		Energy Future Competitive Holdings Company LLC, a direct, wholly- owned subsidiary of EFH Corp. and the direct parent of TCEH, and/or its subsidiaries, depending on context
EFH Corp.		Energy Future Holdings Corp., a holding company, and/or its subsidiaries, depending on context, whose major subsidiaries include TCEH and Oncor
EFH Corp. 10.875% Notes		EFH Corp.'s 10.875% Senior Notes ~~due~~with a maturity date of November 1, 2017, which are guaranteed on a senior unsecured basis by EFIH and EFCH as discussed in Note 58 to the Financial Statements
EFH Corp. Secured Notes		Refers, collectively, to EFH Corp.'s 9.75% Senior Secured Notes due October 15, 2019 (EFH Corp. 9.75% Notes) and EFH Corp.'s 10.000% Senior Secured Notes due January 15, 2020 (EFH Corp. 10% Notes), both of which are guaranteed on a senior secured basis by EFIH and a senior unsecured basis by EFCH as discussed in Note 5 to Financial Statements.
EFH Corp. Toggle Notes		EFH Corp.'s 11.25%/12.00% Senior Toggle Notes with a maturity date of November 1, 2017, which are guaranteed on a senior unsecured basis by EFIH and EFCH as discussed in Note 8 to the Financial Statements
EFH Corp. Toggle Notes		EFH Corp.'s 11.25%/12.00% Senior Toggle Notes due November 1, 2017, which are guaranteed on a senior unsecured basis by EFIH and EFCH as discussed in Note 5 to Financial Statements
EFIH		Energy Future Intermediate Holding Company LLC, a direct, wholly owned subsidiary of EFH Corp. and the direct parent of Oncor Holdings, and/or its subsidiaries depending on context.
EFIH		Energy Future Intermediate Holding Company LLC, a direct, wholly-owned subsidiary of EFH Corp. and the direct parent of Oncor Holdings, and/or its subsidiaries depending on context
EFIH Debtors		EFIH and EFIH Finance
EFIH Finance		EFIH Finance Inc., a direct, wholly- owned subsidiary of EFIH, formed for the sole purpose of serving as co-issuer with EFIH of certain debt securities
EFIH Notes		Refers, collectively, to EFIH's and EFIH Finance's 6.875% Senior Secured Notes due August 15, 2017 (EFIH 6.875% Notes), 9.75% Senior Secured Notes due October 15, 2019 (EFIH 9.75% Notes), 10.000% Senior Secured Notes due December 1, 2020 (EFIH 10% Notes), 11% Senior Secured Second Lien Notes due October 1, 2021 (EFIH 11% Notes), 11.75% Senior Secured Second Lien Notes due March 1, 2022 (EFIH 11.75% Notes) and 11.25%/12.25% Senior Toggle Notes due December 1, 2018 (EFIH Toggle Notes).
EFIH First Lien Notes		Refers, collectively, to EFIH's and EFIH Finance's $503 million principal amount of 6.875% Senior Secured First Lien Notes and $3.482 billion principal amount of 10.000% Senior Secured First Lien Notes.
EFIH Second Lien Notes		Refers, collectively, to EFIH's and EFIH Finance's $406 million principal amount of 11% Senior Secured Second Lien Notes and $1.75 billion principal amount of 11.75% Senior Secured Second Lien Notes.
EFIH PIK Notes		EFIH's $1.566 billion principal amount of 11.25%/12.25% Senior Toggle Notes.
EPA		US Environmental Protection Agency
ERCOT		Electric Reliability Council of Texas, Inc., the independent system operator and the regional coordinator of various electricity systems within Texas
FERC		US Federal Energy Regulatory Commission
ERISA		Employee Retirement Income Security Act of 1974, as amended
Federal and State Income Tax Allocation Agreements		EFH Corp. and certain of its subsidiaries (including EFCH, EFIH and TCEH, but not including Oncor Holdings and Oncor) are parties to a Federal and State Income Tax Allocation Agreement, executed on May 15, 2012 but effective as of January 1, 2010. EFH Corp., Oncor Holdings, Oncor, Oncor's third-party minority investor, and Oncor Management Investment LLC are parties to a separate Federal and State Income Tax Allocation Agreement dated November 5, 2008. See Note 4 to the Financial Statements and Management's Discussion and Analysis, under Financial Condition.
GAAP		generally accepted accounting principles
Luminant		subsidiaries of TCEH engaged in competitive market activities consisting of electricity generation and wholesale energy sales and purchases as well as commodity risk management and trading activities, all largely in Texas
LIBOR		London Interbank Offered Rate, an interest rate at which banks can borrow funds, in marketable size, from other banks in the London interbank market

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Luminant		subsidiaries of TCEH engaged in competitive market activities consisting of electricity generation and wholesale energy sales and purchases as well as commodity risk management and trading activities, all largely in Texas

Merger		the transaction referred to in the Agreement and Plan of Merger, dated February 25, 2007, under which Texas Holdings agreed to acquire EFH Corp., which was completed on October 10, 2007

MW		megawatts

NERC		North American Electric Reliability Corporation

Oncor		Oncor Electric Delivery Company LLC, a direct, majority owned subsidiary of Oncor Holdings, and/or its wholly owned consolidated bankruptcy-remote financing subsidiary, Oncor Electric Delivery Transition Bond Company LLC, depending on context, that is engaged in regulated electricity transmission and distribution activities

Oncor Holdings		Oncor Electric Delivery Holdings Company LLC, a direct, wholly owned subsidiary of EFIH and the direct majority owner of Oncor, and/or its subsidiaries, depending on context

Oncor Ring-Fenced Entities		Oncor Holdings and its direct and indirect subsidiaries, including Oncor

Oncor Tax Sharing Agreement		Federal and State Income Tax Allocation Agreement among EFH Corp., Oncor Holdings, Oncor and Texas Transmission

Petition Date		April 29, 2014, the date the Debtors made the Bankruptcy Filing

PUCT		Public Utility Commission of Texas

PURA		Texas Public Utility Regulatory Act

RSA		Restructuring Support and Lock-Up Agreement

SEC		US Securities and Exchange Commission

Securities Act		Securities Act of 1933, as amended

SG&A		selling, general and administrative

Sponsor Group		Refers, collectively, to certain investment funds affiliated with Kohlberg Kravis Roberts & Co. L.P., TPG Global, LLC (together with its affiliates, TPG) and GS Capital Partners, an affiliate of Goldman, Sachs & Co., that have an ownership interest in Texas Holdings.

TCEH		Texas Competitive Electric Holdings Company LLC, a direct, wholly owned subsidiary of EFCH and an indirect subsidiary of EFH Corp., and/or its subsidiaries, depending on context, that are engaged in electricity generation and wholesale and retail energy markets activities, and whose major subsidiaries include Luminant and TXU Energy

TCEH Demand Notes		Refers to certain loans from TCEH to EFH Corp. in the form of demand notes to finance EFH Corp. debt principal and interest payments and, until April 2011, other general corporate purposes of EFH Corp. that were guaranteed on a senior unsecured basis by EFCH and EFIH and were settled by EFH Corp. in January 2013.

TCEQ		Texas Commission on Environmental Quality

Texas Holdings		Texas Energy Future Holdings Limited Partnership, a limited partnership controlled by the Sponsor Group, that owns substantially all of the common stock of EFH Corp.

Texas Holdings Group		Texas Holdings and its direct and indirect subsidiaries other than the Oncor Ring-Fenced Entities

TRE		Texas Reliability Entity, Inc., an independent organization that develops reliability standards for the ERCOT region and monitors and enforces compliance with NERC standards and monitors compliance with ERCOT protocols

TXU Energy		TXU Energy Retail Company LLC, a direct, wholly owned subsidiary of TCEH that is a REP in competitive areas of ERCOT and is engaged in the retail sale of electricity to residential and business customers

US		United States of America

VIE		variable interest entity

market heat rate		Heat rate is a measure of the efficiency of converting a fuel source to electricity. Market heat rate is the implied relationship between wholesale electricity prices and natural gas prices and is calculated by dividing the wholesale market price of electricity, which is based on the price offer of the marginal supplier in ERCOT (generally natural gas plants), by the market price of natural gas. Forward wholesale electricity market price quotes in ERCOT are generally limited to two or three years; accordingly, forward market heat rates are generally limited to the same time period. Forecasted market heat rates for time periods for which market price quotes are not available are based on fundamental economic factors and forecasts, including electricity supply, demand growth, capital costs associated with new construction of generation supply, transmission development and other factors.
Merger		The transaction referred to in the Agreement and Plan of Merger, dated February 25, 2007, under which Texas Holdings agreed to acquire EFH Corp., which was completed on October 10, 2007.
MW		megawatts
NERC		North American Electric Reliability Corporation
Oncor		Oncor Electric Delivery Company LLC, a direct, majority-owned subsidiary of Oncor Holdings, and/or its wholly-owned consolidated bankruptcy-remote financing subsidiary, Oncor Electric Delivery Transition Bond Company LLC, depending on context, that is engaged in regulated electricity transmission and distribution activities
Oncor Holdings		Oncor Electric Delivery Holdings Company LLC, a direct, wholly-owned subsidiary of EFIH and the direct majority owner of Oncor, and/or its subsidiaries, depending on context
Oncor Ring-Fenced Entities		Oncor Holdings and its direct and indirect subsidiaries, including Oncor
PUCT		Public Utility Commission of Texas
PURA		Texas Public Utility Regulatory Act
purchase accounting		The purchase method of accounting for a business combination as prescribed by US GAAP, whereby the cost or "purchase price" of a business combination, including the amount paid for the equity and direct transaction costs, are allocated to identifiable assets and liabilities (including intangible assets) based upon their fair values. The excess of the purchase price over the fair values of assets and liabilities is recorded as goodwill.
REP		retail electric provider
SEC		US Securities and Exchange Commission
Securities Act		Securities Act of 1933, as amended
Sponsor Group		Refers, collectively, to certain investment funds affiliated with Kohlberg Kravis Roberts & Co. L.P., TPG Global, LLC (together with its affiliates, TPG) and GS Capital Partners, an affiliate of Goldman, Sachs & Co., that have an ownership interest in Texas Holdings.
TCEH		Texas Competitive Electric Holdings Company LLC, a direct, wholly-owned subsidiary of EFCH and an indirect subsidiary of EFH Corp., and/or its subsidiaries, depending on context, that are engaged in electricity generation and wholesale and retail energy markets activities, and whose major subsidiaries include Luminant and TXU Energy
TCEH Demand Notes		Refers to certain loans from TCEH to EFH Corp. in the form of demand notes to finance EFH Corp. debt principal and interest payments and, until April 2011, other general corporate purposes of EFH Corp., that are guaranteed on a senior unsecured basis by EFCH and EFIH.
TCEQ		Texas Commission on Environmental Quality
Texas Holdings		Texas Energy Future Holdings Limited Partnership, a limited partnership controlled by the Sponsor Group, that owns substantially all of the common stock of EFH Corp.
Texas Holdings Group		Texas Holdings and its direct and indirect subsidiaries other than the Oncor Ring-Fenced Entities
Texas Transmission		Texas Transmission Investment LLC, a limited liability company that owns a 19.75% equity interest in Oncor and is not affiliated with EFH Corp., any of EFH Corp.'s subsidiaries or any member of the Sponsor Group

iii

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TRE Texas Reliability Entity, Inc., an independent organization that develops reliability standards for the ERCOT region and monitors and enforces compliance with NERC standards and ERCOT protocols TXU Energy TXU Energy Retail Company LLC, a direct, wholly-owned subsidiary of TCEH that is a REP in competitive areas of ERCOT and is engaged in the retail sale of electricity to residential and business customers US United States of America VIE variable interest entity

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PART I.

Items 1. and 2. BUSINESS AND PROPERTIES

References in this report to "~~we," "our," "us" and "~~the company" are to EFIH and/or its direct and indirect subsidiaries as apparent in the context. See "Glossary" for defined terms.

Energy Future Intermediate Holding Company LLC Business and Strategy

EFIH, a direct, wholly- owned subsidiary of EFH Corp., is a Dallas, Texas-based holding company whose wholly- owned subsidiary, Oncor Holdings, holds a majority interest (approximately 80%) in Oncor. The business and strategy of Oncor is discussed below, as the investment in Oncor represents a substantial portion of the net assets and earnings of EFIH. Oncor is a regulated electricity transmission and distribution company principally engaged in providing delivery services to REPs, including subsidiaries of TCEH, that sell electricity to residential, business and other consumers in Texas. Revenues from services provided to TCEH represented 2925% and 3327% of Oncor's total ~~reported~~ consolidated revenues for the years ended December 31, ~~2012~~2014 and ~~2011~~2013, respectively. EFIH has no reportable business segments. See Notes 1 and 3 to the Financial Statements for a discussion of the reporting of EFIH's investment in Oncor Holdings as an equity method investment and ~~its~~a ~~subsidiaries~~description ~~are~~of ~~not~~the ~~consolidated~~ring-fencing measures implemented with respect to Oncor Holdings and Oncor. These measures were put in ~~EFIH~~place to further enhance Oncor's ~~financial~~credit ~~statements~~quality inand ~~accordance~~mitigate Oncor's and Oncor Holdings' exposure to the Texas Holdings Group with ~~consolidation~~the ~~accounting~~intent ~~standards~~to ~~related~~minimize the risk that a court would order any of the assets and liabilities of the Oncor Ring-Fenced Entities to ~~variable~~be ~~interest~~substantively ~~entities~~consolidated ~~(VIEs)~~with ~~(see~~those ~~Note~~of 2)any member of the Texas Holdings Group in the event any such member were to become a debtor in a bankruptcy case. Accordingly, EFH Corp. and EFIH do not control and do not consolidate Oncor Holdings and Oncor for financial reporting purposes.

InEFIH's ~~October~~sources ~~2009,~~of ~~EFH~~liquidity ~~Corp.~~have ~~and~~included ~~its~~the ~~subsidiaries~~EFIH ~~(excluding~~DIP ~~Oncor~~Facility, ~~Holdings~~dividends ~~and~~received ~~its~~from ~~subsidiaries)~~Oncor ~~implemented~~Holdings aand ~~liability~~interest ~~management~~payments ~~program~~received ~~designed~~on toEFH ~~reduce~~Corp. ~~debt, capture debt discount~~ and ~~extend~~TCEH debt ~~maturities~~it ~~through debt exchanges, repurchases and extensions~~holds. AsIts auses ~~result~~ of ~~this~~liquidity ~~program,~~have aconsisted ~~substantial majority~~ of ~~EFH~~reorganization ~~Corp.~~costs, ~~(parent~~interest ~~entity)~~payments ~~debt~~on ~~has~~the ~~been~~EFIH ~~exchanged~~DIP ~~for~~Facility ~~debt~~and ~~issued by~~ EFIH~~. See~~'s ~~Notes~~outstanding 3debt and 5income totaxes ~~Financial~~paid ~~Statements~~to ~~for discussion of our debt,~~ EFH Corp. ~~debt~~under ~~that~~a weFederal ~~guarantee~~ and ~~EFH~~State ~~Corp.~~Income ~~and~~Tax ~~TCEH~~Allocation ~~debt securities that we hold~~Agreement.

Chapter 11 Cases

On April 29, 2014 (the Petition Date), EFH Corp. and the substantial majority of its direct and indirect subsidiaries, including EFIH, EFCH and TCEH but excluding the Oncor Ring-Fenced Entities, (the Debtors) filed voluntary petitions for relief (the Bankruptcy Filing) under Chapter 11 of the United States Bankruptcy Code (the Bankruptcy Code) in the United States Bankruptcy Court for the District of Delaware (the Bankruptcy Court). During the pendency of the Bankruptcy Filing (the Chapter 11 Cases), the Debtors will operate their businesses as debtors-in-possession under the jurisdiction of the Bankruptcy Court and in accordance with the applicable provisions of the Bankruptcy Code.

Consistent with the ring-fencing measures discussed above, the assets and liabilities of the Oncor Ring-Fenced Entities have not been, and are not expected to be, substantively consolidated with the assets and liabilities of the Debtors in the Chapter 11 Cases.

For additional discussion of the Chapter 11 Cases and the effects on EFIH, see Note 2 to the Financial Statements and Item 1A, Risk Factors – Risks Related to Chapter 11 Cases. See Note 6 to the Financial Statements for discussion of the DIP Facilities.

Oncor's Business

Oncor's transmission and distribution assets are located principally in the north-central, eastern and western parts of Texas. This territory comprises 91 counties and ~~over~~more than 400 incorporated municipalities, including Dallas/Fort Worth and surrounding suburbs, as well as Waco, Wichita Falls, Odessa, Midland, Tyler and Killeen. Oncor is not a seller of electricity, nor does it purchase electricity for resale. It provides transmission services to other electricity distribution companies, cooperatives, municipalities and REPs. It also provides distribution services to REPs, which sell electricity to residential, business and other consumers. Oncor's transmission and distribution rates are regulated by the PUCT, and in certain instances, the FERC.

Oncor operates the largest transmission and distribution system in Texas, delivering electricity to more than 3.23 million homes and businesses and operating more than ~~119~~121,000 miles of transmission and distribution lines. Most of Oncor's power lines have been constructed over lands of others pursuant to easements or along public highways, streets and rights-of-way as permitted by law. At December 31, ~~2012~~2014, Oncor had approximately 3,~~500~~410 full-time employees, including approximately ~~790~~640 employees under collective bargaining agreements.

EFH Corp. and Oncor have implemented certain structural and operational "ring-fencing" measures based on commitments made by Texas Holdings and Oncor to the PUCT and to the FERC to enhance the credit quality of Oncor Holdings and Oncor. These measures serve to mitigate Oncor's and Oncor Holdings' credit exposure to the Texas Holdings Group with the intent to minimize the risk that a court would order any of the assets and liabilities of the Oncor Ring-Fenced Entities to be substantively consolidated with the assets and liabilities of any member of the Texas Holdings Group in the event any such member were to become a debtor in a bankruptcy case. Accordingly, EFH Corp. and EFIH do not control and do not consolidate Oncor Holdings and Oncor for financial reporting purposes. See Notes 1 and 2 to Financial Statements for a description of the material features of these "ring-fencing" measures.

~~Table~~Oncor's ~~of Contents~~Market

Oncor's ~~Market~~operates (within the ERCOT ~~statistics~~market. This ~~below~~market ~~were~~represents ~~derived~~approximately ~~from~~90% ~~information~~of ~~published~~the electricity consumption in Texas. ERCOT is the regional reliability coordinating organization for member electricity systems in Texas and the Independent System Operator of the interconnected transmission grid for those systems. ERCOT is responsible for ensuring reliability, adequacy and security of the electric systems as well as nondiscriminatory access to transmission service by all wholesale market participants in the ERCOT) region. ERCOT's membership consists of approximately 300 corporate and associate members, including electric cooperatives, municipal power agencies, independent generators, independent power marketers, transmission service providers and distribution services providers, independent REPs and consumers.

~~Oncor~~In ~~operates~~2014, ~~within the~~ ERCOT's ~~market. This~~hourly ~~market~~demand ~~represents~~peaked ~~approximately~~at ~~85%~~66,454 ofMW ~~the~~as ~~electricity~~compared ~~consumption~~to ~~in Texas. ERCOT is~~ the ~~regional~~peak ~~reliability~~hourly ~~coordinating~~demand ~~organization~~of ~~for~~67,245 ~~member~~MW ~~electricity~~in ~~systems~~2013. The inERCOT ~~Texas~~market ~~and~~has ~~the~~limited ~~Independent~~interconnections ~~System~~to ~~Operator~~other ~~(ISO)~~markets ofin the ~~interconnected~~US ~~transmission~~and ~~grid~~Mexico, ~~for~~which ~~those~~currently ~~systems. ERCOT~~limits ispotential ~~responsible~~imports ~~for~~into ~~ensuring reliability, adequacy~~ and ~~security~~exports out of the ~~electric~~ERCOT ~~systems~~market ~~as well as nondiscriminatory access~~ to ~~transmission~~1,100 ~~service~~MW byof ~~all~~generation ~~wholesale~~capacity ~~market~~(or ~~participants~~approximately in2% ~~the~~of ~~ERCOT~~peak ~~region~~demand). ~~ERCOT's~~In ~~membership consists of approximately 300 corporate and associate members~~addition, ~~including~~wholesale ~~electric~~transactions ~~cooperatives,~~within ~~municipal~~the ~~power~~ERCOT ~~agencies,~~market ~~independent~~are ~~generators,~~generally ~~independent~~not ~~power~~subject ~~marketers,~~to ~~transmission~~regulation ~~service~~by ~~providers~~the ~~and distribution services providers, independent REPs and consumers~~FERC.

InThe ~~2012,~~ ERCOT's ~~hourly~~market ~~demand~~operates ~~peaked~~under atreliability ~~66,548~~standards ~~MW,~~set ~~which~~by ~~was~~NERC. The ~~less~~PUCT ~~than~~has primary jurisdiction over the ~~record~~ERCOT ~~peak~~market ~~demand~~to ensure the adequacy and reliability of ~~68,379~~power MWsupply inacross ~~2011~~Texas' main interconnected transmission grid. ~~The~~Oncor, ~~ERCOT~~along ~~market~~with ~~has~~other ~~limited~~owners ~~interconnections~~of totransmission ~~other~~and ~~markets~~distribution facilities in ~~the~~Texas, USassists ~~and~~ERCOT ~~Mexico,~~in ~~which~~its ~~currently~~operations. Oncor ~~limits~~has ~~potential~~planning, ~~imports~~design, ~~into~~construction, operation and ~~exports~~maintenance ~~out~~responsibility for the portion of the ~~ERCOT~~transmission ~~market~~grid toand ~~1,106~~for MWthe ofload-serving ~~generation~~substations ~~capacity~~it ~~(or~~owns, ~~approximately~~primarily 2%within ofits ~~peak~~certificated ~~demand)~~distribution service area. InOncor ~~addition~~participates with ERCOT and other ERCOT utilities in obtaining regulatory approvals and planning, ~~wholesale~~designing, ~~transactions~~constructing ~~within~~and upgrading transmission lines in order to remove existing constraints and interconnect generation on the ERCOT ~~market~~transmission ~~are~~grid. The ~~generally~~transmission ~~not~~line ~~subject~~projects are necessary to ~~regulation~~meet byreliability ~~the~~needs, ~~FERC~~support energy production and increase bulk power transfer capability.

The ERCOT market operates under reliability standards set by NERC. The PUCT has primary jurisdiction over the ERCOT market to ensure the adequacy and reliability of power supply across Texas' main interconnected transmission grid. Oncor, along with other owners of transmission and distribution facilities in Texas, assists the ERCOT ISO in its operations. Oncor has planning, design, construction, operation and maintenance responsibility for the portion of the transmission grid and for the load-serving substations it owns, primarily within its certificated distribution service area. Oncor participates with the ERCOT ISO and other ERCOT utilities in obtaining regulatory approvals and planning, designing and constructing new transmission lines in order to remove existing constraints and interconnect generation on the ERCOT transmission grid. The new transmission lines are necessary to meet reliability needs, support renewable energy production and increase bulk power transfer capability.

Oncor's Strategies

Oncor focuses on delivering electricity in a safe and reliable manner, minimizing service interruptions and investing in its transmission and distribution infrastructure to maintain its system, serve its growing customer base with a modernized grid and support ~~renewable~~ energy production.

Oncor believes that building and leveraging upon opportunities to scale its operating advantage and technology programs enables Oncor to create value by eliminating duplicative costs, efficiently managing supply costs, and building and standardizing distinctive process expertise over a larger grid. Scale also allows Oncor to take part in large capital investments in its transmission and distribution system, with a smaller fraction of overall capital at risk and with an enhanced ability to streamline costs. Oncor's growth strategies are to invest in technology upgrades, ~~including advanced metering systems~~ and ~~energy efficiency initiatives, and~~ to construct ~~new~~ transmission and distribution facilities to meet the needs of the growing Texas market and support ~~renewable~~ energy production. Oncor and other transmission and distribution businesses in ERCOT benefit from regulatory capital recovery mechanisms known as "capital trackers" that Oncor believes enable adequate and timely recovery of transmission, distribution and advanced metering investments through its regulated rates.

Oncor's Operations

Performance — Oncor achieved or exceeded market performance protocols in 12 out of 14 PUCT market metrics in ~~2012~~2014. These metrics measure the success of transmission and distribution companies in facilitating customer transactions in the competitive Texas electricity market.

Investing in Infrastructure and Technology — In 2012, Oncor invested $1.4 billion in its network to construct, rebuild and upgrade transmission lines and associated facilities, to extend the distribution infrastructure, and to pursue certain initiatives in infrastructure maintenance and information technology. Reflecting its commitment to infrastructure, Oncor and several other ERCOT utilities filed with the PUCT a plan to participate in the construction of transmission improvements designed to interconnect existing and future renewable energy facilities to transmit electricity from Competitive Renewable Energy Zones (CREZs) identified by the PUCT. In 2009, the PUCT awarded CREZ construction projects to Oncor, and Oncor currently estimates the project costs to total approximately $2.0 billion and be largely completed by the end of 2013. Additional voltage support projects are expected to be completed by early 2014, with the exception of one series capacitor project that is scheduled to be completed in December 2015. The projects involve the construction of transmission lines to support the transmission of electricity from renewable energy sources, principally wind generation facilities, in west Texas to population centers in the eastern part of the state. Through 2012, Oncor's cumulative CREZ-related capital expenditures totaled $1.460 billion, including $561 million invested in 2012. See Item 7, "Management's Discussion and Analysis of Financial Condition and Results of Operations - Significant Activities and Events and Items Influencing Future Performance – Oncor Matters with the PUCT."

~~Table~~Investing ofin ~~Contents~~Infrastructure and Technology — In 2014, Oncor invested approximately $1.1 billion in its network to construct, rebuild and upgrade transmission lines and associated facilities, to extend the distribution infrastructure and to pursue certain initiatives in infrastructure maintenance and information technology.

Oncor's technology upgrade initiatives include development of a modernized grid through ~~the replacement of existing meters with~~ advanced digital ~~metering equipment and development of advanced digital~~ communication, data management, real-time monitoring and outage detection capabilities to take advantage of Oncor's deployment of advanced digital metering equipment. This modernized grid is producing electricity service reliability improvements and providing for additional products and services from REPs that enable businesses and consumers to better manage their electricity usage and costs. ~~The~~ advanced meters can be read remotely, rather than by a meter reader physically visiting the location of each meter. Advanced meters facilitate automated demand side management, which allows consumers to monitor the amount of electricity they are consuming and adjust their electricity consumption habits. Oncor reports 15-minute interval, billing-quality electricity consumption data from the meters to ERCOT for market settlement purposes. The data makes it possible for REPs to support new programs and pricing options.

At December 31, 2012, Oncor had installed 3,263,000 advanced digital meters, including 961,000 in 2012, completing its planned deployment of advanced meters to all residential and most nonresidential retail electricity consumers in its service area. Cumulative capital expenditures for the deployment of the advanced meter system totaled $660 million through December 31, 2012, including $142 million invested in 2012.

In a stipulation that was approved by the PUCT in 2007, Oncor committed to a variety of actions, including minimum capital spending of $3.6 billion and spending an additional $100 million (in excess of regulatory requirements discussed below) in energy efficiency initiatives over the five-year period ending December 31, 2012 (not including CREZ). Oncor satisfied these commitments in 2012.

In addition to the potential energy efficiencies from advanced metering and the $100 million in energy efficiency spending discussed above, Oncor spent approximately $240 million over the five-year period ending December 31, 2012 in programs designed to improve customer electricity demand efficiencies, including approximately $50 million in 2012.

Electricity Transmission — Oncor's electricity transmission business is responsible for the safe and reliable operations of its transmission network and substations. These responsibilities consist of the construction and maintenance of transmission facilities and substations and the monitoring, controlling and dispatching of high-voltage electricity over Oncor's transmission facilities in coordination with ERCOT.

Oncor is a member of ERCOT, and its transmission business actively assists the operations of ERCOT and market participants. Through its transmission business, Oncor participates with ERCOT and other member utilities to plan, design, construct and operate new transmission lines, with regulatory approval, necessary to maintain reliability, interconnect to merchant generation facilities, increase bulk power transfer capability and minimize limitations and constraints on the ERCOT transmission grid.

Transmission revenues are provided under tariffs approved by either the PUCT or, to a small degree related to an interconnection to other markets, the FERC. Network transmission revenues compensate Oncor for delivery of electricity over transmission facilities operating at 60 kilovolt (kV) and above. Other services offered by Oncor through its transmission business include, ~~but are not limited to:~~ system impact studies, facilities studies, transformation service and maintenance of transformer equipment, substations and transmission lines owned by other parties.

PURA allows Oncor to update its transmission rates periodically to reflect changes in invested capital. This "capital tracker" provision encourages investment in the transmission system to help ensure reliability and efficiency by allowing for timely recovery of and return on new transmission investments.

At December 31, ~~2012~~2014, Oncor's transmission facilities included 56,~~760~~447 circuit miles of 345kV transmission lines and 9,~~713~~634 circuit miles of 138kV and 69kV transmission lines. Sixty-~~four~~seven generation facilities totaling 3336,~~880~~410 MW were directly connected to Oncor's transmission system at December 31, ~~2012~~2014, and ~~288~~292 transmission stations and ~~708~~715 distribution substations were served from Oncor's transmission system.

3At December 31, 2014, Oncor's transmission facilities had the following connections to other transmission grids in Texas:

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	Number of Interconnected Lines
Grid Connections	345kV	138kV	69kV
Brazos Electric Power Cooperative, Inc.	8	113	23
Rayburn Country Electric Cooperative, Inc.	—	39	6
Lower Colorado River Authority	10	23	2
Texas New Mexico Power	4	10	12
Tex-La Electric Cooperative of Texas, Inc.	—	12	1
American Electric Power Company, Inc. (a)	5	7	11
Texas Municipal Power Agency	7	6	—
Lone Star Transmission	12	—	—
Centerpoint Energy Inc.	8	—	—
Sharyland Utilities, L.P.	—	8	—
Electric Transmission Texas, LLC	6	1	—
Other small systems operating wholly within Texas	6	7	3

At December 31, 2012, Oncor's transmission facilities have the following connections to other transmission grids in Texas:

	Number of Interconnected Lines
Grid Connections	345kV	138kV	69kV
Centerpoint Energy Inc.	8	—	—
American Electric Power Company, Inc (a)	6	7	11
Lower Colorado River Authority	10	22	3
Texas Municipal Power Agency	7	6	—
Texas New Mexico Power	4	9	12
Brazos Electric Power Cooperative, Inc.	8	109	22
Lone Star Transmission	12	—	—
Electric Transmission Texas, LLC	2	1	—
Rayburn Country Electric Cooperative, Inc.	—	38	6
Tex-La Electric Cooperative of Texas, Inc.	—	12	1
Other small systems operating wholly within Texas	—	7	2

___________

(a) One of the ~~345-kV~~345kV lines is an asynchronous high-voltage direct current connection with the Southwest Power Pool.

Electricity Distribution — Oncor's electricity distribution business is responsible for the overall safe and efficient operation of distribution facilities, including electricity delivery, power quality and system reliability. These responsibilities consist of the ownership, management, construction, maintenance and operation of the distribution system within Oncor's certificated service area. Oncor's distribution system receives electricity from the transmission system through substations and distributes electricity to end-users and wholesale customers through 3~~,169 distribution feeders.~~

~~The~~Electricity Distribution — Oncor's electricity distribution ~~system~~business ~~includes~~is ~~over~~responsible ~~3.2~~for ~~million~~the ~~points~~overall safe and efficient operation of ~~delivery~~distribution atfacilities, ~~December 31~~including electricity delivery, ~~2012~~power quality and system reliability. ~~Over~~These responsibilities consist of the ~~past~~ownership, ~~five~~management, ~~years~~construction, ~~the~~maintenance ~~number~~and operation of the distribution system ~~points~~within ofOncor's ~~delivery~~certificated ~~served~~service by area. Oncor,'s ~~excluding~~distribution ~~lighting~~system ~~sites,~~receives ~~grew~~electricity anfrom ~~average~~the oftransmission ~~just~~system ~~over~~through 1%substations ~~per~~and ~~year. Oncor~~distributes ~~added~~electricity ~~approximately~~to ~~40,000~~end-users ~~points~~and ofwholesale ~~delivery~~customers inthrough ~~2012~~3,207 distribution feeders.

The Oncor distribution system ~~consists~~included ofover ~~56,615~~3.3 ~~miles~~million points of ~~overhead~~delivery ~~primary~~at ~~conductors~~December 31, ~~21,497~~2014. Over ~~miles~~the ofpast ~~overhead~~five ~~secondary~~years, ~~and~~the ~~street~~number ~~light~~of ~~conductors,~~distribution ~~15,898~~system ~~miles~~points of ~~underground~~delivery ~~primary~~served ~~conductors~~by ~~and 9~~Oncor,~~840~~ ~~miles~~excluding oflighting ~~underground~~sites, ~~secondary~~grew ~~and~~an ~~street~~average ~~light~~of ~~conductors~~1. ~~The~~28% ~~majority~~per ofyear. Oncor ~~the~~added ~~distribution~~approximately ~~system~~49,100 ~~operates~~points atof 25delivery kVin ~~and 12~~2014.~~5 kV.~~

The Oncor's distribution ~~rates~~system ~~for~~consists ~~residential~~of ~~and~~56,907 ~~small~~miles ~~business~~of ~~users~~overhead ~~are~~primary ~~based~~conductors, on21,541 ~~actual~~miles ~~monthly~~of ~~consumption~~overhead ~~(kWh),~~secondary and ~~rates~~street ~~for~~light ~~large~~conductors, ~~commercial~~16,517 ~~and~~miles ~~industrial~~of ~~users~~underground ~~are~~primary ~~based~~conductors ~~primarily~~and on10,203 ~~the~~miles ~~greater~~ of ~~actual~~underground ~~monthly~~secondary ~~demand~~and ~~(kilowatts)~~street orlight ~~80%~~conductors. The majority of ~~peak~~the ~~monthly~~distribution ~~demand~~system ~~during~~operates ~~the~~at ~~prior~~25kV ~~eleven~~and ~~months~~12.5kV.

~~Customers —~~ Oncor's ~~transmission~~distribution ~~customers~~revenues ~~consist~~from ofresidential ~~municipalities, electric cooperatives~~ and ~~other~~small ~~distribution~~business ~~companies. Oncor's~~users ~~distribution~~are ~~customers~~based ~~consist~~on ofactual ~~more~~monthly ~~than~~consumption 80(kWh), ~~REPs~~and, ~~including~~depending ~~TXU~~on ~~Energy~~size and ~~certain~~annual ~~electric~~load ~~cooperatives~~factor, inrevenues ~~Oncor's certificated service area. Revenues~~ from ~~services~~large ~~provided~~commercial toand ~~TCEH~~industrial ~~represented~~users ~~29%~~are ofbased ~~Oncor's~~either ~~total~~on ~~reported~~actual ~~consolidated~~monthly ~~revenues~~demand ~~for~~(kilowatts) ~~2012. Revenues~~or ~~from~~the ~~REP~~greater ~~subsidiaries~~ of ~~one~~actual ~~nonaffiliated~~monthly ~~entity~~demand ~~collectively~~(kilowatts) ~~represented~~or 1580% of ~~Oncor's~~peak ~~total~~monthly ~~reported~~demand ~~consolidated~~during ~~revenues for 2012. No other customer represented more than 10% of Oncor's total operating revenues. The consumers of~~ the ~~electricity~~prior ~~delivered~~eleven ~~by Oncor are free to choose their electricity supplier from REPs who compete for their business~~months.

~~Regulation~~The ~~and~~PUCT ~~Rates~~allows ~~— As its operations are wholly within Texas,~~ Oncor isto ~~not a public utility as defined in the Federal Power Act and~~file, asunder acertain ~~result~~circumstances, itup ~~is not subject~~ to ~~general~~four ~~regulation~~rate ~~under~~adjustments ~~this~~between ~~Act. However,~~rate ~~Oncor~~reviews ~~is subject~~ to ~~reliability~~recover ~~standards~~distribution-related ~~adopted~~investments ~~and~~on ~~enforced~~an byinterim ~~the TRE and the NERC, including NERC CIP standards, under the Federal Power Act~~basis.

InCustomers ~~January~~— ~~2011,~~ Oncor's ~~filed~~transmission ~~for~~customers aconsist ~~rate~~of ~~review~~municipalities, ~~with~~electric ~~the~~cooperatives ~~PUCT~~ and ~~203~~other ~~cities~~distribution ~~based~~companies. Oncor's ondistribution acustomers ~~test~~consist ~~year~~of ~~ended~~approximately ~~June~~80 30REPs, ~~2010~~including ~~(PUCT~~TCEH's ~~Docket~~retail ~~No.~~sales ~~38929)~~operations and certain electric cooperatives in Oncor's certificated service area. InRevenues ~~August~~from ~~2011,~~services ~~the~~provided ~~PUCT~~to ~~issued~~TCEH arepresented ~~final~~25% ~~order~~of ~~providing~~Oncor's total reported consolidated revenues for a2014. Revenues ~~distribution~~from ~~rate~~REP ~~increase~~subsidiaries asof ~~discussed~~one innonaffiliated ~~Item~~entity, 7NRG Energy, ~~"Management~~Inc., collectively represented 16% of Oncor's ~~Discussion~~total ~~and~~reported ~~Analysis~~consolidated revenues for 2014. No other customer represented more than 10% of ~~Financial~~Oncor's ~~Condition~~total ~~and~~operating ~~Results~~revenues. The consumers of ~~Operations~~the –electricity ~~Significant~~delivered ~~Activities~~by ~~and~~Oncor ~~Events~~are ~~and~~free ~~Items~~to ~~Influencing~~choose ~~Future~~their ~~Performance~~electricity –supplier ~~Oncor~~from ~~Matters~~REPs ~~with~~who ~~the~~compete ~~PUCT~~for their business."

AsSeasonality ~~directed~~— byOncor's ~~Senate~~revenues ~~Bill~~and ~~1693,~~results ~~which~~of ~~was~~operations ~~passed~~are bysubject ~~the~~to ~~Texas Legislature in 2011~~seasonality, ~~the~~weather ~~PUCT~~conditions ~~approved~~and aother ~~periodic~~electricity ~~rate~~usage ~~adjustment rule in September 2011~~drivers, ~~which~~with ~~allows~~revenues ~~utilities~~being tohighest ~~file,~~in ~~under~~the ~~certain circumstances, up to four rate adjustments between rate reviews to recover distribution-related investments on an interim basis~~summer.

Regulation and Rates — As its operations are wholly within Texas, Oncor is not a public utility as defined in the Federal Power Act and, as a result, it is not subject to general regulation under that Act. However, Oncor is subject to reliability standards adopted and enforced by the TRE and the NERC, including NERC CIP standards, under the Federal Power Act.

The PUCT has original jurisdiction over transmission and distribution rates and services in unincorporated areas and in those municipalities that have ceded original jurisdiction to the PUCT and has exclusive appellate jurisdiction to review the rate and service orders and ordinances of municipalities. Generally, PURA prohibits the collection of any rates or charges by a public utility (as defined by PURA) that does not have the prior approval of the appropriate regulatory authority (i.e., the PUCT or the municipality with original jurisdiction).

At the state level, PURA requires owners or operators of transmission facilities to provide open-access wholesale transmission services to third parties at rates and terms that are nondiscriminatory and comparable to the rates and terms of the utility's own use of its system. The PUCT has adopted rules implementing the state open-access requirements for all utilities that are subject to the PUCT's jurisdiction over transmission services, including Oncor.

Securitization Bonds — Oncor's operations include its wholly owned, bankruptcy-remote financing subsidiary, Oncor Electric Delivery Transition Bond Company LLC. This financing subsidiary was organized for the limited purpose of issuing certain securitization (transition) bonds in 2003 and 2004. Oncor Electric Delivery Transition Bond Company LLC issued $1.3 billion principal amount of transition bonds to recover generation-related regulatory asset stranded costs and other qualified costs under an order issued by the PUCT in 2002. At December 31, 2014, aggregate principal amounts of transition bonds outstanding, which mature in 2015 and 2016, totaled $180 million. See Note 12 to the Financial Statements for discussion of agreements between TCEH and Oncor regarding payment of interest and incremental taxes related to these bonds that were settled in 2012.

~~Table~~Environmental ofRegulations ~~Contents~~and Related Considerations

At the state level, PURA requires owners or operators of transmission facilities to provide open-access wholesale transmission services to third parties at rates and terms that are nondiscriminatory and comparable to the rates and terms of the utility's own use of its system. The PUCT has adopted rules implementing the state open-access requirements for utilities, including Oncor, that are subject to the PUCT's jurisdiction over transmission services.Water

~~Securitization~~The ~~Bonds~~TCEQ —and ~~Oncor's~~the ~~operations~~EPA ~~include~~have ~~its~~jurisdiction ~~wholly-owned,~~over ~~bankruptcy-remote~~water ~~financing~~discharges ~~subsidiary,~~(including ~~Oncor~~storm ~~Electric~~water) ~~Delivery~~from ~~Transition~~facilities ~~Bond~~in ~~Company LLC~~Texas. ~~This~~Oncor ~~financing~~believes ~~subsidiary~~its ~~was~~facilities ~~organized~~are ~~for~~presently ~~the~~in ~~limited~~material ~~purpose~~compliance ofwith ~~issuing~~applicable ~~certain~~state ~~securitization~~and ~~(transition)~~federal ~~bonds~~requirements inrelating ~~2003~~to ~~and~~discharge ~~2004~~of pollutants into water. Oncor ~~Electric~~believes ~~Delivery~~it ~~Transition~~holds ~~Bond~~all ~~Company~~required ~~LLC~~waste ~~issued~~water ~~$1.3~~discharge ~~billion~~permits ~~principal~~from ~~amount~~the ofTCEQ ~~transition~~for ~~bonds~~facilities toin ~~recover~~operation ~~generation-related~~and ~~regulatory~~has ~~asset~~applied ~~stranded~~for ~~costs~~or ~~and~~obtained ~~other~~necessary ~~qualified~~permits ~~costs~~for facilities under anconstruction. Oncor ~~order~~also ~~issued~~believes byit can satisfy the ~~PUCT~~requirements innecessary ~~2002~~to obtain any required permits or renewals. AtThere ~~December 31,~~are ~~2012,~~also ~~$436~~federal ~~million~~rules ~~principal~~pertaining ~~amount~~to ofSpill ~~transition~~Prevention, ~~bonds~~Control ~~maturing~~and ~~between~~Countermeasure ~~2013~~(SPCC) ~~and~~plans ~~2016~~for ~~was~~oil-filled ~~outstanding. See~~electrical ~~Note~~equipment 8and tobulk ~~Financial~~storage ~~Statements~~facilities for ~~discussion~~oil ofthat ~~agreements~~affect ~~between~~certain ~~TCEH~~of ~~and~~Oncor's facilities. Oncor ~~regarding~~has ~~payment~~implemented ofSPCC ~~interest~~plans ~~and~~as ~~incremental~~required ~~taxes~~for ~~related~~those tosubstations, ~~these~~work ~~bonds~~centers ~~that~~and ~~were~~distribution ~~settled~~systems, and believes it is currently in ~~2012~~compliance with these rules.

