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SECURITIES AND EXCHANGE COMMISSION
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Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(D) OF
THE SECURITIES EXCHANGE ACT OF 1934
DATE OF REPORT (DATE OF EARLIEST EVENT REPORTED) - DECEMBER 28, 2001
TXU CORP.
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(Exact name of registrant as specified in its charter)
TEXAS 1-12833 75-2669310
(State or other jurisdiction (Commission (I.R.S. Employer
of incorporation) File Number) Identification No.)
TXU ELECTRIC COMPANY
(Exact name of registrant as specified in its charter)
TEXAS 1-11668 75-1837355
(State or other jurisdiction (Commission (I.R.S. Employer
of incorporation) File Number) Identification No.)
ENERGY PLAZA, 1601 BRYAN STREET, DALLAS, TEXAS
75201-3411 (Address of principal executive offices,
including zip code)
REGISTRANTS' TELEPHONE NUMBER, INCLUDING AREA CODE (214) 812-4600
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Item 5. Other Events and Regulation FD Disclosure.
Reference is made to Items 1. and 2. Business and Properties - Regulation and
Rates - and Item 8. Financial Statements and Supplementary Data - Notes to
Financial Statements - Note 13 - Regulation and Rates - in the Annual Report on
Form 10-K of TXU Electric Company (TXU Electric) for the year ended December 31,
2000 (TXU Electric 2000 10-K) and Item 1. Financial Statements - Notes to
Financial Statements - Note 4 - Regulation and Rates - in the Quarterly Reports
on Form 10-Q of TXU Electric for the quarters ended March 31, 2001, June 30,
2001 and September 30, 2001.
Reference is also made to Items 1. and 2. Business and Properties - US Electric
Segment - Regulation and Rates - and Item 8. Financial Statements and
Supplementary Data - Notes to Financial Statements - Note 13 - Regulation and
Rates - US - in the Annual Report on Form 10-K of TXU Corp. (TXU) for the year
ended December 31, 2000 (TXU 2000 10-K) and Item 1. Financial Statements - Notes
to Financial Statements - Note 7 - Regulation and Rates - in the Quarterly
Reports on Form 10-Q of TXU for the quarters ended March 31, 2001, June 30, 2001
and September 30, 2001.
On December 28, 2001, TXU Electric, a wholly owned subsidiary of TXU, announced
a settlement plan that would resolve all major pending issues related to TXU
Electric's transition to competition. The settlement is expected to be filed on
Monday, December 31, 2001 with the Public Utility Commission of Texas (PUCT).
Parties to the settlement include the PUCT staff, the Office of Public Utility
Counsel, the coalition of cities served by TXU Electric, Texas Industrial Energy
Consumers, Texas Retailers Association, and a new retail electric provider for
the state. The settlement, which must be reviewed and approved by the PUCT, does
not remove regulatory oversight of TXU Electric's energy delivery business nor
does it eliminate the price-to-beat and related possible fuel adjustments.
Among other things, the agreement resolves transmission and distribution rates,
the true-up in 2004 of stranded costs related to generation plant,
securitization of regulatory assets, collection of current unrecovered fuel
costs, reconciliation of 3 1/2 years of fuel expenses and the retail and
wholesale "clawbacks." The retail clawback provision was included in the Texas
Electric Choice Act of 1999 to serve as an incentive for the affiliated retail
electric provider of the utilities to actively compete for customers.
The major terms of the settlement are:
o TRANSMISSION AND DISTRIBUTION RATES. On January 1, 2002, TXU Electric will
implement an excess mitigation credit (EMC) in the amount of $350 million,
applied over a two-year period as a credit to T&D rates charged to retail
electric providers. This amount reflects resolution of stranded cost
mitigation, reconciliation of approximately $8.5 billion of fuel costs
covering July 1998 through 2001, and an anticipated unrecovered fuel
balance at the end of 2001.
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o STRANDED COST RESOLUTION. TXU Electric's stranded costs are fixed at zero,
including resolution of amounts related to its repurchase of minority
ownership interests in the Comanche Peak nuclear generating station and
elimination of the 2004 true-up.
o REGULATORY ASSET SECURITIZATION. TXU Electric will receive a financing
order authorizing it to issue securitization bonds in the amount of $1.3
billion. The settlement stipulates there will be an initial issuance of
securitization bonds in the amount of $500 million followed by a second
issuance of $800 million after 2003. This settlement resolves all issues
related to regulatory assets.
o RETAIL CLAWBACK. In the event that TXU Electric's affiliated retail
electric provider retains more than 60 percent of its residential and
small commercial customers over the first two years of competition, the
amount of the retail clawback credit will be equal to: o the number of
residential and small commercial customers retained by TXU Electric's
retail electric provider on January 1, 2004 o less the number of new
customers TXU Electric's affiliated retail electric provider adds by
January 1, 2004 o multiplied by $90.
This determination will be made separately for the residential and small
commercial classes and compares to the $150 per customer limit contained
in the Texas Electric Choice Act. The credit will be applied to
Transmission and Distribution rates over a two-year period.
o LAWSUIT AND REGULATORY PROCEEDING RESOLUTION. The parties agree to seek
dismissal of a number of currently pending and planned lawsuits, as well
as regulatory proceedings.
In the settlement, TXU Electric has assumed responsibility for any variance
between estimates and actual amounts associated with year-end unrecovered fuel
and mitigation. TXU Electric believes the variance, if any, will be less than
$50 million (after tax) and would be accounted for as a one-time charge in the
fourth quarter of 2001.
This report and other presentations made by TXU and TXU Electric contain
forward-looking statements within the meaning of Section 21E of the Securities
Exchange Act of 1934, as amended. Although TXU and TXU Electric believe that in
making any such statement their expectations are based on reasonable
assumptions, any such statement involves uncertainties and is qualified in its
entirety by reference to factors contained in the Forward-Looking Statements
section of Item 7. Management's Discussion and Analysis of Financial Condition
and Results of Operations in the TXU 2000 10-K and the TXU Electric 2000 10-K,
as well as, prevailing government policies on environmental, tax or accounting
matters, regulatory actions, unanticipated population growth or decline and
changes in market demand and demographic patterns, changing competition for
customers including the deregulation of the U.S. electric utility industry and
the entry of new competitors, natural gas and other commodities, financial
market conditions including unanticipated changes in interest rates, rates of
inflation, or foreign exchange rates, unanticipated changes in operating
expenses and capital expenditures, legal and administrative proceedings and
settlements, and the inability of the various counterparties to
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meet their obligations with respect to financial instruments, among others, that
could cause the actual results of TXU and TXU Electric to differ materially from
those projected in such forward-looking statements.
Any forward-looking statement speaks only as of the date on which such statement
is made, and neither TXU nor TXU Electric undertakes any obligation to update
any forward-looking statement to reflect events or circumstances after the date
on which such statement is made or to reflect the occurrence of unanticipated
events. New factors emerge from time to time and it is not possible for TXU or
TXU Electric to predict all of such factors, nor can it 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.
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
TXU CORP.
By: /s/ Biggs C. Porter
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Name: Biggs C. Porter
Title: Controller and Principal
Accounting Officer
Dated: December 28, 2001
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
TXU ELECTRIC COMPANY
By: /s/ Biggs C. Porter
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Name: Biggs C. Porter
Title: Vice President, Principal
Accounting Officer
Dated: December 28, 2001