UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

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

FOR THE QUARTERLY PERIOD ENDED ~~SEPTEMBER~~JUNE 30, ~~2013~~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
(Address of Principal Executive Offices) (Zip Code)		(Registrant's Telephone Number)

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 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 if the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o No x

At ~~October~~August 311, ~~2013~~2014, the outstanding membership interest in Energy Future Intermediate Holding Company LLC was directly held by Energy Future Holdings Corp.

Energy Future Intermediate Holding Company LLC meets the conditions set forth in General Instructions (H)(1)(a) and (b) of Form 10-Q and is therefore filing this report with the reduced disclosure format.

TABLE OF CONTENTS

		PAGE
GLOSSARY		ii
PART I.	FINANCIAL INFORMATION
Item 1.	Financial Statements (Unaudited)
	Condensed Statements of Consolidated Income —Three and Nine Months Ended September 30, 2013 and 2012	1
	Condensed Statements of Consolidated Income (Loss) —Three and Six Months Ended June 30, 2014 and 2013	1
	Condensed Statements of Consolidated Comprehensive Income —Three and Nine Months Ended September 30, 2013 and 2012	1
	Condensed Statements of Consolidated Comprehensive Income (Loss) —Three and Six Months Ended June 30, 2014 and 2013	1
	Condensed Statements of Consolidated Cash Flows —Nine Months Ended September 30, 2013 and 2012	2
	Condensed Statements of Consolidated Cash Flows —Six Months Ended June 30, 2014 and 2013	2
	Condensed Consolidated Balance Sheets —September 30, 2013 and December 31, 2012	3
	Condensed Consolidated Balance Sheets —June 30, 2014 and December 31, 2013	3
	Notes to Condensed Consolidated Financial Statements	4
Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	1922
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	2729
Item 4.	Controls and Procedures	2932
PART II.	OTHER INFORMATION
Item 1.	Legal Proceedings	2933
Item 1A.	Risk Factors	2933
Item 4.	Mine Safety Disclosures	2933
Item 6.	Exhibits	30
Item 5.	Other Information	34
SIGNATURE		31
Item 6.	Exhibits	34
SIGNATURE		36

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 quarterly report on Form 10-Q. The representations and warranties contained in any agreement that weEFIH ~~have~~has filed as an exhibit to this quarterly report on Form 10-Q 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 quarterly report on Form 10-Q 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.

GLOSSARY

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

2012 Form 10-K		EFIH's Annual Report on Form 10-K for the year ended December 31, 2012
2013 Form 10-K		EFIH's Annual Report on Form 10-K for the year ended December 31, 2013
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-Q (see reconciliations in Exhibits 99(b) and 99(c)) 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 3 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.
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.
CREZ		Competitive Renewable Energy Zone
DIP Facilities		Refers, collectively, to EFIH's debtor-in-possession financing (see Note 5 to Financial Statements) and TCEH's debtor-in-possession financing (TCEH DIP Facility).
EBITDA		earnings (net income) before interest expense, income taxes, depreciation and amortization
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
Effective Date		the effective date of the Debtors' plan of reorganization
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 37 to Financial Statements
EFH Corp. Toggle Notes		EFH Corp.'s 11.25%/12.00% Senior Toggle 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 37 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 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 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 (see Note 5 to Financial Statements)
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 (see Note 5 to Financial Statements)
ERCOT		Electric Reliability Council of Texas, Inc., the independent system operator and the regional coordinator of various electricity systems within Texas
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 Management's Discussion and Analysis, under Financial Condition.
GAAP		generally accepted accounting principles
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
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.

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.
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
Petition Date		April 29, 2014, the date the Debtors made the Bankruptcy Filing
PUCT		Public Utility Commission of Texas
REP		retail electric provider
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.
TCEH DIP Facility		TCEH's $3.375 billion debtor-in-possession financing facility approved by the Bankruptcy Court in June 2014
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
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

iii

PART I. FINANCIAL INFORMATION


Item 1.	FINANCIAL STATEMENTS

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

CONDENSED STATEMENTS OF CONSOLIDATED INCOME (LOSS)

(Unaudited)