~~Environmental~~Solid Regulations and Related Considerations — The TCEQ and the EPA have jurisdiction over water discharges (including storm water) from facilities in Texas. Oncor believes its facilities are presently in material compliance with applicable state and federal requirements relating to discharge of pollutants into the water. Oncor believes it holds all required waste water discharge permits from the TCEQ for facilities in operation and has applied for or obtained necessary permits for facilities under construction. Oncor also believes it can satisfy the requirements necessary to obtain any required permits or renewals. There are also federal rules pertaining to Spill Prevention, Control and Countermeasure (SPCC) plans for oil-filled electrical equipment and bulk storage facilities for oil that affect certain of its facilities. Oncor has implemented SPCC plans as required for those substations, work centers and distribution systems, and believes it is currently in compliance with these rules.Waste

Treatment, storage and disposal of solid waste and hazardous waste are regulated at the state level under the Texas Solid Waste Disposal Act and at the federal level under the Resource Conservation and Recovery Act of 1976, as amended, and the Toxic Substances Control Act. The EPA has issued regulations under the Resource Conservation and Recovery Act of 1976 and the Toxic Substances Control Act, and the TCEQ has issued regulations under the Texas Solid Waste Disposal Act applicable to Oncor's facilities. Oncor is in compliance with applicable solid and hazardous waste regulations.

~~Oncor's~~Environmental ~~capital~~Capital ~~expenditures for environmental matters totaled approximately $54 million in 2012 and are expected to total approximately $43 million in 2013.~~Expenditures

Oncor's capital expenditures for environmental matters totaled $10 million in 2014 and are expected to total approximately $8 million in 2015.

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Item 1A.	RISK FACTORS

~~Some~~Important ~~important~~ factors, in addition to others specifically addressed in Item 7, "Management's Discussion and Analysis of Financial Condition and Results of Operations," that could have a material impact on ~~our~~EFIH's operations, liquidity, financial results and financial condition, or could cause ~~our~~its actual results or outcomes to differ materially from any projected outcome contained in any forward-looking statement in this report, ~~include:~~are described below. There may be further risks and uncertainties that are not currently known or that are not currently believed to be material that may adversely affect EFIH's operations, liquidity and/or financial condition in the future.

Risks Related to ~~Substantial~~Chapter ~~Indebtedness~~11 ~~and Debt Agreements~~Cases

~~Our~~EFIH ~~substantial~~has ~~leverage~~filed ~~could~~voluntary ~~adversely~~petitions ~~affect~~for ~~our~~relief ~~ability~~under tothe ~~fund~~Bankruptcy ~~our~~Code ~~operations,~~and ~~limit~~is ~~our~~subject ~~ability~~ to ~~react to changes in~~ the ~~economy~~risks ~~or our industry, limit our ability to raise additional capital~~ and ~~adversely~~uncertainties ~~impact~~associated ~~our~~with ~~ability~~bankruptcy ~~to meet obligations under our various debt agreements~~cases.

WeEFIH ~~are~~(together ~~highly~~with ~~leveraged. After~~its ~~giving~~parent ~~effect to the debt exchanges and related transactions in early 2013~~company, ~~including $680 million in cash distributions to~~ EFH Corp., and ~~distributions~~substantially of all of the direct and indirect subsidiaries of EFH Corp. ~~Senior~~including ~~Notes~~EFCH ~~due~~and ~~2017~~TCEH webut ~~held~~excluding asthe ~~investments,~~Oncor asRing-Fenced ~~discussed~~Entities) inhas ~~Notes~~filed 3voluntary ~~and~~petitions 5for torelief ~~Financial~~under ~~Statements,~~Chapter ~~our~~11 ~~outstanding~~of ~~debt~~the ~~totaled~~Bankruptcy $7Code.5 For ~~billion~~the ~~principal~~duration ~~amount,~~of ~~and~~the ~~our~~Chapter ~~liabilities~~11 ~~exceed~~Cases, ~~our~~EFIH ~~assets~~will asbe ~~reported~~subject ~~under~~to USvarious ~~GAAP. Our~~risks, ~~substantial~~including ~~indebtedness~~but ~~has~~not orlimited ~~could~~to ~~have,~~the ~~significant consequences, including~~following:

• ~~making~~EFIH's itability ~~more~~to ~~difficult~~develop, ~~for~~file usand complete a Chapter 11 plan of reorganization, particularly during the exclusivity period (i.e., in general the period in which EFIH has the exclusive right to ~~make~~file ~~payments~~a onChapter ~~our~~11 ~~debt~~plan of reorganization);

• ~~requiring~~EFIH's aability ~~substantial portion of our cash flow~~ to beobtain ~~dedicated~~Bankruptcy ~~to the payment of principal and interest on debt~~Court, ~~thereby~~creditor ~~limiting our liquidity~~ and ~~reducing~~regulatory ~~our~~approval ~~ability~~of toa ~~use~~Chapter ~~our~~11 ~~cash~~plan ~~flow~~of toreorganization ~~fund~~in ~~future~~a ~~business~~timely ~~opportunities and execute our strategy~~manner;

• ~~increasing~~EFIH's ~~our~~ability ~~vulnerability~~to obtain Bankruptcy Court approval with respect to ~~adverse~~motions ~~economic,~~in ~~industry~~the orChapter ~~competitive~~11 ~~developments~~Cases and the outcomes of Bankruptcy Court rulings and of the Chapter 11 Cases in general;

• ~~limiting~~Risks ~~our~~associated ~~ability~~with tothird ~~make~~party ~~strategic~~motions ~~acquisitions~~in orthe ~~causing~~Chapter us11 Cases, which may interfere with EFIH's ability to ~~make~~propose ~~non-strategic~~and/or ~~divestitures~~complete a Chapter 11 plan of reorganization;

• ~~limiting~~Increased ~~our~~costs ~~ability~~related to ~~obtain~~the ~~additional~~Chapter ~~financing~~11 ~~for~~Cases ~~working capital, debt service requirements, acquisitions~~ and ~~general~~related ~~corporate or other purposes, or to refinance existing debt, and increasing the costs of any such financing or refinancing, and~~litigation;

• ~~limiting~~EFIH's ~~our~~ ability to ~~adjust~~maintain toor ~~changing~~obtain ~~market~~sufficient ~~conditions~~financing ~~and~~sources ~~placing us at a disadvantage compared~~ to ~~competitors~~fund ~~who are less leveraged and who, therefore, may be able to operate at~~ a ~~lower~~Chapter ~~overall~~11 ~~cost~~plan ~~(including debt service) and take advantage~~ of ~~opportunities that we cannot.~~reorganization;

~~Despite~~• ~~our~~Potential ~~current~~incremental ~~high~~increase ~~debt~~in ~~level,~~risks werelated ~~may still be able~~ to ~~incur~~distributions ~~substantially~~from ~~more debt. This could further exacerbate the risks associated with our substantial debt.~~Oncor;

We• ~~may~~The beoutcome ~~able~~of tocurrent ~~incur~~or ~~additional~~potential ~~debt~~litigation inregarding ~~the~~whether ~~future. Although~~certain ~~our~~holders ~~debt agreements contain restrictions on the incurrence of additional debt, these restrictions~~ are ~~subject~~entitled to amake-whole ~~number~~or ofredemption ~~significant~~premiums ~~qualifications~~ and/or ~~exceptions. Under~~post-petition ~~certain~~interest ~~circumstances, the amount of debt, including secured debt that could be incurred~~ in ~~the~~connection ~~future in compliance~~ with ~~these restrictions, could be significant. The indentures for~~ the ~~EFIH~~treatment ~~Notes permit us to incur $250 million~~ of ~~additional~~their ~~debt~~claims ~~secured by 100% of our membership interests and other investments we own~~ in ~~Oncor Holdings (such membership interests and other investments~~bankruptcy, ~~the Collateral), including $15 million on a first-priority basis~~ and the remainder on a second-priority basis. We can also issue debt secured by assets of ours or EFH Corp. other than the Collateral and up to $375 million of additional unsecured debt. The indentures governing the EFIH Notes also permit us and EFH Corp. to incur additional debt in various other circumstances. If new debt is added to our existing debt levels, the related risks that we and holders of our existing debt now face could intensify.

~~EFH~~• ~~Corp.~~The ~~and~~outcome ~~its~~of ~~subsidiaries~~current ~~(other~~or ~~than~~potential ~~Oncor~~claims ~~Holdings~~regarding ~~and~~intercompany ~~its~~claims ~~subsidiaries) may pursue various transactions~~ and/or ~~initiatives~~derivative ~~to address their highly leveraged balance sheets and significant cash interest requirements~~claims.

~~Future~~EFIH ~~transactions~~is also subject to risks and ~~initiatives~~uncertainties ~~that~~with ~~EFH~~respect ~~Corp.~~to the actions and ~~its~~decisions ~~subsidiaries~~of (creditors and other ~~than~~third ~~Oncor~~parties ~~Holdings~~who ~~and~~have ~~its~~interests ~~subsidiaries)~~in ~~may~~the ~~pursue~~Chapter 11 Cases that may ~~have~~be ~~significant~~inconsistent ~~effects~~with onits ~~our~~plans. In ~~business~~addition, ~~capital~~the ~~structure,~~Chapter ~~ownership,~~11 ~~liquidity,~~Cases ~~credit~~subject ~~ratings~~EFIH to risks related to litigation and/or ~~results~~claims ofasserted ~~operations. For~~by ~~example,~~creditors inor ~~addition~~other tostakeholders in the ~~exchanges~~Chapter 11 Cases. These risks and ~~repurchases~~uncertainties ofcould ~~debt~~affect ~~reflected~~EFIH in ~~Item~~various 7,ways ~~"Management's~~and ~~Discussion~~may ~~and~~significantly ~~Analysis~~increase the duration of ~~Financial~~the ~~Condition~~Chapter ~~and~~11 ~~Results~~Cases. Because of ~~Operations~~the –risks ~~Significant~~and ~~Activities~~uncertainties ~~and~~associated ~~Events~~with ~~and~~Chapter ~~Items~~11 ~~Influencing~~Cases, ~~Future~~EFIH ~~Performance~~cannot –predict ~~Long-Term~~or ~~Debt~~quantify ~~Activity,"~~the ~~EFH~~ultimate ~~Corp.~~impact ~~and~~that ~~its~~events ~~subsidiaries~~occurring ~~(other~~during ~~than~~the ~~Oncor~~Chapter ~~Holdings~~11 ~~and~~Cases ~~its~~may ~~subsidiaries)~~have ~~continue~~on toits ~~consider~~cash ~~and~~flows, ~~evaluate~~liquidity, ~~possible~~financial ~~transactions~~condition and ~~initiatives~~results toof ~~address~~operations ~~their~~nor ~~highly~~can ~~leveraged~~EFIH ~~balance~~predict ~~sheets~~the ~~and~~ultimate ~~significant~~impact ~~cash~~that ~~interest~~events ~~requirements~~occurring ~~and~~during ~~may~~the ~~from~~Chapter ~~time~~11 toCases ~~time~~may ~~enter~~have ~~into~~on ~~discussions~~its ~~with~~or ~~their~~its ~~lenders~~affiliates' ~~and~~(excluding ~~bondholders~~the ~~with~~Oncor ~~respect~~Ring toFenced ~~such~~Entities) ~~transactions~~corporate ~~and initiatives~~structure. ~~These~~For ~~transactions and initiatives may include~~example, ~~among~~in ~~others,~~connection ~~debt~~with ~~for~~the ~~debt~~Chapter ~~exchanges,~~11 ~~recapitalizations~~Cases, ~~amendments~~certain toof ~~and~~EFIH's ~~extensions~~or ofEFIH's ~~debt~~affiliates' ~~obligations~~creditors ~~and~~may ~~debt~~seek, ~~for~~and ~~equity~~receive, ~~exchanges~~Bankruptcy orCourt ~~conversions. There~~approval ~~can~~to besell noor ~~guarantee~~otherwise ~~that~~transfer ~~any~~certain of ~~such~~their ~~transactions~~respective orassets ~~initiatives~~in ~~would~~order beto ~~successful~~satisfy orliabilities ~~produce~~owed ~~the~~to ~~desired~~such ~~outcome,~~creditors. Any ~~which~~such transfer could ~~ultimately~~result ~~affect~~in ussignificant ~~and/or~~tax ~~our~~liabilities ~~debt~~for ~~holders~~EFH inCorp. aand ~~material~~its ~~manner,~~subsidiaries ~~including~~(excluding ~~debt~~the ~~holders~~Oncor ~~not~~Ring-Fenced ~~receiving~~Entities), ~~the~~which ~~full~~could ~~principal~~reduce ~~amount~~the recovery of ~~EFIH debt~~creditors.

The duration of the Chapter 11 Cases is difficult to estimate and could be lengthy. Due to the termination of the Restructuring Support and Lock-Up Agreement (RSA), the Debtors (including the EFIH Debtors) are likely subject to more lengthy, costly and contentious Chapter 11 Cases. If the Debtors (including the EFIH Debtors) are unable to file and solicit votes for a Chapter 11 plan of reorganization prior to the expiration of the exclusivity period granted by the Bankruptcy Court, then third parties can file a plan, which would likely further exacerbate the length, cost and contentiousness of the Chapter 11 Cases. Moreover, the duration of the Chapter 11 Cases is subject to the receipt of Bankruptcy Court approval for a Chapter 11 plan of reorganization and regulatory approvals, the timing of which is unpredictable.

The duration of the Chapter 11 Cases is difficult to estimate and could be lengthy. As a result of the termination of the RSA, the Debtors (including the EFIH Debtors) are likely subject to more lengthy, costly and contentious Chapter 11 Cases, which will likely have a more pronounced adverse effect on its business than the pre-arranged plan contemplated by the RSA. The Chapter 11 Cases will likely involve contested issues with multiple stakeholders.

~~Table~~If the Debtors (including the EFIH Debtors) are unable to file a Chapter 11 plan of ~~Contents~~reorganization, or solicit the appropriate votes for such plan, in each case, prior to the expiration of the exclusivity period granted by the Bankruptcy Court (currently June 23, 2015 for filing a Chapter 11 plan of reorganization and August 23, 2015 for soliciting the appropriate votes for such plan), third parties could file their own plan or plans of reorganization. Any such third party plan or plans will likely exacerbate the length, cost and contentiousness of the Chapter 11 Cases.

WeOperating ~~have~~under ~~significant~~Chapter ~~exposure~~11 may restrict EFIH's ability to ~~EFH~~pursue ~~Corp~~its strategic initiatives. Moreover, ~~credit~~EFIH ~~risk~~is ~~and~~subject to ~~the~~various ~~business~~covenants and ~~financial~~events ~~condition~~ of ~~TCEH~~default under its DIP Facility.

WeThe ~~hold~~EFIH ~~debt~~Debtors ~~securities~~are ofsubject ~~EFH~~to ~~Corp.~~various covenants and ~~TCEH~~events ~~with~~of andefault ~~aggregate~~under ~~principal~~its ~~amount~~DIP ~~of $1~~Facility.~~4 billion.~~ WeIn ~~depend~~general, oncertain ~~receiving~~of ~~cash interest payments on~~ these ~~debt~~covenants ~~securities~~limit tothe ~~fund,~~Debtors' ~~at least in part~~ability, ~~payments~~subject ~~on our debt obligations. The indentures governing our debt do not limit our ability~~ to ~~dividend~~certain ~~these~~exceptions, ~~EFH Corp. debt securities~~ to ~~EFH~~take ~~Corp.~~certain soactions ~~long~~such as weselling ~~received such securities in exchange for the issuance of EFIH debt~~assets, ~~and~~granting ~~in early 2013 and December 2012~~liens, weincurring ~~returned~~indebtedness ~~to EFH Corp. as dividends $6.5 billion principal amount of these securities, including amounts acquired in debt exchanges in January 2013~~ and ~~December~~making ~~2012~~investments. If ~~EFH Corp. and TCEH are unable to service their debt securities for any reason, or if we dividend~~ the ~~remaining~~EFIH ~~debt~~Debtors ~~securities~~fail to ~~EFH~~comply ~~Corp.~~with ~~and/or~~these ~~EFH~~covenants ~~Corp. does not make capital contributions~~ or ~~loans~~an toevent ~~us, we may be unable to make payments on our debt obligations. We may acquire additional debt securities~~ of ~~EFH~~default ~~Corp.~~occurs orunder ~~TCEH in~~ the ~~future~~DIP ~~in connection with exchange offers~~Facility, ~~debt~~its ~~repurchases or other transactions~~liquidity, ~~in which case our exposure to EFH Corp. and TCEH credit risk and to the business and~~ financial condition ofor ~~TCEH~~operations ~~would~~may be ~~increased~~materially impacted.

WeAs are highly dependent upon cash flows from EFH Corp. via cash interest payments on EFH Corp. debt securities we hold and/or contributions or loans in order to meet our debt obligations, including interest payments on our debt. EFH Corp. is a ~~holding~~result ~~company with no business operations and no significant assets other than its equity investments in EFIH and EFCH, which owns TCEH. The liabilities~~ of ~~TCEH~~the ~~exceeded~~Chapter ~~its~~11 ~~assets as shown on its balance sheet prepared in accordance with US GAAP at December 31~~Cases, ~~2012. Further, third-party analyses of TCEH~~EFIH's ~~business~~historical ~~performed~~financial ininformation ~~connection~~may ~~with asset value impairment testing for GAAP purposes have indicated that the principal amount of TCEH's outstanding debt exceeds its enterprise value. If TCEH was deemed~~ not ~~to have net assets, it would not~~ be ~~permitted~~indicative toof ~~pay dividends under applicable state law and/or could be significantly less likely to obtain or access the capital markets and/or liquidity facilities in order to meet~~ its ~~obligations~~future financial performance.

~~Further, our ability to receive cash interest payments on the TCEH debt securities we hold is subject to risks related to TCEH~~EFIH's ~~business,~~capital ~~operations and financial condition, including, among others, general economic conditions, ERCOT market~~ structure, ~~oversight~~will ~~and~~likely ~~competition~~be ~~and~~significantly ~~wholesale~~altered ~~electricity~~under ~~prices~~any inChapter ~~ERCOT~~11 ~~(which~~plan ~~are~~confirmed ~~generally~~by athe ~~function~~Bankruptcy ~~of forward natural gas prices and ERCOT market heat rates)~~Court. AUnder ~~substantial~~fresh-start ~~amount~~accounting ofrules ~~EFH~~that ~~Corp.'s~~may ~~consolidated~~apply ~~debt~~to isEFIH ~~comprised~~upon ~~of debt incurred under~~ the ~~TCEH~~effective ~~senior~~date ~~secured~~of ~~credit~~a ~~facilities. At~~Chapter ~~December 31,~~11 ~~2012~~plan, ~~a substantial amount of EFH Corp.~~EFIH's ~~and~~assets ~~TCEH's long-term debt matures in the next few years, including approximately $90 million, $4.0 billion~~ and ~~$3.3~~liabilities ~~billion~~would ~~principal~~be ~~amount~~adjusted ofto ~~debt~~fair ~~maturing in 2013~~value, ~~2014~~which ~~and~~could ~~2015,~~have ~~respectively. A~~a ~~substantial~~significant ~~amount~~impact ofon ~~TCEH~~EFIH's ~~debt~~financial ~~is comprised of debt incurred under the TCEH senior secured credit facilities~~statements. InAccordingly, ~~April~~if ~~2011~~fresh-start ~~and~~accounting ~~January~~rules ~~2013~~apply, ~~TCEH~~EFIH's ~~secured~~financial ~~extensions~~condition ofand aresults ~~significant portion~~ of ~~the~~operations ~~commitments~~following ~~and~~its ~~loans~~emergence ~~under~~from ~~the~~Chapter ~~TCEH~~11 ~~senior~~would ~~secured~~not ~~credit~~be ~~facilities. However,~~comparable ~~even~~to ~~after~~the ~~taking~~financial ~~these~~condition ~~extensions~~and ~~into~~results ~~account, TCEH still has $3.8 billion principal amount~~ of ~~term~~operations ~~loans~~reflected ~~that~~in ~~were~~its ~~not~~historical ~~extended~~financial ~~and will mature in October 2014~~statements. In ~~addition,~~connection ~~notwithstanding~~with the ~~extensions,~~Chapter ~~the~~11 ~~commitments~~Cases and ~~loans~~the ~~could~~development ~~mature~~of ~~earlier~~a asChapter ~~described~~11 ~~in the next paragraph. Moreover~~plan, ~~while~~it ~~TCEH~~is ~~was~~also ~~able~~possible tothat ~~extend~~additional arestructuring ~~significant portion of the commitments~~ and ~~loans~~related ~~under~~charges ~~the~~may ~~TCEH~~be ~~senior~~identified ~~secured credit facilities, the extensions were only for three years~~ and ~~the~~recorded ~~cost~~in offuture ~~these extensions was significant~~periods. AsSuch acharges ~~result,~~could ~~TCEH~~be ~~has~~material ato ~~substantial~~EFIH's ~~principal~~consolidated ~~amount~~financial ofposition, ~~debt~~liquidity ~~that matures in 2016 (approximately $1.9 billion)~~ and ~~2017~~results ~~(approximately $16.7 billion, including $947 million under the TCEH letter~~ of ~~credit facility that is held in restricted cash)~~operations.

~~The~~There extended commitments and loans under the TCEH senior secured credit facilities include a "springing maturity" provision pursuant to which in the event that (a) more than $500 million aggregate principal amount of the TCEH 10.25% senior notes due 2015 (TCEH 10.25% Notes) or more than $150 million aggregate principal amount of the TCEH 10.50%/11.25% senior toggle notes due 2016 (TCEH Toggle Notes) (in each case, other than notes held by EFH Corp. or its controlled affiliates at March 31, 2011 to the extent held at the determination date), as applicable, remain outstanding as of 91 days prior to the maturity date of the applicable notes and (b) TCEH's consolidated total debt to consolidated EBITDA ratio (as defined in the TCEH senior secured credit facilities) is ~~greater~~no ~~than~~assurance ~~6.00~~regarding ~~to 1.00 at such applicable determination date, then~~ the ~~maturity~~outcome ~~date~~ of ~~the~~any ~~extended~~litigation ~~commitments~~regarding ~~and~~whether ~~loans~~note will automatically change to 90 days prior to the maturity date of the applicable notes. As a result of this "springing maturity" provision, TCEH may lose the benefit of the extension of the commitments and loans under the TCEH senior secured credit facilities if it is unable to refinance the requisite portion of the TCEH 10.25% Notes and TCEH Toggle Notes (collectively, the TCEH Senior Notes) by the applicable deadline. The TCEH 10.25% Notes mature on November 1, 2015, and the TCEH Toggle Notes mature on November 1, 2016. If holders ~~of the TCEH Senior Notes~~ are ~~unwilling~~entitled to extend the maturities of their notes, then, to avoid the "springing maturity" of the extended commitments and loans, TCEH may be required to repay a substantial portion of the TCEH Senior Notes at prices above market or at par. There is no assurance that TCEH will be able to make-whole ~~such payments, whether through cash on hand~~ or ~~additional~~redemption ~~financings. At~~premiums ~~December 31, 2012, $3.125 billion~~ and/or ~~$1.749~~post-petition ~~billion~~interest ~~aggregate~~in ~~principal~~connection ~~amount~~with of the ~~TCEH~~treatment ~~10.25%~~of ~~Notes~~their ~~and~~claims ~~the~~in ~~TCEH Toggle Notes, respectively, were outstanding, excluding amounts held by EFH Corp~~bankruptcy. ~~and EFIH.~~

The EFIH Debtors are engaged in litigation regarding whether holders of its outstanding notes are entitled to receive a make-whole or redemption premium in connection with the repayment of such notes, including pursuant to a Chapter 11 plan of reorganization. As of December 31, 2014, the total aggregate amount of make-whole or redemption premiums that would be owed if such alleged claims were allowed claims would be approximately $1.123 billion (of which $432 million relates to the EFIH First Lien Notes, $591 million relates to the EFIH Second Lien Notes and $100 million relates to the EFIH PIK Notes). In these matters, the EFIH Debtors have requested, or expect to request, orders from the Bankruptcy Court disallowing such make-whole or redemption claims. See Note 10 to the Financial Statements for a more detailed discussion regarding these claims.

Moreover, creditors may make additional claims in the Chapter 11 Cases in connection with a repayment or settlement of their pre-petition debt such as indemnification claims or for the payment of fees and expenses incurred in connection with litigating such claims.

In addition, creditors may assert claims for post-petition interest, including default interest, on their outstanding notes in connection with the repayment of such notes, including pursuant to a Chapter 11 plan of reorganization. Such amounts would be material, particularly if such post-petition interest were required to be paid at the contract rate as opposed to the federal judgment rate.

EFIH cannot predict whether any such litigations would be filed or, if filed, the outcome of any such litigation or the Bankruptcy Court's determination regarding the validity or the amounts payable in respect of any such claim.

The EFIH DIP Facilities may be insufficient to fund EFIH's cash requirements through its emergence from bankruptcy. In addition, EFIH's independent auditor's report on its financial statements raises substantial doubt about its ability to continue as a going concern given the Chapter 11 Cases.

For the duration of the Chapter 11 Cases, EFIH will be subject to various risks, including but not limited to (i) the inability to maintain or obtain sufficient financing sources for operations or to fund any reorganization plan and meet future obligations, and (ii) increased legal and other professional costs associated with the Chapter 11 Cases and its reorganization.

~~Table~~EFIH believes that the EFIH DIP Facilities, plus cash distributions received from Oncor Holdings, will be sufficient to fund EFIH's anticipated cash requirements through the pendency of ~~Contents~~the Chapter 11 Cases. However, if a Chapter 11 plan of reorganization is not completed during the term of the EFIH DIP Facilities, EFIH may not be able to obtain sufficient additional financing on acceptable terms or at all.

~~Wholesale~~In ~~electricity~~its ~~prices~~report inon ~~the ERCOT market have generally moved with the price of natural gas. Accordingly, the contribution to earnings and the value of TCEH~~EFIH's ~~nuclear~~financial ~~and~~statements ~~lignite/coal-fueled~~included ~~generation assets are dependent~~ in significant part upon the price of natural gas. Forward natural gas prices have generally trended downward since mid-2008 (from $11.12 per million British thermal units (MMBtu) in mid-2008 to $4.03 per MMBtu at December 31, 2012 for calendar year 2014). In recent years natural gas supply has outpaced demand as a result of increased drilling of shale gas deposits combined with lingering demand weakness associated with the economic downturn. Many industry experts expect this ~~supply/demand~~Annual ~~imbalance~~Report toon ~~continue~~Form ~~for a number of years, thereby depressing natural gas prices for a long~~10-~~term period. These market conditions are challenging to the liquidity and long-term profitability of EFH Corp. and its competitive businesses. Specifically~~K, ~~low natural gas prices and their effect in ERCOT on wholesale electricity prices could have a material impact on TCEH~~EFIH's ~~overall~~independent ~~profitability~~public ~~for~~accounting ~~periods~~firm instates ~~which~~that TCEH does not have significant hedge positions. At December 31, 2012, TCEH has hedged approximately 96% and 41% of its wholesale natural gas price exposure related to expected generation output for 2013 and 2014, respectively, based on the ~~EPA's~~uncertainties ~~currently~~inherent ~~governing Clean Air Interstate Rule (CAIR), and TCEH does not have any significant amounts of hedges~~ in ~~place for periods after 2014. Consequently, a continuation, or further decline, of current forward natural gas prices could result in further declines in~~ the ~~values~~bankruptcy ofprocess ~~TCEH's~~raise ~~nuclear~~substantial ~~and~~doubt ~~lignite/coal-fueled~~about ~~generation assets and limit or hinder TCEH~~EFIH's ability to ~~hedge~~continue ~~its~~as ~~wholesale~~a ~~electricity~~going revenues at sufficient price levels to support its significant interest payments and debt maturities, which could adversely impact TCEH's ability to obtain additional liquidity and refinance and/or extend the maturities of its outstanding debtconcern.

InEFIH July 2011, the EPA issued the Cross-State Air Pollution Rule (CSAPR), a replacement for CAIR. In February 2012, the EPA released a final rule (Final Revisions) and a proposed rule revising certain aspects of the CSAPR, including emissions budgets for the State of Texas. In June 2012, the EPA finalized the proposed rule (Second Revised Rule). The emissions budgets established by the Final Revision along with the Second Revised Rule would require significant additional reductions of sulfur dioxide (SO2) and nitrogen oxide (NOx) emissions from TCEH's fossil-fueled generation units. TCEH could comply with these emissions limits either through physical reductions or through the purchase of emissions credits from third parties, but the volume of SO2 credits that may not be ~~purchased~~able ~~from sources outside of Texas is subject~~ to ~~limitations~~obtain ~~starting~~exit infinancing ~~2014. Because the CSAPR was vacated and remanded~~ to ~~the~~repay ~~EPA in August 2012 by a three judge panel of~~ the USEFIH ~~Court~~DIP ofFacilities ~~Appeals for the District of Columbia Circuit (D.C. Circuit Court), the CSAPR, the Final Revisions and the Second Revised rule do not impose any immediate legal~~ or ~~compliance requirements on TCEH~~, ~~the~~if ~~State~~EFIH ofis ~~Texas,~~able orto ~~other~~obtain ~~affected~~such ~~parties. In~~exit ~~October 2012~~financing, the ~~EPA~~agreements ~~and~~governing ~~certain~~such ~~other~~exit ~~parties~~financing ~~that~~may ~~supported~~significantly ~~the~~restrict ~~CSAPR~~its ~~filed~~financing ~~petitions seeking review by the full court of the D.C. Circuit Court's ruling. In January 2013, the D.C. Circuit Court denied the request for rehearing. The EPA~~ and ~~the~~operations ~~other~~flexibility ~~parties~~after toemerging ~~these~~from ~~proceedings have approximately 90 days to appeal the D~~bankruptcy.~~C. Circuit Court's decision to the US Supreme Court. TCEH cannot predict whether, when, or in what form the CSAPR, the Final Revisions, the Second Revised Rule or any replacements will take effect.~~

~~Material~~It ~~capital~~is ~~expenditures~~expected ~~would~~that bethe ~~required~~EFIH toFirst ~~comply~~Lien ~~with~~DIP ~~the~~Facility ~~CSAPR,~~will asbe ~~revised~~repaid using, in ~~June~~whole ~~2012~~or in part, asthe ~~well~~proceeds asfrom ~~with~~borrowings ~~other~~under ~~pending~~exit ~~and~~financings. EFIH's ~~expected~~ability ~~environmental~~to ~~regulations~~obtain such exit financings will depend on, ~~including~~among other things, the ~~Mercury~~timing and ~~Air~~outcome ~~Toxics~~of ~~Standard~~various ~~(MATS)~~ongoing matters in the Chapter 11 Cases, ~~for~~its ~~which~~business, ~~TCEH~~operations and ~~certain~~financial ~~states~~condition, and ~~industry~~market ~~participants~~conditions. EFIH ~~have~~has ~~filed~~not ~~petitions~~yet ~~for~~received ~~review~~any incommitment ~~the~~with ~~D.C.~~respect ~~Circuit~~to ~~Court~~any exit facilities, and there can be no assurance that it will be able to obtain such exit facilities on reasonable economic terms, or at all. WeIf EFIH cannot ~~predict~~secure exit financing, it may not be able to emerge from bankruptcy and may not be able to repay the ~~outcome~~EFIH First Lien DIP Facility at its respective maturity. Any exit financing that EFIH is able to secure may include a number of ~~these~~significant ~~petitions~~restrictive covenants which could impair its financing and operational flexibility and make it difficult for EFIH to react to market conditions and satisfy its unanticipated cash requirements.

~~Our~~As ~~debt~~a ~~agreements,~~result ~~certain~~ of the ~~debt~~Chapter ~~agreements~~11 ofCases, ~~EFH~~net ~~Corp.~~operating losses and ~~the~~other ~~Oncor~~tax ~~"ring-fencing"~~attributes ~~measures~~are ~~contain~~not ~~restrictions~~expected ~~that~~to ~~limit~~be ~~flexibility~~available inupon ~~operating~~emergence ~~our~~from ~~businesses~~the Chapter 11 Cases.

~~Our~~Certain ~~debt~~tax ~~agreements~~attributes, such as net operating loss carry-forwards and certain oftax credits, are expected to be utilized in connection with the ~~debt~~Chapter ~~agreements~~11 Cases. Under the Internal Revenue Code, tax attributes are reduced to the extent discharge of ~~EFH~~indebtedness ~~Corp~~income is excluded from gross income arising from a Chapter 11 case. If ~~and~~any attributes are still available after the ~~Oncor~~application ~~"ring-fencing"~~of ~~measures~~this ~~contain~~provision, ~~various~~such ~~covenants~~attributes ~~and~~may ~~other~~be ~~restrictions~~limited ~~that,~~or ~~among~~lost ~~other~~in ~~things~~the event EFH Corp. or any of its subsidiaries, ~~limit~~including ~~flexibility~~EFIH, inexperience ~~operating~~an ~~our~~ownership ~~business~~change as defined under the Internal Revenue Code. AIn ~~breach~~addition, oftax ~~any~~attributes ofmay ~~these~~be ~~covenants~~utilized in a transaction such as a sale or ~~restrictions~~transfer of assets that could result in a significant ~~portion~~tax ofliability ~~our~~for ~~debt~~EFH ~~becoming~~Corp. ~~immediately~~and ~~due~~its ~~and~~subsidiaries, ~~payable~~including EFIH. ~~Our~~As ~~ability~~a toresult ~~comply~~of ~~with~~the ~~certain~~foregoing ofrules, ~~our~~any ~~covenants~~pre-emergence net operating losses and ~~restrictions~~certain ~~can~~tax becredits ~~affected~~are bynot ~~events~~expected ~~beyond~~to ~~our~~be ~~control. These~~available ~~covenants~~to ~~and~~EFH ~~other~~Corp. ~~restrictions~~and ~~limit~~its ~~our~~subsidiaries, ~~ability~~including toEFIH, ~~among~~to ~~other~~reduce ~~things:~~taxable income for tax periods beginning after emergence from Chapter 11.

•While ~~incur~~the ~~additional~~Bankruptcy ~~debt~~Court approved the Debtors' bidding procedures for the solicitation of bids from third parties to purchase EFH Corp.'s indirect economic ownership interest in Oncor, there can be no assurance that the Debtors will receive a bid the Debtors deem acceptable, that the Bankruptcy Court will approve any such bid or ~~issue~~that ~~preferred~~any ~~shares;~~such transaction will ultimately close.

•In ~~pay~~January ~~dividends~~2015, onthe Bankruptcy Court approved the Debtors' bidding procedures motion that sets forth the process by which the Debtors are authorized to solicit proposals (i.e., ~~repurchase~~bids) from third parties to acquire (in any form and employing any structure, whether taxable (in whole or ~~make~~in ~~distributions~~part) or tax-free) EFH Corp.'s indirect economic ownership in ~~respect~~Oncor in accordance with the Bankruptcy Code. EFIH cannot predict the outcome of ~~capital~~this ~~stock~~process, including whether any acceptable bid will be received, whether the Bankruptcy Court will approve any such bid or ~~make~~whether ~~other~~any ~~restricted~~such ~~payments;~~transaction will (or when it will) ultimately close because any such transaction would be the subject of customary closing conditions, including receipt of all applicable regulatory approvals.

• make investments;

• sell or transfer assets;

• create liens on assets to secure debt;

• consolidate, merge, sell or otherwise dispose of all or substantially all of our assets;

• enter into transactions with affiliates, and

• designate subsidiaries as unrestricted subsidiaries.

There are a number of important limitations and exceptions to these covenants and other restrictions. See Note 5 to Financial Statements for a description of these covenants and other restrictions.

~~Table~~Risks ofRelated ~~Contents~~to EFIH's Structure

InEFIH ~~addition,~~is asa ~~described~~holding incompany ~~Note 1 to Financial Statements, EFH Corp.~~ and ~~Oncor~~its ~~have~~obligations ~~implemented~~are astructurally ~~number~~subordinated ofto ~~"ring-fencing"~~existing ~~measures~~and tofuture ~~enhance~~liabilities ~~the~~and ~~credit~~preferred ~~quality~~stock of ~~Oncor Holdings and~~ its subsidiaries~~, including Oncor~~. ~~Those measures, many of which were agreed to and required by the PUCT's Order on Rehearing in Docket No. 34077, include, among other things:~~

•EFIH's ~~Oncor~~cash ~~Holdings'~~flows and ~~Oncor's~~ability ~~board~~to meet its obligations are largely dependent upon the earnings of ~~directors~~the ~~being~~Oncor ~~comprised~~Ring-Fenced Entities, and the payment of asuch ~~majority~~earnings to EFIH in the form of ~~directors~~dividends ~~that~~or distributions. The Oncor Ring-Fenced Entities are ~~independent~~separate and distinct legal entities from ~~the~~EFIH ~~Texas~~and ~~Holdings~~have ~~Group~~no obligation (other than any existing contractual obligations, ~~EFH~~which ~~Corp~~may be suspended or altered in the Chapter 11 Cases) to provide EFIH with funds for its payment obligations. Any ~~and~~decision by a subsidiary to provide EFIH with funds for its payment obligations, whether by dividends or distributions, will depend on, among other ~~subsidiaries~~things, ~~including~~the ~~EFIH;~~subsidiary's results of operations, financial condition, cash requirements, contractual restrictions and other factors. In addition, a subsidiary's ability to pay dividends may be limited by covenants in its existing and future debt agreements, applicable law and the Chapter 11 Cases. Further, the distributions that may be paid by Oncor are limited as discussed below.

•Because ~~Oncor~~EFIH ~~being~~is ~~treated~~a asholding ancompany, ~~unrestricted~~its obligations to its creditors are structurally subordinated to all existing and future liabilities and existing and future preferred stock of its subsidiaries that do not guarantee such obligations. Therefore, EFIH's rights and the rights of its creditors to participate in the assets of any subsidiary in the event that such a subsidiary is liquidated or reorganized are subject to the prior claims of such subsidiary's creditors and holders of such subsidiary's preferred stock. To the extent that EFIH may be a creditor with ~~respect~~recognized claims against any such subsidiary, EFIH's claims would still be subject to the prior claims of such subsidiary's creditors to the extent that they are secured or senior to those held by EFIH. Subject to restrictions contained in EFIH's financing arrangements and ~~EFH~~limitations ~~Corp.~~imposed by the EFIH's subsidiaries may incur additional debt; and other liabilities.

EFIH has a very limited ability to control activities at Oncor due to structural and operational ring-fencing measures.

EFIH depends upon Oncor for a significant amount of its cash flows and relies on such cash flows in order to satisfy its obligations. However, EFIH has a very limited ability to control the activities of Oncor. As part of the ring-fencing measures implemented by EFH Corp. and Oncor, including certain measures required by the PUCT's Order on Rehearing in Docket No. 34077, a majority of the members of Oncor's board of directors are required to meet the New York Stock Exchange requirements for independence in all material respects, and the unanimous, or majority, consent of such directors is required for Oncor to take certain actions. In addition, any new independent directors are required to be appointed by the nominating committee of Oncor Holdings' board of directors, a majority of whose members are independent directors. No member of EFIH's or EFH Corp.'s management is a member of Oncor's board of directors. Under Oncor Holdings' and Oncor's organizational documents, EFH Corp. has limited indirect consent rights with respect to the activities of Oncor, including (i) new issuances of equity securities by Oncor, (ii) material transactions with third parties involving Oncor outside of the ordinary course of business, (iii) actions that cause Oncor's assets to be subject to an increased level of jurisdiction of the FERC, (iv) any changes to the state of formation of Oncor, (v) material changes to accounting methods not required by US GAAP and (vi) actions that fail to enforce certain tax sharing obligations between Oncor and EFH Corp. In addition, Oncor's organizational agreements contain restrictions on Oncor's ability to make distributions to its members, including indirectly to EFIH.

Additionally, the restrictive measures required by the PUCT's Order on Rehearing in Docket No. 34077, include, among other things:


•	Oncor not being restricted from incurring its own debt;

• Oncor not guaranteeing or pledging any of its assets to secure the debt of any member of the Texas Holdings Group,; ~~including EFIH,~~ and

• restrictions on distributions by Oncor, and the right of the independent members of Oncor's board of directors and the largest non-majority member of Oncor to block the payment of distributions to Oncor Holdings (i.e., such distributions not being available to usEFIH ~~or EFH Corp.~~ under certain circumstances).

WeOncor may ~~not be able to generate~~ or ~~receive sufficient cash to service our debt and~~ may benot ~~forced~~make toany ~~take~~distributions ~~other actions~~ to ~~satisfy the obligations under our debt agreements, which may not be successful~~EFIH.

~~EFIH~~EFH isCorp. aand ~~holding~~Oncor ~~company~~have ~~with~~implemented nocertain ~~operations~~structural orand ~~operating~~operational ~~assets. Our~~ring-fencing ~~ability~~measures, toincluding ~~make~~certain ~~scheduled~~measures ~~payments~~required onby orthe toPUCT's ~~refinance~~Order ~~our debt obligations depends~~ on i)Rehearing ~~receiving~~in ~~dividends~~Docket ~~from~~No. ~~Oncor Holdings~~34077, ~~ii)~~that ~~receiving~~were ~~interest~~based ~~payments~~on ~~from~~principles ~~EFH~~articulated ~~Corp.~~by rating agencies and ~~TCEH~~commitments onmade ~~EFH~~by ~~Corp.~~Texas Holdings and ~~TCEH~~Oncor ~~debt~~to wethe ~~hold~~PUCT and, ifthe ~~needed,~~FERC ~~iii)~~to ~~receiving~~further ~~capital~~enhance ~~contributions~~Oncor's orcredit ~~loans from EFH Corp~~quality. InThese ~~each~~measures ~~case,~~were ~~our~~put ~~receipt~~in ofplace ~~funds is subject~~ to ~~factors~~mitigate ~~beyond~~Oncor's ~~our~~credit ~~control,~~exposure ~~including~~to ~~prevailing~~the ~~economic~~Texas ~~and~~Holdings ~~competitive~~Group ~~conditions~~ and to ~~certain~~reduce ~~financial,~~the ~~operational~~risk ~~and~~that ~~other~~the ~~factors~~assets ~~affecting~~and ~~the~~liabilities ~~business~~ of Oncor, ~~EFH~~would ~~Corp.~~be orsubstantively ~~TCEH~~consolidated ~~(as~~with ~~applicable). We~~the ~~may~~assets ~~not~~and beliabilities ~~able to maintain a level~~ of ~~cash~~the ~~flows~~Texas ~~sufficient~~Holdings toGroup ~~pay~~in ~~the~~a ~~principal,~~bankruptcy ~~premium,~~of ifone ~~any,~~or ~~and~~more ~~interest~~of onthose ~~our debt~~entities.

If cash flows and capital resources are insufficient to fund our debt obligations, we could face substantial liquidity problems and might be forced to reduce or delay investments, dispose of assets, seek additional capital or restructure or refinance debt. These alternative measures may not be successful, may not be completed on economically attractive terms or may not be adequate for us to meet our debt obligations when due. Additionally, our and our affiliates' debt agreements limit the use of the proceeds from many dispositions of our and our subsidiaries' assets or operations. As a result, we may not be permitted to use the proceeds from these dispositions to satisfy our debt obligations.

If we, EFH Corp. or TCEH default on obligations to pay debt, we may not be able to make payments on our debt.

Any default under our, our subsidiaries', EFH Corp.'s or TCEH's debt agreements that is not waived by the required lenders or noteholders, and the remedies sought by the holders of such debt, could prevent us from paying principal, premium, if any, and interest on our debt. If we, our subsidiaries or our affiliated entities (including EFH Corp. and TCEH) are unable to generate sufficient cash flows, including amounts that may be distributed to us from our unrestricted subsidiaries, and are otherwise unable to obtain funds necessary to meet required payments of principal, premium, if any, and interest on our or their debt, or if we or our subsidiaries or affiliated entities (including EFH Corp. and TCEH) otherwise fail to comply with the various covenants, including the requirement in the TCEH Senior Secured Credit Facilities to timely deliver to the lenders audited annual financial statements that are not qualified as to the status of TCEH and its consolidated subsidiaries as a going concern, or any financial and operating covenants, in the instruments governing our or their debt, or if we or they otherwise take any action or any event, occurrence, fact, condition, effect, change or development occurs that constitutes an event of default under such debt agreements, we or they could be in default under the terms of the agreements governing such debt. In the event of such default, the holders of such debt could elect to declare all the funds borrowed thereunder to be due and payable, together with accrued and unpaid interest, and/or the lenders could elect to terminate their commitments thereunder, cease making further loans and, in the case of the holders of secured debt, institute foreclosure proceedings against the collateral securing such debt. In the case of a default under debt of EFH Corp. that is guaranteed by us, holders of such debt could also seek to enforce the guarantees against us. As a result of any of the foregoing, we could go into bankruptcy, liquidation or insolvency. A portion of our cash flows comes from EFH Corp.'s and TCEH's payment of interest on certain of their debt securities held by EFIH, and a default under their debt agreements could result in EFIH no longer receiving interest payments on such debt. If we do not receive these interest payments, we may not be able to make payments on our debt.

~~Table~~As part of ~~Contents~~the ring-fencing measures, a majority of the members of the board of directors of Oncor are required to be, and are, independent from EFH Corp. and EFIH. Any new independent directors of Oncor are required to be appointed by the nominating committee of Oncor Holdings, which is required to be, and is, comprised of a majority of directors that are independent from EFH Corp. and EFIH. The organizational documents of Oncor give its independent directors, acting by majority vote, and, during certain periods, any director designated by Texas Transmission, the express right to prevent distributions from Oncor if they determine that it is in the best interests of Oncor to retain such amounts to meet expected future requirements. The Chapter 11 Cases could result in Oncor limiting or suspending such dividends to EFIH during the pendency of such filing. Accordingly, there can be no assurance that Oncor will make any distributions to EFIH.

~~EFH~~In ~~Corp.~~addition, Oncor's organizational documents prohibit Oncor from making any distribution to its owners, including EFIH, so long as and ~~TCEH~~to ~~are~~the ~~not~~extent ~~obligated~~that such distribution would cause Oncor's regulatory capital structure to ~~provide~~exceed ~~funds~~the debt-to-equity usratio established from time to ~~pay~~time ~~principal~~by the PUCT for ratemaking purposes, ~~premium~~which is currently set at 60% debt to 40% equity. Under the terms of a Federal and ~~interest~~State Income Tax Allocation Agreement, Oncor makes tax payments to EFH Corp. (bypassing EFIH) based on its share of an amount calculated to approximate the ~~EFIH~~amount ~~Notes~~of ortaxes ~~other~~Oncor ~~obligations~~would have paid to the IRS if it were a stand-alone taxpayer.

~~None of EFH Corp.~~Moreover, ~~EFCH~~Oncor orhas ~~TCEH~~incurred ~~and~~debt ~~its~~in ~~subsidiaries~~connection ~~are~~with ~~obligated~~CREZ toand ~~make~~may ~~any~~incur ~~loans~~additional ordebt ~~payments~~in toconnection uswith other ~~than~~investments ~~interest~~in ~~and~~infrastructure ~~principal~~or ~~payments on EFH Corp~~technology. ~~and TCEH debt we hold.~~ ~~However~~Accordingly, ~~EFH~~while ~~Corp.~~Oncor ~~may choose to, but~~ is ~~not~~required ~~obligated~~ to, ~~loan~~maintain ~~or contribute cash to us to make such payments. EFH Corp. is~~ a ~~holding~~specified ~~company and substantially all of its consolidated assets are held by its subsidiaries. Therefore,~~ debt-to-equity ~~the extent EFH Corp. chooses to loan or contribute cash to make payments on our debt or other obligations~~ratio, ~~EFH~~there ~~Corp.~~can ~~may~~be ~~depend~~no onassurance ~~cash~~that ~~generated by or loans from EFCH, TCEH and TCEH~~Oncor's ~~subsidiaries~~equity tobalance ~~make~~will ~~such~~be ~~loans~~sufficient ~~or contributions. Pursuant~~ to ~~the~~maintain ~~indentures governing certain TCEH notes due in 2015, 2016, 2020 and 2021 and TCEH's senior secured credit facilities, as long as TCEH is a subsidiary of EFH Corp., TCEH may provide loans under~~ the ~~TCEH~~required ~~Demand Notes~~ debt-to-equity ~~EFH~~ratio ~~Corp.~~established onfrom ~~arm's~~time ~~length terms~~ to ~~allow~~time ~~EFH~~by ~~Corp.~~the toPUCT ~~pay principal, premium and interest on certain debt of EFH Corp. However, such indentures limit TCEH's ability to provide such loans~~ for ~~payment~~ratemaking ~~of principal~~purposes, ~~premium~~thereby ~~and~~restricting ~~interest~~Oncor ~~on debt of EFH Corp.'s subsidiaries, including the EFIH Notes. Further, under the terms of TCEH's debt agreements and state law, TCEH is restricted~~ from ~~paying~~making any distributions, ~~except in limited circumstances. As a result, if EFH Corp. does not make capital contributions or loans~~ to EFIH ~~or if TCEH does not or is not permitted to make loans to EFH Corp~~. ~~for EFH Corp. to service its debt, then we may not be able to make payments on the EFIH Notes or our other obligations. In January 2013, EFH Corp. repaid all amounts due under the TCEH Demand Notes.~~

~~EFIH~~Oncor's ~~has~~ring-fencing ameasures ~~very~~may ~~limited~~not ~~ability~~work toas ~~control~~planned ~~activities~~and atthe ~~Oncor~~Bankruptcy ~~due~~Court may nevertheless subject Oncor to ~~structural~~the ~~and~~claims ~~operational~~of ~~"ring-fencing"~~Texas ~~measures~~Holdings Group entity creditors.

~~EFIH~~In ~~depends~~2007, ~~upon~~EFH Corp. and Oncor ~~for~~implemented acertain ~~significant~~structural ~~amount~~and ofoperational ~~its~~ring-fencing ~~cash~~measures, ~~flows~~including ~~and~~certain ~~relies~~measures onrequired ~~such~~by ~~cash~~the ~~flows~~PUCT's inOrder ~~order~~on toRehearing ~~satisfy~~in ~~its obligations~~Docket No. ~~However~~ 34077, ~~EFIH~~that ~~has~~were abased ~~very~~on ~~limited~~principles ~~ability~~articulated toby ~~control~~rating ~~the~~agencies ~~activities~~and ofcommitments ~~Oncor. As~~made ~~part~~by ofTexas Holdings and Oncor to the ~~"ring-fencing"~~PUCT ~~measures~~and ~~implemented~~the byFERC ~~EFH~~to ~~Corp.~~further ~~and~~enhance Oncor,'s ~~including~~credit ~~certain~~quality. These measures ~~required~~were byput ~~the~~in ~~PUCT~~place to mitigate Oncor's ~~Order~~credit onexposure ~~Rehearing~~to inthe ~~Docket~~Texas ~~No.~~Holdings ~~34077,~~Group aand ~~majority~~to ofminimize the ~~members~~risk that a court would order any of Oncor Holdings', Oncor's ~~board~~or ofOncor's ~~directors~~subsidiary's ~~are~~(collectively, ~~required~~the Oncor Ring-Fenced Entities) assets and liabilities to ~~meet~~be ~~the~~substantively ~~New~~consolidated ~~York~~with ~~Stock~~those ~~Exchange~~of ~~requirements~~any ~~for~~member ~~independence~~of inthe ~~all~~Texas ~~material~~Holdings ~~respects,~~Group ~~and~~in the ~~unanimous,~~event orthat ~~majority,~~a ~~consent~~member of ~~such~~the ~~directors~~Texas isHoldings ~~required~~Group ~~for~~were ~~Oncor~~ to ~~take~~become ~~certain~~a ~~actions~~debtor in a bankruptcy case. InSubstantive ~~addition,~~consolidation ~~any~~is ~~new~~an ~~independent~~equitable ~~directors~~remedy ~~are~~in ~~required~~bankruptcy tothat beresults ~~appointed~~in by the ~~nominating~~pooling ~~committee~~ of ~~Oncor~~the ~~Holdings'~~assets ~~board~~and liabilities of ~~directors,~~the adebtor ~~majority~~and ofone ~~whose~~or ~~members~~more ~~are~~of ~~independent~~its ~~directors. No~~affiliates ~~member~~solely offor ~~EFIH's~~purposes orof ~~EFH~~the ~~Corp.'s~~bankruptcy ~~management~~case, isincluding afor ~~member~~purposes of ~~Oncor's~~distributions ~~board~~to ofcreditors ~~directors. Under~~and ~~Oncor~~voting ~~Holdings'~~on and ~~Oncor's~~treatment ~~organizational~~under ~~documents,~~a ~~EFH~~reorganization ~~Corp~~plan. Bankruptcy ~~has~~courts ~~limited~~have ~~indirect~~broad ~~consent~~equitable ~~rights~~powers, ~~with~~and ~~respect~~as toa ~~the~~result, ~~activities~~outcomes ofin ~~Oncor,~~bankruptcy ~~including~~proceedings ~~(i)~~are ~~new~~inherently ~~issuances~~difficult ofto ~~equity~~predict. To ~~securities~~the byextent ~~Oncor,~~the ~~(ii)~~Bankruptcy ~~material~~Court ~~transactions~~were ~~with~~to ~~third~~determine ~~parties~~that ~~involving~~substantive ~~Oncor~~consolidation ~~outside~~was ofappropriate under the ~~ordinary~~facts ~~course~~and ~~of business~~circumstances, ~~(iii)~~then ~~actions~~the ~~that~~assets ~~cause~~and ~~Oncor's~~liabilities ~~assets~~of toany beOncor ~~subject~~Ring-Fenced toEntity anthat ~~increased~~were ~~level~~subject ofto ~~jurisdiction~~the ofsubstantive ~~the~~consolidation ~~FERC,~~order ~~(iv)~~would ~~any~~be ~~changes~~available to help satisfy the ~~state~~debt ofor ~~formation~~contractual obligations of ~~Oncor,~~the ~~(v)~~Texas ~~material~~Holdings ~~changes~~Group toentity ~~accounting~~that ~~methods~~was ~~not~~a ~~required~~debtor byin ~~US GAAP~~bankruptcy and ~~(vi)~~subject ~~actions~~to ~~that~~the ~~fail~~same tosubstantive ~~enforce~~consolidation ~~certain~~order. However, ~~tax~~even ~~sharing~~if ~~obligations~~any ~~between~~ Oncor ~~and~~Ring-Fenced ~~EFH~~Entity ~~Corp. In~~were ~~addition,~~included ~~Oncor's~~in ~~organizational~~such ~~agreements~~a ~~contain~~substantive ~~restrictions~~consolidation onorder, ~~Oncor's~~the ~~ability~~secured tocreditors ~~make~~of ~~distributions~~Oncor towould ~~its~~retain ~~members,~~their ~~including~~liens ~~indirectly~~and priority with respect to ~~EFIH~~Oncor's assets.

There can be no assurance that the Bankruptcy Court will not order an Oncor Ring-Fenced Entity's assets and liabilities to be substantively consolidated with those of the Debtors or that the Chapter 11 Cases will not result in a disruption of services Oncor receives from, or jointly with, EFIH's affiliates. See Note 1 to the Financial Statements for additional information on ring-fencing measures.

In addition, Oncor's access to capital markets and cost of debt could be directly affected by its credit ratings. Any adverse action with respect to Oncor's credit ratings would generally cause borrowing costs to increase and the potential pool of investors and funding sources to decrease. Oncor's credit ratings are currently substantially higher than those of the Texas Holdings Group. If credit rating agencies were to change their views of Oncor's independence from any member of the Texas Holdings Group, Oncor's credit ratings would likely decline. Despite the ring-fencing measures, rating agencies have in the past, and could in the future, take an adverse action with respect to Oncor's credit ratings in response to debt restructuring or other activities by EFH Corp. or any of its subsidiaries, including the Chapter 11 Cases In the event any such adverse action takes place and causes Oncor's borrowing costs to increase, it may not be able to recover these increased costs if they exceed Oncor's PUCT-approved cost of debt determined in its most recent rate case or subsequent rate cases.

~~Table~~Risks ofRelated ~~Contents~~to EFIH's Investment in Oncor

~~Risks~~EFIH ~~Related~~is a holding company conducting its operations principally through its subsidiary, Oncor (in which it indirectly holds an approximate 80% ownership interest). As such, the risks described below relating to ~~Our~~Oncor's ~~Structure~~business will apply to EFIH. Given the ring-fencing measures that have been implemented by EFH Corp. and Oncor described in Note 1 to the Financial Statements, EFIH will have limited ability to mitigate any of the risks described below.

~~EFIH~~Oncor's business is asubject ~~holding~~to ~~company~~ongoing ~~and~~complex ~~its~~governmental ~~obligations~~regulations ~~are~~and ~~structurally~~legislation ~~subordinated~~that tohave ~~existing~~impacted, and ~~future~~will ~~liabilities~~continue ~~and~~in ~~preferred~~the ~~stock~~future ofto impact, its ~~subsidiaries~~business and/or results of operations.

~~EFIH~~Oncor's ~~cash~~business ~~flows~~operates ~~and ability to meet its obligations are largely dependent upon the earnings of its subsidiaries,~~ in ~~particular,~~a ~~Oncor,~~changing ~~and~~market ~~the~~environment ~~payment~~influenced ~~of such earnings to EFIH in the form of dividends or distributions (as well as cash interest payments on debt securities of EFH Corp. and TCEH held~~ by ~~EFIH~~various asstate ~~discussed above). These subsidiaries are separate~~ and ~~distinct~~federal ~~legal~~legislative ~~entities~~ and ~~have~~regulatory noinitiatives ~~obligation~~regarding ~~(other~~the ~~than~~electricity ~~any existing contractual obligations) to provide EFIH with funds for its payment obligations~~industry. ~~Any~~Oncor ~~decision~~will byneed ~~a subsidiary~~ to ~~provide~~continually ~~EFIH~~adapt with funds for its payment obligations, whether by dividends or distributions, will depend on, among other things, the subsidiary's results of operations, financial condition, cash requirements, contractual restrictions and other factors. In addition, a subsidiary's ability to ~~pay~~these ~~dividends may be limited by covenants in its existing and future debt agreements or applicable law~~changes. ~~Further, the distributions that may be paid by Oncor are limited as discussed below.~~

~~Because~~Oncor's ~~EFIH~~business is asubject ~~holding~~to ~~company~~changes in state and federal laws (including PURA, ~~its~~the ~~obligations~~Federal toPower ~~its~~Act, ~~creditors~~the ~~are~~Public ~~structurally~~Utility ~~subordinated~~Regulatory toPolicies ~~all~~Act ~~existing~~of 1978 and ~~future~~the ~~liabilities~~Energy ~~and~~Policy ~~existing~~Act of 2005), changing governmental policy and ~~future~~regulatory ~~preferred~~actions ~~stock~~including a review of ~~its~~a ~~subsidiaries~~change ~~that~~in docontrol ~~not~~of ~~guarantee~~Oncor ~~such~~in ~~obligations. Therefore,~~connection ~~EFIH's~~with ~~rights~~resolution ~~and~~of the ~~rights~~EFH Bankruptcy Proceedings(including those of ~~its~~the ~~creditors~~PUCT, tothe ~~participate~~NERC, inthe TRE, the ~~assets~~TCEQ, ofthe ~~any~~FERC ~~subsidiary~~and inthe EPA) and the ~~event~~rules, ~~that~~guidelines ~~such~~and aprotocols ~~subsidiary~~of isERCOT ~~liquidated~~with orrespect ~~reorganized~~to ~~are~~matters ~~subject~~including, but not limited to, ~~the~~market ~~prior~~structure ~~claims~~and design, construction and operation of ~~such~~transmission ~~subsidiary's~~facilities, ~~creditors~~acquisition, disposal, depreciation and ~~holders~~amortization of ~~such~~regulated ~~subsidiary's~~assets ~~preferred~~and ~~stock~~facilities, recovery of costs and investments, return on invested capital and environmental matters. ToChanges ~~the~~in, ~~extent~~revisions ~~that~~to, ~~EFIH~~or ~~may~~reinterpretations beof aexisting ~~creditor~~laws ~~with~~and ~~recognized~~regulations ~~claims~~and ~~against~~other ~~any~~regulatory ~~such~~actions ~~subsidiary,~~may ~~EFIH~~have a material effect on Oncor's ~~claims~~business ~~would~~and ~~still~~it could be ~~subject~~exposed to increased costs to comply with the ~~prior~~more ~~claims~~stringent ofrequirements ~~such~~or ~~subsidiary's~~new ~~creditors~~interpretations and to ~~the~~potential ~~extent~~liability ~~that~~for ~~they~~customer ~~are~~refunds, ~~secured~~penalties or ~~senior~~other toamounts. If ~~those~~it ~~held~~is bydetermined ~~EFIH. Subject~~that Oncor did not comply with applicable statutes, regulations, rules, tariffs or orders and it is ordered to ~~restrictions~~pay ~~contained~~a material amount in ~~financing~~customer ~~arrangements~~refunds, ~~EFIH's~~penalties ~~subsidiaries~~or ~~may~~other ~~incur~~amounts, ~~additional~~its ~~debt~~financial condition, results of operations, and ~~other~~cash ~~liabilities~~flows would be materially affected.

~~Oncor~~The Texas Legislature meets every two years. The current regular legislative session began in January 2015; however, at any time the governor of Texas may convene a special session of the legislature. During any regular or special session, bills may ~~not~~be ~~make~~introduced ~~any~~that, ~~distributions~~if toadopted, ~~EFIH~~could materially affect Oncor's business and its business prospects.

EFH Corp. and Oncor have implemented certain structural and operational "ring-fencing" measures, including certain measures required by the PUCT's Order on Rehearing in Docket No. 34077, that were based on principles articulated by rating agencies and commitments made by Texas Holdings and Oncor to the PUCT and the FERC to further enhance Oncor's credit quality. These measures were put in place to mitigate Oncor's credit exposure to the Texas Holdings Group and to reduce the risk that the assets and liabilities of Oncor would be substantively consolidated with the assets and liabilities of the Texas Holdings Group in the event of a bankruptcy of one or more of those entities.

As part of the ring-fencing measures, a majority of the members of the board of directors of Oncor are required to be, and are, independent from EFH Corp. and EFIH. Any new independent directors of Oncor are required to be appointed by the nominating committee of Oncor Holdings, which is required to be, and is, comprised of a majority of directors that are independent from EFH Corp. and EFIH. The organizational documents of Oncor give these independent directors, acting by majority vote, and, during certain periods, any director designated by Texas Transmission, the express right to prevent distributions from Oncor if they determine that it is in the best interests of Oncor to retain such amounts to meet expected future requirements. Accordingly, there can be no assurance that Oncor will make any distributions to EFIH.

In addition, Oncor's organizational documents prohibit Oncor from making any distribution to its owners, including EFIH, so long as and to the extent that such distribution would cause Oncor's regulatory capital structure to exceed the debt-to-equity ratio established from time to time by the PUCT for ratemaking purposes, which is currently set at 60% debt to 40% equity.

In 2009, the PUCT awarded Oncor the right to construct transmission lines and facilities associated with its CREZ Transmission Plan, the cost of which is estimated by Oncor to be approximately $2.0 billion (see discussion in Item 7, "Management's Discussion and Analysis of Financial Condition and Results of Operations – Significant Activities and Events and Items Influencing Future Performance – Oncor Matters with the PUCT"). With the award, Oncor has incurred additional debt. In addition, Oncor may incur additional debt in connection with other investments in infrastructure or technology. Accordingly, while Oncor is required to maintain a specified debt-to-equity ratio, there can be no assurance that Oncor's equity balance will be sufficient to maintain the required debt-to-equity ratio established from time to time by the PUCT for ratemaking purposes, thereby restricting Oncor from making any distributions to EFIH. In addition, any increase in Oncor's interest expense, including as a result of any adverse action with respect to Oncor's credit ratings as discussed below, may reduce the amounts available to be distributed to EFIH.

Table of Contents

Risks Related to Our Investment in Oncor

We are a holding company conducting our operations principally through our subsidiary Oncor (in which we indirectly hold an approximate 80% ownership interest). As such, the risks described below relating to Oncor's business will apply to us. Given the "ring-fencing" measures that have been implemented by EFH Corp. and Oncor described in Note 1 to Financial Statements, we will have limited ability to mitigate any of the risks described below.

Oncor's business is subject to ongoing complex governmental regulations and legislation that have impacted, and may in the future impact, its business and/or results of operations.

Oncor's business operates in a changing market environment influenced by various state and federal legislative and regulatory initiatives regarding the restructuring of the energy industry. Oncor will need to continually adapt to these changes.

Oncor's business is subject to changes in state and federal laws (including PURA, the Federal Power Act, the Public Utility Regulatory Policies Act of 1978 and the Energy Policy Act of 2005), changing governmental policy and regulatory actions (including those of the PUCT, the NERC, the TRE, the TCEQ, the FERC and the EPA) and the rules, guidelines and protocols of ERCOT with respect to matters including, but not limited to, market structure and design, construction and operation of transmission facilities, acquisition, disposal, depreciation and amortization of regulated assets and facilities, recovery of costs and investments, return on invested capital and environmental matters. Changes in, revisions to, or reinterpretations of existing laws and regulations may have a material effect on Oncor's business and it could be exposed to increased costs to comply with the more stringent requirements or new interpretations and to potential liability for customer refunds, penalties or other amounts. If it is determined that Oncor did not comply with applicable statutes, regulations, rules, tariffs or orders and it is ordered to pay a material amount in customer refunds, penalties or other amounts, its financial condition, results of operations, and cash flows would be materially affected.

For example, under the Energy Policy Act of 2005, the FERC can impose penalties (up to $1 million per day per violation) for failure to comply with mandatory electric reliability standards, including standards to protect the power system against potential disruptions from cyber and physical security breaches. In addition, the PUCT may impose penalties on Oncor if it finds that it violated any law, regulation, PUCT order or other rule or requirement. The PUCT has the authority to impose penalties of up to $25,000 per day, per violation

The Texas Legislature meets every two years (the current regular legislative session runs from January 2013 to May 2013); however, at any time the governor of Texas may convene a special session of the Legislature. During any regular or special session bills may be introduced that, if adopted, could materially affect Oncor's business and its business prospects.

The rates of Oncor's electricity delivery business are subject to regulatory review, and may be reduced below current levels, which could adversely impact Oncor's financial condition and results of operations.

The rates charged by Oncor are regulated by the PUCT and certain cities and are subject to cost-of-service regulation and annual earnings oversight. This regulatory treatment does not provide any assurance as to achievement of earnings levels. Oncor's rates are regulated based on an analysis of Oncor's costs and capital structure, as reviewed and approved in a regulatory proceeding. While rate regulation is premised on the full recovery of prudently incurred costs and a reasonable rate of return on invested capital, there can be no assurance that the PUCT will judge all of Oncor's costs to have been prudently incurred, that the PUCT will not reduce the amount of invested capital included in the capital structure that Oncor's rates are based upon, or that the regulatory process in which rates are determined will always result in rates that will produce full recovery of Oncor's costs, including regulatory assets reported inon Oncor's balance sheet, and the return on invested capital allowed by the PUCT. See Item 7, "Management's Discussion and Analysis of Financial Condition and Results of Operations —– Significant Activities and Events and Items Influencing Future Performance —– Oncor Matters with the PUCT" for discussion of recent and pending rate-related filings with the PUCT.

12Oncor's Operational Risks

~~Table~~Attacks on Oncor's infrastructure or other events that disrupt or breach its cyber/data or physical security measures could have an adverse impact on its reputation, disrupt business operations and expose it to significant liabilities including penalties for failure to comply with federal, state or local statutes and regulations, which could have a material effect on Oncor's results of ~~Contents~~operations, liquidity and financial condition.

~~Attacks~~A onbreach of cyber/data security measures that impairs Oncor's information technology infrastructure orcould ~~other~~disrupt ~~events~~normal ~~that~~business ~~disrupt~~operations orand ~~breach~~affect its ~~cyber/data~~ability ~~security~~to ~~measures~~control ~~could~~its transmission and distribution assets, access customer information and limit communication with third parties. Recently there have anbeen ~~adverse~~numerous ~~impact~~attacks on ~~its~~government ~~reputation,~~and ~~disrupt~~industry ~~business~~information ~~operations~~technology systems that have resulted in material operational, reputation and/or ~~expose~~financial itcosts. While Oncor has controls in place designed to ~~significant~~protect ~~liabilities~~its ~~including~~information ~~penalties~~technology ~~for~~infrastructure ~~failure~~and tohas ~~comply~~not ~~with~~had ~~federal~~any significant breaches, ~~state~~any loss of confidential or ~~local~~proprietary ~~statutes~~data ~~and~~through ~~regulations,~~a ~~which~~breach could ~~have~~adversely aaffect Oncor's reputation, expose it to material ~~effect~~legal and regulatory claims, impair its ability to execute on ~~Oncor's~~business strategies and/or materially affect its results of operations, liquidity and financial condition.

A breach of cyber/data security measures that impairs Oncor's information technology infrastructure could disrupt normal business operations and affect its ability to control its transmission and distribution assets, access customer information and limit communication with third parties. Much of Oncor's information technology infrastructure is connected (directly or indirectly) to the Internet. Recently there have been numerous attacks on government and industry information technology systems through the Internet that have resulted in material operational, reputation and/or financial costs. While Oncor has controls in place designed to protect its infrastructure and has not had any significant breaches, any loss of confidential or proprietary data through a breach could adversely affect Oncor's reputation, expose it to material legal/regulatory claims, impair its ability to execute on business strategies and/or materially affect its results of operations, liquidity and financial condition.11

AsA ~~part~~physical ofattack ~~the~~on ~~continuing~~Oncor's ~~development~~transmission ofand ~~new~~distribution ~~and~~infrastructure ~~modified~~could ~~reliability~~also ~~standards,~~interfere ~~the~~with ~~FERC~~normal ~~has~~business ~~approved~~operations ~~changes~~and toaffect its ~~Critical~~ability ~~Infrastructure~~to ~~Protection~~control ~~reliability~~its ~~standards~~transmission and ~~has~~distribution ~~established standards for~~ assets. ~~that~~While aOncor ~~utility~~ has ~~identified~~security asmeasures ~~"critical~~in ~~cyber~~place ~~assets." Under~~designed ~~the~~to ~~Energy~~protect ~~Policy~~its ~~Act~~transmission ofand ~~2005,~~distribution ~~the~~system ~~FERC~~and ~~can~~has ~~impose~~not ~~penalties~~had ~~(up~~any tosignificant $1security ~~million~~breaches, ~~per~~a ~~day~~physical ~~per~~security ~~violation)~~breach ~~for~~could ~~failure~~adversely toaffect ~~comply~~its ~~with mandatory electric reliability standards~~reputation, ~~including~~expose ~~standards~~Oncor to ~~protect~~material ~~the~~regulatory ~~power~~claims ~~system~~and/or ~~against~~materially ~~potential~~affect ~~disruptions~~its ~~from~~results ~~cyber~~of ~~and~~operations, ~~physical~~liquidity ~~security~~and ~~breaches~~financial condition.

~~Oncor~~The ~~participates~~FERC inhas ~~industry~~established ~~groups~~standards ~~and~~for ~~discussions~~assets ~~with~~identified ~~regulators~~as to"critical ~~remain~~cyber ~~current on emerging threats and mitigating techniques~~assets." ~~These~~Under ~~groups include, but are not limited to:~~ the USEnergy ~~Cyber~~Policy ~~Emergency~~Act ~~Response~~of ~~Team~~2005, the ~~National~~FERC ~~Electric~~can ~~Sector~~impose ~~Cyber~~penalties ~~Security~~(up ~~Organization,~~to ~~the~~$1 ~~Department~~million ofper ~~Homeland~~day ~~Security,~~per ~~the~~violation) USfor ~~Nuclear~~failure ~~Regulatory~~to ~~Commission~~comply ~~and~~with ~~NERC. Oncor~~mandatory ~~also~~electric ~~applies~~reliability ~~the knowledge gained by continuing to invest in technology~~standards, ~~processes~~including ~~and~~standards ~~services~~ to ~~detect, mitigate and~~ protect ~~its~~the ~~cyber~~power ~~assets. These~~system ~~investments~~against ~~include~~potential ~~upgrades~~disruptions tofrom ~~network~~cyber ~~architecture, regular intrusion detection monitoring~~ and ~~compliance~~physical ~~with~~security ~~emerging industry regulation~~breaches.

Oncor participates in industry groups and discussions with regulators to remain current on emerging threats and mitigating techniques. These groups include, but are not limited to: the US Cyber Emergency Response Team, the National Electric Sector Cyber Security Organization, the Department of Homeland Security, the US Nuclear Regulatory Commission and NERC. Oncor also applies the knowledge gained by continuing to invest in technology, processes, security measures and services to detect, mitigate and protect its assets, both physical and cyber. These investments include upgrades to network architecture and physical security measures, regular intrusion detection monitoring and compliance with emerging industry regulation.

Oncor's capital deployment program may not be executed as planned, which could adversely impact Oncor's financial condition and results of operations.

There can be no guarantee that the execution of Oncor's capital deployment program for its electricity delivery facilities will be successful, and there can be no assurance that the capital investments Oncor intends to make in connection with its electricity delivery business will produce the desired reductions in cost and improvements to service and reliability. Furthermore, there can be no guarantee that Oncor's capital investments, ~~including its investments associated with projects to construct CREZ-related transmission lines and facilities and additional voltage support projects~~ will ultimately be recoverable through rates or, if recovered, that they will be recovered on a timely basis. For more information regarding the limitation on recovering the value of investments using rates ~~and the CREZ project~~, see Item 7, "Management's Discussion and Analysis of Financial Condition and Results of Operations —– Significant Activities and Events and Items Influencing Future Performance —– Oncor Matters with the PUCT" and "—– Key Risks and Challenges." There can also be no assurance that the PUCT's award of CREZ construction projects will not be modified or otherwise vacated through judicial or administrative actions, or that CREZ-related costs will not be materially increased as a result of administrative actions of the finalization of voltage support facilities and final detailed designs of subsequent project routes.

Market volatility may impact Oncor's business and financial condition in ways that Oncor currently cannot predict.

Because its operations are capital intensive, Oncor expects to rely over the long-term upon access to financial markets as a significant source of liquidity for capital requirements not satisfied by cash-on-hand, operating cash flows or its revolving credit facility. ~~With~~Considering ~~the construction of~~ Oncor's ~~CREZ-related~~construction ~~transmission~~plans ~~lines~~to ~~and~~service ~~facilities~~its ~~and~~growing ~~its~~customer ~~other~~base ~~planned~~and ~~projects~~ERCOT needs, it is likely Oncor will incur additional debt. In addition, Oncor may incur additional debt in connection with other investments in infrastructure or technology, such as smart grid systems. Oncor's ability to access the capital or credit markets may be severely restricted at a time when Oncor would like, or need, to access those markets, which could have an impact on Oncor's flexibility to react to changing economic and business conditions. In addition, the cost of debt financing may be materially and adversely impacted by these market conditions. Even if Oncor is able to obtain debt financing, it may be unable to recover in rates some or all of the costs of such debt financing if they exceed its PUCT -approved cost of debt determined in Oncor's most recent rate review or subsequent rate reviews. Accordingly, there can be no assurance that the capital and credit markets will continue to be a reliable or acceptable source of short-term or long-term financing for Oncor. Additionally, disruptions in the capital and credit markets could have a broader impact on the economy in ~~general in~~ ways that could lead to reduced electricity usage, which could have a negative impact on Oncor's revenues, or have an impact on Oncor's customers, counterparties and/or lenders, causing them to fail to meet their obligations to Oncor.

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Adverse actions with respect to Oncor's credit ratings could negatively affect Oncor's ability to access capital.

Oncor's access to capital markets and its cost of debt ~~are~~could be directly affected by its credit ratings. Any adverse action with respect to Oncor's credit ratings could generally cause borrowing costs to increase and the potential pool of investors and funding sources to decrease. Oncor's credit ratings are currently substantially higher than those of EFH Corp. and EFIH. If credit rating agencies were to change their views on Oncor's independence offrom EFH Corp., Oncor's credit ratings would likely decline. Despite the ring-fencing measures, rating agencies have in the past taken, and could in the future, take, an adverse action with respect to Oncor's credit ratings in response to financing and liability management activities by, or restructuring transactions involving EFH Corp. orand ~~its~~other ~~subsidiaries,~~members ~~including~~of the ~~issuance~~Texas ofHoldings ~~debt by EFH Corp~~Group. Further, ~~and/or~~it ~~EFIH~~is ~~that~~unclear ishow ~~secured~~the byprogress aof ~~lien~~the onEFH ~~EFIH's~~Bankruptcy ~~equity~~Proceedings ~~interests~~may inaffect Oncor's ~~Holdings~~credit ratings. In the event any ~~such~~action ~~adverse~~in ~~action~~connection ~~takes~~with ~~place~~the ~~and~~EFH Bankruptcy Proceedings causes Oncor's borrowing costs to increase, Oncor may not be able to recover such increased costs if they exceed the PUCT-approved cost of debt determined in its most recent rate review or subsequent rate reviews.

Most of Oncor's suppliers and counterparties require an expected level of creditworthiness in order for them to enter into transactions with Oncor. If its credit ratings decline, the costs to operate Oncor's business would likely increase because counterparties could require the posting of collateral in the form of cash-related instruments, or counterparties could decline to do business with Oncor.12

AsMost aof ~~transmission~~Oncor's ~~operator,~~suppliers ~~Oncor~~and iscounterparties ~~subject~~require toan ~~mandatory~~expected ~~reliability~~level ~~standards~~of ~~and~~creditworthiness ~~periodic~~in ~~audits~~order offor ~~its~~them ~~compliance~~to ~~with~~enter ~~those~~into ~~standards~~transactions with Oncor. ~~Efforts~~If toits ~~comply~~credit ~~with~~ratings ~~those~~decline, ~~standards~~the ~~could~~costs ~~subject~~to operate Oncor's tobusiness ~~higher~~could ~~operating~~increase ~~costs~~because ~~and/or~~counterparties ~~increased~~could ~~capital~~require ~~expenditures,~~the ~~and~~posting ~~non-compliance~~of ~~with~~collateral ~~applicable~~in ~~standards~~the ~~could~~form ~~subject~~of ~~Oncor~~cash-related toinstruments, ~~penalties~~or ~~that~~counterparties could ~~have~~decline ato ~~material~~do ~~effect~~business onwith ~~its business~~Oncor.

~~The~~Oncor ~~FERC~~is ~~has~~subject ~~approved~~to ~~the~~mandatory ~~delegation~~reliability bystandards ~~NERC of compliance~~ and ~~enforcement~~periodic ~~authority~~audits ~~for~~of ~~reliability~~its incompliance ~~the~~with ~~ERCOT~~those ~~region to the TRE~~standards. ToEfforts ~~maintain~~to ~~compliance~~comply with ~~the~~those ~~mandatory~~standards ~~reliability~~could ~~standards,~~subject Oncor ~~may be subjected~~ to higher operating costs and/or increased capital expenditures~~. While~~, ~~Oncor expects to recover costs~~ and ~~expenditures~~non-compliance from customers through regulated rates, there can be no assurance that the PUCT will approve full recovery of such costs or the timing of any such recovery. In addition, if Oncor were to be found in noncompliance with applicable ~~reliability~~ standards, it could be subject to sanctions, including monetary penalties. Under the Energy Policy Act of 2005, FERC can impose penalties (up to $1 million per day per violation) for failure to comply with reliability standards, which would not be recoverable from customers through regulated rates. Oncor has five registrations with NERC – as a transmission planner, a transmission owner, a transmission operator, a distribution provider and a load serving entity. As a registered entity Oncor is subject to ~~periodic~~penalties ~~audits~~that bycould ~~the~~have ~~TRE of its compliance with reliability standards. These audits will occur as designated by the TRE at~~ a ~~minimum~~material ofeffect ~~every~~on ~~three years. The TRE has indicated that it intends to audit Oncor's compliance with mandatory planning and operations reliability standards in June 2013 and~~ its ~~compliance with critical infrastructure protection standards in August 2013~~business. ~~Oncor cannot predict the outcome of any such audits.~~

~~Oncor's~~The ~~revenues~~FERC ~~are~~has ~~concentrated~~approved inthe adelegation ~~small~~by ~~number~~NERC of ~~customers~~compliance and enforcement authority for reliability in the ERCOT region to the TRE. To maintain compliance with the mandatory reliability standards, Oncor may be subjected to higher operating costs and/or ~~any~~increased ~~delay~~capital expenditures. While Oncor expects to recover costs and expenditures from customers through regulated rates, there can be no assurance that the PUCT will approve full recovery of such costs or ~~default~~the timing of any such recovery. In addition, if Oncor were to be found in ~~payment~~noncompliance with applicable reliability standards, it could ~~adversely~~be ~~affect~~subject ~~its~~to ~~cash~~sanctions, ~~flows~~including monetary penalties. Under the Energy Policy Act of 2005, ~~financial~~FERC ~~condition~~can impose penalties (up to $1 million per day per violation) for failure to comply with reliability standards, which would not be recoverable from customers through regulated rates. Oncor has five registrations with NERC – as a transmission planner, a transmission owner, a transmission operator, a distribution provider and ~~results~~a load serving entity. As a registered entity, Oncor is subject to periodic audits by the TRE of ~~operations~~its compliance with reliability standards. These audits will occur as designated by the TRE at a minimum of every three years. Oncor cannot predict the outcome of any such audits.

Oncor's revenues ~~from the distribution of electricity~~ are ~~collected~~concentrated ~~from~~in ~~more than 80 REPs, including TXU Energy (~~a ~~subsidiary~~small number of ~~TCEH)~~customers, ~~that~~including ~~sell the electricity Oncor distributes to consumers. Revenues from services provided to~~ TCEH ~~represented 29% of Oncor's total reported consolidated revenues for the year ended December 31~~, ~~2012. Revenues~~and ~~from~~any services provided to REP subsidiaries of one non-affiliated entity collectively represented 15% of Oncor's total reported consolidated revenues for the year ended December 31, 2012. Adverse economic conditions, structural problems in the market served by ERCOT or financial difficulties of TCEH or other REPs could impair the ability of these REPs to pay for Oncor's services or could cause them to delay ~~such payments. Oncor depends on these REPs to timely remit these revenues. Oncor could experience delays~~ or ~~defaults~~default in payment ~~from these REPs, which~~ could adversely affect ~~Oncor's~~its cash flows, financial condition and results of operations. Due to commitments made to the PUCT in connection with the Merger, Oncor may not recover bad debt expense, or certain other costs and expenses, from rate payers in the event of a default or bankruptcy by an affiliate REP.

14Oncor's revenues from the distribution of electricity are collected from approximately 80 REPs (including TXU Energy, a subsidiary of TCEH) and certain electric cooperatives in Oncor's certificated service area, that sell the electricity Oncor distributes to consumers. Revenues from services provided to TCEH represented 25% of Oncor's total reported consolidated revenues for the year ended December 31, 2014. Revenues from services provided to REP subsidiaries of a non-affiliated entity collectively represented 16% of Oncor's total reported consolidated revenues for the year ended December 31, 2014. Adverse economic conditions, structural problems in the market served by ERCOT, the EFH Bankruptcy Proceedings involving TCEH or the financial difficulties of other REPs could impair the ability of these REPs to pay for Oncor's services or could cause them to delay such payments. Oncor depends on these REPs to timely remit these revenues. Oncor could experience delays or defaults in payment from these REPs, which could adversely affect Oncor's cash flows, financial condition and results of operations. Due to commitments made to the PUCT in connection with the Merger, Oncor will not be allowed to recover bad debt expense, or certain other costs and expenses, from rate payers in the event of a default or bankruptcy by an affiliate REP.

~~Table of Contents~~13

In the future, Oncor could have liquidity needs that could be difficult to satisfy under some circumstances, especially in uncertain financial market conditions.

Oncor's operations are capital intensive. Oncor relies on access to financial markets and its revolving credit facility as a significant source of liquidity for capital requirements, including maturities of long-term debt, not satisfied by cash-on-hand or operating cash flows. The inability to raise capital on favorable terms or access liquidity facilities, particularly during times of uncertainty similar to those experienced in the financial markets in 2008 and 2009, could adversely impact Oncor's ability to sustain and grow its business and would likely increase capital costs that may not be recoverable through rates. Oncor's access to the financial markets and its revolving credit facility, and the pricing and terms Oncor receives in the financial markets, could be adversely impacted by various factors, such as:


•	changes in financial markets that reduce available credit or the ability to obtain or renew liquidity facilities on acceptable terms;


•	economic weakness in the ERCOT market;


•	changes in interest rates;


•	a deterioration of Oncor's credit or a reduction in its credit ratings;

• a deterioration of the credit or ~~bankruptcy~~insolvency or financial distress of one or more lenders under Oncor's revolving credit facility that affects the ability of the lender(s) to make loans to Oncor;

• a deterioration of the credit or bankruptcy of EFH Corp. or EFH Corp.'s other subsidiaries or a reduction in the credit ratings of EFH Corp. or EFH Corp.'s other subsidiaries that is perceived to potentially have an adverse impact on Oncor despite the ring-fencing of the Oncor Ring-Fenced Entities from the Texas Holdings Group;

• a material breakdown in Oncor's risk management procedures,; and


•	the occurrence of changes that restrict Oncor's ability to access its revolving credit facility.

Oncor's primary source of liquidity aside from operating cash flows is its ability to borrow under its revolving credit facility. The revolving credit facility contains a debt-to-capital ratio covenant that effectively limits Oncor's ability to incur indebtedness in the future. At December 31, ~~2012~~2014, Oncor was in compliance with such covenant. The revolving credit facility and the senior notes and debentures issued by Oncor are secured by the Deed of Trust, which permits Oncor to secure other indebtedness with the lien of the Deed of Trust up to the aggregate of (i) the amount of available bond credits, and (ii) 85% of the lower of the fair value or cost of certain property additions that could be certified to the Deed of Trust collateral agent. At December 31, ~~2012~~2014, the available bond credits were approximately $2.2208 billion and the amount of future debt Oncor could secure with property additions, subject to those property additions being certified to the Deed of Trust collateral agent, was $~~731~~1.570 ~~million~~billion. In connection with the Merger, Oncor committed to the PUCT that it would maintain a regulatory capital structure at or below the assumed debt-to-equity ratio established periodically by the PUCT for ratemaking purposes, which is currently set at 60% debt to 40% equity. At December 31, ~~2012~~2014, Oncor's regulatory capitalization ratio was 58.8% debt and 41.2% equity. Oncor's ability to incur additional long-term debt will be limited by its regulatory capital structure.