	Three Months Ended September 30,						Nine Months Ended September 30,
	Three Months Ended June 30,						Six Months Ended June 30,
	2013			2012			2013			2012
	2014			2013			2014			2013
	(millions of dollars)
Selling, general and administrative expenses	$	(58	)	$	—		$	(519	)	$	—
Interest income — affiliates (Note 5)	—			152			284			462
Other deductions (Note 4)	(122		)	—			(199		)	—
Interest expense and related charges (Note 7)	(191		)	(137		)	(566		)	(368		)
Interest income — affiliates (Note 10)	—			—			—			284
Income (loss) before income taxes and equity in earnings of unconsolidated subsidiary	(196		)	15			(287		)	94
Interest expense and related charges (Note 8)	(124		)	(190		)	(323		)	(374		)
Income tax benefit (expense)	68			(6		)	100			(35		)
Reorganization items (Note 6)	(228		)	—			(228		)	—
Equity in earnings of unconsolidated subsidiary (net of tax) (Note 2)	114			109			255			249
Loss before income taxes and equity in earnings of unconsolidated subsidiary	(482		)	(190		)	(769		)	(90		)
Net income (loss)	$	(14	)	$	118		$	68		$	308
Income tax benefit	118			67			191			31
Equity in earnings of unconsolidated subsidiary (net of tax) (Note 3)	72			74			152			141
Net income (loss)	$	(292	)	$	(49	)	$	(426	)	$	82

See Notes to Financial Statements.

CONDENSED STATEMENTS OF CONSOLIDATED COMPREHENSIVE INCOME (LOSS)

(Unaudited)

	Three Months Ended September 30,						Nine Months Ended September 30,
	Three Months Ended June 30,						Six Months Ended June 30,
	2013			2012			2013			2012
	2014			2013			2014			2013
	(millions of dollars)
Net income (loss)	$	(14292	)	$	~~118~~(49	)	$	68(426	)	$	~~308~~82
Other comprehensive income (loss) — net of tax effects:
Mark-to-market valuations of holdings of long-term debt of affiliates reclassified to interest income (net of tax benefit of $—, $—, $99 and $—) (Note 5)	—			—			(185		)	—
Reclassification to interest income of mark-to-market valuations of holdings of affiliate debt (net of tax expense of $—, $—, $— and $99) (Note 10)	—			—			—			(185		)
Mark-to-market valuations of holdings of long-term debt of affiliates held as available for sale (net of tax expense of $—, $30, $—, and $31) (Note 5)	—			191			—			272
Net effects related to Oncor — reported in equity in earnings of unconsolidated subsidiaries (net of tax benefit of $— in all periods)	1			—			1			1
Net effects related to Oncor — reported in equity in earnings of unconsolidated subsidiaries (net of tax benefit of $—, $—, $— and $1)	1			1			1			2
Total other comprehensive income (loss)	1			—			1			(184		)
Total other comprehensive income (loss)	1			192			(184		)	274
Comprehensive loss	$	(291	)	$	(49	)	$	(425	)	$	(102	)
Comprehensive income (loss)	$	(13	)	$	310		$	(116	)	$	582

See Notes to Financial Statements.

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

CONDENSED STATEMENTS OF CONSOLIDATED CASH FLOWS

(Unaudited)