The costs of providing pension and other postretirement employee benefits (OPEB) and related funding requirements may have a material adverse effect on Oncor's financial condition, results of operations and cash flows.

Oncor offers certain pension, ~~and~~ health care and life insurance benefits to eligible employees and their eligible dependents upon the retirement of such employees through pension and OPEB plans. ~~Some~~Previously, some of these benefits ~~are~~were provided through participation with EFH Corp. and certain other subsidiaries of EFH Corp. in joint plans. In 2012, Oncor also entered into an agreement with EFH Corp. to assume primary responsibility for pension benefits of certain participants for whom EFH Corp. bore primary funding responsibility (a closed group of retired and terminated vested plan participants not related to Oncor's regulated utility business). As the Oncor Retirement Plan received an amount of plan assets equal to the liabilities we assumed for those participants, execution of the agreement did not have a material impact on its reported results of operations or financial condition in 2012. However, there can be no guarantee that such assumption will not have an impact on Oncor's results of operations or financial condition in the future.

~~Oncor's~~In ~~costs~~2012, orOncor ~~share~~entered ofinto ~~the~~an ~~costs~~agreement ofwith ~~providing~~EFH ~~pension~~Corp. ~~and~~to ~~OPEB~~assume ~~benefits~~primary ~~and~~responsibility ~~related~~for ~~funding~~pension ~~requirements~~benefits ~~are~~of ~~dependent~~certain ~~upon~~participants ~~numerous~~for ~~factors,~~whom ~~assumptions~~EFH ~~and~~Corp. ~~estimates~~bore ~~and~~primary ~~are~~funding ~~subject~~responsibility to(a ~~changes~~closed ingroup ~~these~~of ~~factors,~~retired ~~assumptions~~ and ~~estimates,~~terminated ~~including~~vested ~~the~~plan ~~market~~participants ~~value~~not ofrelated ~~the~~to ~~assets~~Oncor's ~~funding~~regulated ~~the~~utility ~~pension~~business). As ~~and~~ the ~~OPEB~~Oncor ~~plans. Benefits~~Retirement ~~costs~~Plan ~~and~~received ~~related~~an ~~funding~~amount ~~requirements~~of ~~are~~plan ~~also~~assets ~~subject~~equal to ~~changing~~the ~~employee~~liabilities ~~demographics~~Oncor ~~(including~~assumed ~~but~~for ~~not~~those ~~limited to age~~participants, ~~compensation~~execution ~~levels and years~~ of ~~accredited service),~~ the ~~level~~agreement ofdid ~~contributions~~not ~~made~~have toa ~~retiree~~material ~~plans,~~impact ~~expected and actual earnings~~ on ~~plan~~its ~~assets~~reported ~~and~~results ~~the~~of ~~discount~~operations ~~rates~~or ~~used~~financial condition in ~~determining the projected benefit obligation~~2012. ~~Changes~~However, ~~made~~there tocan ~~the~~be ~~provisions~~no ofguarantee ~~the~~that ~~plans~~such ~~may~~assumption ~~also~~will ~~impact~~not ~~current~~have ~~and~~an ~~future~~impact ~~benefit~~on ~~costs. Fluctuations~~Oncor's inresults ~~actual~~of ~~market~~operations ~~returns as well as changes in general interest rates may result in increased~~ or ~~decreased~~financial ~~benefit~~condition ~~costs~~ in ~~future~~the ~~periods~~future.

1514

~~Table~~In April 2014, Oncor entered into an agreement with EFH Corp. in which Oncor agreed to transfer to the Oncor OPEB Plan effective July 1, 2014, the assets and liabilities related to its eligible current and future retirees as well as retirees of ~~Contents~~EFH Corp. whose employment included service with both Oncor (or a predecessor regulated electric business) and a nonregulated business of EFH Corp. Pursuant to the agreement, EFH Corp. will retain its portion of the liability for retiree benefits related to those retirees. Since the Oncor OPEB Plan offers identical benefits as the EFH OPEB Plan and Oncor and EFH Corp. retain the same responsibility for participants as before, there was no financial impact as a result of the transfer other than from a remeasurement of the Oncor OPEB Plan’s asset values and obligations. As Oncor is not responsible for EFH Corp.’s portion of the Oncor OPEB Plan’s unfunded liability totaling $101 million as of December 31, 2014, that amount is not reported on its balance sheet.

IfOncor's ~~EFH~~costs ~~Corp.~~or ~~was~~share ~~unable~~of ~~to make contributions to~~ the ~~EFH~~costs ~~Retirement~~of ~~Plan~~providing ~~while~~pension itand isOPEB abenefits ~~member~~and ofrelated ~~Oncor's~~funding ~~controlled~~requirements ~~group~~are ~~within~~dependent ~~the~~upon ~~meaning~~numerous ~~of ERISA~~factors, ~~Oncor~~assumptions ~~could~~and beestimates ~~liable~~and ~~under~~are ~~ERISA~~subject ~~for~~to ~~such~~changes ~~contributions~~in asthese ~~well~~factors, asassumptions ~~any~~and ~~unfunded~~estimates, ~~pension~~including ~~plan~~the ~~liability~~market ~~that~~value ~~EFH Corp. is unable to pay. EFH Corp.'s portion~~ of the ~~EFH~~assets ~~Retirement~~funding ~~Plan's~~the ~~unfunded~~ pension ~~liability~~and isOPEB ~~$20 million at December 31, 2012~~plans. ~~Funding~~Benefits ofcosts ~~the~~and ~~EFH~~related ~~Retirement~~funding ~~Plan,~~requirements ~~based~~are onalso ~~the~~subject ~~funded~~to ~~status~~changing atemployee ~~December~~demographics ~~31,~~(including ~~2012,~~but isnot ~~expected~~limited to ~~total~~age, ~~approximately~~compensation $6levels ~~million in 2013~~ and ~~$109~~years ~~million~~of inaccredited service), the ~~2013~~level ~~to 2017 period,~~ of ~~which~~contributions ~~Oncor~~made ~~is expected~~ to ~~fund~~retiree ~~approximately~~plans, $6expected ~~million~~ and ~~$97~~actual ~~million,~~earnings ~~respectively. Oncor's~~on ~~share~~plan ofassets ~~funding~~and of the ~~EFH~~discount ~~Retirement~~rates ~~Plan~~used ~~relates~~in todetermining ~~obligations~~the itprojected ~~assumed~~benefit ~~with~~obligation. Changes ~~respect~~made to ~~employees of EFH Corp.'s electric utility business at~~ the ~~time~~provisions of the ~~deregulation~~plans ofmay ~~the~~also ~~Texas~~impact ~~electricity~~current ~~market~~and infuture ~~2002~~benefit costs. ~~PURA~~ Fluctuations ~~allows~~in ~~for~~actual ~~Oncor's~~market ~~recovery~~returns ofas ~~these~~well ~~costs, and~~ as achanges ~~result,~~ in ~~2005~~general ~~Oncor~~interest ~~entered~~rates ~~into~~may anresult ~~agreement~~in ~~with~~increased ~~TCEH~~or todecreased ~~assume~~benefit ~~these~~ costs in future periods.

If EFH Corp. was unable to make contributions to the EFH qualified retirement plan (the plan) assets while it is a member of Oncor's ~~ring-fencing~~controlled ~~measures~~group ~~may~~within ~~not~~the ~~work~~meaning of ERISA, Oncor could be liable under ERISA for such contributions as ~~planned~~well ~~and~~as aany ~~bankruptcy~~unfunded ~~court~~plan ~~may~~liability ~~nevertheless~~that ~~subject~~EFH ~~Oncor~~Corp. is unable to pay. EFH Corp.'s portion of the ~~claims~~plan's unfunded pension liability is $30 million at December 31, 2014. Funding for the plan is expected to total approximately $52 million in the 2015 to 2019 period, of ~~Texas~~which ~~Holdings~~Oncor ~~Group~~is ~~entity~~expected ~~creditors~~to fund $41 million.

~~In 2007, EFH Corp. and~~ Oncor ~~implemented certain structural and operational "ring-fencing" measures, including certain measures required by the PUCT~~'s ~~Order~~rights onunder ~~Rehearing~~certain inagreements ~~Docket~~with ~~No.~~EFH ~~34077, that were based on principles articulated by rating agencies and commitments made by Texas Holdings and Oncor to the PUCT and the FERC to further enhance Oncor's credit quality~~Corp. ~~These~~ ~~measures were put in place to mitigate Oncor's credit exposure to the Texas Holdings Group~~ and toother ~~minimize~~members ~~the risk that a court would order any~~ of ~~Oncor Holdings', Oncor's or Oncor's subsidiary's (collectively,~~ the ~~Oncor Ring-Fenced Entities) assets and liabilities to be substantively consolidated with those of any member of the~~ Texas Holdings Group incould ~~the~~be ~~event~~adversely ~~that~~affected ~~a member of the Texas Holdings Group were to become a debtor~~ in aconnection ~~bankruptcy~~with ~~case. Substantive consolidation is an equitable remedy in bankruptcy that results in~~ the ~~pooling~~EFH of the assets and liabilities of the debtor and one or more of its affiliates solely for purposes of the bankruptcy case, including for purposes of distributions to creditors and voting on and treatment under a reorganization plan. Bankruptcy ~~courts have broad equitable powers, and as a result, outcomes in bankruptcy proceedings are inherently difficult to predict~~Proceedings. To the extent a bankruptcy court were to determine that substantive consolidation was appropriate under the facts and circumstances, then the assets and liabilities of any Oncor Ring-Fenced Entity that were subject to the substantive consolidation order would be available to help satisfy the debt or contractual obligations of the Texas Holdings Group entity that was a debtor in bankruptcy and subject to the same substantive consolidation order. If any Oncor Ring-Fenced Entity were included in such a substantive consolidation order, the secured creditors of Oncor would retain their liens and priority with respect to Oncor's assets.

IfOncor ~~any~~is ~~member~~party to various contracts and unexpired leases with EFH Corp. and other members of the Texas Holdings Group. The ~~were~~US toBankruptcy ~~become~~Code permits a debtor in a bankruptcy ~~case,~~to ~~there~~assume ~~can~~(accept) beor noreject ~~assurance~~contracts ~~that~~and aunexpired ~~court~~leases. If ~~would~~members ~~not~~of ~~order~~the anTexas ~~Oncor~~Holdings ~~Ring-Fenced~~Group, ~~Entity's~~who ~~assets~~are ~~and~~debtors ~~liabilities~~in tothe beEFH ~~substantively~~Bankruptcy ~~consolidated~~Proceedings, ~~with~~were ~~those~~to ofreject ~~such~~some ~~member~~or all of ~~the~~their ~~Texas~~contracts ~~Holdings~~and ~~Group~~unexpired orleases ~~that~~with aOncor ~~proceeding~~in ~~would~~connection ~~not~~with ~~result~~that inbankruptcy acase, ~~disruption~~Oncor's results of ~~services~~operations ~~Oncor~~and ~~receives~~financial ~~from,~~condition orcould ~~jointly~~be ~~with~~adversely affected, ~~our~~particularly ~~affiliates. See~~if ~~Note~~Oncor 1is an unsecured creditor with respect to ~~Financial~~pre-petition ~~Statements~~amounts ~~for~~owed ~~additional~~to ~~information~~Oncor onunder ~~ring-fencing~~such ~~measures~~contracts.

Goodwill that Oncor has recorded in connection with the Merger is subject to at least annual impairment evaluations, and as a result, Oncor could be required to write off some or all of this goodwill, which may cause adverse impacts on Oncor's financial condition and results of operations.

In accordance with accounting standards, recorded goodwill is not amortized but is reviewed annually or, if certain conditions exist, more frequently, for impairment. Any reduction in or impairment of the value of goodwill will result in a charge against earnings, which could cause a material adverse impact on Oncor's reported results of operations and financial condition.

Oncor's results of operations and financial condition could be negatively impacted by any development or event beyond Oncor's control that causes economic weakness in the ERCOT market.

Oncor derives substantially all of its revenues from operations in the ERCOT market, which covers approximately 75% of the geographical area in the State of Texas. As a result, regardless of the state of the economy in areas outside the ERCOT market, economic weakness in the ERCOT market could lead to reduced demand for electricity in the ERCOT market. Such a reduction could have a material negative impact on Oncor's results of operations and financial condition.

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The PUCT and ERCOT are subject to regular "sunset" review by the Texas Sunset Advisory Commission. The PUCT is currently subject to a limited purpose sunset review. If either the PUCT or ERCOT is not renewed by the Texas Legislature pursuant to Sunset review, it could have a material effect on Oncor's business.

Sunset review is the regular assessment of the continuing need for an administrative agency to exist, and is grounded in the premise that an agency will be abolished unless legislation is passed to continue its functions. The Texas Sunset Advisory Commission (Sunset Commission) closely reviews each agency and recommends action on each agency to the Texas Legislature, which action may include modifying or even abolishing the agency. Of the agencies scheduled for Sunset review by the Sunset Commission, the PUCT and ERCOT are the most significant to Oncor's business. The PUCT is scheduled for a limited purpose sunset review in 2013 and ERCOT is scheduled for review in 2023. These agencies, for the most part, participate in, govern or operate the electricity markets in Texas upon which Oncor's business model is based. If the Texas Legislature materially changes or fails to renew either of these agencies, it could result in a significant restructuring of the Texas electricity market or regulatory regime that could have a material impact on Oncor's business. There can be no assurance that future action of the Sunset Commission will not result in legislation that could have a material effect on Oncor and its financial prospects.

Disruptions at power generation facilities owned by third parties could interrupt Oncor's sales of transmission and distribution services.

The electricity Oncor transmits and distributes to customers of REPs is obtained by the REPs from electricity generation facilities. Oncor does not own or operate any generation facilities. If generation is disrupted or if generation capacity is inadequate, Oncor's sales of transmission and distribution services may be diminished or interrupted, and its results of operations, financial condition and cash flows may be adversely affected.

~~The operation and maintenance of electricity delivery facilities involves significant risks that could adversely affect its results of operations and financial condition.~~15

The operation and maintenance of electricity delivery facilities involves significant risks that could adversely affect Oncor's results of operations and financial condition.

The operation and maintenance of delivery facilities involves many risks, including equipment breakdown or failure of facilities, lack of sufficient capital to maintain the facilities, impact of unusual or adverse weather conditions or other natural events, as well as the risk of performance below expected levels of efficiency or reliability, the occurrence of any of which could result in lost revenues and/or increased expenses that may not be recoverable through rates. A significant number of Oncor's facilities were constructed many years ago. In particular, older transmission and distribution equipment, even if maintained in accordance with good engineering practices, may require significant capital expenditures to keep operating at peak efficiency or reliability. The risk of increased maintenance and capital expenditures arises from damage to facilities due to storms, natural disasters, wars, terrorist acts and other catastrophic events. Further, Oncor's ability to successfully and timely complete capital improvements to existing facilities or other capital projects is contingent upon many variables and subject to substantial risks. Should any such efforts be unsuccessful, Oncor could be subject to additional costs that may not be recoverable through rates and/or the write-off of its investment in the project or improvement.

Insurance, warranties or performance guarantees may not cover all or any of the lost revenues or increased expenses that could result from the risks discussed above. Likewise, Oncor's ability to obtain insurance, and the cost of and coverage provided by such insurance, could be affected by events outside Oncor's control.

Changes in technology or increased electricity conservation efforts may reduce the value of Oncor's electricity delivery facilities and may significantly impact Oncor's business in other ways as well.

Research and development activities are ongoing to improve existing and alternative technologies to produce electricity, including gas turbines, fuel cells, microturbines, photovoltaic (solar) cells and concentrated solar thermal devices. It is possible that advances in these or other technologies will reduce the costs of electricity production from these technologies to a level that will enable these technologies to compete effectively with traditional generation ~~facilities~~plants. Changes in technology could also alter the channels through which retail customers buy electricity. To the extent self-generation facilities become a more cost-effective option for certain customers, ~~Oncor's~~our revenues could be materially reduced.

Also, electricity demand could be reduced by increased conservation efforts and advances in technology, which could likewise significantly reduce the value of Oncor's electricity delivery facilities. Certain regulatory and legislative bodies have introduced or are considering requirements and/or incentives to reduce energy consumption by a fixed date. Effective energy conservation by ~~Oncor's~~its customers could result in reduced energy demand, or significantly slow the growth in demand. Such reduction in demand could materially reduce ~~Oncor's~~its revenues. Furthermore, Oncor may incur increased capital expenditures if it is required to invest in conservation measures.

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Oncor is dependent upon a limited number of suppliers and service providers for certain of its operations. If any of these suppliers or service providers failed or became unable to perform on their agreements with Oncor, it could disrupt Oncor's business and have an adverse effect on Oncor's cash flows, financial condition and results of operations.

Oncor relies on suppliers and service providers to provide it with certain specialized materials and services, including materials and services for power line maintenance, repair and construction, its advanced metering system, information technology and customer operations. The financial condition of Oncor's suppliers and service providers may be adversely affected by general economic conditions, such as credit risk ~~and the turbulent macroeconomic environments in recent years~~. Because many of the tasks of these suppliers and service providers require specialized electric industry knowledge and equipment, if any of these parties fail to perform, go out of business or otherwise become unable to perform, Oncor may not be able to transition to substitute suppliers or service providers in a timely manner. This could delay Oncor's construction and improvement projects, increase its costs and disrupt its operations, which could negatively impact its business and reputation. In addition, Oncor could be subject to fines or penalties in the event a delay resulted in a violation of a PUCT or other regulatory order.

Oncor's revenues and results of operations are seasonal.

A significant portion of Oncor's revenues is derived from rates that Oncor collects from REPs based on the amount of electricity Oncor distributes on behalf of such REPs. Sales of electricity to residential and commercial customers are influenced by temperature fluctuations. Thus, Oncor's revenues and results of operations are subject to seasonality, weather conditions and other electricity usage drivers, with revenues being highest in the summer.

The litigation environment in which Oncor operates poses a significant risk to its business.

Oncor is involved in the ordinary course of business in a number of lawsuits involving employment, commercial and environmental issues, and other claims for injuries and damages, among other matters. Judges and juries in the State of Texas have demonstrated a willingness to grant large verdicts, including punitive damages, to plaintiffs in personal injury, property damage and business tort cases. Oncor uses appropriate means to contest litigation threatened or filed against it, but the litigation environment in the State of Texas poses a significant business risk.

have demonstrated a willingness to grant large verdicts, including punitive damages, to plaintiffs in personal injury, property

damage and business tort cases. Oncor uses appropriate means to contest litigation threatened or filed against it, but the litigation environment in the State of Texas poses a significant business risk.

The loss of the services of Oncor's key management and personnel could adversely affect Oncor's ability to operate its business.

Oncor's future success will depend on its ability to continue to attract and retain highly qualified personnel. Oncor competes for such personnel with many other companies, in and outside Oncor's industry, government entities and other organizations. Oncor may not be successful in retaining its current personnel or in hiring or retaining qualified personnel in the future. Failure to attract new personnel or retain existing personnel could have a material effect on Oncor's business.

EFIH has disclosed a material weakness in its internal control over financial reporting relating to its accounting for deferred income taxes, which could adversely affect EFIH's ability to report its financial condition, results of operations or cash flows accurately and on a timely basis.

In connection with EFIH's assessment of internal control over financial reporting under Section 404 of the Sarbanes-Oxley Act of 2002, it identified a material weakness in its internal control over financial reporting relating to its accounting for deferred income taxes. For a discussion of EFIH's internal control over financial reporting and a description of the identified material weakness, see Management's Annual Report on Internal Control over Financial Reporting under Item 9A, Controls and Procedures.

A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of EFIH's annual or interim financial statements will not be prevented or detected on a timely basis. Management's procedures and testing identified control deficiencies related to incomplete underlying data and insufficient documentation in the reconciliation process related to deferred income tax accounting that led management to conclude that control deficiencies existed at December 31, 2014. As a result of these deficiencies, until they are substantially remediated, it is reasonably possible that internal controls over financial reporting may not prevent or detect errors in the financial statements from occurring that could have been material, either individually or in the aggregate.

While actions have been taken to improve EFIH's internal controls in response to the identified material weakness related to certain aspects of accounting for deferred income taxes, additional work continues to address and remediate the identified material weakness. Until these actions are fully implemented and tested, a material weakness in its internal control over financial reporting will continue to exist. As a result, EFIH's ability to timely or accurately report its future financial condition, results of operations or cash flows may be adversely affected.


Item 1B.	UNRESOLVED STAFF COMMENTS

None.


Item 3.	LEGAL PROCEEDINGS

From time to time, weEFIH may be involved in various legal and administrative proceedings in the normal course of business, the ultimate ~~resolution~~resolutions of which, in the opinion of management, should not have a material effect ~~upon~~on ~~our~~its ~~financial condition,~~ results of operations, liquidity or ~~liquidity~~financial condition.


Item 4.	MINE SAFETY DISCLOSURES

Not applicable.

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PART II.


Item 5.	MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED EQUITY HOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES

Not applicable. EFIH's outstanding membership interest is held by EFH Corp.

See Note 711 to the Financial Statements for a description of cash distributions EFIH paid to EFH Corp. and the restrictions on EFIH's ability to pay such distributions.


Item 6.	SELECTED FINANCIAL DATA

	At December 31,
	2012 (d)			2011			2010			2009			2008
	(millions of dollars, except ratios)
Total assets	$	7,023		$	9,517		$	8,547		$	5,577		$	5,363
Capitalization
Long-term debt (a)	$	6,954		$	3,436		$	3,172		$	2,513		$	2,250
Membership interests	(179		)	5,805			5,193			3,010			3,069
Total	$	6,775		$	9,241		$	8,365		$	5,523		$	5,319
Capitalization ratios
Long-term debt (a)	102.6		%	37.2		%	37.9		%	45.5		%	42.3		%
Membership interests	(2.6		)%	62.8		%	62.1		%	54.5		%	57.7		%
Total	100.0		%	100.0		%	100.0		%	100.0		%	100.0		%

ENERGY FUTURE INTERMEDIATE HOLDING COMPANY LLC

	Year Ended December 31,
	2012 (d)		2011		2010			2009			2008
	(millions of dollars, except ratios)
Income (loss) before income taxes and equity in earnings of unconsolidated subsidiary	$	72	$	204	$	(106	)	$	(275	)	$	(260	)
Equity in earnings (losses) of unconsolidated subsidiary (net of tax) (b)	$	270	$	286	$	277		$	256		$	(323	)
Net income (loss)	$	315	$	417	$	213		$	74		$	(495	)
Ratio of earnings to fixed charges (c)	1.42		1.92		1.20			—			1.27

SELECTED CONSOLIDATED FINANCIAL DATA

(millions of dollars, except ratios)



	At December 31,
	2014			2013			2012 (c)			2011			2010
Total assets	$	7,236		$	6,252		$	7,023		$	9,517		$	8,547
Capitalization
Borrowings under debtor-in-possession credit facility	$	5,400		$	—		$	—		$	—		$	—
Debt (a)	—			7,877			6,954			3,436			3,172
Prepetition notes reported as liabilities subject to compromise (a) (b)	3,876			—			—			—			—
Membership interests	(2,203		)	(1,822		)	(179		)	5,805			5,193
Total	$	7,073		$	6,055		$	6,775		$	9,241		$	8,365
Capitalization ratios
Borrowings under debtor-in-possession credit facility	76.3		%	—		%	—		%	—		%	—		%
Debt (a)	—		%	130.1		%	102.6		%	37.2		%	37.9		%
Prepetition notes reported as liabilities subject to compromise (a) (b)	54.8		%	—		%	—		%	—		%	—		%
Membership interests	(31.1		)%	(30.1		)%	(2.6		)%	62.8		%	62.1		%
Total	100.0		%	100.0		%	100.0		%	100.0		%	100.0		%



	Year Ended December 31,
	2014			2013			2012 (d)		2011		2010
Income (loss) before income taxes and equity in earnings of unconsolidated subsidiary	$	(858	)	$	(606	)	$	72	$	204	$	(106	)
Equity in earnings of unconsolidated subsidiary (net of tax)	$	349		$	335		$	270	$	286	$	277
Net income (loss)	$	(354	)	$	(102	)	$	315	$	417	$	213
Ratio of earnings to fixed charges (c)	—			—			1.42		1.92		1.20

____________

(a) Includes push down of certain EFH Corp. (parent) debt due to EFIH's guarantee of the debt (see Note 58 to the Financial Statements).

(b) ~~Amount~~Includes inboth ~~2008~~unsecured ~~includes~~and secured obligations incurred prior to the ~~effect~~Petition ofDate, ~~Oncor's~~and includes $~~860~~33 million ~~goodwill~~of ~~impairment~~deferred ~~charge~~debt issuance costs.

(c) Fixed charges exceeded earnings by $59656 million and $393 million for ~~year~~years ended December 31, ~~2009~~2014 and 2013, respectively.

(d) See Note 311 to the Financial Statements for discussion of the reclassification to membership interests in December 2012 of the EFH Corp. and TCEH debt weEFIH held as an investment.

See Notes to the Financial Statements.

~~Table~~Quarterly ofInformation ~~Contents~~(Unaudited)

~~Quarterly~~Results ~~Information~~of operations by quarter are summarized below. In EFIH's opinion, all adjustments (~~unaudited~~consisting of normal recurring accruals) necessary for a fair statement of such amounts have been made. Quarterly results are not necessarily indicative of a full year's operations because of seasonal and other factors. All amounts are in millions of dollars and may not add to full year amounts due to rounding.

Results of operations by quarter are summarized below. In our opinion, all adjustments (consisting of normal recurring accruals) necessary for a fair statement of such amounts have been made. Quarterly results are not necessarily indicative of a full year's operations because of seasonal and other factors. Quarterly results may not add to full year amounts due to rounding.



	First Quarter			Second Quarter			Third Quarter			Fourth Quarter
2014:
Income (loss) before income taxes and equity in earnings of unconsolidated subsidiary (a)	$	(286	)	$	(482	)	$	(79	)	$	(11	)
Equity in earnings of unconsolidated subsidiary (net of tax)	$	80		$	72		$	123		$	74
Net income (loss) (a)	$	(134	)	$	(292	)	$	69		$	3

	FirstQuarter		SecondQuarter			ThirdQuarter			FourthQuarter
	(millions of dollars)
2013:
2012:
Income (loss) before income taxes and equity in earnings of unconsolidated subsidiary (a)	$	100	$	(190	)	$	(196	)	$	(320	)
Income (loss) before income taxes and equity in earnings of unconsolidated subsidiary (a)	$	46	$	33		$	15		$	(20	)
Equity in earnings of unconsolidated subsidiary (net of tax)	$	67	$	74		$	114		$	80
Equity in earnings of unconsolidated subsidiary (net of tax)	$	57	$	83		$	109		$	20
Net income (a)	$	131	$	(49	)	$	(14	)	$	(170	)
Net income (a)	$	86	$	104		$	118		$	7
2011:
Income (loss) before income taxes and equity in earnings of unconsolidated subsidiary	$	63	$	71		$	72		$	(2	)
Equity in earnings of unconsolidated subsidiary (net of tax)	$	50	$	72		$	113		$	51
Net income	$	90	$	118		$	160		$	49

____________

(a) ~~See~~For ~~Note~~the 3years toended ~~Financial~~December ~~Statements~~31, ~~for~~2014 ~~discussion~~and of2013, ~~the~~EFIH ~~reclassification~~fully toreserved ~~membership~~income ~~interests~~tax inreceivables ~~December~~from ~~2012~~EFH ofCorp. in the ~~EFH~~amounts ~~Corp.~~of $125 and ~~TCEH~~$110 ~~debt~~million we(see ~~held~~Note as5 anto ~~investment~~the Financial Statements).

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Item 7.	MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion and analysis of ~~our~~EFIH's financial condition and results of operations for the years ended December 31, ~~2012~~2014, ~~2011~~2013 and ~~2010~~2012 should be read in conjunction with Selected Consolidated Financial Data and ~~our~~its audited consolidated financial statements and the notes to those statements. Comparisons of year-over-year results are impacted by the effects of the Bankruptcy Filing and the application of Financial Accounting Standards Board Accounting Standards Codification (ASC) 852, Reorganizations.

All dollar amounts in the tables in the following discussion and analysis are stated in millions of US dollars unless otherwise indicated.

Business

EFIH, a direct, wholly- owned subsidiary of EFH Corp., is a Dallas, Texas-based holding company whose wholly- owned subsidiary, Oncor Holdings, holds a majority interest (approximately 80%) in Oncor. Oncor is a regulated electricity transmission and distribution company principally engaged in providing delivery services to REPs, including subsidiaries of TCEH, that sell electricity to residential, business and other consumers in ~~the north-central, eastern and western parts of~~ Texas. Revenues from services provided to TCEH represented 2925% and 3327% of Oncor's total reported consolidated revenues for the years ended December 31, ~~2012~~2014 and ~~2011~~2013, respectively. EFIH has no reportable business segments. See Notes 1 and 23 to the Financial Statements for a discussion of the reporting of ~~our~~EFIH's investment in Oncor Holdings as an equity method investment and a description of the "ring-fencing" measures implemented with respect to Oncor Holdings and Oncor. These measures were put in place to ~~further enhance Oncor's credit quality and~~ mitigate Oncor's and Oncor Holdings' exposure to the Texas Holdings Group with the intent to minimize the risk that a court would order any of the assets and liabilities of the Oncor Ring-Fenced Entities to be substantively consolidated with those of any member of the Texas Holdings Group in the event any such member were to become a debtor in a bankruptcy case. WeConsistent ~~believe,~~with asthese ~~several~~ring-fencing ~~major credit rating agencies have acknowledged~~measures, ~~that~~ the ~~likelihood~~assets ofand ~~such~~liabilities ~~substantive consolidation~~ of the Oncor Ring-Fenced Entities' ~~assets~~have not been, and ~~liabilities~~are isnot ~~remote~~expected into ~~consideration~~be, substantively consolidated with the assets and liabilities of the ~~ring-fencing~~Debtors ~~measures~~in ~~and~~the ~~applicable~~Chapter ~~law~~11 Cases.

Significant Activities and Events and Items Influencing Future Performance

~~Liability~~Filing ~~Management~~under ~~Activity~~Chapter 11 of the United States Bankruptcy Code — InOn ~~October~~April ~~2009~~29, 2014 (the Petition Date), EFH Corp. and the substantial majority of its direct and indirect subsidiaries, (including EFIH, EFCH and TCEH but excluding the Oncor ~~Holdings~~Ring-Fenced ~~and~~Entities, ~~its~~filed ~~subsidiaries)~~voluntary ~~implemented~~petitions afor ~~liability~~relief ~~management~~under ~~program~~Chapter ~~designed~~11 toof ~~reduce~~the ~~debt,~~United ~~capture~~States ~~debt~~Bankruptcy ~~discount~~Code ~~and~~in ~~extend~~the ~~debt~~United ~~maturities~~States ~~through~~Bankruptcy ~~debt~~Court ~~exchanges,~~for ~~repurchases~~the ~~and~~District ~~extensions~~of Delaware. AsDuring athe ~~result~~pendency of ~~this~~the ~~program~~Chapter 11 Cases, athe ~~substantial~~Debtors ~~majority~~(including the EFIH Debtors) will operate their businesses as "debtors-in-possession" under the jurisdiction of ~~EFH~~the ~~Corp.~~Bankruptcy ~~(parent~~Court ~~entity)~~and ~~debt~~in ~~has~~accordance ~~been~~with ~~exchanged~~the ~~for~~applicable ~~debt~~provisions ~~issued~~of bythe ~~EFIH~~Bankruptcy Code.

InFor ~~2012,~~additional ~~EFIH~~discussion ~~issued $2.253 billion principal amount~~ of ~~debt,~~ the ~~proceeds~~Chapter ~~from~~11 ~~which~~Cases ~~funded~~and ~~$1.630~~its ~~billion in distributions to EFH Corp~~effects, ~~including~~see ~~the~~Note ~~$680~~2 ~~million held as restricted cash at December 31, 2012 that was distributed in January 2013 and used by EFH Corp.~~ to ~~settle~~ the ~~TCEH~~Financial ~~Demand~~Statements ~~Notes, with the remaining proceeds held as cash on hand. In 2012~~ and ~~early~~Item ~~2013~~1A, ~~EFIH~~Risk ~~issued~~Factors ~~$2.695~~– ~~billion~~Risks ~~principal~~Related amount of debt in exchange for $3.027 billion principal amount of EFH Corp. debt and $139 million principal amount of EFIH debt. In December 2012 and early 2013, EFIH returned $6.518 billion principal amount of EFH Corp. debt that it received in debt exchanges, including $1.799 billion received in December 2012 and January 2013, as a dividend to ~~EFH~~the ~~Corp.,~~Chapter ~~which~~11 ~~cancelled them, leaving $1~~Cases.~~361 billion principal amount of affiliate debt still held by EFIH.~~ See Note 56 to the Financial Statements for ~~details~~discussion of ~~debt~~the ~~related~~EFIH ~~activity~~DIP ~~in 2012 and early 2013~~Facilities.

Proposed Sale of EFH Corp.'s ~~and~~Indirect ~~its~~Economic ~~subsidiaries~~Ownership ~~(other~~Interest ~~than~~in Oncor ~~Holdings~~— ~~and~~In ~~its~~January ~~subsidiaries)~~2015, ~~continue~~the toBankruptcy ~~consider~~Court ~~and~~approved ~~evaluate~~the ~~possible~~Debtors' ~~transactions~~bidding ~~and~~procedures ~~initiatives~~motion tothat ~~address~~sets ~~their~~forth ~~highly~~the ~~leveraged~~process ~~balance~~by ~~sheets~~which ~~and~~the ~~significant~~Debtors ~~cash~~are ~~interest~~authorized ~~requirements~~to ~~and~~solicit ~~may~~proposals (i.e., bids) from ~~time~~third parties to ~~time~~acquire ~~enter~~(in ~~into~~any ~~discussions~~form ~~with~~and ~~their~~employing ~~lenders~~any ~~and~~structure, ~~bondholders~~whether ~~with~~taxable ~~respect~~(in towhole ~~such~~or ~~transactions~~in ~~and~~part) ~~initiatives~~or tax-free) EFH Corp.'s indirect economic ownership interest in Oncor in accordance with the Bankruptcy Code. These ~~transactions~~bidding ~~and~~procedures ~~initiatives~~contemplate ~~may~~that ~~include,~~the ~~among~~Debtors ~~others,~~select ~~debt~~a ~~for~~stalking ~~debt~~horse ~~exchanges~~bid after a two-stage closed bidding process, ~~recapitalizations~~and, ~~amendments~~after approval by the Bankruptcy Court of such stalking horse bid, the Debtors conduct a round of open bidding culminating in an auction intended to obtain a higher or otherwise best bid for a transaction. Initial bids were received in early March 2015, and ~~extensions~~each of ~~debt~~the ~~obligations~~Debtors is currently assessing those submissions. For additional discussion see Note 2 to the Financial Statements and ~~debt~~Item ~~for~~1A, ~~equity~~Risk ~~exchanges~~Factors or– ~~conversions~~Risks Related to the Chapter 11 Cases.

~~Settlement~~Repayment of ~~Make-Whole~~EFIH ~~Agreements~~Second ~~with~~Lien ~~Oncor~~Notes — ~~See~~In ~~Note~~March 82015, with the approval of the Bankruptcy Court, EFIH used some of its cash to ~~Financial~~repay ~~Statements~~(Repayment) $735 million, including interest at contractual rates, in amounts outstanding under EFIH's pre-petition 11.00% Second Lien Notes due 2021 (11.00% Notes) and 11.75% Second Lien Notes due 2022 (11.75% Notes) and $15 million in certain fees and expenses of the trustee for ~~discussion~~such notes. The Repayment required the requisite consent of the ~~settlement~~lenders inunder the ~~third~~EFIH ~~quarter~~DIP ~~2012~~Facility. EFIH received such consent from approximately 97% of ~~TCEH's~~the ~~interest~~lenders under the EFIH DIP Facility and ~~tax-related~~paid ~~reimbursement~~an ~~agreements~~aggregate ~~with~~consent ~~Oncor~~fee ~~associated~~equal ~~with~~to ~~Oncor's~~approximately ~~bankruptcy-remote~~$13 ~~financing~~million. As ~~subsidiary's~~a ~~securitization~~result ~~bonds~~of the Repayment, as of the date hereof, the principal amount outstanding on the 11.00% Notes and 11.75% are $322 million and $1.388 billion, respectively.

Oncor Technology Initiatives — Oncor continues to invest in technology initiatives that include development of a modernized grid through the replacement of existing meters with advanced digital metering equipment and development of advanced digital communication, data management, real-time monitoring and outage detection capabilities. This modernized grid is producing electricity service reliability improvements and providing for additional products and services from REPs that enable businesses and consumers to better manage their electricity usage and costs.

~~Table~~EFIH First Lien Notes Settlement — See Note 6 to the Financial Statements for discussion of ~~Contents~~the incurrence of the EFIH DIP Facility and the use of certain proceeds to settle the EFIH First Lien Notes.

Oncor ~~completed~~Credit ~~the~~Risk ~~deployment~~Exposure ~~of advanced meters~~ to ~~all~~EFH ~~residential~~Corp. and ~~most non-residential retail electricity customers in~~ its ~~service~~Subsidiaries ~~area~~— inAs ~~2012. The~~a ~~advanced~~result ~~meters~~of ~~can~~the beBankruptcy ~~read remotely~~Filing, ~~rather~~Oncor ~~than~~had bycredit arisk ~~meter~~exposure ~~reader~~to ~~physically~~trade ~~visiting~~accounts ~~the~~receivable ~~location~~from ofTCEH, ~~each~~which ~~meter. Advanced~~related ~~meters~~to ~~facilitate~~delivery ~~automated~~services ~~demand~~provided ~~side~~by ~~management,~~Oncor ~~which allows consumers~~ to ~~monitor~~TCEH's ~~the~~retail ~~amount of~~ electricity ~~they~~operations. At ~~are~~the ~~consuming~~Petition ~~and~~Date, ~~adjust~~these ~~their~~accounts ~~electricity~~receivable ~~consumption~~totaled ~~habits~~$109 million. ~~Oncor~~In ~~reports~~June ~~15-minute interval~~2014, ~~billing-quality~~the ~~electricity~~Bankruptcy ~~consumption~~Court ~~data~~authorized ~~from~~ the ~~meters~~TCEH Debtors to ~~ERCOT~~pay ~~for~~all ~~market~~pre-petition ~~settlement~~delivery ~~purposes. The~~charges ~~data~~due ~~makes~~Oncor, itand ~~possible~~such ~~for~~amounts ~~REPs~~were topaid ~~support~~in ~~new programs and pricing options~~full.

AtEFH ~~December 31~~Corp., ~~2012,~~ Oncor ~~had installed 3~~Holdings,~~263,000~~ ~~advanced~~Oncor ~~digital~~and ~~meters,~~Oncor's ~~including~~minority ~~961,000~~investor inare ~~2012,~~parties ~~completing its planned deployment of advanced meters~~ to ~~all~~a ~~residential~~Federal and ~~most~~State ~~nonresidential~~Income ~~retail~~Tax ~~electricity~~Allocation ~~consumers in its service area~~Agreement. ~~Cumulative~~Additional ~~capital~~income ~~expenditures~~tax ~~for~~amounts ~~the~~receivable ~~deployment~~or ofpayable ~~the~~may ~~advanced~~arise ~~meter~~in ~~system~~the ~~totaled~~normal ~~$660~~course ~~million~~under ~~through~~that ~~December 31, 2012, including $142 million invested in 2012~~agreement.

~~Sunset~~Further, ~~Review~~EFIH —had ~~Sunset~~current ~~review~~income istax ~~the~~receivables ~~regular~~arising ~~assessment~~under of the ~~continuing~~Federal ~~need~~and ~~for~~State aIncome ~~state~~Tax ~~agency~~Allocation toAgreement ~~exist,~~from ~~and~~EFH isCorp. ~~grounded~~which intotaled ~~the~~$125 ~~premise~~million ~~that~~and an$110 ~~agency~~million ~~will~~at beDecember ~~abolished~~31, ~~unless~~2014 ~~legislation~~and is2013, ~~passed to continue its functions~~respectively. OnBecause aof ~~specified~~the ~~time~~significant ~~schedule,~~uncertainty regarding the ~~Texas~~ultimate ~~Sunset~~settlement ~~Advisory~~of ~~Commission~~these ~~(Sunset~~amounts ~~Commission)~~due ~~closely~~to ~~reviews~~the ~~each~~Bankruptcy ~~agency~~Filing, ~~and~~the ~~recommends~~income ~~action~~tax onreceivables ~~each~~were ~~agency~~fully toreserved, ~~the~~resulting ~~Texas~~in ~~Legislature,~~charges ~~which~~of ~~action~~$125 ~~may~~million ~~include~~and ~~modifying~~$110 ormillion ~~even~~for ~~abolishing~~ the ~~agency. In~~years ~~2011,~~ended ~~the~~December ~~Texas~~31, ~~Legislature~~2014 ~~extended~~and ~~the~~2013, ~~authority~~respectively, ofreported ~~the~~in ~~PUCT~~other ~~until 2013~~deductions. ~~The~~Additionally, ~~PUCT~~as isof ~~subject~~December to31, a2014, ~~limited~~Oncor ~~review~~has bya ~~the~~noncurrent ~~Sunset~~tax ~~Commission~~receivable infrom ~~2013~~EFH Corp. We ~~cannot~~of ~~predict~~$64 ~~the~~million ~~outcome~~arising offrom the ~~sunset~~Oncor ~~review~~Tax ~~process~~Sharing Agreement.