	Nine Months Ended September 30,
	Six Months Ended June 30,
	2013			2012
	2014			2013
	(millions of dollars)
Cash flows — operating activities:
Net income	$	68		$	308
Net income (loss)	$	(426	)	$	82
Adjustments to reconcile net income to cash used in operating activities:
Equity in earnings of unconsolidated subsidiary	(~~255~~152		)	(~~249~~141		)
Distributions of earnings from unconsolidated subsidiary	~~148~~77			~~100~~80
Deferred income taxes, net	(962		)	(830		)
PIK interest income on EFH Corp. Toggle Notes held as investment (Note 5)	—			(259		)
Fees paid for EFIH DIP Facility (Note 5) (reported as financing activities)	88			—
Interest expense related to pushed-down debt of parent (Notes 3 and 7)	5			57
Interest expense related to pushed-down debt of parent (Notes 7 and 8)	1			4
Interest expense on toggle notes payable in additional principal (Notes 3 and 7)	130			—
Interest expense on toggle notes payable in additional principal (Notes 7 and 8)	65			83
Noncash impairment of investment in long-term debt of affiliates	—			6
Reserve recorded for income tax receivable from EFH Corp. (Note 4)	199			—
Accretion of purchase discount on investment in long-term debt of affiliates	—			(71		)
Loss on exchange and settlement of EFIH First Lien Notes (Note 6)	108			—
Amortization of debt exchange and issuance costs	(39		)	6
Amortization of debt related balances (Note 8)	(17		)	(24		)
Mark-to-market gain reclassified from accumulated other comprehensive income (Note 5)	(284		)	—
Mark-to-market gain reclassified from accumulated other comprehensive income (Note 10)	—			(284		)
Changes in operating assets and liabilities:
Income taxes receivable from/payable to EFH Corp. (Note 6)	(6		)	(118		)
Income taxes receivable from/payable to EFH Corp. (Note 11)	—			(3		)
Other changes in operating assets and liabilities	32			32
Accrued interest	20			2
Cash used in operating activities	(297		)	(196		)
Other changes in operating assets and liabilities	(182		)	(6		)
Cash used in operating activities	(221		)	(237		)
Cash flows — financing activities:
Issuances of long-term debt (Note 3)	—			2,000
Proceeds from EFIH DIP Facility before fees paid (Note 5)	3,564			—
Interest received on holdings of long-term debt of affiliates (Note 5)	208			—
Fees paid for EFIH DIP Facility (Note 5)	(88		)	—
Distributions to EFH Corp. (Note 5)	(680		)	(950		)
Repayments/repurchases of debt (Note 5)	(2,312		)	—
Debt exchange and issuance costs, premiums and discounts	(6		)	(42		)
Interest received on holdings of affiliate debt (Note 10)	—			208
Cash provided by (used in) financing activities	(478		)	1,008
Distributions to EFH Corp. (Note 10)	—			(680		)
Debt exchange and issuance costs, premiums and discounts	—			(6		)
Cash provided by (used in) financing activities	1,164			(478		)
Cash flows — investing activities:
Restricted cash related to debt issuance (Notes 3 and 5)	680			(680		)
Restricted cash related to debt issuance	—			680
Purchase of make-whole agreements between affiliate and unconsolidated subsidiary (Note 6)	—			(159		)
Cash provided by investing activities	—			680
Sale of make-whole agreements between affiliate and unconsolidated subsidiary (Note 6)	—			159
Net change in cash and cash equivalents	943			(35		)
Cash provided by (used in) investing activities	680			(680		)
Cash and cash equivalents — beginning balance	242			424
Net change in cash and cash equivalents	(95		)	132
Cash and cash equivalents — ending balance	$	1,185		$	389
Cash and cash equivalents — beginning balance	424			46
Cash and cash equivalents — ending balance	$	329		$	178

See Notes to Financial Statements.

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

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited)

	September 30, 2013			December 31, 2012
	June 30, 2014			December 31, 2013
ASSETS	(millions of dollars)
Current assets:
Cash and cash equivalents	$	~~329~~1,185		$	~~424~~242
Restricted cash (Note 5)	—			680
Other current assets	7			2
Income taxes receivable from EFH Corp.	7			1
Total current assets	1,192			244
Other current assets	1			—
Investment in Oncor Holdings (Note 3)	6,026			5,950
Total current assets	337			1,105
Other noncurrent assets (Note 7)	—			58
Investment in Oncor Holdings (Note 2)	5,950			5,842
Total assets	$	7,218		$	6,252
Accumulated deferred income taxes	6			—
Other noncurrent assets, principally unamortized debt premium/discount	60			76
Total assets	$	6,353		$	7,023
LIABILITIES AND MEMBERSHIP INTERESTS
Current liabilities:
Trade accounts and other payables to affiliates	$	15		$	210
Accrued interest	217			137
Notes, loans and other debt (Note 7)	—			7,877
Total current liabilities	218			139
Accumulated deferred income taxes	26			26
Accumulated deferred income taxes	—			109
Accrued interest	8			137
Long-term debt (Note 3)	7,803			6,954
Other current liabilities	9			—
Total liabilities	8,021			7,202
Total current liabilities	48			8,050
Commitments and Contingencies (Note 4)
Borrowings under debtor-in-possession credit facilities (Note 5)	5,400			—
Membership interests (Note 5):
Liabilities subject to compromise (Note 7)	3,984			—
Capital account	(964		)	5,049
Accumulated deferred income taxes	22			24
Long-term debt of affiliates held by EFIH	(680		)	(5,388		)
Total liabilities	9,454			8,074
Accumulated other comprehensive income (loss)	(24		)	160
Commitments and Contingencies (Note 9)
Total membership interests	(1,668		)	(179		)
Membership interests (Note 10):
Total liabilities and membership interests	$	6,353		$	7,023
Capital account	(1,563		)	(1,148		)
Affiliate debt held by EFIH (Note 10)	(635		)	(635		)
Accumulated other comprehensive income (loss)	(38		)	(39		)
Total membership interests	(2,236		)	(1,822		)
Total liabilities and membership interests	$	7,218		$	6,252

See Notes to Financial Statements.

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

NOTES TO CONDENSED 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 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) 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~~Bankruptcy ~~Considerations~~Filing

~~Our~~As ~~substantial~~discussed ~~debt,~~further ~~resulting~~ in ~~part~~Note ~~from~~2, ~~debt~~on ~~issued~~April in29, ~~exchange~~2014 ~~for~~(the ~~outstanding~~Petition Date), EFH Corp. ~~debt,~~and ~~requires~~the ~~significant~~substantial ~~cash~~majority ~~flows~~of toits bedirect ~~dedicated~~and toindirect ~~interest payments. Our liquidity depends on~~subsidiaries, ~~among~~including ~~other things~~EFIH, ~~receiving~~EFCH ~~dividends from Oncor Holdings~~ and ~~receiving interest payments on EFH Corp. and~~ TCEH ~~debt~~but weexcluding ~~hold. The~~the ~~interest~~Oncor weRing-Fenced ~~receive~~Entities, ~~from~~(the ~~EFH~~Debtors) ~~Corp.~~filed ~~has~~voluntary ~~decreased~~petitions ~~from~~for ~~2012~~relief ~~following~~ (the ~~January~~Bankruptcy ~~2013~~Filing) ~~distribution~~under toChapter ~~EFH~~11 ~~Corp.~~ of ~~debt~~the ~~previously~~United ~~held~~States byBankruptcy usCode (~~see~~the ~~Notes 3~~Bankruptcy ~~and 5~~Code)~~. EFIH~~ ~~has~~in ~~sufficient~~the ~~liquidity~~United toStates ~~meet~~Bankruptcy ~~its~~Court ~~obligations~~ for ~~approximately~~ the ~~next~~District ~~twelve~~of ~~months. See~~Delaware ~~discussion~~(the ~~immediately~~Bankruptcy ~~below regarding EFH Corp~~Court).'s See ~~discussions~~Note ~~with~~5 ~~creditors~~for ~~that~~discussion ~~included~~of ~~proposals~~debtor-in-possession ~~to restructure EFIH's debt~~financing.

~~EFH~~Basis ~~Corp.~~of ~~Discussions~~Presentation, ~~with~~Including ~~Creditors~~Application of Bankruptcy Accounting