~~Oncor~~Settlement ~~Matters~~of ~~with~~Make-Whole ~~the~~Agreements ~~PUCT~~with —Oncor ~~Competitive Renewable Energy Zones (CREZs)~~ — InSee ~~2009,~~Note ~~the~~12 PUCT awarded Oncor CREZ construction projects (PUCT Docket Nos. 35665 and 37902) requiring 14 related Certificate of Convenience and Necessity (CCN) amendment proceedings before the PUCT for 17 projects. All 17 projects and 14 CCN amendments have been approved by the PUCT. The projects involve the construction of transmission lines and stations to ~~support~~ the ~~transmission~~Financial ofStatements ~~electricity~~for ~~from~~discussion ~~renewable energy sources, principally wind generation facilities, in the western part~~ of ~~Texas to population centers in~~ the ~~eastern~~settlement ~~part of Texas. In addition to these projects, ERCOT completed a study~~ in ~~December~~2012 ~~2010 that will result in Oncor and other transmission service providers building additional facilities to provide further voltage support to the transmission grid as a result~~ of ~~CREZ. Oncor~~EFIH's ~~currently~~interest ~~estimates, based on these additional voltage support facilities~~ and ~~the approved routes and stations for its awarded CREZ projects, that CREZ construction costs will total approximately $2.0 billion. CREZ~~tax-related ~~costs~~reimbursement ~~could~~agreements ~~change~~with ~~based~~Oncor onassociated ~~finalization~~with ~~of costs for the additional voltage support facilities and final detailed designs of subsequent project routes. At December 31, 2012,~~ Oncor's ~~cumulative CREZ~~bankruptcy-~~related~~remote ~~capital~~financing expenditures totaled $1.460 billion, including $561 million in 2012. Oncor expects that all necessary permitting actions and other requirements and all line and station construction activities for Oncorsubsidiary's ~~CREZ~~securitization ~~construction projects will be completed by the end of 2013~~bonds. ~~Additional voltage support projects are expected to be completed by early 2014, with the exception of one series capacitor project that is scheduled to be completed in December 2015.~~

~~2011~~Oncor's ~~Rate~~Investment ~~Review~~in ~~Filing~~Transmission ~~(PUCT~~and ~~Docket~~Distribution ~~No.~~Infrastructure ~~38929)~~ — ~~In January 2011,~~ Oncor ~~filed~~expects ~~for~~its acapital ~~rate~~expenditures ~~review~~on ~~with~~transmission ~~the PUCT~~ and ~~203~~distribution ~~original~~infrastructure ~~jurisdiction~~to ~~cities~~total ~~based~~approximately on$1.1 abillion ~~test~~in ~~year ended June 30, 2010~~2015. Oncor's ~~filed~~management acurrently ~~stipulation~~expects into ~~May~~recommend ~~2011 that incorporated a Memorandum of Settlement with the parties~~ to ~~the~~its ~~review~~board ~~along with other documentation (stipulation) for the purpose~~ of ~~obtaining~~directors ~~final~~capital ~~approval~~expenditures of ~~the~~approximately ~~settlement~~$1. ~~The~~4 ~~terms~~billion ofin ~~the~~2016 ~~stipulation include an approximate $137 million base rate increase~~ and ~~additional~~approximately ~~provisions to address franchise fees (discussed below) and other expenses~~$1. ~~The~~5 ~~stipulation~~billion ~~resulted~~ in aneach ~~impact~~ of ~~less~~the ~~than~~years 1%2017 onthrough ~~an average retail residential monthly bill of 1,300 kilowatt-hours~~2020. ~~Approximately~~These ~~$93~~capital ~~million~~expenditures ofare ~~the~~expected ~~increase~~to ~~became~~be ~~effective~~used infor ~~July~~investment ~~2011,~~in transmission and ~~the~~distribution ~~remainder became effective January 1~~infrastructure, ~~2012. Under~~including ~~the stipulation, amortization of Oncor's regulatory assets increased by~~ approximately $~~24 million ($14 million of which will be recognized as income tax expense) annually beginning January~~ 1~~, 2012~~. ~~The~~2 ~~stipulation~~billion ~~did~~in ~~not change Oncor's authorized regulatory capital structure of 60% debt and 40% equity or its authorized return on equity of 10.25%. In August 2011,~~ the ~~PUCT~~period ~~issued~~2015 athrough ~~final~~2018 ~~order~~that ~~approving~~Oncor ~~the~~currently ~~rate~~expects ~~review settlement terms contained in a "modified" stipulation, which removed a payment~~ to ~~certain~~use ~~cities~~for ofelectric ~~franchise~~infrastructure ~~fees~~enhancement asin ~~discussed~~the ~~immediately~~West ~~below~~Texas region.

InOncor ~~response~~Matters towith ~~concerns~~the ~~raised~~PUCT by— ~~PUCT~~Application ~~Commissioners~~for atReconciliation aof ~~July~~Advanced ~~2011~~Meter Surcharge (PUCT ~~open~~Docket ~~meeting~~No. ~~regarding~~41814) ~~the~~— ~~stipulation~~In September 2013, Oncor filed aan ~~modified~~application ~~stipulation~~with ~~that~~the ~~removed~~PUCT for reconciliation of all costs incurred and investments made from ~~the~~January ~~stipulation~~1, a2011 ~~one-time~~through ~~payment~~December to31, ~~certain~~2012, ~~cities~~in ~~served~~the bydeployment of Oncor's ~~for~~advanced ~~retrospective~~metering ~~franchise~~system ~~fees. Instead,~~(AMS) pursuant to the ~~terms~~AMS ofDeployment aPlan ~~separate~~approved ~~agreement~~in ~~with~~Docket ~~certain~~No. ~~cities~~35718. During ~~served~~the by2011 ~~Oncor~~to 2012 period, Oncor ~~paid~~incurred approximately $22300 million inof ~~retrospective~~capital ~~franchise~~expenditures ~~fees~~and to$34 ~~cities~~million ~~that~~of ~~accepted~~operating and maintenance expense, and billed customers approximately $174 million through the ~~terms~~AMS ofsurcharge. Oncor was not seeking a change in the ~~separate~~AMS ~~agreement~~surcharge in this proceeding. ~~The~~In ~~payments~~November ~~are~~2013, ~~subject~~Oncor tofiled ~~refund~~an ~~from~~amended request and the ~~cities~~PUCT orStaff ~~recovery~~filed ~~from~~its ~~customers~~recommendation ~~after~~concluding ~~final~~that ~~resolution~~all costs presented in the amended application, with the exception of ~~proceedings~~less ~~related~~than to$1,000 of expenses, are appropriate for recovery. In December 2013, the ~~appeals~~PUCT ~~from~~issued ~~Oncor~~its final order in the proceeding agreeing with the PUCT Staff's ~~June~~recommendation, ~~2008~~finding ~~rate~~that ~~review~~costs ~~filing~~expended ~~discussed~~and ~~below. No~~investments ~~other~~made ~~significant~~in ~~terms~~the deployment of ~~the~~Oncor's ~~stipulation~~AMS through December 31, 2012 were ~~revised~~properly allocated, reasonable and necessary.

Competitive Renewable Energy Zones (CREZs) (PUCT Docket Nos. 35665 and 37902) — In 2009, the PUCT awarded Oncor CREZ construction projects. These projects involve the construction of transmission lines and stations to support the transmission of electricity from renewable energy sources, principally wind generation facilities, in the western part of Texas to population centers in the eastern part of Texas, as well as building additional facilities to provide further voltage support to the transmission grid as a result of CREZ. At December 31, 2014, Oncor's cumulative CREZ-related capital expenditures totaled $2.011 billion, including $140 million in 2014.

~~Table~~2008 Rate Review Filing (PUCT Docket No. 35717) — In August 2009, the PUCT issued a final order with respect to Oncor's June 2008 rate review filing with the PUCT and 204 cities based on a test year ended December 31, 2007, and new rates were implemented in September 2009. Oncor and four other parties appealed various portions of ~~Contents~~the rate review final order to a state district court. In January 2011, the district court signed its judgment reversing the PUCT with respect to two issues: the PUCT's disallowance of certain franchise fees and the PUCT's decision that PURA no longer requires imposition of a rate discount for state colleges and universities. Oncor filed an appeal with the Texas Third Court of Appeals (Austin Court of Appeals) in February 2011 with respect to the issues it appealed to the district court and did not prevail upon, as well as the district court's decision to reverse the PUCT with respect to discounts for state colleges and universities. In August 2014, the Austin Court of Appeals reversed the district court and affirmed the PUCT with respect to the PUCT's disallowance of certain franchise fees and the PUCT's decision that PURA no longer requires imposition of a rate discount for state colleges and universities. The Austin Court of Appeals also reversed the PUCT and district court's rejection of a proposed consolidated tax savings adjustment arising out of EFH Corp.'s ability to offset Oncor's taxable income against losses from other investments and remanded the issue to the PUCT to determine the amount of the consolidated tax savings adjustment. In late August 2014, Oncor filed a motion on rehearing with the Austin Court of Appeals with respect to certain appeal issues on which Oncor was not successful, including the consolidated tax savings adjustment. In December 2014, the Austin Court of Appeals issued its Opinion on Rehearing, clarifying that it was rendering judgment on the rate discount for state colleges and universities issue (affirming that PURA no longer requires imposition of the rate discount) rather than remanding it to the PUCT, and dismissing the motions for rehearing regarding the franchise fee issue and the consolidated tax savings adjustment. Oncor filed a petition for review with the Texas Supreme Court in February 2015. If Oncor's appeals efforts are unsuccessful and the proposed consolidated tax savings adjustment is implemented, Oncor estimates that on remand the impact on earnings of the consolidated tax savings adjustment's value could range from zero, as originally determined by the PUCT in Docket No. 35717, to a $130 million loss (after tax). Oncor does not believe that any of the other issues ruled upon by the Austin Court of Appeals would result in a material impact to its results of operations or financial condition.

~~Appeals~~Transmission ofCost ~~2008~~Recovery ~~Rate~~and ~~Review~~Rates ~~Filing~~(PUCT Docket Nos. 43858, 42558, 42059 and 41543) — In ~~November~~order ~~2009~~to reflect increases or decreases in its wholesale transmission costs, ~~Oncor~~including ~~and~~fees ~~four~~it pays to other ~~parties~~transmission ~~appealed~~service providers, PUCT rules allow Oncor to aupdate ~~state~~the ~~district~~transmission ~~court~~cost ~~various~~recovery ~~portions~~factor (TCRF) component of ~~the~~its ~~PUCT's~~retail ~~final~~delivery ~~order~~rates incharged ~~Oncor's~~to ~~2008~~REPs ~~rate~~on ~~review~~March ~~filing~~1 and September 1 each year. In ~~January~~December ~~2011~~2014, ~~the~~Oncor ~~district~~filed ~~court~~an ~~reversed~~application ~~the~~to ~~PUCT~~update ~~with~~the ~~respect~~TCRF, towhich ~~two~~became ~~issues:~~effective ~~the~~March ~~PUCT's~~1, ~~disallowance~~2015. This ofapplication ~~certain~~was ~~franchise~~designed ~~fees~~to ~~and~~reduce ~~the PUCT~~Oncor's ~~decision~~billings ~~that~~for ~~PURA~~the noperiod ~~longer~~from ~~requires~~March ~~imposition~~2015 ofthrough aAugust ~~rate~~2015 ~~discount~~by ~~for~~$27 ~~state~~million. In ~~colleges~~May ~~and~~2014, ~~universities.~~ Oncor filed an ~~appeal~~application ~~with~~to update the ~~Texas~~TCRF, ~~Third~~which ~~Court~~became ofeffective ~~Appeals~~September ~~(Austin~~1, ~~Court~~2014. This ofapplication ~~Appeals)~~was indesigned ~~February~~to ~~2011~~increase ~~with~~Oncor's ~~respect~~billings tofor the ~~issues~~period itfrom ~~appealed~~September to2014 ~~the~~through ~~district~~February ~~court~~2015 ~~and~~by ~~did~~$71 ~~not~~million. In ~~prevail~~December ~~upon~~2013, asOncor ~~well~~filed asan application to update the ~~district~~TCRF, ~~court's~~which ~~decision~~became toeffective ~~reverse~~March ~~the~~1, ~~PUCT~~2014. This ~~with~~application ~~respect~~was designed to ~~discounts~~increase Oncor's billings for ~~state~~the ~~colleges~~period ~~and~~from ~~universities. All~~March ~~briefing~~2014 inthrough ~~the~~August ~~appeal~~2014 ~~has~~by ~~been~~$44 ~~completed~~million. ~~Oral~~In ~~argument~~June ~~before~~2013, ~~the~~Oncor ~~Austin~~filed ~~Court~~an ofapplication ~~Appeals~~to ~~was~~update ~~completed~~the inTCRF, ~~April~~which ~~2012~~became effective September 1, 2013. ~~Oncor~~This isapplication ~~unable~~was designed to ~~predict~~increase Oncor's billings for the ~~final~~period ~~outcome~~from ofSeptember ~~the~~2013 ~~litigation~~through February 2014 by $88 million.

Transmission ~~Cost~~Interim ~~Recovery~~Rate ~~and~~Update ~~Rates~~Applications (PUCT Docket Nos. ~~41002~~44363, ~~40451~~42706, ~~39940~~42267, ~~39456,~~41706 ~~41166, 40603, 40142~~ and ~~39644~~41166) — In order to reflect ~~increases~~changes ~~or decreases~~ in its ~~wholesale~~invested transmission ~~costs~~capital, ~~including~~PUCT ~~fees~~rules ~~paid~~allow Oncor to ~~other~~update its transmission cost of service ~~providers,~~(TCOS) ~~Oncor~~rates isby ~~allowed~~filing up to ~~file~~two aninterim ~~update~~TCOS torate ~~the~~adjustments ~~transmission~~in ~~cost~~a ~~recovery~~calendar ~~factor~~year. TCOS ~~(TCRF)~~revenues ~~component~~are ofcollected ~~its~~from ~~retail~~load ~~delivery~~serving ~~rates~~entities ~~charged~~benefiting tofrom ~~REPs~~Oncor's ~~twice~~transmission ~~a year~~system. InREPs ~~November~~serving ~~2012,~~customers in Oncor's ~~filed~~service anterritory ~~application~~are tobilled ~~update~~through the TCRF, ~~which~~mechanism ~~has~~discussed ~~been~~above ~~approved~~while byother ~~the~~load ~~PUCT~~serving ~~and~~entities ~~will~~are ~~become~~billed ~~effective~~directly. In ~~March~~January 12015, ~~2013. This~~Oncor filed an application ~~was~~for ~~designed~~an tointerim ~~reduce~~update ~~Oncor's~~of ~~billings~~its ~~for~~TCOS ~~the~~rate. The ~~period~~new ~~from~~rate ~~March~~was ~~2013~~approved ~~through~~by ~~August~~the ~~2013~~PUCT byand ~~$47~~became ~~million~~effective in March 2015. InOncor's ~~June~~annualized ~~2012,~~revenues ~~Oncor~~increased ~~filed~~by an ~~application~~estimated to$35 ~~update~~million ~~the~~with ~~TCRF,~~approximately ~~which~~$23 ~~became~~million ~~effective~~of inthis ~~September~~increase ~~2012. This~~recoverable ~~application~~through ~~was~~transmission ~~designed~~costs charged to ~~increase~~wholesale ~~Oncor's~~customers ~~billings~~and ~~for~~$12 ~~the~~million ~~period~~recoverable from ~~September~~REPs ~~2012~~ through ~~February~~the ~~2013~~TCRF bycomponent ~~$129~~of ~~million~~Oncor's delivery rates.

In ~~November~~July ~~2011~~2014, Oncor filed an application tofor an interim update ~~the~~of ~~TCRF,~~its ~~which~~TCOS rate. The new rate was approved by the PUCT ~~in January 2012~~ and became effective in ~~March~~September ~~2012~~2014. ~~This~~Oncor's ~~application~~annualized ~~was~~revenues ~~designed~~increased toby ~~reduce~~an ~~Oncor's~~estimated ~~billings~~$12 ~~for~~million ~~the~~with ~~period~~approximately ~~from~~$8 ~~March~~million ~~2012~~of this increase recoverable through ~~August~~transmission ~~2012~~costs bycharged ~~$41~~to ~~million,~~wholesale ~~reflecting~~customers ~~over-recoveries~~and ~~due~~$4 tomillion ~~hot~~recoverable ~~weather~~from inREPs through the ~~summer~~TCRF component of ~~2011~~Oncor's delivery rates. In ~~June~~February ~~2011~~2014, Oncor filed an application tofor an interim update of its TCOS rate. The new rate was approved by the ~~TCRF,~~PUCT ~~which~~and became effective in ~~September~~April ~~2011~~2014. ~~This~~Oncor's ~~application~~annualized ~~was~~revenues ~~designed~~increased toby ~~increase~~an ~~Oncor's~~estimated ~~billings~~$74 ~~for~~million ~~the~~with ~~period~~approximately ~~from~~$47 ~~September~~million ~~2011~~of this increase recoverable through ~~February~~transmission ~~2012~~costs bycharged to wholesale customers and $2427 million recoverable from REPs through the TCRF component of Oncor's delivery rates.

In order to reflect changes in its invested transmission capital, PUCT rules allow Oncor to update its transmission cost of service (TCOS) rates by filing up to two interim TCOS rate adjustments per year. The TCOS rate is charged directly to third-party wholesale transmission providers benefiting from Oncor's transmission system and through the TCRF component of Oncor's delivery rates to REPs with retail customers in Oncor's service territory. In January 2013, Oncor filed an application for an interim update of its TCOS rate. Oncor expects PUCT approval and implementation of the new rate by March 2013. The update is expected to increase Oncor's annualized revenues by approximately $27 million with approximately $17 million of this increase recoverable through transmission costs charged to wholesale customers and $10 million recoverable from REPs through the TCRF component of Oncor's delivery rates.

In July 2012, Oncor filed an application for an interim update of its TCOS rate. The new rate was approved by the PUCT and became effective in August 2012. Oncor's annualized revenues increased by an estimated $30 million with approximately $19 million of this increase recoverable through transmission costs charged to wholesale customers and $11 million recoverable from REPs through the TCRF component of Oncor's delivery rates. In January 2012, Oncor filed an application for an interim update of its TCOS rate. The new rate was approved by the PUCT and became effective in March 2012. Oncor's annualized revenues increased by an estimated $2 million with approximately 65% of this increase recoverable through transmission costs charged to wholesale customers and the remaining 35% recoverable from REPs through the TCRF component of Oncor's delivery rates.

In August 2011, Oncor filed an application for an interim update of its wholesale transmission rate, and the PUCT approved the new rate effective October 27, 2011. Oncor's annualized revenues increased by an estimated $35 million with $22 million of this increase recoverable through transmission rates charged to wholesale customers and the remaining $13 million recoverable from REPs through the TCRF component of Oncor's delivery rates.

Application for 2013 Energy Efficiency Cost Recovery Factor (PUCT Docket No. 40361) — PUCT rules require Oncor to make an annual EECRF filing by the first business day in May for implementation at the beginning of the next calendar year. In May 2012, Oncor filed an application with the PUCT to request approval of an energy efficiency cost recovery factor (EECRF) for 2013. The requested 2013 EECRF was $73 million as compared to $54 million established for 2012 and $51 million for 2011, and would result in a monthly charge for residential customers of $1.23 as compared to the 2012 residential charge of $0.99 per month effective December 31, 2012. In August 2012, the PUCT issued a final order approving the 2013 EECRF, which is designed to recover $62 million of Oncor's costs for the 2013 program year, a $9 million performance bonus based on Oncor's 2011 results and a $2 million increase for under-recovery of 2011 costs.

~~Table~~In July 2013, Oncor filed an application for an interim update of ~~Contents~~its TCOS rate. The new rate was approved by the PUCT and became effective in September 2013. Oncor's annualized revenues increased by an estimated $71 million with approximately $45 million of this increase recoverable through transmission costs charged to wholesale customers and $26 million recoverable from REPs through the TCRF component of Oncor's delivery rates. In January 2013, Oncor filed an application for an interim update of its TCOS rate. The new rate was approved by the PUCT and became effective in March 2013. Oncor's annualized revenues increased by an estimated $27 million with approximately $17 million of this increase recoverable through transmission costs charged to wholesale customers and $10 million recoverable from REPs through the TCRF component of Oncor's delivery rates.

~~Summary~~Application for 2015 Energy Efficiency Cost Recovery Factor Surcharge (PUCT Docket No. 42559) — WeIn ~~cannot~~May ~~predict~~2014, ~~future~~Oncor ~~regulatory~~filed oran ~~legislative~~application ~~actions~~with orthe ~~any~~PUCT ~~changes~~to request approval of the energy efficiency cost recovery factor (EECRF) for 2015. PUCT rules require Oncor to make an annual EECRF filing by the first business day in ~~economic~~June in each year for implementation on March 1 of the next calendar year. The requested 2015 EECRF was $68 million as compared to $73 million established for 2014, and ~~securities~~would ~~market~~result ~~conditions~~in a monthly charge for residential customers of $1.03 as compared to the 2014 residential charge of $1.01 per month. ~~Such~~In ~~actions~~October or2014, ~~changes~~the ~~could~~PUCT ~~significantly~~issued ~~affect~~a ~~our~~final ~~results~~order approving the 2015 EECRF, which is designed to recover $50 million of ~~operations~~Oncor's costs for the 2015 program year, ~~liquidity~~a or$23 ~~financial~~million ~~condition~~performance bonus based on Oncor's 2013 results and a $5 million decrease for over-recovery of 2013 costs.

Summary — EFIH cannot predict future regulatory or legislative actions or any changes in economic and securities market conditions. Such actions or changes could significantly affect EFIH's results of operations, liquidity or financial condition.

KEY RISKS AND CHALLENGES

Following is a discussion of key risks and challenges facing management and the initiatives currently underway to manage such challenges. These matters involve risks that could have a material effect on ~~our~~EFIH's results of operations, liquidity or financial condition. Also see Item 1A, "Risk Factors."

~~Substantial~~Chapter ~~Debt~~11 ~~and Liquidity Risk~~Cases

~~Our~~As ~~substantial~~discussed ~~debt~~above, ~~resulting~~EFIH infiled ~~large~~voluntary ~~part~~petitions ~~from debt issued in exchange~~ for ~~outstanding~~relief ~~EFH~~under ~~Corp.~~Chapter ~~debt,~~11 ~~requires~~of ~~significant~~the ~~cash~~Bankruptcy ~~flows to be dedicated to interest payments~~Code. ~~Taking~~For ~~into~~the ~~account~~duration ~~debt~~of ~~exchange~~the ~~transactions~~Chapter ~~completed~~11 ~~in January 2013~~Cases, ~~principal amounts of~~ EFIH ~~long-term~~will ~~debt~~be ~~totaled~~subject ~~$7.5~~to ~~billion~~various ~~at December 31~~risks, ~~2012~~including ~~(see~~but ~~Note~~not 5limited to ~~Financial Statements~~(i)~~. Cash~~ ~~interest~~the ~~payments~~inability ~~on long-term debt in 2013 are expected~~ to ~~total~~maintain ~~approximately~~or ~~$625~~obtain ~~million. We believe our cash on hand, which totaled $424 million at December 31, 2012, distributions from Oncor and interest payments on EFH Corp. and TCEH debt we hold will provide~~ sufficient ~~liquidity~~financing tosources ~~meet our obligations~~ for atoperations ~~least~~or ~~the next twelve months. We also have capacity~~ to ~~issue~~fund upany toreorganization ~~$625~~plan ~~million aggregate principal amount of debt (see "Financial Condition – Liquidity~~ and ~~Capital~~meet ~~Resources"~~future ~~section below). See discussion of credit risk in Item 7A~~obligations, ~~"Quantitative~~ and ~~Qualitative~~(ii) ~~Disclosures~~increased ~~About~~legal ~~Market Risk," discussion of EFH Corp.~~ and ~~TCEH~~other ~~debt~~professional wecosts ~~hold,~~associated ~~including~~with ~~amounts~~the ~~returned~~Chapter as11 aCases ~~dividend to EFH Corp in January 2013, in Note 3 to Financial Statements~~ and ~~discussion~~EFIH's ~~of restrictions on distributions from Oncor below in "Financial Condition – Liquidity and Capital Resources" and in Note 2 to Financial Statements~~reorganization.

~~Oncor~~The ~~Rates~~duration of the Chapter 11 Cases is difficult to estimate and ~~Cost~~ultimately ~~Recovery~~could be lengthy. If the EFIH Debtors are unable to file a Chapter 11 plan of reorganization, or solicit the appropriate votes for such plan, in each case, prior to the expiration of the exclusivity period granted by the Bankruptcy Court (currently June 23, 2015 for filing a Chapter 11 plan of reorganization and August 23, 2015 for soliciting the appropriate votes for such plan), third parties could file their own plan or plans of reorganization. Any such third party plan or plans will likely exacerbate the duration, cost and contentiousness of the Chapter 11 Cases.

~~Oncor's~~To ~~rates~~mitigate ~~are regulated by~~ the ~~PUCT~~risks ~~and~~discussed ~~certain~~above, ~~cities~~EFIH ~~and~~has ~~are~~engaged ~~subject~~outside tocounsel ~~regulatory rate-setting processes~~ and ~~annual~~other ~~earnings~~advisors ~~oversight. This~~who ~~regulatory treatment does not provide any assurance as to achievement of earnings levels. Oncor's rates~~ are ~~regulated~~experts ~~based on an analysis of their costs and capital structure, as reviewed and approved~~ in abankruptcy ~~regulatory~~matters ~~proceeding. While~~to ~~rate~~assist ~~regulation~~it iswith ~~premised~~legal ~~on the full recovery of prudently incurred costs~~ and aadministrative ~~reasonable~~matters ~~rate~~related ~~of return on invested capital, there is no assurance that the PUCT will judge all of Oncor's costs~~ to ~~have been prudently incurred, that~~ the ~~PUCT~~Chapter ~~will~~11 not reduce the amount of invested capital included in the capital structure that Oncor's rates are based upon, that the regulatory process in which rates are determined will always result in rates that produce full recovery of Oncor's costs or that Oncor's authorized return on equity will not be reducedCases. ~~See "Significant Activities and Events and Items Influencing Future Performance – Oncor Matters with the PUCT."~~

Oncor's ~~Advanced~~Rates ~~Meter~~and ~~Deployment~~Cost Recovery

~~Under~~Oncor's arates ~~PUCT~~are ~~order~~regulated ~~approving~~by ~~Oncor's~~the ~~proposed~~PUCT ~~advanced~~and ~~meter~~certain ~~deployment~~cities ~~plan~~ and ~~rate~~are ~~surcharge~~subject to ~~recover~~regulatory ~~its~~rate-setting ~~investment,~~processes ~~Oncor~~and ~~began~~annual ~~billing~~earnings ~~the~~oversight. This ~~advanced~~regulatory ~~metering~~treatment ~~surcharge~~does innot ~~the~~provide ~~January~~any ~~2009~~assurance ~~billing~~as ~~month~~to ~~cycle. In~~achievement ~~July~~of ~~2011~~earnings levels. Oncor's ~~filed~~rates ~~with~~are ~~the~~regulated ~~PUCT~~based on an ~~application~~analysis ~~for reconciliation~~ of ~~all~~their costs and ~~investments~~capital ~~incurred~~structure, ~~through~~as ~~December~~reviewed ~~31,~~and ~~2010~~approved in ~~the~~a ~~deployment~~regulatory ofproceeding. Rate ~~Oncor's~~regulation ~~advanced~~is ~~meter~~premised ~~system~~on ~~(AMS). In~~the ~~November~~full ~~2011,~~recovery ~~the~~of ~~PUCT~~prudently ~~issued~~incurred ~~its~~costs ~~final~~and ~~order~~a inreasonable ~~the~~rate ~~proceeding~~of ~~approving~~return ~~the~~on ~~stipulation~~invested ~~and~~capital. However, ~~finding~~there ~~that~~is ~~costs~~no ~~expended~~assurance ~~and~~that ~~investments~~the ~~made~~PUCT inwill ~~the~~judge ~~deployment~~all of Oncor's ~~AMS~~costs ~~through~~to ~~December~~have ~~31,~~been ~~2010~~prudently ~~were properly allocated~~incurred, ~~reasonable~~that ~~and~~the ~~necessary. Oncor~~PUCT ~~may,~~will ~~through~~not ~~subsequent~~reduce ~~reconciliation~~the ~~proceedings,~~amount ~~request~~of ~~recovery~~invested ofcapital ~~additional~~included ~~costs~~in ~~that~~the ~~are~~capital ~~reasonable~~structure ~~and~~that ~~necessary. While~~Oncor's ~~there~~rates isare abased ~~presumption~~upon, that ~~costs~~the ~~spent~~regulatory process in ~~accordance~~which ~~with~~rates aare ~~plan~~determined ~~approved~~will byalways ~~the~~result ~~PUCT~~in ~~are~~rates ~~reasonable~~that ~~and~~produce ~~necessary,~~full recovery of ~~any~~Oncor's costs or that ~~are~~Oncor's ~~found~~authorized ~~not~~return toon ~~have~~equity ~~been~~will ~~spent or properly allocated, or~~ not to be ~~reasonable or necessary, must be refunded~~reduced. See "Significant Activities and Events and Items Influencing Future Performance – Oncor Matters with the PUCT."

Oncor Technology Initiatives

Risks to Oncor's technology initiative programs discussed above under "Significant Activities and Events and Items Influencing Future Performance" include nonperformance by equipment and service providers, failure of the technology to meet performance expectations and inadequate cost recovery allowances by regulatory authorities. Oncor is implementing measures to mitigate these risks, but there can be no assurance that these technology initiatives will achieve the operational and financial objectives.

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Oncor's Capital Availability and Cost

~~Our~~EFIH's investment in Oncor, which represents approximately 80% of ~~its~~Oncor's membership interests, is a significant value driver of ~~our~~EFIH's overall business. Oncor's access to capital markets and cost of debt could be directly affected by its credit ratings. Any adverse action with respect to Oncor's credit ratings ~~would~~could generally cause borrowing costs to increase and the potential pool of investors and funding sources to decrease and could result in reduced distributions from Oncor. Oncor's credit ratings are currently substantially higher than those of the Texas Holdings Group. If credit rating agencies were to change their views of Oncor's independence from any member of the Texas Holdings Group, Oncor's credit ratings would likely decline. WeEFIH ~~believe~~believes these risks are substantially mitigated by the significant ring-fencing measures implemented by EFH Corp. and Oncor as described in Note 1 to the Financial Statements.

Oncor's Technology Initiatives

Risks to Oncor's technology initiative programs include nonperformance by equipment and service providers, failure of the technology to meet performance expectations and inadequate cost recovery allowances by regulatory authorities. Oncor is implementing measures to mitigate these risks, but there can be no assurance that these technology initiatives will achieve the operational and financial objectives.

Oncor's Cyber Security and Infrastructure Protection Risk

A breach of Oncor's cyber/data or physical security measures that impairs Oncor's information technology infrastructure or transmission and distribution infrastructure could disrupt normal business operations, affect its ability to control its transmission and distribution system, expose Oncor to material regulatory claims and limit communication with third parties. Any loss of confidential or proprietary data through a cyber/data breach could also materially affect Oncor's reputation, expose the company to legal claims or impair its ability to execute on business strategies. Oncor participates in industry groups and with regulators to remain current on emerging threats and mitigating techniques. While it has not experienced any security breach with a significant operational, reputational or financial impact, Oncor recognizes the growing threat within its industry and is proactively taking steps to continuously improve its technology, security measures, processes and services to detect, mitigate and protect its assets, both physical and cyber.

APPLICATION OF CRITICAL ACCOUNTING POLICIES

~~Our~~EFIH's significant accounting policies are discussed in Note 1 to the Financial Statements. WeEFIH ~~follow~~follows accounting principles generally accepted in the US. Application of these accounting policies in the preparation of ~~our~~its consolidated financial statements requires management to make estimates and assumptions about future events that affect the reporting of assets and liabilities at the balance sheet dates and income and expenses during the periods covered. The following is a summary of certain critical accounting policies that are impacted by judgments and uncertainties and under which different amounts might be reported using different assumptions or estimation methodologies.

Investment in ~~Long-Term~~Affiliate Debt ~~of Affiliates~~

EFIH holds ~~long-term~~ debt securities of EFH Corp. and TCEH that it acquired through debt exchanges ~~and payment-in-kind interest payments it received on EFH Corp~~. ~~Toggles Notes.~~ The securities were held as available for sale securities and were recorded at fair value, ~~with~~within ~~interest reported in~~ the income statement as interest income. WeEFIH evaluated ~~our~~its ~~long-term~~affiliate debt ~~of affiliates~~ for impairment and recorded an impairment loss if declines in fair value were deemed to be other than temporary, which occurred if weit determined weit would be unable to recover the carrying value of the investment. Impairments were accounted for as a reduction of interest income if related to the issuer's credit. If they were not related to the issuer's credit, the impairments were recorded in other comprehensive income. As discussed in Note 3,11 to the Financial Statements these securities were classified as a reduction of membership interests at December 31, 2012 and thus, were no longer carried as available for sale securities.

Push Down of Merger-Related Debt

Merger-related debt of EFH Corp. and its subsidiaries consists of debt issued or existing at the time of the Merger. Debt issued in exchange for Merger-related debt is considered Merger-related. Debt issuances are considered Merger-related debt to the extent the proceeds are used to repurchase Merger-related debt. Merger-related debt of EFH Corp. (parent) that is fully and unconditionally guaranteed on a joint and several basis by EFCH and EFIH is subject to push down in accordance with SEC Staff Accounting Bulletin Topic 5-J, and as a result, a portion of such debt and related interest expense is reflected in ~~our~~EFIH's financial statements. Merger-related debt of EFH Corp. held by its subsidiaries is not subject to push down. The amount reflected in ~~our~~EFIH's balance sheet represents 50% of the EFH Corp. Merger-related debt guaranteed by EFIH. This percentage reflects the fact that at the time of the Merger, the equity investments of EFCH and EFIH in their respective operating subsidiaries were essentially equal amounts. Because payment of principal and interest on the debt is the responsibility of EFH Corp., weEFIH ~~record~~records the settlement of such amounts (net of income tax) as noncash capital contributions from EFH Corp. As a result of transactions completed in January 2013, ~~only~~ $60 million principal amount of debt remains subject to push down at both December 31, 2014 and December 31, 2013. See Note 58 to the Financial Statements.

Investment in Oncor Holdings

~~Our~~EFIH's balance sheet reflects ~~our~~its investment in Oncor Holdings, which holds an approximate 80% interest in Oncor, as an equity method investment. See Note 23 to the Financial Statements for additional information regarding ~~our~~the accounting for EFIH's investment in Oncor Holdings.

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Impairment of Equity Method Investment

WeEFIH ~~evaluate~~evaluates ~~our~~its investment in Oncor Holdings for impairment when factors indicate that a decrease in value has occurred that is not temporary. Indications of a loss in value include recurring operating losses of Oncor Holdings or a fair value of the investment that is less than its carrying amount. An impairment loss is recognized if the carrying value of the investment is greater than the fair value of the investment, and the loss is not deemed temporary. Fair value is based on analyses that reflect discounted cash flows and values of comparable companies. The determination of the existence of impairment indicators and the determination of fair value involves judgments that are subjective in nature and require the use of estimates in forecasting future results and cash flows.

Accounting for Income Taxes

EFH Corp. files a US federal income tax return that includes the results of EFCH, EFIH, Oncor Holdings and TCEH. Oncor is a partnership for US federal income tax purposes and is not a corporate member of the EFH Corp. consolidated group.

EFH Corp. and its subsidiaries (including EFCH, EFIH, and TCEH, but not including Oncor Holdings and Oncor) are bound by a Federal and State Income Tax Allocation Agreement, which provides, among other things, that each of EFCH, EFIH, TCEH and any other subsidiaries under the agreement is required to make payments to EFH Corp. in an amount calculated to approximate the amount of tax liability such entity would have owed if it filed a separate corporate tax return. Accordingly, our income tax expense and related balance sheet amounts are recorded as if we file our own corporate income tax returns. Deferred income taxes are provided for temporary differences between the book and tax basis of assets and liabilities as required under accounting rules. Income tax assets and liabilities related to pushed down debt are settled as membership interests transactions.

EFH Corp., Oncor Holdings and Oncor are parties to a separate tax sharing agreement, which governs the computation of federal income tax liability between EFH Corp., on one hand, and Oncor Holdings and Oncor, on the other hand, and similarly provides for payments to EFH Corp. in an amount calculated to approximate the amount of tax liability as if Oncor Holdings and Oncor filed separate corporate tax returns.

Our income tax expense and related balance sheet amounts involve significant management estimates and judgments. Amounts of deferred income tax assets and liabilities, as well as current and noncurrent accruals, involve estimates and judgments of the timing and probability of recognition of income and deductions by taxing authorities. In assessing the likelihood of realization of deferred tax assets, management considers estimates of the amount and character of future taxable income. Actual income taxes could vary from estimated amounts due to the future impacts of various items, including changes in income tax laws, our forecasted results of operations and financial condition in future periods, as well as final review of filed tax returns by taxing authorities. EFH Corp.'s income tax returns are regularly subject to examination by applicable tax authorities. In management's opinion, pursuant to income tax accounting guidance related to uncertain tax positions, there is no material liability for future taxes that may be owed as a result of any examination. See Notes 1 and 4 to Financial Statements for discussion of income tax matters.

~~Table~~EFH Corp. and its subsidiaries (including EFCH, EFIH, and TCEH, but not including Oncor Holdings and Oncor) are parties to a Federal and State Income Tax Allocation Agreement, which provides, among other things, that each of ~~Contents~~EFCH, EFIH, TCEH and any other subsidiaries under the agreement is required to make payments to EFH Corp. in an amount calculated to approximate the amount of tax liability such entity would have owed if it filed a separate corporate tax return. Accordingly, EFIH's income tax expense and related balance sheet amounts are recorded as if it files its own corporate income tax returns. Deferred income taxes are provided for temporary differences between the book and tax basis of assets and liabilities as required under accounting rules. Income tax assets and liabilities related to pushed down debt are settled as membership interests transactions.

~~RESULTS~~EFH OFCorp., ~~OPERATIONS~~Oncor Holdings, Oncor and Oncor's third-party minority investor are parties to a Federal and State Income Tax Allocation Agreement, which governs the computation of federal income tax liability among such parties, and similarly provides, among other things, that each of Oncor Holdings and Oncor will pay EFH Corp. its share of an amount calculated to approximate the amount of tax liability such entity would have owed if it filed a separate corporate tax return.

~~Financial~~EFIH's ~~Results~~income —tax ~~Year~~expense ~~Ended~~and ~~December 31~~related consolidated balance sheet amounts involve significant management estimates and judgments. Amounts of deferred income tax assets and liabilities, ~~2012~~as ~~Compared~~well as current and noncurrent accruals, involve estimates and judgments of the timing and probability of recognition of income and deductions by taxing authorities. In assessing the likelihood of realization of deferred tax assets, management considers estimates of the amount and character of future taxable income. Actual income taxes could vary from estimated amounts due to ~~Year~~the ~~Ended~~future ~~December 31~~impacts of various items, ~~2011~~including changes in income tax laws, EFIH's forecasted financial condition and results of operations in future periods, as well as final review of filed tax returns by taxing authorities. EFH Corp.'s income tax returns are regularly subject to examination by applicable tax authorities. In management's opinion, pursuant to income tax accounting guidance related to uncertain tax positions, there is no material liability for future taxes that may be owed as a result of any examination.

Interest income — affiliates increased $46 million to $598 million in 2012 reflecting acquisitions of additional long-term debt of affiliates as a result of the debt exchange transactions in December 2012. See Notes 31 and 54 to the Financial Statements for discussion of ~~January~~income ~~2013~~tax ~~transactions and reclassification of long-term debt of affiliates we hold that will result in interest received on such debt no longer being recorded as interest income~~matters.

~~Interest~~Accounting ~~expense and related charges increased $178 million to $526 million~~ in ~~2012. The increase reflected the issuance of $3.557 billion and $406 million aggregate principal amount of EFIH Notes in 2012 and April 2011, respectively (see Note 5 to Financial Statements).~~Reorganization

~~Income~~Consolidated ~~tax~~financial ~~expense~~statements ~~totaled~~for ~~$27~~periods ~~million~~following ~~and~~the ~~$73~~Petition ~~million~~Date inhave ~~2012~~been ~~and~~prepared ~~2011,~~in ~~respectively. The~~accordance ~~effective~~with ~~rate~~ASC on852, ~~pretax~~Reorganizations, ~~income~~which ~~was~~contemplates ~~37.5%~~the ~~and~~realization ~~35.8%~~of inassets ~~2012~~ and ~~2011,~~the ~~respectively. The~~satisfaction ~~increase~~of inliabilities ~~the~~on ~~effective~~a ~~rate~~going ~~reflected~~concern anbasis. However, ~~increase~~as ina ~~Texas~~result ~~margin~~of ~~tax~~the ~~due~~Chapter to11 anCases, ~~increase~~such inrealization ~~the~~of ~~apportionment~~assets ~~factor. See~~and ~~Note~~satisfaction 4of toliabilities ~~Financial~~are ~~Statements~~subject ~~for~~to a ~~reconciliation~~number of ~~the~~uncertainties. ASC ~~effective~~852 ~~rates~~requires to the ~~US federal statutory rate.~~following:

~~Equity~~• inReclassification ~~earnings~~ of ~~our~~unsecured ~~Oncor~~or ~~Holdings~~under-secured ~~unconsolidated~~pre-petition ~~subsidiary~~debt, ~~(net~~including ofunamortized ~~tax)~~deferred ~~decreased~~financing ~~$16~~costs ~~million to $270 million in 2012. Oncor's results reflected unusual charges of $57 million (pretax) in 2012 related to settlement of a management incentive pay plan~~ and $7discounts/premiums ~~million~~associated ~~(pretax)~~with ~~in 2011 related to an inventory write-off. Other drivers of the change in Oncor's results were higher tariffs~~debt, ~~reflecting the 2011 rate case~~ and other ~~filings~~liabilities ~~with~~to ~~the~~a ~~PUCT,~~separate ~~partially~~line ~~offset~~item byin the ~~effect~~consolidated ofbalance ~~milder weather on revenues and higher depreciation~~sheets, ~~operation~~called ~~and~~"Liabilities ~~maintenance~~subject ~~and interest expense. See Note 2~~ to ~~Financial Statements.~~compromise;"

~~Net~~• ~~income~~Nonaccrual ~~decreased~~of ~~$102 million to $315 million in 2012 driven by increased~~ interest expense ~~and~~for ~~decreased~~financial ~~equity~~reporting ~~in earnings of Oncor Holdings~~purposes, ~~partially~~to ~~offset~~the byextent ~~increased~~not ~~interest~~paid ~~income.~~during bankruptcy;

~~Financial~~• ~~Results~~Reporting —in ~~Year~~a ~~Ended~~new ~~December 31,~~line ~~2011~~in ~~Compared~~the statements of consolidated income (loss) of incremental items of income or loss related to ~~Year~~bankruptcy, ~~Ended~~such ~~December 31~~as professional fees, ~~2010~~as well as adjustments of liabilities to allowed claim amounts and ultimately settlement amounts as a separate line item in the statements of consolidated income (loss);

~~Interest~~• ~~income~~Evaluation ~~totaled~~of ~~$552~~actual ~~million~~or inpotential ~~2011~~bankruptcy ~~compared~~claims, towhich ~~$209~~are ~~million~~not inalready ~~2010. The~~reflected ~~increase~~as ~~reflected~~a ~~additional~~liability ~~investments~~on inthe ~~long-term~~consolidated ~~debt~~balance ofsheets, ~~affiliates~~under asASC a450, ~~result~~Contingencies. ofIf ~~debt~~valid ~~exchange~~unrecorded ~~transactions~~claims inmeeting ~~2010~~the ~~and~~ASC ~~2011~~450 ~~(see~~criteria ~~Note~~are 3presented to ~~Financial~~EFIH ~~Statements).~~in future periods, EFIH will accrue for these amounts at the expected amount of the allowed claim, and

~~Interest~~• ~~expense~~Upon ~~and~~emergence ~~related~~from ~~charges~~Chapter ~~increased~~11 ~~$33 million~~reorganization, orfresh-start ~~10%,~~accounting tounder ~~$348~~GAAP ~~million~~may inbe ~~2011~~required. ~~The~~ ~~increase~~Under ~~reflected~~fresh-start accounting, the ~~issuance~~reorganization value of ~~$406~~the ~~million~~entity ~~and~~would ~~$2.180~~be ~~billion~~allocated ~~aggregate~~to ~~principal~~the ~~amount~~entity's ofindividual ~~EFIH~~assets ~~Notes in April 2011~~ and ~~August~~liabilities ~~2010,~~on ~~respectively, partially offset by~~ a ~~$142~~fair ~~million~~value ~~net~~basis ~~reduction~~ in ~~debt~~conformity ~~pushed~~with ~~down~~the ~~from~~procedures ~~EFH~~specified ~~Corp.~~by ~~reflecting~~ASC ~~EFH~~805, ~~Corp.~~Business ~~and EFIH debt exchanges and repurchases in 2011 and 2010~~Combinations.