~~EFH~~The ~~Corp.~~condensed ~~and~~consolidated ~~its~~financial ~~subsidiaries~~statements ~~(other~~have ~~than~~been ~~the~~prepared ~~Oncor~~as ~~Ring-Fenced~~if ~~Entities)~~EFH ~~continue~~Corp. tois ~~consider~~a going concern and ~~evaluate~~reflect ~~possible~~the ~~transactions~~application ~~and~~of ~~initiatives~~ASC to852-10, ~~address~~Reorganizations. During ~~their~~the ~~highly~~pendency ~~leveraged~~of ~~balance~~the ~~sheets~~Bankruptcy ~~and~~Filing, ~~significant~~the ~~cash~~Debtors ~~interest~~will ~~requirements~~operate ~~and~~their ~~have~~businesses ~~entered~~as ~~into~~"debtors-in-possession" ~~discussions~~under ~~with~~the ~~their~~jurisdiction ~~lenders~~of the Bankruptcy Court and ~~bondholders~~in accordance with ~~respect~~the toapplicable ~~such~~provisions ~~transactions~~of ~~and~~the ~~initiatives~~Bankruptcy Code. ~~These~~ASC ~~transactions~~852-10 ~~and~~applies ~~initiatives~~to ~~may~~entities ~~include,~~that ~~among~~have ~~others,~~filed ~~debt~~a petition for ~~debt~~bankruptcy ~~exchanges,~~under ~~recapitalizations,~~Chapter ~~amendments~~11 ~~to and extensions~~ of ~~debt~~the ~~obligations~~Bankruptcy ~~and~~Code. The ~~exchanges~~guidance orrequires ~~conversions~~that oftransactions ~~debt~~and ~~for~~events ~~preferred~~directly orassociated ~~common~~with ~~equity~~the orreorganization ~~warrants,~~be ~~including~~distinguished ~~exchanges~~from orthe ~~conversions~~ongoing ofoperations ~~debt~~ of ~~EFH~~the ~~Corp~~business., In ~~EFIH~~addition, ~~EFCH~~the ~~and~~guidance ~~TCEH~~provides ~~into~~for ~~preferred~~changes orin ~~common~~the ~~equity~~accounting orand ~~warrants~~presentation of ~~EFH Corp.~~liabilities, ~~EFIH,~~as ~~EFCH,~~well ~~TCEH~~as expenses and~~/or~~ ~~any~~income ofdirectly ~~their~~associated ~~subsidiaries. These~~with ~~actions~~the ~~could~~Chapter ~~result~~11 ~~in holders of EFH Corp~~Cases., See ~~EFIH,~~Notes ~~EFCH~~6 and ~~TCEH~~7 ~~debt~~for ~~instruments~~discussion ~~not~~of ~~recovering~~these ~~the~~accounting ~~full~~and ~~principal~~reporting ~~amount of those obligations~~changes.

InInvestments ~~March~~in ~~and~~unconsolidated ~~April 2013~~subsidiaries, ~~EFH~~which ~~Corp.~~are ~~engaged~~50% inor ~~discussions~~less ~~with~~owned ~~certain~~and/or ~~unaffiliated~~do ~~holders~~not ofmeet ~~first~~accounting ~~lien~~standards ~~senior~~criteria ~~secured~~for ~~claims against EFCH~~consolidation, ~~TCEH~~are ~~and~~accounted ~~certain~~for ofunder ~~TCEH's~~the ~~subsidiaries~~equity method (~~the~~see ~~TCEH~~Note ~~Creditors~~3). Adjustments ~~with~~(consisting ~~respect~~of tonormal ~~proposed~~recurring ~~changes~~accruals) tonecessary ~~its~~for ~~capital~~a ~~structure. No~~fair ~~agreement~~presentation ~~was~~of ~~reached~~the asresults ~~part~~ of ~~those~~operations ~~discussions,~~ and infinancial ~~September~~position ~~and~~have ~~October~~been ~~2013,~~included ~~EFH Corp~~therein. All ~~engaged~~intercompany initems ~~further~~and ~~discussions~~transactions ~~with~~have ~~the~~been ~~TCEH~~eliminated ~~Creditors,~~in ~~certain~~consolidation. Certain ~~unaffiliated~~information ~~holders~~and offootnote ~~unsecured~~disclosures ~~claims~~normally ~~against~~included ~~EFIH~~in ~~and~~annual aconsolidated ~~significant~~financial ~~creditor~~statements ~~with~~prepared ~~claims~~in ~~against~~accordance ~~TCEH,~~with ~~EFCH,~~US ~~EFIH~~GAAP ~~and~~have ~~EFH~~been ~~Corp.~~omitted ~~(collectively,~~pursuant to the ~~Creditors)~~rules ~~with~~and ~~respect~~regulations toof ~~its~~the ~~capital~~SEC. Because ~~structure, including~~ the ~~possibility~~condensed ofconsolidated ainterim ~~consensual,~~financial ~~prepackaged~~statements ~~restructuring~~do ~~transaction. EFH~~not ~~Corp.'s~~include ~~objectives~~all inof ~~these~~the ~~discussions~~information ~~were~~and tofootnotes ~~promote~~required aby ~~sustainable~~US ~~capital~~GAAP, ~~structure~~they ~~and~~should ~~maximize~~be ~~enterprise~~read ~~value~~in ofconjunction ~~EFH~~with ~~Corp.~~the ~~and~~audited ~~its~~financial ~~subsidiaries~~statements ~~by,~~and ~~among~~related ~~other~~notes ~~things,~~included ~~encouraging~~in ~~agreement~~EFIH's on2013 aForm ~~restructuring~~10-K. The ~~plan~~results ~~that~~of ~~would~~operations ~~minimize~~for ~~time~~an ~~spent~~interim inperiod amay ~~restructuring~~not ~~through~~give a ~~proactive~~true ~~and~~indication ~~organized~~of ~~solution;~~results ~~minimizing~~for ~~any~~a ~~potential~~full ~~adverse~~year. All ~~tax~~dollar ~~impacts~~amounts ofin athe ~~restructuring;~~financial ~~maintaining~~statements ~~EFH~~and ~~Corp.~~tables in ~~one~~the ~~consolidated~~notes ~~group;~~are ~~maintaining~~stated ~~focus~~in onmillions ~~operating~~of ~~its~~US ~~businesses,~~dollars ~~and~~unless ~~maintaining~~otherwise ~~EFH Corp~~indicated.~~'s high-performing work force.~~