Income tax expense totaled $73 million in 2011 and income tax benefit totaled $42 million in 2010. The effective rate on pretax income was 35.8% in 2011 compared to an effective rate on a pretax loss of 39.6% in 2010. The 2010 effective rate reflects the recognition of interest expense previously treated as nondeductible, which resulted from the acquisition of pushed down Merger-related debt in August 2010.

Equity in earnings of our Oncor Holdings unconsolidated subsidiary (net of tax) increased $9 million to $286 million in 2011 reflecting improved results at Oncor due to higher revenue rates and the effects of warmer weather, partially offset by higher depreciation and operation and maintenance expense.

Net income increased $204 million to $417 million in 2011 driven by the increase in interest income.

~~Table~~RESULTS ofOF ~~Contents~~OPERATIONS

~~FINANCIAL~~Financial ~~CONDITION~~Results – Year Ended December 31, 2014 Compared to Year Ended December 31, 2013

~~Liquidity~~Selling, general, and ~~Capital~~administrative ~~Resources~~expenses increased $2 million to $22 million in 2014. The 2014 amount includes $15 million for legal and other professional services associated with EFIH's debt restructuring activities prior to the Petition Date, of which $4 million was allocated by EFH Corp. The 2014 amount also includes $3 million in allocated Sponsor Group management fees and $4 million in allocated other shared services costs. Payments of Sponsor Group management fees and associated cost allocations were suspended beginning with the payment due December 31, 2013. The 2013 amount reflects legal and other consulting services costs associated with EFH Corp.'s debt restructuring initiatives, of which $12 million was allocated by EFH Corp. See Note 12 to the Financial Statements for discussion of allocations from EFH Corp.

~~Cash~~Other ~~Flows~~deductions —increased ~~Year Ended December 31, 2012 Compared to Year Ended December 31, 2011 — Cash used in operating activities totaled~~ $~~202~~18 million ~~in 2012 compared~~ to ~~cash provided totaling~~ $3128 million in ~~2011. The $205 million decrease reflected $150 million in higher income taxes paid to EFH Corp. (including amounts related to prior periods) and $95 million in higher cash interest paid~~2014, ~~partially~~primarily ~~offset~~reflecting bythe ~~$31~~recording ~~million~~of ina ~~higher~~larger ~~cash~~reserve ~~distributions~~against ~~from~~EFIH's ~~Oncor Holdings. See Note 8 to Financial Statements for discussion of~~ income tax ~~payments~~receivable tofrom EFH Corp. ~~and Note 3 to Financial Statements for discussion of the return~~ in ~~early~~2014 ~~2013~~(see ofNote ~~EFH~~5 ~~Corp. debt as a dividend~~ to ~~EFH~~the ~~Corp.,~~Financial ~~which will substantially reduce cash interest received in 2013~~Statements).

~~Amortization~~Interest ofincome ~~debt~~– ~~issuance~~affiliates ~~costs~~decreased ~~reported~~$284 million to zero in ~~the~~2014. The ~~statement~~decline ofreflects ~~consolidated~~reclassification ~~cash~~in ~~flows~~2013 ~~relates~~of mark-to-market ~~both~~gains ~~the~~on ~~debt~~certain ~~pushed~~holdings ~~down~~of affiliate debt from ~~EFH~~accumulated ~~Corp.~~other ~~and~~comprehensive ~~the~~income ~~debt~~to weinterest ~~have~~income ~~issued~~resulting ~~(see~~from ~~Note~~the 52013 todistribution ~~Financial~~of ~~Statements)~~all EFH Corp. 10.875% Notes and isEFH ~~reported~~Corp. inToggle ~~interest~~Notes ~~expense~~held ~~and~~by ~~related~~EFIH. See ~~charges~~Notes in11 ~~the~~and ~~statement~~13 ofto ~~consolidated~~the ~~income~~Financial Statements.

~~Cash~~Interest ~~provided~~expense byand ~~financing~~related ~~activities~~charges ~~totaled~~decreased $1319 million to $441 million in 2014.~~260~~ The ~~billion~~decrease reflected $479 million in ~~2012,~~lower ~~reflecting~~interest ~~the~~expense ~~net~~on ~~proceeds~~pre-petition ~~from~~debt ~~EFIH's~~due ~~issuances~~to the discontinuation of interest upon the Bankruptcy Filing, partially offset by $~~2.253~~125 ~~billion~~million ofin ~~EFIH~~interest ~~Notes~~expense ~~and~~on ~~distributions~~debtor-in-possession offinancing and $~~950~~35 million in lower amortization of ~~the~~pre-petition ~~proceeds~~debt topremiums, ~~EFH~~discounts ~~Corp.~~and ~~(see~~issuance ~~Note~~costs 5due to ~~Financial~~discontinuance ~~Statements). There~~of ~~were~~amortization noand ~~cash~~reclassification ~~flows~~of ~~related~~such amounts to ~~financing~~liabilities ~~activities~~subject into ~~2011.~~compromise

~~Cash~~Reorganization ~~used~~items ~~in investing activities~~ totaled $~~680~~267 million in ~~2012~~2014 and ~~represented~~included a$50 ~~portion~~million ofin ~~the~~legal ~~net~~advisory ~~proceeds~~and ~~from~~representation ~~the~~services ~~issuance~~fees, ofa ~~EFIH~~$108 ~~Notes~~million innet ~~August~~loss ~~2012~~on ~~that~~the ~~EFIH~~exchange ~~placed~~and insettlement ~~escrow~~of ~~(reported~~the asEFIH ~~restricted~~First ~~cash)~~Lien Notes and ~~was~~$94 ~~used~~million toin ~~pay~~fees aassociated ~~dividend~~with incompletion ~~this~~of ~~amount~~the toEFIH ~~EFH~~First ~~Corp.~~Lien inDIP ~~January~~Facility. See ~~2013 (see~~ Note 57 to the Financial Statements~~). There~~ ~~were~~for noadditional ~~cash flows related to investing activities in 2011~~discussion.

~~Year~~Income ~~Ended~~tax ~~December 31,~~benefit ~~2011 Compared to Year Ended December 31, 2010 — Cash provided by operating activities~~ totaled $3155 million and $~~133~~169 million in ~~2011~~2014 and ~~2010~~2013, respectively. ~~The~~Pretax ~~decline~~amounts ~~reflected~~exclude aequity ~~$181~~in ~~million~~earnings ~~increase~~of inunconsolidated ~~cash~~subsidiaries. Excluding ~~interest~~the ~~paid,~~effect aof ~~$53~~the ~~million~~reserve ~~decrease~~against inthe ~~dividends~~income ~~received~~tax receivable from ~~Oncor~~EFH ~~Holdings~~Corp. (see Notes 4 and ~~payment~~5 ofto ~~$30~~the ~~million~~Financial inStatements) that was recorded without income ~~taxes~~tax benefit, the effective tax rate was 21.1% in 2014 compared to ~~EFH~~34.1% ~~Corp~~in 2013. The decrease in ~~2011,~~the ~~partially~~effective ~~offset~~income tax rate is driven primarily by a valuation allowance against deferred tax assets and higher ~~interest~~nondeductible ~~payments~~legal ~~received~~and onother ~~investments~~professional inservices ~~long-term~~costs ~~debt~~related ofto ~~affiliates~~the Chapter 11 Cases in 2014.

~~There~~Equity in earnings of EFIH's Oncor Holdings unconsolidated subsidiary (net of tax) increased $14 million to $349 million in 2014. The increase in equity earnings of Oncor reflected increased revenue from higher transmission rates and lower interest expense. These favorable effects were nopartially ~~cash~~offset ~~flows~~by ~~related~~higher income taxes reflecting the $11 million favorable tax effect in 2013 due to ~~financing~~resolution orof ~~investing~~certain ~~activities~~income tax positions and an increase in ~~2011~~non-deductible amortization of regulatory assets, higher depreciation, higher operation and maintenance expense and higher property taxes. See Note 3 to the Financial Statements.

~~Liquidity~~Net ~~Needs~~loss —increased ~~Our~~$252 ~~liquidity~~million ~~needs~~to ~~represent~~$354 ~~interest~~million ~~and~~in ~~principal~~2014. The ~~payments~~change onwas ~~our~~driven ~~long-term~~by ~~debt~~a ~~and~~decrease ~~payments~~in ofinterest income ~~taxes~~- ~~to EFH Corp.~~affiliates, ~~which~~the weexistence ~~expect~~of toreorganization ~~fund~~items ~~with~~in ~~distributions~~2014 ~~we receive from Oncor Holdings, interest~~ and ~~principal~~the ~~payments~~reserve weagainst ~~receive~~the onincome ~~investments~~tax inreceivable from EFH Corp., orpartially ~~TCEH~~offset ~~debt~~by ~~securities~~lower ~~(see~~interest ~~Note~~expense 3on topre-petition ~~Financial~~debt ~~Statements),~~ and ashigher ~~necessary,~~equity ~~additional~~in ~~liquidity~~earnings ~~sources~~of ~~including borrowings from EFH Corp. (See "Distributions from~~ Oncor" ~~below and Notes 2 and 8 to Financial Statements~~Holdings.)

~~Long-Term~~Financial ~~Debt~~Results ~~Activity~~– —Year InEnded ~~2012~~December 31, ~~EFIH~~2013 ~~issued~~Compared ~~$2.253 billion principal amount of debt, the proceeds from which funded $1.630 billion in distributions~~ to ~~EFH~~Year ~~Corp.~~Ended ~~(including the $680 million held as restricted cash at~~ December 31, 2012 and distributed in January 2013), with the remaining proceeds held as cash on hand. In 2012 and early 2013, EFIH issued $2.695 billion principal amount of debt in exchange for $3.027 billion principal amount of EFH Corp. debt and $139 million principal amount of EFIH debt. See "Significant Activities and Events and Items Influencing Future Performance – Liability Management Activity" and Note 5 to Financial Statements for details of debt related activity in 2012 and early 2013, including EFH Corp. debt returned by EFIH as dividends to EFH Corp., which cancelled it.

~~Debt~~Selling, ~~Capacity~~general, ~~— We believe that we~~ and ~~EFH~~administrative ~~Corp.~~expenses ~~collectively~~totaled ~~are~~$20 ~~permitted~~million ~~under~~in ~~our~~2013, ~~applicable debt agreements to issue (subject to certain exceptions~~ and ~~conditions~~no ~~set~~amounts ~~forth~~were recorded in ~~our~~2012. The ~~applicable~~2013 ~~debt~~amount ~~documents)~~reflects uplegal toand ~~approximately~~other ~~$250~~professional ~~million~~services ofcosts ~~additional~~associated ~~aggregate~~with ~~principal~~EFH ~~amount of debt secured by EFIH~~Corp.'s ~~equity~~debt ~~interest~~restructuring ~~in Oncor Holdings~~initiatives, of which $1512 million ~~can~~was beallocated onby aEFH ~~first-priority~~Corp. ~~basis~~(see ~~and~~Note ~~the~~12 ~~remainder~~to onthe aFinancial ~~second-priority basis~~Statements).

InOther ~~addition,~~deductions ~~EFIH~~totaled ~~is permitted under its debt agreements to issue up to approximately~~ $~~375~~110 million ofin ~~additional~~2013, ~~principal~~reflecting ~~amount~~the recording of ~~senior~~a ~~unsecured~~reserve ~~debt~~against ~~(subject~~EFIH's toincome ~~certain~~tax ~~exceptions~~receivable ~~and~~from ~~conditions~~EFH ~~set forth in its debt agreements)~~Corp. ~~Such~~ ~~unsecured~~(see ~~debt~~Note ~~may~~5 beto ~~incurred~~the ~~for,~~Financial ~~among other things, exchanges for EFH Corp~~Statements). ~~unsecured debt.~~

~~Table~~Interest income – affiliates decreased $314 million to $284 million in 2013. The decline reflects the reclassification of ~~Contents~~affiliate debt EFIH holds that resulted in interest received on such debt in 2013 being recorded as an increase in membership interests instead of interest income. This impact was partially offset by $284 million in interest income in 2013 that represents previous mark-to-market gains on certain holdings of affiliate debt reclassified from accumulated other comprehensive income. See Note 13 to the Financial Statements for discussion of these reclassifications.

~~These~~Interest ~~amounts~~expense ~~are estimates based on our current interpretation of the covenants set forth in our debt agreements~~ and dorelated ~~not~~charges ~~take~~increased ~~into~~$234 ~~account~~million ~~exceptions in the debt agreements that may allow for the incurrence of additional secured or unsecured debt, including, but not limited~~ to, ~~acquisition~~$760 ~~debt,~~million ~~refinancing~~in ~~debt, capital leases and hedging obligations~~2013. ~~Moreover,~~The ~~such~~increase ~~amounts~~was ~~could~~driven ~~change~~by ~~from time to time as a result of, among other things,~~ the ~~termination~~issuance of ~~any~~EFIH ~~debt~~Notes ~~agreement (or specific terms therein) or amendments to the debt agreements that result from negotiations with new or existing lenders. In addition, covenants included~~ in ~~agreements~~2012 ~~governing~~and ~~additional~~2013 ~~future~~(see ~~debt~~Note ~~may~~9 ~~impose greater restrictions on our incurrence of secured or unsecured debt. Consequently, the actual amount of senior secured or unsecured debt that we are permitted~~ to ~~incur under our debt agreements could be materially different than~~ the ~~amounts~~Financial ~~provided above~~Statements).

~~EFIH~~Income ~~Toggle~~tax ~~Notes~~benefit ~~Interest~~totaled ~~Election~~$169 —million Wein ~~have~~2013 ~~the~~on ~~option~~a ~~every~~pretax ~~six~~loss ~~months~~compared atto ~~our~~income ~~discretion,~~tax ~~ending~~expense ~~with~~of ~~the~~$27 ~~interest~~million ~~payment~~on ~~due~~pretax ~~June~~income ~~2016,~~in to2012. Pretax ~~use~~amounts ~~the~~exclude ~~payment-~~equity in~~-kind~~ ~~(PIK)~~earnings ~~feature~~of unconsolidated subsidiaries. Excluding the effect of ~~our~~the ~~toggle~~reserve ~~notes~~against ~~($1.392~~the ~~billion~~income ~~aggregate~~tax ~~principal~~receivable ~~amount~~that ~~issued~~was inrecorded ~~December~~without ~~2012~~income ~~and~~tax ~~January~~benefit, ~~2013)~~the effective tax rate was 34.1% in ~~lieu~~2013 ofcompared ~~making~~to ~~cash~~37.5% ~~interest~~in ~~payments~~2012. ~~Once~~The wechange ~~make~~in athe ~~PIK~~effective ~~election,~~income ~~the~~tax ~~election~~rate is ~~valid~~due ~~for~~largely ~~each~~to ~~succeeding~~the ~~interest~~effects ~~payment~~of ~~period~~a ~~until~~relatively welarge ~~revoke~~pretax ~~the~~loss ~~applicable~~in ~~election. Use~~2013 ofcompared to the ~~PIK~~small ~~feature~~pretax ~~will~~income beamount ~~evaluated~~in at2012. See ~~each~~Note ~~election~~4 ~~period,~~to ~~taking~~the ~~into~~Financial ~~account~~Statements ~~market~~for ~~conditions~~a ~~and~~reconciliation ~~other~~of ~~relevant~~the ~~factors~~effective atrates ~~such~~to ~~time~~the US federal statutory rate.

WeEquity ~~will~~in ~~make~~earnings ~~our~~of ~~June~~EFIH's ~~2013~~Oncor ~~interest~~Holdings ~~payment~~unconsolidated ~~and~~subsidiary ~~expect~~(net of tax) increased $65 million to ~~make~~$335 ~~our~~million ~~December~~in 2013. The ~~interest~~increase ~~payment~~in onequity ~~the~~earnings ~~EFIH~~of ~~Toggle~~Oncor ~~Notes~~reflected byan ~~using~~$11 ~~the~~million ~~PIK~~favorable ~~feature~~tax ofeffect ~~those~~in ~~notes. During~~2013 ~~the~~due ~~applicable~~to ~~PIK~~resolution ~~interest~~of ~~periods,~~certain ~~the~~income ~~interest~~tax ~~rate~~positions onat ~~these~~Oncor ~~notes~~and isa ~~increased~~$31 million unfavorable impact in 2012 from ~~11.25%~~the tosettlement 12of a management incentive pay plan.~~25%.~~ AsThe settlement resulted in a ~~result~~$57 ofmillion ~~the~~pretax ~~PIK~~charge ~~election,~~reported weby ~~will~~Oncor. Excluding ~~increase~~these items, the ~~aggregate~~increase ~~principal~~in ~~amount~~Oncor's ofearnings reflected higher revenues from higher transmission rates, the ~~notes~~effect byof ~~$83~~colder ~~million~~fall/winter weather and growth in ~~June~~points ~~2013~~of ~~and~~delivery, ~~expect~~partially tooffset ~~issue~~by anhigher ~~additional~~operation ~~$90~~and ~~million~~maintenance inexpenses ~~December~~and ~~2013~~higher depreciation. See Note 53 to ~~Financial Statements for further discussion of~~ the ~~EFIH~~Financial ~~Toggle Notes~~Statements.

~~Income~~Net ~~Tax~~loss ~~Payments~~totaled —$102 ~~See~~million ~~Note~~in 82013 compared to ~~Financial~~net ~~Statements~~income ~~for~~of ~~discussion~~$315 ofmillion in 2012. The $417 million change was driven by a decrease in interest income, an increase in interest expense and the reserve against the income tax ~~payments~~receivable tofrom EFH Corp., partially offset by higher equity in earnings of Oncor Holdings.

Distributions of Earnings from Oncor Holdings — Oncor Holdings' distributions of earnings to us totaled $147 million, $116 million and $169 million for the years ended December 31, 2012, 2011 and 2010, respectively. We also received a distribution totaling $31 million from Oncor Holdings on February 15, 2013. See Note 2 to Financial Statements for discussion of limitations on amounts Oncor can distribute to its members.

In 2009, the PUCT awarded certain CREZ construction projects to Oncor. See discussion above under "Significant Activities and Events and Items Influencing Future Performance – Oncor Matters with the PUCT." As a result of the increased capital expenditures for CREZ and the debt-to-equity ratio cap, our distributions from Oncor could be substantially reduced or temporarily discontinued during the CREZ construction period, which is expected to be largely completed by the end of 2013.

Capitalization — Our capitalization ratios consisted of (2.6)% and 62.8% membership interests and 102.6% and 37.2% long-term debt at December 31, 2012 and 2011, respectively.

Financial Covenants, Credit Rating Provisions and Cross Default Provisions — Covenants and Restrictions Related to EFIH Notes and Pushed Down Debt — The indentures governing the EFIH Notes, EFH Corp. 10.875% Notes and EFH Corp. Toggle Notes contain covenants that could have a material impact on our liquidity and operations. See Note 5 to Financial Statements for discussion of our long-term debt, including EFH Corp. debt pushed down to us as a result of our guarantee of the debt.

Adjusted EBITDA (as used in the restricted payments covenants contained in the indentures governing the EFIH Notes and the EFH Corp. Notes) for the year ended December 31, 2012 totaled $1.747 billion and $5.257 billion, respectively. See Exhibits 99(a) and 99(b) for a reconciliation of net income (loss) to Adjusted EBITDA for EFIH and EFH Corp., respectively, for the years ended December 31, 2012 and 2011.

~~Table~~FINANCIAL ~~of Contents~~CONDITION

~~The~~Operating ~~table~~Cash below summarizes various financial ratios of EFIH and EFH Corp. that are applicable under certain thresholds in the indentures governing the EFIH Notes, EFH Corp. 10.875% Notes and EFH Corp. Toggle Notes at December 31, 2012 and 2011 and the corresponding covenant threshold levels at December 31, 2012. The debt incurrence and restricted payments/limitations on investments covenants thresholds described below represent levels that must be met in order for EFH Corp. and EFIH to incur certain permitted debt or make certain restricted payments and/or investments. Our debt agreements do not contain maintenance covenants. In January 2013, in accordance with amendments to the terms of the EFH Corp. Secured Notes and their governing indentures, restrictive covenants to the notes were removed. Accordingly, the related coverage ratios are not reflected below (see Note 5 to Financial Statements).Flows

	December 31,2012	December 31,2011	Threshold Level atDecember 31, 2012
Debt Incurrence Thresholds:
EFIH Notes:
EFIH fixed charge coverage ratio (a)	0.3 to 1.0	(b)	At least 2.0 to 1.0
Restricted Payments/Limitations on Investments Thresholds:
EFH Corp. 10.875% Notes and Toggle Notes:
General restrictions (Sponsor Group payments):
EFH Corp. leverage ratio	10.1 to 1.0	9.7 to 1.0	Equal to or less than 7.0 to 1.0
EFIH Notes:
General restrictions (non-EFH Corp. payments):
EFIH fixed charge coverage ratio (a)(c)	2.1 to 1.0	81.7 to 1.0	At least 2.0 to 1.0
General restrictions (EFH Corp. payments):
EFIH fixed charge coverage ratio (a)(c)	0.3 to 1.0	(b)	At least 2.0 to 1.0
EFIH leverage ratio	7.0 to 1.0	5.3 to 1.0	Equal to or less than 6.0 to 1.0

Year Ended December 31, 2014 Compared to Year Ended December 31, 2013 — Cash used in operating activities totaled $243 million in 2014 and $428 million in 2013, respectively. The decrease in cash used of $185 million was primarily driven by $243 million in lower cash interest payments due to the discontinuation of interest paid on pre-petition debt (see Note 9 to the Financial Statements), partially offset by higher legal and other professional services costs.

~~_____________~~Year Ended December 31, 2013 Compared to Year Ended December 31, 2012 — Cash used in operating activities totaled $428 million in 2013 and $202 million in 2012, respectively. The change of $226 million reflected $267 million in higher interest payments and a decrease of $184 million in interest received on affiliate debt, partially offset by a decrease of $185 million in income taxes paid to EFH Corp. (2012 payments included amounts related to prior years) and $66 million in higher cash distributions from Oncor Holdings. See Note 11 to the Financial Statements for discussion of the distribution of EFH Corp. debt as a dividend to EFH Corp., which has resulted in interest received in 2013 being reported as a financing cash flow.

~~(a)~~Amortization ~~The~~of ~~December~~debt ~~31,~~issuance ~~2012~~costs ~~calculation~~reported ~~excludes~~in ~~interest~~the ~~income~~condensed onstatements of consolidated cash flows relates to the debt pushed down from EFH Corp. ~~Senior~~and ~~Notes~~the ~~that~~debt issued by EFIH, ~~returned~~including asEFIH's adebtor-in-possession ~~dividend~~financing. Remaining unamortized costs at the Petition Date were reclassified to ~~EFH~~liabilities ~~Corp.~~subject into ~~January~~compromise ~~2013~~(LSTC) and amortization ceased (see Note 38 to the Financial Statements). All amortized debt issuance costs are reported in interest expense and related charges in the condensed statements of consolidated income (loss).

~~(b)~~Financing WeCash ~~meet the ratio threshold. Because our interest income exceeds interest expense, the result of the ratio calculation is not meaningful.~~Flows

~~(c)~~Year ~~The~~Ended ~~EFIH~~December 31, ~~fixed~~2014 ~~charge~~Compared ~~coverage~~to ~~ratio~~Year ~~for~~Ended ~~non-EFH~~December 31, ~~Corp~~2013 — Cash provided by financing activities totaled $1.158 ~~payments~~billion ~~includes~~in 2014 and cash used in financing activities totaled $434 million in 2013. Cash provided by financing activities in 2014 included $3.564 billion in borrowings under the ~~results~~EFIH DIP Facility, partially offset by $2.312 billion in repayments of ~~Oncor~~EFIH ~~Holdings~~First Lien Notes and ~~its~~$94 ~~subsidiaries.~~million ~~The~~in payments for fees associated with the completion of the EFIH ~~fixed~~DIP ~~charge~~Facility. Cash ~~coverage~~used ~~ratio~~in financing activities in 2013 reflected a cash distribution to EFH Corp. of $680 million for the purpose of EFH Corp. ~~payments~~repaying ~~excludes~~the balance of the ~~results~~TCEH Demand Notes (see discussion below of ~~Oncor~~investing ~~Holdings~~cash ~~and~~flows), ~~its~~partially ~~subsidiaries~~offset by $252 million of interest received on holdings of affiliate debt.

~~Material~~Year ~~Cross~~Ended ~~Default/Acceleration~~December 31, ~~Provisions~~2013 Compared to Year Ended December 31, 2012 — ~~Certain~~Cash ofused ~~our~~in financing ~~arrangements~~activities ~~contain~~totaled ~~provisions~~$434 ~~that~~million ~~could~~in ~~result~~2013 compared to cash provided totaling $1.260 billion in 2012, respectively. Activity in 2013 reflected a cash distribution to EFH Corp. of $680 million released from an ~~event~~escrow account for the purpose of ~~default~~EFH ifCorp. ~~there~~repaying ~~were~~the abalance ~~failure~~of ~~under~~the ~~other~~TCEH ~~financing~~Demand ~~arrangements~~Notes to(see ~~meet~~discussion ~~payment~~below ~~terms~~of orinvesting tocash ~~observe~~flows), ~~other~~partially ~~covenants~~offset ~~that~~by ~~could~~$252 ormillion ~~does~~of ~~result~~interest inreceived anon ~~acceleration~~holdings of ~~payments~~affiliate ~~due~~debt. ~~Such~~Activity ~~provisions~~in ~~are~~2012 ~~referred~~reflected the issuances of $2.253 billion of EFIH Notes and distributions of $950 million of the proceeds to EFH Corp. See Note 11 to the Financial Statements for discussion of reclassification of affiliate debt EFIH holds that resulted in interest received on such debt in 2013 being recorded as ~~"cross~~an ~~default"~~increase orin ~~"cross~~membership ~~acceleration"~~interests ~~provisions~~instead of interest income.

~~The~~Investing ~~indentures~~Cash governing the EFIH Notes contain a cross acceleration provision whereby a payment default at maturity or on acceleration of principal indebtedness under any instrument or instruments of EFIH or any of its restricted subsidiaries or of any debt that EFIH guarantees in an aggregate amount equal to or greater than $250 million may cause the acceleration of the EFIH Notes.Flows

Year Ended December 31, 2014 Compared to Year Ended December 31, 2013 — There was no cash used in or provided by investing activities in 2014. Cash provided by investing activities in 2013 totaled $680 million and represented a release of funds from a collateral account to pay a distribution to EFH Corp. in January 2013. The funds represented a portion of the net proceeds from the issuance of EFIH Notes in 2012 that were placed in escrow at that time.

Year Ended December 31, 2013 Compared to Year Ended December 31, 2012 — Cash provided by investing activities totaled $680 million in 2013 compared to cash used totaling $680 million in 2012. The change was driven by restricted cash movements, as $680 million was deposited in a collateral account in 2012 for the purpose of EFH Corp. repaying the balance of the TCEH Demand Notes and the funds were released from the escrow account in January 2013 to make the repayment (see Note 11 to the Financial Statements).

~~Table~~Available Liquidity — In March 2015, with the approval of ~~Contents~~the Bankruptcy Court, EFIH used some of its cash to repay (Repayment) $735 million, including interest at contractual rates, in amounts outstanding under EFIH's pre-petition 11.00% Second Lien Notes due 2021 (11.00% Notes) and 11.75% Second Lien Notes due 2022 (11.75% Notes) and $15 million in certain fees and expenses of the trustee for such notes. The Repayment required the requisite consent of the lenders under the EFIH DIP Facility. EFIH received such consent from approximately 97% of the lenders under the EFIH DIP Facility and paid an aggregate consent fee equal to approximately $13 million. As a result of the Repayment, as of the date hereof, the principal amount outstanding on the 11.00% Notes and 11.75% are $322 million and $1.388 billion, respectively.

~~Long-Term~~Liquidity ~~Contractual~~After ~~Obligations~~the ~~and~~Bankruptcy ~~Commitments~~Filing — ~~The~~Subject ~~following~~to ~~table~~certain ~~summarizes~~exceptions ~~our~~under ~~contractual~~the ~~cash~~Bankruptcy ~~obligations~~Code, atthe ~~December 31~~Bankruptcy Filing automatically enjoined, ~~2012~~or ~~(see~~stayed, ~~Note~~the 5continuation of most pending judicial or administrative proceedings and the filing of other actions against the EFIH Debtors or their property to ~~Financial~~recover ~~Statements~~on, ~~for~~collect ~~additional~~or ~~disclosures~~secure ~~regarding~~a ~~these~~claim ~~long~~arising prior to the date of the Bankruptcy Filing (including with respect to EFIH's pre-~~term~~petition debt ~~obligations~~instruments).

Contractual Cash Obligations (a)	Less ThanOne Year		One toThreeYears		Three toFiveYears		MoreThan FiveYears		Total
Long-term debt – principal	$	—	$	—	$	565	$	6,169	$	6,734
Long-term debt – interest	638		1,436		1,422		1,891		5,387
Total contractual cash obligations	$	638	$	1,436	$	1,987	$	8,060	$	12,121

The Bankruptcy Court approved final orders in June 2014 authorizing the EFIH DIP Facility (see Note 6 to the Financial Statements). The EFIH DIP Facility provides for up to $5.4 billion in senior secured, super-priority financing.

EFIH believes that the EFIH DIP facility, plus cash distributions received from Oncor Holdings, will be sufficient to fund its anticipated cash requirements through at least the maturity date of the EFIH DIP facility. As a result of the Chapter 11 Cases, EFIH does not expect to receive further interest payments on affiliate debt securities it holds.

Debt Capacity — The EFIH DIP Facility permits, subject to certain terms, conditions and limitations, EFIH to incur incremental junior lien subordinated debt in an aggregate amount not to exceed $3 billion.

Distributions of Earnings from Oncor Holdings — Oncor Holdings' distributions of earnings to EFIH totaled $202 million, $213 million and $147 million for the years ended December 31, 2014, 2013 and 2012, respectively. On February 26, 2015, EFIH received a distribution totaling $74 million from Oncor Holdings. See Note 3 to the Financial Statements for discussion of limitations on amounts Oncor can distribute to its members.

Debt Activity — Debt activities during the year ended December 31, 2014 are principal amounts, and settlements exclude amounts related to debt discount, financing and reacquisition expenses. In June 2014, EFIH issued a $5.4 billion first-lien debtor-in-possession financing facility which was used in settlements of the EFIH First Lien Notes consisting of a $2.312 billion cash exchange and a $1.673 billion noncash exchange (see Note 6 to the Financial Statements).

EFIH Toggle Notes Interest Election — EFIH made its 2013 interest payments on the EFIH Toggle Notes by using the PIK feature of those notes. During the applicable PIK interest periods, the interest rate on these notes is increased from 11.25% to 12.25%. As a result of the PIK election, EFIH increased the aggregate principal amount of the notes by $173 million in 2013. See Note 8 to the Financial Statements for further discussion of the EFIH Toggle Notes.

Income Tax Matters — EFH Corp. and certain of its subsidiaries (including EFCH, EFIH, and TCEH, but not including Oncor Holdings and Oncor) are parties to a Federal and State Income Tax Allocation Agreement, which provides, among other things, that any corporate member or disregarded entity in the EFH Corp. group is required to make payments to EFH Corp. in an amount calculated to approximate the amount of tax liability such entity would have owed if it filed a separate corporate tax return. EFH Corp., Oncor Holdings, Oncor and Oncor's third-party minority investor are parties to a separate Federal and State Income Tax Allocation Agreement, which governs the computation of federal income tax liability among such parties, and similarly provides, among other things, that each of Oncor Holdings and Oncor will pay EFH Corp. its share of an amount calculated to approximate the amount of tax liability such entity would have owed if it filed a separate corporate tax return. The material weakness in EFH Corp.'s internal controls over financial reporting related to accounting for deferred income taxes, as described in Item 9A, Controls and Procedures, did not cause any change in its historic tax sharing practices or the interpretation of any tax sharing agreements within the different members of its company.

See Note 12 to the Financial Statements for discussion of income tax payments to and from EFH Corp.

Capitalization — At December 31, 2014, EFIH's capitalization ratios consisted of 131.1% borrowings under debtor -in-possession credit facilities and pre-petition notes reported as liabilities subject to compromise and (31.1)% membership interests. At December 31, 2013, EFIH's capitalization ratios consisted of 130.1% debt and (30.1)% membership interests.

Financial Covenants — The Bankruptcy Filing constituted an event of default and automatic acceleration under the agreements governing the pre-petition debt of the EFIH Debtors. The creditors are, however, stayed from taking any action against the EFIH Debtors as a result of such defaults and accelerations under the Bankruptcy Code.

The EFIH DIP Facility includes a minimum liquidity covenant pursuant to which EFIH cannot allow unrestricted cash (as defined in the EFIH DIP Facility) to be less than $150 million. EFIH is in compliance with this covenant.

See Note 6 to the Financial Statements for discussion of other covenants related to the DIP Facility.

Material Cross Default/Acceleration Provisions — Certain of EFIH's financing arrangements contain provisions that result in an event of default if there were a failure under other financing arrangements to meet payment terms or to observe other covenants that could or does result in an acceleration of payments due. Such provisions are referred to as "cross default" or "cross acceleration" provisions. The Bankruptcy Filing triggered defaults on EFIH's pre-petition debt obligations, but pursuant to the Bankruptcy Code, the creditors are stayed from taking any actions against the Debtors as a result of such defaults.

Contractual Obligations and Commitments — The following table summarizes EFIH's contractual cash obligations at December 31, 2014 (see Note 6 to the Financial Statements for additional disclosures regarding these debt obligations). Pre-petition liabilities subject to compromise (i.e., obligations incurred or accrued prior to the Bankruptcy Filing) are being administered by the Bankruptcy Court and are excluded from the table below due to the uncertainty related to when those obligations will mature.



Contractual Cash Obligations	Less Than One Year		One to Three Years		Three to Five Years		More Than Five Years		Total
Debt – principal (a)	$	—	$	5,400	$	—	$	—	$	5,400
Debt – interest	230		107		—		—		337
Total contractual cash obligations	$	230	$	5,507	$	—	$	—	$	5,737

_____________

(a) Includes $~~450 million principal amount and related interest of EFH Corp. notes pushed down to EFIH (see Note~~ 5 ~~to Financial Statements~~.)4 ~~Excludes~~billion ~~$83 million~~ of ~~additional~~borrowings ~~principal~~under ~~amount of notes expected to be issued in June 2013 and due in 2018, reflecting~~ the ~~PIK feature on toggle notes discussed above under "~~EFIH ~~toggle~~DIP ~~Notes Interest Election~~Facility."

Guarantees — See Note 610 to the Financial Statements for discussion of guarantees.

OFF-BALANCE SHEET ARRANGEMENTS

See Notes 23 and 610 to the Financial Statements regarding VIEs and guarantees, respectively.

COMMITMENTS AND CONTINGENCIES

See Note 610 to the Financial Statements for discussion of commitments and contingencies.

CHANGES IN ACCOUNTING STANDARDS

~~There~~See ~~have~~Note ~~been~~1 noto ~~recently~~the ~~issued~~Financial ~~accounting~~Statements ~~standards~~for ~~effective~~discussion ~~after~~of ~~December 31,~~changes ~~2012~~in ~~that~~accounting ~~are expected to materially impact our financial statements~~standards.

3132

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Item 7A.	QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Interest Rate Risk

Market risk is the risk that wein the ordinary course of business that EFIH may experience a loss in value as a result of changes in market conditions that affect economic factors such as interest rates. EFIH's ~~that~~debt ~~may~~at beDecember ~~experienced~~31, in2014 ~~the~~consists ~~ordinary course~~ of ~~business~~debtor-in-possession financing. WePre-petition ~~may~~obligations ~~transact~~(i.e., inobligation ~~financial~~incurred ~~instruments~~or accrued prior to ~~hedge~~the ~~interest~~Bankruptcy ~~rate~~Filing) ~~risk~~are ~~related~~being toadministered ~~our~~by ~~debt,~~the ~~but~~Bankruptcy ~~there~~Court and are ~~currently~~excluded nofrom ~~such~~the ~~hedges~~table inbelow ~~place~~due to the uncertainty related to when those obligations will mature. All of ~~our~~EFIH's ~~long-term~~ debt at December 31, ~~2012~~2013 ~~and 2011~~ carried fixed interest rates~~. The~~ and exclude the effects of unamortized premiums. See ~~are~~Notes ~~excluded~~6 ~~from~~and 8 to the ~~table~~Financial Statements for further discussion of these financial instruments.

	Expected Maturity Date
		2014Total CarryingAmount				2014Total FairValue			2013Total CarryingAmount				2013Total FairValue
	~~(millions of dollars, except percentages)~~	(millions of dollars, except percentages)
	2013				2014			2015				2016			2017			There-after			2012TotalCarryingAmount			2012TotalFairValue		2011TotalCarryingAmount			2011TotalFairValue
Debt amounts:
Long-term debt (including current maturities):
Fixed rate debt amount (a)		$	—			$	—		$	7,739			$	7,849
Fixed rate debt amount (a)	$	—			$	—		$	—			$	—		$	565		$	6,169		$	6,734		$	7,258	$	3,433		$	3,494
Average interest rate (b)		—		%					10.90		%
Average interest rate (b)	—		%		—		%	—		%		—		%	7.34		%	10.82		%	10.53		%			10.21		%
Variable rate debt amount		$	5,400			$	5,400		$	—			$	—
Average interest rate (b)		4.25		%
Total Debt		$	5,400			$5,400			$7,739				$7,849

_____________

(a) ~~Includes~~2013 includes pushed down debt. See Note 58 to the Financial Statements.

(b) ~~Reflects~~The ~~11.25%~~weighted ~~cash~~average interest rate ~~for~~presented ~~EFIH~~is ~~Toggle~~based ~~Notes~~on the rate in effect at December 31, 2014.

~~Oncor's~~ Credit Risk

Oncor's Credit Risk — Credit risk relates to the risk of loss associated with nonperformance by counterparties. Oncor's customers consist primarily of REPs. As a prerequisite for obtaining and maintaining certification, a REP must meet the financial resource standards established by the PUCT. Meeting these standards does not guarantee that a REP will be able to perform its obligations. REP certificates granted by the PUCT are subject to suspension and revocation for significant violation of Texas Public Utility Regulatory Act and PUCT rules. Significant violations include failure to timely remit payments for invoiced charges to a transmission and distribution utility pursuant to the terms of tariffs approved by the PUCT. PUCT rules allow for the recovery of uncollectible amounts from nonaffiliated REPs, reducing the credit risk of such receivables.

At December 31, ~~2012~~2014, Oncor's exposure to credit risk associated with accounts receivable ~~totaled $53 million~~ from ~~affiliates,~~nonaffiliate ~~substantially~~customers ~~all~~totaled ~~of which consisted of trade accounts receivable from TCEH, and~~ $~~340~~410 million ~~from nonaffiliated customers~~. The nonaffiliated customer receivable amount is before the allowance for uncollectible accounts, which totaled $23 million ~~at December 31~~, ~~2012. The~~and ~~nonaffiliate exposure~~ includes trade accounts receivable from REPs totaling $~~251~~298 million, which are almost entirely noninvestment grade. At December 31, ~~2012~~2014, REP subsidiaries of one nonaffiliated entity collectively represented approximately 12% of the nonaffiliated trade receivable amount. No other nonaffiliated parties represented 10% or more of the total exposure. Oncor views its exposure to this customer to be within an acceptable level of risk tolerance considering PUCT rules and regulations; however, this concentration increases the risk that a default would have a material effect on cash flows.

See ~~Note~~Management's 8Discussion toand Analysis of Financial ~~Statements~~Condition ~~for~~and ~~discussion~~Results of ~~transactions~~Operations ~~between~~– ~~Oncor~~Significant Activities and ~~TCEH~~Events and Items Influencing Future Performance – Credit Risk Exposure to EFH Corp. and its Subsidiaries above for discussion of Oncor's credit risk to accounts receivable from affiliates.

32See Note 12 to the Financial Statements for discussion of transactions between Oncor and TCEH and EFH Corp.

~~Table of Contents~~33

FORWARD-LOOKING STATEMENTS

This report and other presentations made by usEFIH contain "forward-looking statements." All statements, other than statements of historical facts, that are included in this report, or made in presentations, in response to questions or otherwise, that address activities, events or developments that wemay ~~expect or anticipate to~~ occur in the future, including such matters as activities related to EFIH's bankruptcy, financial or operational projections, capital allocation, future capital expenditures, business strategy, competitive strengths, goals, future acquisitions or dispositions, development or operation of facilities, market and industry developments and the growth of ~~our~~EFIH's business and operations (often, but not always, through the use of words or phrases such as "intends," "plans," "will likely," "unlikely," "expected," "anticipated," "estimated," "should," "projection," "target," "goal," "objective" and "outlook"), are forward-looking statements. Although weEFIH ~~believe~~believes that in making any such forward-looking statement ~~our~~its expectations are based on reasonable assumptions, any such forward-looking statement involves uncertainties and is qualified in its entirety by reference to the discussion of risk factors under Item 1A, "Risk Factors" and the discussion under Item 7, "Management's Discussion and Analysis of Financial Condition and Results of Operations" in this report and the following important factors, among others, that could cause ~~our~~EFIH's actual results to differ materially from those projected in such forward-looking statements:

• ~~prevailing~~The ~~governmental~~Debtors ~~policies~~(including ~~and~~the ~~regulatory~~EFIH ~~actions~~Debtors) ability to develop, ~~including~~file ~~those~~and complete a Chapter 11 plan of ~~the~~reorganization ~~Texas~~that ~~Legislature,~~receives the ~~Governor~~necessary ofvotes ~~Texas,~~from the USrequired ~~Congress,~~creditors ~~the~~and ~~FERC,~~stakeholders and the ~~NERC,~~approval from the ~~TRE~~Bankruptcy Court, ~~the~~particularly ~~PUCT,~~prior to the ~~EPA,~~expiration ~~and~~of the ~~TCEQ,~~exclusivity ~~with~~period ~~respect~~granted ~~to,~~by ~~among~~the ~~other~~Bankruptcy ~~things:~~Court;

◦• ~~allowed~~the ~~rate~~outcome of ~~return;~~the court-supervised bid process with respect to the restructuring of EFH Corp. and EFIH


•	EFIH's ability to obtain Bankruptcy Court approval with respect to the EFIH Debtors' motions in the Chapter 11 Cases, including such approvals not being overturned on appeal or being stayed for any extended period of time;


•	the terms and conditions of any Chapter 11 plan of reorganization that is ultimately approved by the Bankruptcy Court;


•	EFIH's ability to remain in compliance with the requirements of the EFIH DIP Facility;


•	EFIH's ability to maintain or obtain sufficient financing sources for EFIH's cash requirements during the pendency of the Chapter 11 Cases and its ability to obtain sufficient exit financing to fund any Chapter 11 plan of reorganization;


•	the actions and decisions of creditors, regulators and other third parties that have an interest in the Chapter 11 Cases or reorganization that may be inconsistent with, or interfere with, EFIH's plans;


•	the duration of the Chapter 11 Cases;


•	the actions and decisions of regulatory authorities relative to any Chapter 11 plan of reorganization;


•	restrictions on EFIH's activities due to the terms of its debt agreements, including the EFIH DIP Facility, and restrictions imposed by the Bankruptcy Court;


•	EFIH's ability to obtain any required regulatory consent necessary to implement any Chapter 11 plan of reorganization;


•	the outcome of current or potential litigation regarding whether holders are entitled to make-whole premiums and/or post-petition interest in connection with the treatment of their claims in bankruptcy;


•	the outcome of current or potential litigations regarding intercompany claims and/or derivative claims;


•	prevailing governmental policies and regulatory actions, including those of the Texas Legislature, the Governor of Texas, the US Congress, the FERC, the NERC, the TRE, the PUCT, the EPA and the TCEQ, with respect to, among other things:


◦	allowed rates of return;


◦	permitted capital structure;


◦	industry, market and rate structure;


◦	recovery of investments;


◦	acquisition and disposal of assets and facilities;

◦ ~~operation~~development, construction and ~~construction~~operation of facilities;


◦	changes in tax laws and policies, and


◦	changes in and compliance with environmental and safety laws and policies;

• legal and administrative proceedings and settlements, including the legal proceedings arising out of the Chapter 11 Cases;


•	general industry trends;


•	economic conditions, including the impact of an economic downturn;

• weather conditions, including drought and limitations on access to water, and other natural phenomena, and acts of sabotage, wars or terrorist or ~~cybersecurity~~cyber security threats or activities;


•	population growth or decline, or changes in market supply or demand and demographic patterns, particularly in ERCOT;


•	changes in business strategy, development plans or vendor relationships;


•	changes in interest rates or rates of inflation;


•	changes in operating expenses, liquidity needs and capital expenditures;

• commercial bank market and ~~financial~~capital market conditions, ~~access to capital, the cost of such capital,~~ and the ~~results of financing and refinancing efforts by EFIH and/or its subsidiaries and affiliates, including availability of funds in the capital markets and the~~ potential impact of disruptions in US and international credit markets;

• ~~willingness of EFH Corp.'s and TCEH's lenders to extend~~ the ~~maturities~~amount ~~of their debt instruments~~ and ~~the~~timing ~~terms and conditions~~ of ~~any~~dividends ~~such~~received ~~extensions~~from Oncor;

• ~~activity~~access into capital, the ~~credit~~cost ~~default~~of ~~swap~~such ~~market~~capital, ~~related~~and tothe ~~our~~results ~~debt~~of ~~securities~~financing orand ~~debt~~refinancing ~~securities~~efforts, ofincluding ~~EFH~~availability ~~Corp.~~of ~~that~~funds wein ~~guarantee~~capital markets;

• inability of various counterparties to meet their financial obligations to EFIH and/or its subsidiaries, including failure of counterparties to perform under agreements;

• changes in technology used by and services offered by EFIH and/or its subsidiaries;

• significant changes in the relationship of EFIH and/or its subsidiaries with their employees, including the availability of qualified personnel, and the potential adverse effects if labor disputes or grievances were to occur;

• changes in assumptions used to estimate costs of providing employee benefits, including medical and dental benefits, pension and other postretirement employee benefits, and future funding requirements related thereto;

• significant changes in critical accounting policies material to EFIH and/or its subsidiaries;

• circumstances that may contribute to impairment of goodwill, intangible or other long-lived assets of EFIH and/or its subsidiaries;

• restrictions imposed by the agreements governing EFIH's, Oncor's and certain of EFH Corp.'s debt instruments;

• our ability to generate sufficient cash flow to make interest payments on our debt instruments;

• defaults under our debt agreements that could trigger cross default or cross acceleration provisions under other debt agreements;

• EFH Corp.'s or its subsidiaries', including, in particular, TCEH's, ability to make principal and interest payments on their debt we hold as an investment or to provide sufficient capital contributions or loans to us to make interest payments on our debt instruments;

• hazards customary to the industry and the possibility that EFIH and/or its subsidiaries may not have adequate insurance to cover losses resulting from such hazards;

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• actions by credit rating agencies;

• adverse claims by our creditors or holders of our debt securities, and

• the ability of EFIH and/or its subsidiaries to effectively execute their operational strategy.

Any forward-looking statement speaks only at the date on which it is made, and except as may be required by law, we undertake no obligation to update any forward-looking statement to reflect events or circumstances after the date on which it is made or to reflect the occurrence of unanticipated events. New factors emerge from time to time, and it is not possible for us to predict all of them; nor can we assess the impact of each such factor or the extent to which any factor, or combination of factors, may cause results to differ materially from those contained in any forward-looking statement. As such, you should not unduly rely on such forward-looking statements.

~~Table~~• ofEFIH's ~~Contents~~ability to obtain and maintain sufficient cash flow to make interest payments, and EFIH's ability to refinance its debt instruments, including the EFIH DIP Facility;


•	changes in technology used by and services offered by EFIH and/or its subsidiaries;


•	significant changes in the relationship of EFIH with their employees, including the availability of qualified personnel, and the potential adverse effects if labor disputes or grievances were to occur;


•	changes in assumptions used to estimate costs of providing employee benefits, including medical and dental benefits, pension and OPEB, and future funding requirements related thereto, including joint and several liability exposure under ERISA;


•	changes in assumptions used to estimate future executive compensation payments;


•	hazards customary to the industry and the possibility that EFIH may not have adequate insurance to cover losses resulting from such hazards;


•	significant changes in critical accounting policies, and


•	actions by credit rating agencies.

Any forward-looking statement speaks only at the date on which it is made, and except as may be required by law, EFIH undertakes no obligation to update any forward-looking statement to reflect events or circumstances after the date on which it is made or to reflect the occurrence of unanticipated events or circumstances. New factors emerge from time to time, and it is not possible for EFIH to predict all of them; nor can EFIH assess the impact of each such factor or the extent to which any factor, or combination of factors, may cause results to differ materially from those contained in any forward-looking statement. As such, you should not unduly rely on such forward-looking statements.

INDUSTRY AND MARKET INFORMATION

The industry and market data and other statistical information used throughout this report are based on independent industry publications, government publications, reports by market research firms or other published independent sources, including certain data published by ERCOT, the PUCT and NYMEX. EFIH did not commission any of these publications or reports. Some data is also based on good faith estimates, which are derived from EFIH's review of internal surveys, as well as the independent sources listed above. Independent industry publications and surveys generally state that they have obtained information from sources believed to be reliable, but do not guarantee the accuracy and completeness of such information. While EFIH believes that each of these studies and publications is reliable, it has not independently verified such data and make no representation as to the accuracy of such information. Forecasts are particularly likely to be inaccurate, especially over long periods of time, and EFIH does not know what assumptions regarding general economic growth are used in preparing the forecasts included in this report. Similarly, while EFIH believes that such internal and external research is reliable, it has not been verified by any independent sources, and EFIH makes no assurances that the predictions contained therein are accurate.


Item 8.	FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of ~~Directors~~Managers and Member of Energy Future Intermediate Holding Company LLC (Debtor-in-Possession)

Dallas, Texas

We have audited the accompanying consolidated balance sheets of Energy Future Intermediate Holding Company LLC (a direct subsidiary of Energy Future Holdings Corp. ("EFH Corp.")) and subsidiaries (Debtor-in-Possession) (“EFIH”) as of December 31, ~~2012~~2014 and ~~2011~~2013, and the related statements of consolidated income (loss), comprehensive income (loss), cash flows and membership interests for each of the three years in the period ended December 31, ~~2012~~2014. These financial statements are the responsibility of EFIH's management. Our responsibility is to express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, such consolidated financial statements present fairly, in all material respects, the financial position of Energy Future Intermediate Holding Company LLC and subsidiaries (Debtor-in-Possession) as of December 31, ~~2012~~2014 and ~~2011~~2013, and the results of their operations and their cash flows for each of the three years in the period ended December 31, ~~2012~~2014, in conformity with accounting principles generally accepted in the United States of America.

~~The~~As discussed in Note 2 to the consolidated financial statements, ~~include~~on ~~related~~April ~~party~~29, ~~debt~~2014, ~~securities~~Energy ~~held~~Future byHoldings ~~EFIH~~Corp. ~~with~~and ~~aggregate~~the ~~principal~~substantial ~~amounts~~majority of ~~$6.5~~its ~~billion~~direct and indirect subsidiaries (ofincluding ~~which~~Energy ~~$5.1~~Future ~~billion~~Intermediate ~~aggregate~~Holding ~~principal~~Company ~~amount~~LLC), ofexcluding ~~these~~Oncor ~~securities~~Electric ~~were~~Delivery ~~distributed~~Holdings toCompany ~~EFH~~LLC ~~Corp.~~and inits ~~early~~subsidiaries, ~~2013)~~filed ~~and~~voluntary ~~$4.5~~petitions ~~billion~~for asrelief ofunder ~~December~~Chapter ~~31,~~11 ~~2012~~of ~~and~~the ~~2011,~~United ~~respectively~~States Bankruptcy Code. The ~~EFIH~~accompanying ~~provided~~consolidated ~~guarantees~~financial statements do not purport to reflect or provide for ~~debt~~the ~~issued~~consequences byof ~~EFH~~the ~~Corp~~bankruptcy proceedings. ~~EFIH's~~In ~~primary~~particular, ~~liquidity~~such ~~needs~~financial ~~are~~statements ~~sourced~~do ~~from~~not ~~distributions~~purport ~~from~~to ~~its~~show ~~equity~~(1) ~~method~~as ~~investment~~to assets, ~~Oncor~~their ~~Electric~~realizable ~~Delivery~~value ~~Holdings~~on ~~Company~~a ~~LLC~~liquidation ~~and~~basis ~~principal~~or their availability to satisfy liabilities; (2) as to prepetition liabilities, the amounts that may be allowed for claims or contingencies, or the status and priority thereof; (3) as to membership interest ~~payments~~accounts, onthe ~~EFH~~effect ~~Corp.~~of ~~and~~any ~~Texas~~changes ~~Competitive~~that ~~Electric~~may ~~Holdings~~be ~~Company~~made ~~LLC~~in ~~debt~~the ~~securities~~capitalization of EFIH; ~~holds.~~or ~~See~~(4) ~~Notes~~as 2,to 3operations, 5the ~~and~~effect 8of any changes that may be made in its business.

WeThe ~~have~~accompanying ~~also~~consolidated ~~audited~~financial statements for the years ended December 31, in2014 ~~accordance~~and ~~with~~2013 ~~the~~have ~~standards~~been ofprepared ~~the~~assuming ~~Public~~that ~~Company~~EFIH ~~Accounting~~will ~~Oversight~~continue ~~Board~~as ~~(United~~a ~~States)~~going concern. As discussed in Note 2 to the consolidated financial statements, EFIH'’s ~~internal~~ability ~~control~~to ~~over~~continue as a going concern is contingent upon its ability to comply with the financial ~~reporting~~and asother ofcovenants ~~December~~contained ~~31,~~in ~~2012~~the DIP Facilities described in Note 6, ~~based~~its onability ~~the~~to ~~criteria~~obtain ~~established~~new debtor in ~~Internal~~possession ~~Control~~financing -in ~~Integrated~~the ~~Framework~~event ~~issued~~the byDIP Facilities were to expire during the ~~Committee~~pendency of ~~Sponsoring~~the ~~Organizations~~Chapter 11 Cases, its ability to complete a Chapter 11 plan of ~~the~~reorganization ~~Treadway~~in ~~Commission~~a timely manner, including obtaining creditor and ~~our~~Bankruptcy ~~report~~Court ~~dated~~approval ~~February~~of 19such plan as well as applicable regulatory approvals required for such plan, ~~2013~~and ~~expressed~~its anability ~~unqualified~~to ~~opinion~~obtain onany exit financing needed to implement such plan, among other factors. These circumstances and uncertainties inherent in the bankruptcy proceedings raise substantial doubt about EFIH'’s ~~internal~~ability ~~control~~to ~~over~~continue as a going concern. Management’s plans concerning these matters are also discussed in Note 2 to the consolidated financial ~~reporting~~statements. The consolidated financial statements do not include adjustments that might result from the outcome of these uncertainties.

We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), EFIH's internal control over financial reporting as of December 31, 2014, based on the criteria established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission and our report dated March 31, 2015 expressed an adverse opinion on EFIH's internal control over financial reporting because of a material weakness.

/s/ Deloitte & Touche LLP

Dallas, Texas

~~February~~March 1931, ~~2013~~2015

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ENERGY FUTURE INTERMEDIATE HOLDING COMPANY LLC

STATEMENTS OF CONSOLIDATED INCOME

	Year Ended December 31,
	2012			2011			2010
	(millions of dollars)
Interest income — affiliates (Note 3)	$	598		$	552		$	209
Interest expense and related charges (Note 9)	(526		)	(348		)	(315		)
Income (loss) before income taxes and equity in earnings of unconsolidated subsidiary	72			204			(106		)
Income tax (expense) benefit (Note 4)	(27		)	(73		)	42
Equity in earnings of unconsolidated subsidiary (net of tax) (Note 2)	270			286			277
Net income	$	315		$	417		$	213

See Notes to Financial Statements.

STATEMENTS OF CONSOLIDATED COMPREHENSIVE INCOME

	Year Ended December 31,
	2012		2011			2010
	(millions of dollars)
Net income	$	315	$	417		$	213
Other comprehensive income — net of tax effects:
Net increase in fair value of affiliate debt securities held as available for sale (net of tax expense of $78, $21 and $—) (Note 3)	145		40			—
Cash flow hedges - Net decrease in fair value of derivatives held by unconsolidated subsidiary (net of tax benefit of $—, $13 and $—)	—		(23		)	—
Cash flow hedges - derivative value net loss related to hedged transactions recognized during the period and reported in equity earnings of unconsolidated subsidiary (net of tax benefit of $1, $— and $—)	2		—			—
Total other comprehensive income	147		17			—
Comprehensive income	$	462	$	434		$	213

See Notes to Financial Statements.

~~Table~~ENERGY ofFUTURE ~~Contents~~INTERMEDIATE HOLDING COMPANY LLC, A DEBTOR-IN-POSSESSION

~~ENERGY~~STATEMENTS ~~FUTURE~~OF ~~INTERMEDIATE~~CONSOLIDATED ~~HOLDING~~INCOME ~~COMPANY LLC~~(LOSS)

STATEMENTS OF CONSOLIDATED CASH FLOWS



	Year Ended December 31,
	2014			2013			2012
	(millions of dollars)
Selling, general and administrative expenses	$	(22	)	$	(20	)	$	—
Other deductions — (Note 5)	(128		)	(110		)	—
Interest income — affiliates (Note 13)	—			284			598
Interest expense and related charges (Note 9)	(441		)	(760		)	(526		)
Reorganization items (Note 7)	(267		)	—			—
Income (loss) before income taxes and equity in earnings of unconsolidated subsidiary	(858		)	(606		)	72
Income tax benefit (expense) (Note 4)	155			169			(27		)
Equity in earnings of unconsolidated subsidiary (net of tax) (Note 3)	349			335			270
Net income (loss)	$	(354	)	$	(102	)	$	315

	Year Ended December 31,
	2012		2011			2010
	(millions of dollars)
Cash flows — operating activities:
Net income	315		$	417		$	213
Adjustments to reconcile net income to cash provided by (used in) operating activities:
Equity in earnings of unconsolidated subsidiary	(270	)	(286		)	(277		)
Distributions of earnings from unconsolidated subsidiary	147		116			169
Deferred income taxes, net	(2	)	(2		)	144
PIK interest income on EFH Corp. Toggle Notes held as investment (Note 3)	(288	)	(309		)	(55		)
Interest expense related to pushed-down debt of parent (Notes 5 and 9)	75		78			211
Interest expense on toggle notes payable in additional principal (Note 5)	12		—			—
Noncash impairment of investment in long-term debt of affiliates (Note 3)	14		77			17
Accretion of purchase discount on investment in long-term debt of affiliates (Note 3)	(92	)	(140		)	(61		)
Amortization of debt exchange and issuance costs	5		6			9
Gain on retirement of EFH Corp. debt acquired in debt exchange (Note 5)	—		(3		)	—
Changes in operating assets and liabilities:
Income taxes payable to EFH Corp. (Note 8)	(120	)	73			45
Assets	(2	)	(12		)	(50		)
Other liabilities (primarily accrued taxes)	4		(12		)	(232		)
Cash provided by (used in) operating activities	(202	)	3			133
Cash flows — financing activities:
Issuances of long-term debt (Note 5)	2,253		—			—
Equity contribution from EFH Corp. (Note 7)	—		—			440
Distributions to EFH Corp. (Note 7)	(950	)	—			(2		)
Debt exchange and issuance costs, premiums and discounts	(43	)	—			(31		)
Cash provided by financing activities	1,260		—			407
Cash flows — investing activities:
Restricted cash related to debt issuance (Note 5)	(680	)	—			—
Advances to EFH Corp.	—		—			3
Investment in long-term debt of affiliates	—		—			(500		)
Purchase of make-whole agreements between affiliate and unconsolidated subsidiary (Note 8)	(159	)	—			—
Sale of make-whole agreements between affiliate and unconsolidated subsidiary (Note 8)	159		—			—
Cash used in investing activities	(680	)	—			(497		)
Net change in cash and cash equivalents	378		3			43
Cash and cash equivalents — beginning balance	46		43			—
Cash and cash equivalents — ending balance	424		$	46		$	43

See Notes to the Financial Statements.

~~See~~STATEMENTS ~~Notes~~OF toCONSOLIDATED ~~Financial~~COMPREHENSIVE ~~Statements.~~INCOME (LOSS)



	Year Ended December 31,
	2014			2013			2012
	(millions of dollars)
Net income (loss)	$	(354	)	$	(102	)	$	315
Other comprehensive income (loss) — net of tax effects:
Reclassification to interest income of mark-to-market valuations of holdings of affiliate debt (net of tax expense of $—, $99 and $—) (Note 11)	—			(185		)	—
Mark-to-market valuations of holdings of affiliate debt held as available for sale (net of tax expense of $—, $—, and $78) (Note 11)	—			—			145
Net effects related to Oncor (net of tax benefit (expense) of $(25), $(8) and $1)	(47		)	(14		)	2
Total other comprehensive income (loss)	(47		)	(199		)	147
Comprehensive income (loss)	$	(401	)	$	(301	)	$	462

See Notes to the Financial Statements.

~~Table~~ENERGY ofFUTURE ~~Contents~~INTERMEDIATE HOLDING COMPANY LLC, A DEBTOR-IN-POSSESSION

~~ENERGY~~STATEMENTS ~~FUTURE~~OF ~~INTERMEDIATE~~CONSOLIDATED ~~HOLDING~~CASH ~~COMPANY LLC~~FLOWS

CONSOLIDATED BALANCE SHEETS



	Year Ended December 31,
	2014			2013			2012
	(millions of dollars)
Cash flows — operating activities:
Net income (loss)	$	(354	)	$	(102	)	$	315
Adjustments to reconcile net income (loss) to cash used in operating activities:
Equity in earnings of unconsolidated subsidiary	(349		)	(335		)	(270		)
Distributions of earnings from unconsolidated subsidiary	202			213			147
Deferred income taxes, net	(51		)	(55		)	(2		)
Fees paid for EFIH DIP Facility (Notes 6 and 7) (reported as financing activities)	94			—			—
PIK interest income on EFH Corp. Toggle Notes held as investment (Note 13)	—			—			(288		)
Interest expense related to pushed-down debt of parent (Notes 8 and 9)	1			6			75
Interest expense on toggle notes payable in additional principal (Notes 8 and 9)	65			176			12
Noncash impairment of investment in affiliate debt (Note 13)	—			—			14
Reserve recorded for income tax receivable from EFH Corp. (Note 5)	125			110			—
Loss on exchange and settlement of EFIH First Lien Notes (Note 6)	108			—			—
Accretion of purchase discount on investment in affiliate debt (Note 13)	—			—			(92		)
Amortization of debt related balances (Note 9)	(17		)	(52		)	5
Mark-to-market gain reclassified from accumulated other comprehensive income (Note 11)	—			(284		)	—
Other, net	3			—			—
Changes in operating assets and liabilities:
Income taxes receivable from/payable to EFH Corp. (Note 12)	—			1			(120		)
Assets	(2		)	(5		)	(2		)
Accrued interest	16			2			33
Other liabilities (primarily accrued taxes)	(84		)	(103		)	(29		)
Cash used in operating activities	(243		)	(428		)	(202		)
Cash flows — financing activities:
Proceeds from EFIH DIP Facility before fees paid (Notes 6 and 7)	3,564			—			—
Fees paid for EFIH DIP Facility (Note 6)	(94		)	—			—
Repayments/repurchases of debt (Note 6)	(2,312		)	—			—
Issuances of debt	—			—			2,253
Interest received on holdings of affiliate debt (Note 11)	—			252			—
Distributions to EFH Corp. (Note 11)	—			(680		)	(950		)
Debt exchange and issuance costs, premiums and discounts	—			(6		)	(43		)
Cash provided by (used in) financing activities	1,158			(434		)	1,260
Cash flows — investing activities:
Restricted cash related to debt issuance (Note 11)	—			680			(680		)
Purchase of make-whole agreements between affiliate and unconsolidated subsidiary (Note 12)	—			—			(159		)
Sale of make-whole agreements between affiliate and unconsolidated subsidiary (Note 12)	—			—			159
Cash provided by (used in) investing activities	—			680			(680		)
Net change in cash and cash equivalents	915			(182		)	378
Cash and cash equivalents — beginning balance	242			424			46
Cash and cash equivalents — ending balance	$	1,157		$	242		$	424

	December 31,
	2012			2011
ASSETS	(millions of dollars)
Current assets:
Cash and cash equivalents	$	424		$	46
Restricted cash (Note 5)	680			—
Receivables from affiliates, principally accrued interest	—			86
Income taxes receivable from EFH Corp.	1			—
Total current assets	1,105			132
Investment in Oncor Holdings (Note 2)	5,842			5,720
Investment in long-term debt of affiliates (all available-for-sale securities) (Note 3)	—			3,632
Other noncurrent assets, principally unamortized debt premium/discount	76			33
Total assets	$	7,023		$	9,517
LIABILITIES AND MEMBERSHIP INTERESTS
Current liabilities:
Trade accounts and other payables to affiliates	$	2		$	—
Accrued interest	137			49
Total current liabilities	139			49
Accumulated deferred income taxes	109			108
Income taxes payable to EFH Corp. (Note 8)	—			119
Long-term debt (Note 5)	6,954			3,436
Total liabilities	7,202			3,712
Commitments and Contingencies (Note 6)
Membership interests (Note 7):
Capital account	5,049			5,790
Long-term debt of affiliate held by EFIH (Note 3)	(5,388		)	—
Accumulated other comprehensive income	160			15
Total membership interests	(179		)	5,805
Total liabilities and membership interests	$	7,023		$	9,517

See Notes to the Financial Statements.

See Notes to Financial Statements.

~~Table~~ENERGY ofFUTURE ~~Contents~~INTERMEDIATE HOLDING COMPANY LLC, A DEBTOR-IN-POSSESSION

~~ENERGY~~CONSOLIDATED ~~FUTURE~~BALANCE ~~INTERMEDIATE HOLDING COMPANY LLC~~SHEETS



	December 31,
	2014			2013
ASSETS	(millions of dollars)
Current assets:
Cash and cash equivalents	$	1,157		$	242
Other current assets	3			2
Total current assets	1,160			244
Investment in Oncor Holdings (Note 3)	6,050			5,950
Accumulated deferred income taxes	26			—
Other noncurrent assets	—			58
Total assets	$	7,236		$	6,252
LIABILITIES AND MEMBERSHIP INTERESTS
Current liabilities:
Trade accounts and other payables to affiliates	$	6		$	10
Notes, loans and other debt (Note 8)	—			7,877
Accumulated deferred income taxes (Note 4)	26			26
Accrued interest	1			137
Other current liabilities	18			—
Total current liabilities	51			8,050
Borrowings under debtor-in-possession credit facilities (Note 6)	5,400			—
Liabilities subject to compromise (Note 8)	3,988			—
Accumulated deferred income taxes	—			24
Total liabilities	9,439			8,074
Commitments and Contingencies (Note 10)
Membership interests (Note 11):
Capital account	(1,482		)	(1,148		)
Affiliate debt held by EFIH	(635		)	(635		)
Accumulated other comprehensive income (loss)	(86		)	(39		)
Total membership interests	(2,203		)	(1,822		)
Total liabilities and membership interests	$	7,236		$	6,252

See Notes to the Financial Statements.

ENERGY FUTURE INTERMEDIATE HOLDING COMPANY LLC, A DEBTOR-IN-POSSESSION

STATEMENTS OF CONSOLIDATED MEMBERSHIP INTERESTS

	Year Ended December 31,
	2012			2011			2010
	2014			2013			2012
	(millions of dollars)
Capital account:
Balance at beginning of period	$	5(1,~~790~~148	)	$	5,~~195~~049		$	35,~~012~~790
Net income	315			417			213
Net income (loss)	(354		)	(102		)	315
Contribution from parent	—			—			440
Cash distributions to EFH Corp. (Note 11)	—			(680		)	(950		)
Cash distributions to EFH Corp.	(950		)	—			(2		)
Distribution to EFH Corp. of debt held as investment (Note 11)	—			(5,778		)	(160		)
Deferred gain on debt exchanges, net of deferred tax asset (Note 5)	(253		)	—			—
Income tax on interest received on holdings of affiliate debt (b)	—			(88		)	—
Effect of debt push-down from EFH Corp. (a)	308			194			1,492
Deferred gain on debt exchanges, net of deferred tax asset (Note 8)	—			—			(253		)
Net effect of Oncor's settlement of reimbursement agreements with TCEH	(1		)	—			—
Effect of debt push-down from EFH Corp. (a)	21			438			308
Capital contributions (b)	—			29			40
Other	(1		)	13			(1		)
Dividend to EFH Corp. of debt held as an investment (Note 7)	(160		)	(45		)	—
Balance at end of period	(1,482		)	(1,148		)	5,049
Balance at end of period	5,049			5,790			5,195
Affiliate debt held by EFIH:
Long-term debt of affiliate held by EFIH:
Balance at beginning of period	(635		)	(5,388		)	—
Reclassification of investments in debt securities of affiliates (Note 3)	(5,388		)	—			—
Reclassification of investments in debt securities of affiliates (Note 11)	—			—			(5,388		)
EFH Corp. debt distributed to EFH Corp. ($5.125 billion principal amount)	—			4,524			—
Net affiliate debt received in debt exchanges ($31 million principal amount)	—			(23		)	—
Interest received on holdings of affiliate debt (b)	—			252			—
Balance at end of period	(635		)	(635		)	(5,388		)
Accumulated other comprehensive income (loss), net of tax effects:
Balance at beginning of period	15(39		)	(2160		)	(215		)
Changes in fair values of investments in debt securities of affiliates	145			40			—
Recognition in interest income of mark-to-market valuations of investments in affiliate debt upon distribution to EFH Corp. (c)	—			(185		)	—
Unrecognized gains (losses) related to pension and other retirement benefit plans assumed by unconsolidated subsidiary	(2		)	—			—
Changes in fair values of investments in debt securities of affiliates	—			—			145
Net effects of cash flow hedges of unconsolidated subsidiary	2			(23		)	—
Unrecognized gains (losses) related to pension and other retirement benefit plans assumed by Oncor	(49		)	(16		)	(2		)
Balance at end of period	160			15			(2		)
Net effects related to Oncor	2			2			2
Total membership interests at end of period	$	(179	)	$	5,805		$	5,193
Balance at end of period	(86		)	(39		)	160
Total membership interests at end of period	$	(2,203	)	$	(1,822	)	$	(179	)

_____________

(a) Represents the effect of a net reduction of $~~259~~420 million, ~~$142 million~~ and $~~1.521~~259 ~~billion~~million in ~~2012,~~2013 ~~2011~~ and ~~2010~~2012, respectively, of debt pushed down from EFH Corp. (Note 58) and related interest and income tax effects.

(b) ~~Reflects~~Includes ~~noncash~~$244 ~~settlement~~million ofrelated ~~certain~~to ~~income~~EFH ~~taxes~~Corp. ~~payable~~debt ~~arising~~held asand a$8 ~~result~~million ofrelated ~~the~~to ~~sale~~TCEH debt held. Income tax effect of ~~equity~~$88 ~~interests~~million inon ~~Oncor~~cash interest received reported as a capital transaction.

~~See~~(c) ~~Notes~~Pre-tax toamount ~~Financial~~is ~~Statements~~$284 million.

39See Notes to the Financial Statements.

~~Table of Contents~~40

ENERGY FUTURE INTERMEDIATE HOLDING COMPANY LLC, A DEBTOR-IN-POSSESSION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)


1.	BUSINESS AND SIGNIFICANT ACCOUNTING POLICIES

Description of Business

References in this report to "~~we," "our," "us" and "~~the company" are to EFIH and/or its direct and indirect subsidiaries as apparent in the context. See "Glossary" for defined terms.

EFIH, a direct, wholly- owned subsidiary of EFH Corp., is a Dallas, Texas-based holding company with no operations or operating assets whose wholly- owned subsidiary, Oncor Holdings, holds a majority interest (approximately 80%) in Oncor. Oncor is a regulated electricity transmission and distribution company principally engaged in providing delivery services to REPs, including subsidiaries of TCEH, that sell electricity to residential, business and other consumers in ~~the north-central, eastern and western parts of~~ Texas. EFIH has no reportable business segments. Oncor Holdings and its subsidiaries (the Oncor Ring-Fenced Entities) are not consolidated in EFIH's financial statements in accordance with consolidation accounting standards related to variable interest entities (VIEs) (see Note 23).

Various "ring-fencing" measures have been taken to enhance the credit quality of Oncor Holdings and Oncor. These measures serve to mitigate Oncor's and Oncor Holdings' credit exposure to the Texas Holdings Group, which includes EFIH, and to reduce the risk that the assets and liabilities of the Oncor Ring-Fenced Entities would be substantively consolidated with the assets and liabilities of the Texas Holdings Group in the event of a bankruptcy of one or more of Texas Holding Group's subsidiaries. Such measures include, among other things: Oncor's sale of a 19.75% equity interest to Texas Transmission in November 2008; maintenance of separate books and records for the Oncor Ring-Fenced Entities; the board of directors of Oncor Holdings and Oncor being comprised of a majority of independent directors, and prohibitions on the Oncor Ring-Fenced Entities' providing credit support to, or receiving credit support from, any member of the Texas Holdings Group. The assets and liabilities of the Oncor Ring-Fenced Entities are separate and distinct from those of the Texas Holdings Group, including TXU Energy and Luminant, and none of the assets of the Oncor Ring-Fenced Entities are available to satisfy the debt or contractual obligations of any member of the Texas Holdings Group. Oncor and Oncor Holdings do not bear any liability for debt or contractual obligations of the Texas Holdings Group (including, but not limited to, ~~our~~EFIH's debt obligations), and vice versa. Accordingly, Oncor Holdings' operations are conducted, and its cash flows managed, independently from the Texas Holdings Group.

~~Liquidity~~Consistent ~~Considerations~~with the ring-fencing measures discussed above, the assets and ~~Concentration~~liabilities of ~~Risk~~the Oncor Ring-Fenced Entities have not been, and are not expected to be, substantively consolidated with the assets and liabilities of the Debtors in the Chapter 11 Cases.

~~Our~~Bankruptcy ~~substantial debt, resulting in part from debt issued in exchange for outstanding EFH Corp. debt, requires significant cash flows to be dedicated to interest payments.~~Filing

~~Our~~As ~~ability~~discussed tofurther ~~make~~in ~~scheduled~~Note ~~payments~~2, on orApril to29, ~~refinance~~2014 ~~our~~(the ~~debt~~Petition ~~obligations~~Date), ~~depends~~EFH onCorp. i)and ~~receiving~~the ~~dividends~~substantial ~~from~~majority ~~Oncor~~of ~~Holdings,~~its ~~ii)~~direct ~~receiving~~and ~~interest~~indirect ~~payments~~subsidiaries, onincluding ~~EFH~~EFIH, ~~Corp.~~EFCH and TCEH ~~debt~~but weexcluding ~~hold~~the ~~and~~Oncor Ring-Fenced Entities, if(collectively, ~~needed~~the Debtors), ~~iii~~filed voluntary petitions for relief (the Bankruptcy Filing) ~~receiving~~under ~~capital~~Chapter ~~contributions~~11 orof ~~loans~~the ~~from~~United ~~EFH~~States ~~Corp.~~Bankruptcy Code (~~see~~the ~~Notes~~Bankruptcy 2,Code) 3,in ~~and~~the 5United States Bankruptcy Court for the District of Delaware (the Bankruptcy Court). See Note 6 for discussion of the DIP Facilities.

Basis of Presentation, Including Application of Bankruptcy Accounting

The consolidated financial statements have been prepared in accordance with US GAAP. ~~Our~~The ~~investment~~consolidated infinancial ~~Oncor~~statements ~~Holdings~~have ~~does~~been ~~not~~prepared ~~meet~~as ~~accounting~~if ~~standards~~EFIH ~~criteria~~is ~~for~~a ~~consolidation~~going concern and iscontemplate ~~accounted~~the ~~for~~realization ~~under~~of assets and liabilities in the ~~equity~~normal ~~method~~course ~~(see~~of ~~Note~~business. The 2consolidated financial statements reflect the application of Financial Accounting Standards Board Accounting Standards Codification (ASC) 852, Reorganizations. ~~All~~During ~~intercompany~~the ~~items~~pendency ~~and~~of ~~transactions~~the ~~have~~Bankruptcy ~~been~~Filing, ~~eliminated~~the Debtors will operate their businesses as debtors-in-possession ~~consolidation~~under the jurisdiction of the Bankruptcy Court and in accordance with the applicable provisions of the Bankruptcy Code. ~~All~~ASC ~~dollar~~852 ~~amounts~~applies into entities that have filed a petition for bankruptcy under Chapter 11 of the ~~financial~~Bankruptcy ~~statements~~Code. The guidance requires that transactions and ~~tables~~events indirectly associated with the ~~notes~~reorganization ~~are~~be ~~stated~~distinguished from the ongoing operations of the business. In addition, the guidance provides for changes in ~~millions~~the accounting and presentation of USliabilities. See ~~dollars~~Notes ~~unless~~7 ~~otherwise~~and ~~indicated~~8 for discussion of these accounting and reporting changes.

EFIH's investment in Oncor Holdings does not meet accounting standards criteria for consolidation and is accounted for under the equity method (see Note 3). All intercompany items and transactions have been eliminated in consolidation. All dollar amounts in the financial statements and tables in the notes are stated in millions of US dollars unless otherwise indicated.

Use of Estimates

Preparation of financial statements requires estimates and assumptions about future events that affect the reporting of assets and liabilities at the balance sheet dates and the reported amounts of income and expense, including fair value measurements and estimates of expected allowed claims. In the event estimates and/or assumptions prove to be different from actual amounts, adjustments are made in subsequent periods to reflect more current information.

Table of Contents

Income Taxes

EFH Corp. files a consolidated US federal income tax return; ~~however,~~that ~~consistent~~includes ~~with~~the aresults ~~tax~~of ~~sharing~~EFCH, ~~agreement~~EFIH, ~~our~~Oncor ~~income~~Holdings ~~tax~~and ~~expense~~TCEH. Oncor ~~and~~is ~~related~~a ~~balance~~partnership ~~sheet~~for ~~amounts~~US ~~are~~federal ~~recorded~~income astax ifpurposes weand ~~file~~is ~~our~~not ~~own~~a corporate ~~income~~member ~~tax~~of ~~returns~~the EFH Corp. consolidated group. Deferred income taxes are provided for temporary differences between the book and tax basis of assets and liabilities as required under accounting rules. See Note 4.

Investment in ~~Long-Term~~Affiliate Debt ~~of Affiliates~~

Investments in ~~long-term~~affiliate debt were classified as a reduction of ~~affiliates~~membership ~~have~~interests ~~been~~effective December 31, 2012 (see Note 11). Prior to December 2012, investments in affiliate debt were classified as available-for-sale securities as assets in the balance sheet and were recorded at fair value with unrealized gains or losses recorded in other comprehensive income. WeEFIH evaluated ~~our~~its investment in ~~long-term~~affiliate debt ~~of affiliates~~ for impairment and recorded an impairment loss if declines in fair value were deemed to be other than temporary, which occurred if weit determined weit would be unable to recover the carrying value of the investment. Impairments were accounted for as a reduction of interest income if related to the issuer's credit. If they were not related to the issuer's credit, the impairments were recorded in other comprehensive income. ~~As discussed in Note 3, these securities were classified as a reduction of membership interests at December 31, 2012.~~

Impairment of Equity Method Investments

WeEFIH ~~evaluate~~evaluates ~~our~~its investment in Oncor Holdings when factors indicate that a decrease in the value of the investment has occurred that is not temporary. Indications of a loss in value include recurring operating losses of the investee or fair value measures that are less than carrying value. An impairment loss is recognized if the carrying value of the investment is greater than the fair value of the investment, and the loss is not deemed temporary. Fair value is determined primarily by discounted cash flows, supported by available market valuations, if applicable.

Fair Value of Nonderivative Financial Instruments

The carrying amounts of financial assets classified as current assets and the carrying amounts of financial liabilities classified as current liabilities approximate fair value due to the short maturity of such balances, which include cash equivalents and receivables from affiliates.

Cash and Cash Equivalents

For purposes of reporting cash and cash equivalents, temporary cash investments purchased with a remaining maturity of three months or less are considered to be cash equivalents.

Push-Down of EFH Corp. Debt

In accordance with SEC Staff Accounting Bulletin (SAB) Topic 5-J, weEFIH ~~reflect~~reflects amounts of certain EFH Corp. 10.875% Notes, ~~EFH Corp. Toggle Notes~~ and EFH Corp. ~~Secured~~Toggle Notes on ~~our~~its balance sheet and the related interest expense in ~~our~~its income statement. The ~~amount~~amounts reflected on ~~our~~EFIH's balance sheet ~~was~~were calculated based upon the relative equity investment of EFCH and EFIH in their respective operating subsidiaries at the time of the Merger (see Note 58).

41Changes in Accounting Standards

~~Table~~In April 2014 the FASB issued ASU No. 2014-08, Presentation of ~~Contents~~Financial Statements (Topic 205) and Property Plant, and Equipment (Topic 360): Reporting Discontinued Operations and Disclosures of Disposals of Components of an Entity, which changes the requirements for reporting discontinued operations. The ASU states that a disposal of a component of an entity or a group of components of an entity is required to be reported in discontinued operations if the disposal represents a strategic shift that has or will have a major effect on an entity's operations and financial results when the component of an entity or group of components of an entity meets the criteria to be classified as held for sale, is disposed of by sale, or is disposed of other than by sale. The amendments in this ASU also require additional disclosures about discontinued operations. ASU 2014-08 is effective for the Company for the first quarter 2015. This new requirement is relevant to our presentation of the equity method investment in Oncor, which has been proposed for sale within the Chapter 11 Cases. The new guidance will eliminate a scope exception currently applicable to equity method investments, resulting in the requirement of further analysis of the presentation of the Oncor equity method investment within the consolidated financial statements in 2015. EFIH does not currently expect ASU 2014-08 to materially affect its results of operations, financial position, or cash flows, until a plan of sale of the Oncor investment is approved by the Bankruptcy Court, at which time presentation as a discontinued operations may be appropriate.

2. INVESTMENT IN ONCOR HOLDINGS

We have an equity investment in Oncor Holdings, which holds an approximate 80% interest in Oncor. Oncor Holdings is considered a variable interest entity (VIE). A VIE is an entity with which we have a relationship or arrangement that indicates some level of control over the entity or results in economic risks to us. Accounting standards require consolidation of a VIE if we have (a) the power to direct the significant activities of the VIE and (b) the right or obligation to absorb profit and loss from the VIE (primary beneficiary). In determining the appropriateness of consolidation of a VIE, we evaluate its purpose, governance structure, decision making processes and risks that are passed on to its interest holders. We also examine the nature of any related party relationships among the interest holders of the VIE and the nature of any special rights granted to the interest holders of the VIE.

We do not consolidate Oncor Holdings and instead account for it as an equity method investment because the structural and operational "ring-fencing" measures discussed in Note 1 prevent us from having power to direct the significant activities of Oncor Holdings or Oncor. In accordance with accounting standards, we account for our investment in Oncor Holdings under the equity, as opposed to the cost method, based on our level of influence over its activities.

In reaching the conclusion to deconsolidate, we conducted an extensive analysis of Oncor Holdings' underlying governing documents and management structure. Oncor Holdings' unique governance structure was adopted in conjunction with the Merger, when the Sponsor Group, EFH Corp. and Oncor agreed to implement structural and operational measures to "ring-fence" (the Ring-Fencing Measures) Oncor Holdings and Oncor as discussed in Note 1. The Ring-Fencing Measures were designed to prevent, among other things, (i) increased borrowing costs at Oncor due to the attribution to Oncor of debt from any of EFH Corp.'s other subsidiaries, (ii) the activities of EFH Corp.'s competitive operations following the Merger resulting in the deterioration of Oncor's business, financial condition and/or investment in infrastructure, and (iii) Oncor becoming substantively consolidated into a bankruptcy proceeding involving any member of the Texas Holdings Group. The Ring-Fencing Measures effectively separate the daily operational and management control of Oncor Holdings and Oncor from EFH Corp. and its other subsidiaries. By implementing the Ring-Fencing Measures, Oncor maintained its investment grade credit rating following the Merger, and EFH Corp. reaffirmed Oncor's independence from its competitive businesses to the PUCT.

We determined the most significant activities affecting the economic performance of Oncor Holdings (and Oncor) are the operation, maintenance and growth of Oncor's electric transmission and distribution assets and the preservation of its investment grade credit profile. The boards of directors of Oncor Holdings and Oncor have ultimate responsibility for the management of the day-to-day operations of their respective businesses, including the approval of Oncor's capital expenditure and operating budgets and the timing and prosecution of Oncor's rate cases. While both boards include members appointed by EFH Corp., a majority of the board members are independent in accordance with rules established by the New York Stock Exchange, and therefore, we concluded for purposes of applying the amended accounting standards that EFH Corp. does not have the power to control the activities deemed most significant to Oncor Holdings' (and Oncor's) economic performance.

In assessing EFIH's ability to exercise control over Oncor Holdings and Oncor, we considered whether it could take actions to circumvent the purpose and intent of the Ring-Fencing Measures (including changing the composition of Oncor Holdings' or Oncor's board) in order to gain control over the day-to-day operations of either Oncor Holdings or Oncor. We also considered whether (i) we have the unilateral power to dissolve, liquidate or force into bankruptcy either Oncor Holdings or Oncor, (ii) we could unilaterally amend the Ring-Fencing Measures contained in the underlying governing documents of Oncor Holdings or Oncor, and (iii) we could control Oncor's ability to pay distributions and thereby enhance its own cash flow. We concluded that, in each case, no such opportunity exists.

The carrying value of our variable interest in Oncor Holdings totaled $5.842 billion and $5.720 billion at December 31, 2012 and 2011, respectively, and is reported as investment in Oncor Holdings in our balance sheet. Our maximum exposure to loss from this investment does not exceed our carrying value.

See Note 8 for discussion of Oncor Holdings' and Oncor's transactions with EFH Corp. and its other subsidiaries.

~~Table~~In August 2014, the FASB issued Accounting Standards Update No. 2014-15 (ASU 2014-15), Presentation of ~~Contents~~Financial Statements – Going Concern. ASU 2014-15 is effective for annual reporting periods (including interim periods within those periods) ending after December 15, 2016. Early application is permitted. The amendments in ASU 2014-15 create a new ASC Sub-topic 205-40, Presentation of Financial Statements – Going Concern and requires management to assess for each annual and interim reporting period if conditions exist that raise substantial doubt about an entity's ability to continue as a going concern. The rule requires various disclosures depending on the facts and circumstances surrounding an entity's ability to continue as a going concern. EFIH is in the process of assessing the effects of the application of the new guidance on its financial statement disclosures.

Distributions from Oncor Holdings — Oncor Holdings' distributions of earnings to us totaled $147 million, $116 million and $169 million for the years ended December 31, 2012, 2011 and 2010, respectively2. ~~Distributions~~ ~~were~~CHAPTER ~~limited~~11 to Oncor's cumulative net income until December 31, 2012 and may not be paid except to the extent Oncor maintains a required regulatory capital structure, as discussed below. At December 31, 2012, $167 million was eligible to be distributed to Oncor's members after taking into account the remaining regulatory capital structure limit, of which approximately 80% relates to our ownership interest in Oncor. The boards of directors of each of Oncor and Oncor Holdings can withhold distributions to the extent the applicable board determines in good faith that it is necessary to retain such amounts to meet expected future requirements of Oncor and/or Oncor Holdings.CASES

~~For~~On the ~~period~~Petition ~~beginning October 11~~Date, ~~2007~~EFH Corp. and ~~ending~~the ~~December~~substantial ~~31,~~majority ~~2012, distributions (other than distributions~~ of ~~the proceeds of any equity issuance) paid by Oncor to~~ its ~~members~~direct ~~were~~and ~~limited~~indirect bysubsidiaries, aincluding ~~PUCT~~EFIH, ~~order~~EFCH toand anTCEH ~~amount~~but ~~not~~excluding tothe ~~exceed~~ Oncor's ~~cumulative~~Ring-Fenced ~~net~~Entities, ~~income~~filed ~~determined~~voluntary inpetitions ~~accordance~~for ~~with~~relief USunder ~~GAAP,~~Chapter as11 ~~adjusted. Adjustments consisted~~ of the ~~removal~~United ofStates ~~noncash~~Bankruptcy ~~impacts~~Code ofin ~~purchase accounting and deducting two specific cash commitments. The noncash impacts consisted of removing~~ the ~~effect~~United ofStates anBankruptcy ~~$860~~Court ~~million~~for ~~goodwill impairment charge in 2008 and~~ the ~~cumulative~~District ~~amount~~ of ~~net accretion of fair value adjustments~~Delaware. ~~The~~During ~~two~~the ~~specific~~pendency ~~cash~~of ~~commitments~~the ~~were~~Bankruptcy aFiling ~~$72 million~~ (~~$46~~the ~~million~~Chapter ~~after~~11 ~~tax~~Cases), ~~one-time~~the ~~refund~~Debtors towill ~~customers~~operate intheir ~~September~~businesses ~~2008~~as ~~and~~"debtors-in-possession" ~~funds~~under ~~spent~~the asjurisdiction ~~part~~ of athe ~~five-year,~~Bankruptcy ~~$100~~Court ~~million~~and ~~commitment~~in ~~for~~accordance ~~additional~~with ~~energy~~the ~~efficiency~~applicable ~~initiatives~~provisions ~~that~~of ~~was~~the ~~completed~~Bankruptcy ~~in 2012~~Code.

~~Oncor's~~The ~~distributions~~Bankruptcy ~~continue~~Filing toresulted beprimarily ~~limited~~from bythe ~~its~~adverse ~~regulatory~~effects ~~capital~~on ~~structure,~~EFH ~~which~~Corp.'s iscompetitive ~~required~~businesses toof belower atwholesale orelectricity ~~below~~prices ~~the~~in ~~assumed~~ERCOT ~~debt-to-equity~~driven ~~ratio established periodically~~ by the ~~PUCT~~sustained ~~for~~decline ~~ratemaking~~in ~~purposes,~~natural ~~which~~gas isprices ~~currently~~since ~~set at 60% debt to 40% equity~~mid-2008. ~~At December 31~~Further, ~~2012, Oncor's regulatory capitalization ratio was 58.8% debt and 41.2% equity. The PUCT has~~ the ~~authority~~natural togas ~~determine~~hedges ~~what~~that ~~types~~TCEH ofentered ~~debt~~into ~~and~~when ~~equity~~forward ~~are~~market ~~included~~prices ~~in a utility's debt-to-equity ratio. For purposes~~ of ~~this~~natural ~~ratio,~~gas ~~debt~~were issignificantly ~~calculated~~higher asthan ~~long-term~~current ~~debt~~prices ~~plus~~had ~~unamortized~~largely ~~gains~~matured onbefore ~~reacquired~~the ~~debt~~remaining ~~less~~positions ~~unamortized~~were ~~issuance~~terminated ~~expenses,~~shortly ~~premiums~~after ~~and~~the ~~losses~~Bankruptcy ~~on reacquired debt~~Filing. ~~The~~These ~~debt~~market ~~calculation~~conditions ~~excludes~~challenged ~~bonds~~the ~~issued~~profitability byand ~~Oncor~~operating ~~Electric~~cash ~~Delivery~~flows ~~Transition~~of ~~Bond~~EFH ~~Company,~~Corp.'s ~~which~~competitive ~~were~~businesses ~~issued~~and resulted in ~~2003~~the ~~and~~inability ~~2004~~ to ~~recover~~support ~~specific~~their ~~generation-related~~significant ~~regulatory~~interest ~~asset~~payments ~~stranded~~ and ~~other~~debt ~~qualified~~maturities, ~~costs. Equity~~including isthe ~~calculated~~remaining asdebt ~~membership~~obligations ~~interests~~due ~~determined~~ in ~~accordance with US GAAP~~2014, ~~excluding the effects of accounting for the Merger (which included recording the initial goodwill~~ and ~~fair value adjustments and~~ the ~~subsequent~~inability ~~related~~to ~~impairments~~refinance and/or ~~amortization). At~~extend ~~December 31, 2012, $167 million was available for distribution under~~ the ~~capital~~maturities ~~structure restriction,~~ of ~~which~~their ~~approximately~~outstanding ~~80% relates to our ownership interest in Oncor~~debt.

~~Oncor~~After ~~Holdings~~a ~~Financial~~series ~~Statements—~~of ~~Condensed~~discussions ~~statements~~with ofcertain ~~consolidated~~creditors ~~income~~that ofbegan ~~Oncor~~in ~~Holdings~~2013 and ~~its~~in ~~subsidiaries~~anticipation ~~for~~of the ~~years~~Bankruptcy ~~ended~~Filing, ~~December 31~~on April 29, ~~2012~~2014, ~~2011~~the Debtors entered into a Restructuring Support and ~~2010~~Lock-Up ~~are~~Agreement ~~presented~~(RSA) ~~below:~~with various stakeholders (Consenting Parties) in order to effect an agreed upon restructuring of the Debtors through a pre-arranged Chapter 11 plan of reorganization.

	Year Ended December 31,
	2012			2011			2010
Operating revenues	$	3,328		$	3,118		$	2,914
Operation and maintenance expenses	(1,171		)	(1,097		)	(1,009		)
Depreciation and amortization	(771		)	(719		)	(673		)
Taxes other than income taxes	(415		)	(400		)	(384		)
Other income	26			30			36
Other deductions	(64		)	(9		)	(8		)
Interest income	24			32			38
Interest expense and related charges	(374		)	(359		)	(347		)
Income before income taxes	583			596			567
Income tax expense	(243		)	(236		)	(220		)
Net income	340			360			347
Net income attributable to noncontrolling interests	(70		)	(74		)	(70		)
Net income attributable to Oncor Holdings	$	270		$	286		$	277

Upon receiving competing bids for the sale of EFH Corp.'s indirect economic ownership interest in Oncor, which offered new alternatives to maximize the value of the Debtors' estates, the Debtors terminated the RSA effective July 31, 2014.

In cooperation with various stakeholders, the Debtors are focused on formulating and implementing an effective and efficient plan of reorganization for each of the Debtors under Chapter 11 of the Bankruptcy Code that maximizes enterprise value. The Debtors currently have the exclusive right to file a Chapter 11 plan of reorganization until June 23, 2015 and the exclusive right to solicit the appropriate votes for any such plan it files prior to such date until August 23, 2015 (i.e., the exclusivity period). Upon expiration of this exclusivity period (unless extended by the Bankruptcy Court), any creditor or stakeholder has the ability to file one or more Chapter 11 plans of reorganization.

Proposed Sale of EFH Corp.'s Indirect Economic Ownership Interest in Oncor

In September 2014, with input and support from several key stakeholders, the Debtors filed a motion with the Bankruptcy Court seeking the entry of an order approving bidding procedures with respect to the potential sale of EFH Corp.'s indirect economic ownership interest in Oncor. During October 2014, the bankruptcy court held hearings regarding the motion. In November 2014, the Bankruptcy Court conditionally approved the motion. In January 2015, the Bankruptcy Court approved the Debtors' bidding procedures motion that sets forth the process by which the Debtors are authorized to solicit proposals (i.e., bids) from third parties to acquire (in any form and employing any structure, whether taxable (in whole or in part) or tax-free) EFH Corp.'s indirect economic ownership interest in Oncor in accordance with the Bankruptcy Code. These bidding procedures contemplate that the Debtors select a stalking horse bid after a two-stage closed bidding process, and, after approval by the Bankruptcy Court of such stalking horse bid, the Debtors conduct a round of open bidding culminating in an auction intended to obtain a higher or otherwise best bid for a transaction. Initial bids were received in early March 2015, and each of the Debtors is currently assessing those submissions. EFIH cannot predict the outcome of this process, including whether any acceptable bid will be received, whether the Bankruptcy Court will approve any such bid or whether any such transaction will (or when it will) ultimately close because any such transaction would be the subject of customary closing conditions, including receipt of all applicable regulatory approvals.

~~Table~~Tax ~~of Contents~~Matters

~~Assets~~In June 2014, EFH Corp. filed a request with the IRS for a private letter ruling (Private Letter Ruling) that, among other things, will provide (a) that (i) the transfer by TCEH of all of its assets and its ordinary course operating liabilities ofto ~~Oncor~~reorganized ~~Holdings~~TCEH atcompleted ~~December 31~~through a tax-free spin (in accordance with the Private Letter Ruling) in connection with TCEH's emergence from bankruptcy (Reorganized TCEH), ~~2012~~(ii) the transfer by the Debtors to Reorganized TCEH of certain assets and ~~2011~~liabilities that are ~~presented~~reasonably ~~below:~~necessary to the operation of Reorganized TCEH and (iii) the distribution by TCEH of (A) the equity it holds in Reorganized TCEH and (B) the cash proceeds TCEH receives from Reorganized TCEH to the holders of TCEH first lien claims, will qualify as a reorganization within the meaning of Sections 368(a)(1)(G), 355 and 356 of the Code and (b) for certain other rulings under Sections 368(a)(1)(G) and 355 of the Code. The Debtors intend to continue to pursue the Private Letter Ruling to support potential Chapter 11 plans of reorganization that could ultimately be proposed. In October 2014, the Debtors filed a memorandum with the Bankruptcy Court that described tax related matters regarding restructuring alternatives.

	December 31,
	2012		2011
ASSETS
Current assets:
Cash and cash equivalents	$	45	$	12
Restricted cash	55		57
Trade accounts receivable — net	338		303
Trade accounts and other receivables from affiliates	53		179
Inventories	73		71
Accumulated deferred income taxes	26		73
Prepayments and other current assets	82		74
Total current assets	672		769
Restricted cash	16		16
Other investments	83		73
Property, plant and equipment — net	11,318		10,569
Goodwill	4,064		4,064
Note receivable due from TCEH	—		138
Regulatory assets — net	1,788		1,730
Other noncurrent assets	78		73
Total assets	$	18,019	$	17,432
LIABILITIES
Current liabilities:
Short-term borrowings	$	735	$	392
Long-term debt due currently	125		494
Trade accounts payable — nonaffiliates	121		197
Income taxes payable to EFH Corp.	34		2
Accrued taxes other than income	153		151
Accrued interest	95		108
Other current liabilities	110		112
Total current liabilities	1,373		1,456
Accumulated deferred income taxes	1,736		1,688
Investment tax credits	24		28
Long-term debt, less amounts due currently	5,400		5,144
Other noncurrent liabilities and deferred credits	1,999		1,832
Total liabilities	$	10,532	$	10,148

Operation and Implications of the Chapter 11 Cases

EFIH's ability to continue as a going concern is contingent upon, among other factors, its ability to comply with the financial and other covenants contained in the EFIH DIP Facilities described in Note 6, its ability to obtain new debtor in possession financing in the event the EFIH DIP Facilities were to expire during the pendency of the Chapter 11 Cases and its ability to complete a Chapter 11 plan of reorganization in a timely manner, including obtaining creditor and Bankruptcy Court approval of such plan as well as applicable regulatory approvals required for such plan and obtaining any exit financing needed to implement such plan.

A Chapter 11 plan of reorganization determines the rights and satisfaction of claims of various creditors and security holders and is subject to the ultimate outcome of negotiations and Bankruptcy Court decisions ongoing through the date on which the Chapter 11 plan is confirmed. EFIH currently expect that any proposed Chapter 11 plan of reorganization will provide, among other things, mechanisms for settlement of claims against the Debtors' estates, treatment of EFH Corp.'s existing equity holders and the Debtors' respective existing debt holders, potential income tax liabilities and certain corporate governance and administrative matters pertaining to a reorganized EFH Corp. Any proposed Chapter 11 plan of reorganization will be subject to revision prior to submission to the Bankruptcy Court based upon discussions with the Debtors' creditors and other interested parties, and thereafter in response to creditor claims and objections and the requirements of the Bankruptcy Code or the Bankruptcy Court. There can be no assurance that the Debtors will be able to secure approval from the Bankruptcy Court for any Chapter 11 plan of reorganization it ultimately proposes or that any Chapter 11 plan will be accepted by the Debtors' creditors.

In order for the Debtors (including the EFIH Debtors) to emerge successfully from the Chapter 11 Cases as reorganized companies, they must obtain approval from the Bankruptcy Court and certain of their respective creditors for a Chapter 11 plan, which will enable each of the Debtors to transition from the Chapter 11 Cases into reorganized companies conducting ordinary course operations outside of bankruptcy. In connection with an exit from bankruptcy, TCEH and EFIH will require a new credit facility, or exit financing. EFIH's ability to obtain such financing and the approval of such financing will depend on, among other things, the timing and outcome of various ongoing matters in the Chapter 11 Cases.

Pre-Petition Claims

Holders of the substantial majority of pre-petition claims were required to file proofs of claims by the bar date established by the Bankruptcy Court. A bar date is the date by which certain claims against the Debtors must be filed if the claimants wish to receive any distribution in the Chapter 11 Cases. The Bankruptcy Court established a bar date of October 27, 2014 for the substantial majority of claims. The Debtors have received approximately 10,000 filed claims since the Petition Date. The Debtors are in the process of reconciling those claims to the amounts listed in its schedules of assets and liabilities, which includes communications with claimants to acquire additional information required for reconciliation. As of March 31, 2015, approximately 2,450 of those claims have been settled, withdrawn or expunged. To the extent claims are reconciled and resolved, EFIH has recorded them at the expected allowed amount. Claims that remain unresolved or unreconciled through the filing of this report have been estimated based upon management's best estimate of the likely claim amounts that the Bankruptcy Court will ultimately allow.

~~Table~~Beginning in November 2014, EFH Corp. began the process to request the Bankruptcy Court to disallow claims that it believes are duplicative, have been later amended or superseded, are without merit, are overstated or should be disallowed for other reasons. Given the substantial number of ~~Contents~~claims filed, the claims resolution process will take considerable time to complete. Differences between liability amounts recorded by the company as liabilities subject to compromise and claims filed by creditors will be investigated and, if necessary, the Bankruptcy Court will make a final determination of the allowable claim. Differences between those final allowed claims and the liabilities recorded in the consolidated balance sheets will be recognized as reorganization items in EFIH's statements of consolidated income (loss) as they are resolved. The determination of how liabilities will ultimately be resolved cannot be made until the Bankruptcy Court approves a plan of reorganization or approves orders related to settlement of specific liabilities. Accordingly, the ultimate amount or resolution of such liabilities is not determinable at this time. The resolution of such claims could result in material adjustments to the company's financial statements.

3. INVESTMENT IN LONG-TERM DEBT OF AFFILIATES

As a result of debt exchanges in 2009 through 2012, we held debt securities of EFH Corp. and TCEH with carrying values totaling $5.388 billion and $3.632 billion at December 31, 2012 and 2011, respectively.

Previously, all of these debt securities were classified as available-for-sale and reported as investment in long-term debt of affiliates because management had determined it would sell or exchange the securities under certain conditions. The EFH Corp. and TCEH securities were reclassified to available-for-sale from held-to-maturity in the third quarter 2011 and fourth quarter 2010, respectively. Any sale or exchange of these securities to/with nonaffiliates would have required EFH Corp. to facilitate the transaction. In accordance with accounting guidance for investments classified as available-for-sale, the securities were recorded at fair value, interest was recorded in the income statement as interest income and unrealized gains or losses were recorded in other comprehensive income unless such losses were other than temporary, in which case they were recorded as impairments in net income.

In December 2012, management determined that some or all of these debt securities may be returned as dividends to EFH Corp. Accordingly, effective in December 2012, the debt securities were reclassified to membership interests as indicated in the table below. In addition, accrued interest receivable on the securities, totaling $87 million, was reclassified to membership interests. The principal amounts, coupon rates, maturities and carrying value are as follows:

	December 31, 2012					December 31, 2011
	Principal Amount		Investment Carrying Value (a)			Principal Amount		Investment Carrying Value (a)
EFH Corp. 10.875% Fixed Senior Notes due November 1, 2017	$	1,685	$	1,502		$	1,591	$	1,288
EFH Corp. 11.25/12.00% Senior Toggle Notes due November 1, 2017	3,441		3,108			2,784		2,283
EFH Corp. 5.55% Fixed Senior Notes Series P due November 15, 2014	279		197			45		30
EFH Corp. 6.50% Fixed Senior Notes Series Q due November 15, 2024	516		260			6		2
EFH Corp. 6.55% Fixed Senior Notes Series R due November 15, 2034	456		221			3		2
TCEH 10.25% Fixed Senior Notes due November 1, 2015 (both periods include $48 million principal amount of Series B Notes)	79		13			79		27
Total	$	6,456	$	5,301		$	4,508	$	3,632
Reclassification to membership interests			(5,301		)
Balance at December 31, 2012			—
Reconciliation of carrying value to amortized cost basis:
Carrying (fair) value								$	3,632
Cumulative unrealized gains (recorded as other comprehensive income) (b)								(61		)
Amortized cost basis (c)								$	3,571

_____________

(a) Carrying value equals fair value.

(b) Amount reflects unrealized gain on EFH Corp. Toggle Notes.

Dividend to EFH Corp. — In early 2013, EFIH returned all $1.685 billion principal amount of EFH Corp. 10.875% Notes and all $3.441 billion principal amount of EFH Corp. Toggle Notes that it received in previous exchanges as a dividend to EFH Corp., which cancelled them.

~~Table~~3. ofINVESTMENT ~~Contents~~IN ONCOR HOLDINGS

~~Interest~~EFIH ~~income~~has ~~was~~a ~~recorded~~wholly-owned onsubsidiary, ~~these~~Oncor ~~securities~~Holdings, upwhich ~~until~~holds ~~December~~an ~~2012~~approximate ~~when~~80% ~~such~~equity ~~securities~~interest ~~were~~in ~~reclassified~~Oncor. Oncor Holdings is considered a variable interest entity (VIE). A VIE is an entity with which an entity has a relationship or arrangement that indicates some level of control over the entity or results in economic risks to ~~membership~~it. Accounting ~~interests~~standards asrequire ~~discussed~~consolidation ~~above~~of a VIE if an entity has (a) the power to direct the significant activities of the VIE and (b) the right or obligation to absorb profit and loss from the VIE (i.e., the entity is the primary beneficiary of the VIE). ~~Amounts~~In ~~recorded~~determining asthe ~~interest~~appropriateness ~~income~~of consolidation of a VIE, EFIH evaluates its purpose, governance structure, decision making processes and risks that are aspassed ~~follows:~~on to its interest holders. EFIH also examines the nature of any related party relationships among the interest holders of the VIE and the nature of any special rights granted to the interest holders of the VIE.

	Year Ended December 31,
	2012			2011			2010
Held-to-maturity securities:
Interest received/accrued	$	—		$	—		$	58
Accretion of purchase discount	—			—			57
PIK interest received/accrued related to EFH Corp. Toggle Notes	—			—			99
Total interest income related to held-to-maturity securities	—			—			214
Available-for-sale securities:
Interest received/accrued	232			178			8
Accretion of purchase discount	92			140			4
PIK interest received/accrued related to EFH Corp. Toggle Notes	288			308			—
Gain on retirement of EFH Corp. Toggle Notes (Note 5)	—			3			—
Impairments related to issuer credit	(14		)	(77		)	(17		)
Total interest income related to available-for-sale securities	598			552			(5		)
Total interest income	$	598		$	552		$	209

As discussed below, EFIH's consolidated balance sheets include assets and liabilities of VIEs that meet the consolidation standards. The maximum exposure to loss from EFIH's interests in VIEs does not exceed its carrying value.

~~Impairments~~EFIH —does Innot ~~2012,~~consolidate weOncor ~~deemed~~Holdings ~~the declines in values of the TCEH securities were other than temporary~~ and ~~recorded~~instead aaccounts ~~$14~~for ~~million~~it ~~impairment, which is reported~~ as ~~a reduction of interest income. We considered that the securities were in a loss position for~~ an ~~extended~~equity ~~period~~method ~~and~~investment ~~the~~because ~~effects of low wholesale power prices on~~ the ~~profitability~~structural and ~~cash~~operational ~~flows~~ring-fencing ofmeasures ~~TCEH~~discussed ~~(which~~in ~~has~~Note ~~below~~1 ~~investment~~prevent ~~grade~~it ~~credit~~from ~~ratings)~~having ~~were~~power ~~unlikely~~ to ~~reverse~~direct in the ~~near~~significant ~~term. In~~activities ~~2011, we deemed the declines in values~~ of ~~EFH~~Oncor ~~Corp.~~Holdings ~~and~~or ~~TCEH securities were other than temporary and recorded a $77 million impairment recorded as a reduction of interest income~~Oncor. WeIn ~~considered~~accordance ~~that~~with ~~the~~accounting ~~securities~~standards, ~~were~~EFIH inaccounts ~~a loss position~~ for ~~more~~its ~~than~~investment 12in ~~months~~Oncor ~~and~~Holdings ~~the~~under ~~effect of low wholesale power prices on~~ the ~~profitability~~equity ~~and~~method, ~~cash~~as ~~flows~~opposed ~~of EFH Corp. and TCEH (both of which have below investment grade credit ratings) were unlikely~~ to ~~reverse in~~ the ~~near~~cost ~~term. In 2010~~method, webased ~~recorded~~on aits ~~$17~~level ~~million~~of ~~impairment~~influence ofover ~~TCEH~~its ~~securities~~activities.

WeIn ~~determine~~reaching ~~value~~the ~~under~~conclusion ~~the~~to ~~fair~~deconsolidate, ~~value~~EFIH ~~hierarchy~~conducted ~~established~~an inextensive ~~accounting~~analysis ~~standards~~of Oncor Holdings' underlying governing documents and management structure. ~~Under~~Oncor Holdings' unique governance structure was adopted in conjunction with the ~~fair~~Merger, ~~value~~when ~~hierarchy~~the Sponsor Group, ~~Level~~EFH 2Corp. ~~valuations~~and ~~are~~Oncor ~~based~~agreed onto ~~evaluated~~implement ~~prices~~structural ~~that~~and ~~reflect~~operational ~~observable~~measures ~~market~~to ~~information,~~ring-fence ~~such~~(the asRing-Fencing ~~actual~~Measures) ~~trade~~Oncor ~~information~~Holdings ofand ~~similar~~Oncor ~~securities,~~as ~~adjusted~~discussed ~~for~~in ~~observable~~Note ~~differences~~1. The ~~fair~~Ring-Fencing ~~value~~Measures ofwere ~~our~~designed ~~investment~~to inprevent, ~~long-term~~among ~~debt~~other ofthings, ~~affiliates~~(i) isincreased ~~estimated~~borrowing costs at ~~the~~Oncor ~~lesser~~due ofto ~~either~~ the ~~call~~attribution ~~price~~to orOncor ~~the~~of ~~market~~debt ~~value~~from asany ~~determined~~of byEFH ~~broker~~Corp.'s ~~quotes~~other ~~and~~subsidiaries, ~~quoted~~(ii) ~~market~~the ~~prices~~activities ~~for~~of ~~similar~~EFH ~~securities~~Corp.'s incompetitive ~~active~~operations ~~markets. For~~following the ~~periods~~Merger ~~presented,~~resulting in the ~~fair~~deterioration ~~values~~ of ~~our~~Oncor's business, financial condition and/or investment in ~~long-term~~infrastructure, ~~debt~~and of(iii) ~~affiliates~~Oncor ~~represent~~becoming ~~Level~~substantively 2consolidated ~~valuations. At~~into ~~December 31,~~a ~~2012,~~bankruptcy ~~unaffiliated~~proceeding ~~parties~~involving ~~held~~any 2%member of the ~~outstanding~~Texas ~~EFH~~Holdings ~~Corp~~Group. The ~~Toggle~~Ring-Fencing ~~Notes~~Measures effectively separate the daily operational and 4%management control of ~~the~~Oncor ~~outstanding~~Holdings and Oncor from EFH Corp. 10and its other subsidiaries.~~875%~~ By ~~Notes;~~implementing ~~EFIH~~the ~~held~~Ring-Fencing Measures, Oncor maintained its investment grade credit rating following the ~~remaining~~Merger, ~~outstanding~~and ~~notes~~EFH Corp. reaffirmed Oncor's independence from its competitive businesses to the PUCT.

~~Our~~EFIH ~~liquidity~~determined ~~needs~~the ~~represent~~most ~~interest~~significant ~~and~~activities ~~principal~~affecting ~~payments~~the oneconomic ~~our~~performance ~~long-term~~of ~~debt~~Oncor Holdings (and ~~payments~~Oncor) ofare ~~income~~the ~~taxes~~operation, tomaintenance ~~EFH~~and ~~Corp.,~~growth ~~which~~of weOncor's ~~expect~~electric totransmission ~~fund~~and ~~with~~distribution ~~distributions~~assets weand ~~receive~~the ~~from~~preservation ~~Oncor~~of ~~Holdings,~~its ~~interest~~investment ~~and~~grade ~~principal~~credit ~~payments~~profile. The weboards ~~receive~~of ondirectors ~~investments~~of inOncor ~~TCEH~~Holdings and ~~EFH~~Oncor ~~Corp.~~have ~~debt~~ultimate ~~securities~~responsibility ~~and~~for asthe ~~necessary,~~management ~~additional~~of ~~liquidity~~the ~~sources~~day-to-day ~~including~~operations ~~borrowings~~of ~~from~~their ~~EFH~~respective ~~Corp. The~~businesses, ~~indentures~~including ~~governing~~ the ~~EFIH~~approval ~~Notes~~of doOncor's ~~not~~capital ~~limit~~expenditure ~~our~~and ~~ability~~operating tobudgets ~~dividend~~and the ~~EFH~~timing ~~Corp~~and prosecution of Oncor's rate cases. While ~~debt~~both ~~securities~~boards ~~that~~include wemembers ~~hold~~appointed toby EFH Corp., soa ~~long~~majority asof wethe ~~received~~board ~~such~~members ~~securities~~are independent in ~~exchange~~accordance ~~for~~with rules established by the ~~issuance~~New ofYork ~~EFIH~~Stock ~~debt~~Exchange, ~~which~~and ~~applies~~therefore, toEFIH ~~all~~concluded for purposes of applying the amended accounting standards that EFH Corp. ~~debt~~does wenot ~~currently~~have ~~hold~~the power to control the activities deemed most significant to Oncor Holdings' (and Oncor's) economic performance.

In assessing EFIH's ability to exercise control over Oncor Holdings and Oncor, EFIH considered whether it could take actions to circumvent the purpose and intent of the Ring-Fencing Measures (including changing the composition of Oncor Holdings' or Oncor's board) in order to gain control over the day-to-day operations of either Oncor Holdings or Oncor. EFIH also considered whether (i) it has the unilateral power to dissolve, liquidate or force into bankruptcy either Oncor Holdings or Oncor, (ii) it could unilaterally amend the Ring-Fencing Measures contained in the underlying governing documents of Oncor Holdings or Oncor, and (iii) it could control Oncor's ability to pay distributions and thereby enhance its own cash flow. EFIH concluded that, in each case, no such opportunity exists.

The carrying value of EFIH's variable interest in Oncor Holdings totaled $6.050 billion and $5.950 billion at December 31, 2014 and 2013, respectively, and is reported as investment in Oncor Holdings in EFIH's consolidated balance sheets. EFIH's maximum exposure to loss from this investment does not exceed its carrying value.

See Note 12 for discussion of Oncor Holdings' and Oncor's transactions with EFH Corp. and its other subsidiaries.

~~Table~~Distributions from Oncor Holdings — Oncor Holdings' distributions of ~~Contents~~earnings to EFIH totaled $202 million, $213 million and $147 million for the years ended December 31, 2014, 2013 and 2012, respectively. Distributions may not be paid except to the extent Oncor maintains a required regulatory capital structure as discussed below. At December 31, 2014, $184 million was eligible to be distributed to Oncor's members after taking into account the regulatory capital structure limit, of which approximately 80% or $146 million relates to EFIH's ownership interest in Oncor. The boards of directors of each of Oncor and Oncor Holdings can withhold distributions to the extent the applicable board determines in good faith that it is necessary to retain such amounts to meet expected future requirements of Oncor and/or Oncor Holdings.

4For the period beginning October 11, 2007 and ending December 31, 2012, distributions (other than distributions of the proceeds of any equity issuance) paid by Oncor to its members were limited by a PUCT order to an amount not to exceed Oncor's cumulative net income determined in accordance with US GAAP, as adjusted. Adjustments ~~INCOME~~consisted ~~TAXES~~of the removal of noncash impacts of purchase accounting and deducting two specific cash commitments. The noncash impacts consisted of removing the effect of an $860 million goodwill impairment charge in 2008 and the cumulative amount of net accretion of fair value adjustments. The two specific cash commitments were a $72 million ($46 million after tax) one-time refund to customers in September 2008 and funds spent as part of a five-year, $100 million commitment for additional energy efficiency initiatives that was completed in 2012.

~~EFH~~Oncor's ~~Corp.~~distributions ~~files~~are alimited USby ~~federal~~its ~~income~~regulatory ~~tax~~capital ~~return~~structure, ~~that~~which ~~includes~~is required to be at or below the ~~results~~assumed ofdebt-to-equity ~~EFCH~~ratio established periodically by the PUCT for ratemaking purposes, ~~EFIH~~which is currently set at 60% debt to 40% equity. At December 31, 2014, Oncor's ~~Holdings~~regulatory capitalization ratio was 58.8% debt and ~~TCEH~~41.2% equity. ~~Oncor~~For purposes of this ratio, debt is acalculated ~~partnership~~as ~~for~~long-term USdebt ~~federal~~plus ~~income~~unamortized ~~tax~~gains ~~purposes~~on reacquired debt less unamortized issuance expenses, premiums and losses on reacquired debt. The debt calculation excludes bonds issued by Oncor Electric Delivery Transition Bond Company LLC, which were issued in 2003 and 2004 to recover specific generation-related regulatory assets and other qualified costs. Equity is ~~not~~calculated aas ~~corporate~~membership ~~member~~interests determined in accordance with US GAAP, excluding the effects of accounting for the ~~EFH~~Merger ~~Corp.~~(which ~~consolidated~~included ~~group~~recording the initial goodwill and fair value adjustments and the subsequent related impairments and amortization).

~~EFH~~As ~~Corp.~~a ~~and~~result ~~its~~of ~~subsidiaries~~the ~~(including~~Bankruptcy ~~EFCH~~Filing, ~~EFIH, and TCEH, but not including~~ Oncor ~~Holdings~~had ~~and~~credit ~~Oncor)~~risk ~~are~~exposure ~~bound~~to bytrade aaccounts ~~Federal~~receivable ~~and~~from ~~State~~subsidiaries ~~Income~~of ~~Tax Allocation Agreement~~TCEH, which ~~provides,~~related ~~among~~to ~~other~~delivery ~~things,~~services ~~that~~provided ~~each~~by ofOncor ~~EFCH,~~to ~~EFIH,~~ TCEH's ~~and~~retail ~~any~~electricity ~~other subsidiaries under the agreement is required to make payments to EFH Corp~~operations. At ~~in an amount calculated to approximate~~ the ~~amount~~Petition ~~of tax liability such entity would have owed if it filed a separate corporate tax return. Accordingly~~Date, ~~our~~these ~~income~~accounts ~~tax~~receivable ~~expense~~totaled ~~and~~$109 ~~related balance sheet amounts are recorded as if we file our own corporate income tax returns~~million. ~~Deferred~~In ~~income~~June ~~taxes~~2014, ~~are~~the ~~provided~~Bankruptcy ~~for~~Court ~~temporary~~authorized ~~differences between~~ the ~~book~~Debtors ~~and~~to ~~tax~~pay ~~basis~~all ofpre-petition ~~assets~~delivery ~~and~~charges ~~liabilities~~due asOncor, ~~required under accounting rules. Income tax assets~~ and ~~liabilities~~such ~~related~~amounts towere ~~pushed~~paid ~~down~~in ~~debt are settled as membership interests transactions~~full.

EFH Corp., Oncor Holdings, Oncor and Oncor's minority investor are parties to a ~~separate~~Federal ~~tax~~and ~~sharing~~State ~~agreement,~~Income ~~which~~Tax ~~governs~~Allocation ~~the~~Agreement. Additional ~~computation of federal~~ income tax ~~liability~~amounts ~~between~~receivable ~~EFH~~or ~~Corp.,~~payable onmay ~~one~~arise ~~hand, and Oncor Holdings and Oncor, on the other hand, and similarly provides for payments to EFH Corp.~~ in ~~an amount calculated to approximate~~ the ~~amount~~normal ofcourse ~~tax~~under ~~liability~~that ~~as if Oncor Holdings and Oncor filed separate corporate tax returns~~agreement.

~~The~~Oncor ~~components~~Holdings Financial Statements — Condensed statements of ~~our~~consolidated income ~~tax~~of ~~expense~~Oncor Holdings and its subsidiaries for the years ended December 31, 2014, 2013 and 2012 are aspresented ~~follows~~below:

	Year Ended December 31,
	2012			2011			2010
	2014			2013			2012
Current:
Operating revenues	$	3,822		$	3,552		$	3,328
US federal	$	25		$	72		$	(187	)
Operation and maintenance expenses	(1,453		)	(1,269		)	(1,171		)
State	4			3			1
Depreciation and amortization	(851		)	(814		)	(771		)
Deferred:
Taxes other than income taxes	(438		)	(424		)	(415		)
US federal	(2		)	(2		)	144
Other income	13			18			26
Total income tax expense (benefit)	$	27		$	73		$	(42	)
Other deductions	(15		)	(15		)	(64		)
Interest income	3			4			24
Interest expense and related charges	(353		)	(371		)	(374		)
Income before income taxes	728			681			583
Income tax expense	(289		)	(259		)	(243		)
Net income	439			422			340
Net income attributable to noncontrolling interests	(90		)	(87		)	(70		)
Net income attributable to Oncor Holdings	$	349		$	335		$	270

Reconciliation of income taxes computed at the US federal statutory rate to income tax expense:

	Year Ended December 31,
	2012			2011			2010
Income (loss) before income taxes	$	72		$	204		$	(106	)
Income taxes at the US federal statutory rate of 35%	25			72			(37		)
Other	2			1			(5		)
Income tax expense (benefit)	$	27		$	73		$	(42	)
Effective rate	37.5		%	35.8		%	39.6		%

~~Table~~Assets and liabilities of ~~Contents~~Oncor Holdings at December 31, 2014 and 2013 are presented below:

Deferred income taxes provided for temporary differences based on tax laws in effect at December 31, 2012 and 2011 are as follows:



	December 31,
	2014		2013
ASSETS
Current assets:
Cash and cash equivalents	$	5	$	28
Restricted cash	56		52
Trade accounts receivable — net	407		385
Trade accounts and other receivables from affiliates	118		135
Income taxes receivable from EFH Corp.	144		16
Inventories	73		65
Accumulated deferred income taxes	10		32
Prepayments and other current assets	91		82
Total current assets	904		795
Restricted cash	16		16
Other investments	97		91
Property, plant and equipment — net	12,463		11,902
Goodwill	4,064		4,064
Regulatory assets — net	1,429		1,324
Other noncurrent assets	67		71
Total assets	$	19,040	$	18,263
LIABILITIES
Current liabilities:
Short-term borrowings	$	711	$	745
Long-term debt due currently	639		131
Trade accounts payable — nonaffiliates	202		178
Income taxes payable to EFH Corp.	24		23
Accrued taxes other than income	174		169
Accrued interest	93		95
Other current liabilities	156		135
Total current liabilities	1,999		1,476
Accumulated deferred income taxes	1,978		1,905
Long-term debt, less amounts due currently	4,997		5,381
Other noncurrent liabilities and deferred credits	2,245		1,822
Total liabilities	$	11,219	$	10,584

	December 31, 2012						December 31, 2011
	Total		Current		Noncurrent		Total		Current		Noncurrent
Deferred Income Tax Assets:
Accrued interest	$	5	$	—	$	5	$	9	$	—	$	9
Debt extinguishment gains (Note 5)	75		—		75		—		—		—
Debt fair value	—		—		—		6		—		6
Total	80		—		80		15		—		15
Deferred Income Tax Liabilities:
Debt extinguishment gains related to pushed down debt of EFH Corp. (Note 5)	104		—		104		104		—		104
Debt fair value discount	85		—		85		19		—		19
Total	189		—		189		123		—		123
Net Deferred Income Tax (Asset) Liability	$	109	$	—	$	109	$	108	$	—	$	108

~~Table~~4. ofINCOME ~~Contents~~TAXES

5EFH Corp. ~~LONG-TERM~~files ~~DEBT~~a US federal income tax return that includes the results of EFCH, EFIH, Oncor Holdings and TCEH. Oncor is a partnership for US federal income tax purposes and is not a corporate member of the EFH Corp. consolidated group.

AtEFH ~~December 31~~Corp. and its subsidiaries (including EFCH, ~~2012~~EFIH, and ~~2011~~TCEH, ~~long-term~~but ~~debt~~not ~~consisted~~including Oncor Holdings and Oncor) are parties to a Federal and State Income Tax Allocation Agreement, which provides for the computation of income tax liabilities and benefits, and among other things, that each of EFCH, EFIH, TCEH and any other subsidiaries under the ~~following:~~agreement is required to make payments to EFH Corp. in an amount calculated to approximate the amount of tax liability such entity would have owed if it filed a separate corporate tax return. Accordingly, EFIH's income tax expense and related balance sheet amounts are recorded as if EFIH files its own corporate income tax returns. Deferred income taxes are provided for temporary differences between the book and tax basis of assets and liabilities as required under accounting rules. Income tax assets and liabilities related to pushed down debt are settled as membership interests transactions.

	December 31,
	2012			2011
Debt issued by EFIH:
6.875% Fixed Senior Secured First Lien Notes due August 15, 2017	$	503		$	—
9.75% Fixed Senior Secured First Lien Notes due October 15, 2019	141			141
10% Fixed Senior Secured First Lien Notes due December 1, 2020	2,180			2,180
11% Fixed Senior Secured Second Lien Notes due October 1, 2021	406			406
11.75% Fixed Senior Secured Second Lien Notes due March 1, 2022	1,750			—
11.25% / 12.25% Senior Toggle Notes due December 1, 2018	1,304			—
Unamortized premium	351			—
Unamortized discount	(131		)	—
Total debt issued by EFIH	6,504			2,727
Pushed down debt (a):
10% EFH Corp. Fixed Senior Secured Notes due January 15, 2020	331			331
9.75% EFH Corp. Fixed Senior Secured Notes due October 15, 2019	57			57
10.875% EFH Corp. Fixed Senior Notes due November 1, 2017	32			98
11.25/12.00% EFH Corp. Senior Toggle Notes due November 1, 2017	30			220
Unamortized premium	—			3
Total pushed down debt	450			709
Total long-term debt (b)	$	6,954		$	3,436

Deferred income taxes arise from temporary differences between the tax basis of assets and liabilities and their reported amounts in the financial statements, which will result in taxable or deductible amounts in the future. In evaluating EFIH's ability to recover its deferred tax assets related to its net operating losses, EFIH considers all available positive and negative information, including scheduled reversals of deferred tax liabilities, projected future taxable income, tax-planning strategies, and results of operations. Due to the significant uncertainty of the ultimate recovery by EFIH of the benefit of its NOLs, a valuation allowance of $72 million has been recorded on EFIH’s net deferred tax assets as of December 31, 2014.

~~________________~~EFH Corp., Oncor Holdings, Oncor and Oncor's third-party minority investor are parties to a separate Federal and State Income Tax Allocation Agreement, which governs the computation of federal income tax liability among such parties, and similarly provides, among other things, that each of Oncor Holdings and Oncor will pay EFH Corp. its share of an amount calculated to approximate the amount of tax liability such entity would have owed if it filed a separate corporate tax return.

~~(a)~~The ~~Represents~~components ~~50%~~ of ~~the amount of these EFH Corp. securities guaranteed by~~ EFIH's ~~and~~income ~~pushed~~tax ~~down~~expense ~~per~~(benefit) ~~the~~are ~~discussion~~as ~~below under "Guarantees and Push Down of EFH Corp. Debt."~~follows:

(b) EFIH had no long-term debt due currently at December 31, 2012 and 2011.



	Year Ended December 31,
	2014			2013			2012
Current:
US Federal	$	(104	)	$	(115	)	$	25
State

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