EFH Corp. and the Creditors discussed a number of proposed changes to EFH Corp.'s capital structure. Certain proposals contemplated that some combination of EFH Corp. and certain of its subsidiaries (including EFIH, EFCH and TCEH but excluding the Oncor Ring-Fenced Entities) would implement a plan of reorganization by commencing one or more voluntary cases under Chapter 11 of the United States Bankruptcy Code (the Code). Such proposals would have resulted in a prenegotiated restructuring of EFCH’s approximately $32.2 billion principal amount of debt, EFH Corp.’s approximately $650 million principal amount of debt and EFIH’s approximately $7.6 billion principal amount of debt (each as of September 30, 2013 and excluding debt held by affiliates) and contemplated that after the restructuring EFH Corp. would continue to hold all of the equity interests in EFCH and EFIH; EFCH would continue to hold all of the equity interests in TCEH; and EFIH would continue to hold all of the equity interests in Oncor Holdings. Another proposal contemplated that EFIH (excluding Oncor Holdings and its subsidiaries) would implement a plan of reorganization by commencing a stand-alone voluntary case under the Code. Such proposal contemplated that after the restructuring certain creditors of EFIH would own a substantial majority of, and certain creditors of EFH Corp. and the equity holders of EFH Corp. would collectively own a minority of, the equity interests in EFIH. The confirmation of any plans of reorganization in such cases would be subject to applicable regulatory approvals. EFH Corp. and the Creditors have not reached agreement on the terms of any change in our capital structure.

EFH Corp. is not currently engaged in ongoing negotiations with the principals of any of the Creditors. Although the Creditors are not currently engaged in ongoing negotiations with EFH Corp., certain of the Creditors have directed their advisors to continue to work with EFH Corp. and its advisors to explore further whether the parties can reach an agreement on the terms of a consensual restructuring. EFH Corp. will continue to consider and evaluate a range of future changes to its capital structure, in addition to the proposed changes described above, which may include filing a voluntary case under Chapter 11 of the Code for some or all of EFH Corp. and its subsidiaries (excluding the Oncor Ring-Fenced Entities).

Basis of Presentation

The condensed consolidated financial statements have been prepared in accordance with US GAAP and on the same basis as the audited financial statements included in our 2012 Form 10-K. Our investment in Oncor Holdings does not meet accounting standards criteria for consolidation and is accounted for under the equity method (see Note 2). Adjustments (consisting of normal recurring accruals) necessary for a fair presentation of the results of operations and financial position have been included therein. All intercompany items and transactions have been eliminated in consolidation. Certain information and footnote disclosures normally included in annual consolidated financial statements prepared in accordance with US GAAP have been omitted pursuant to the rules and regulations of the SEC. Because the condensed consolidated interim financial statements do not include all of the information and footnotes required by US GAAP, they should be read in conjunction with the audited financial statements and related notes included in our 2012 Form 10-K. The results of operations for an interim period may not give a true indication of results for a full year. 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.

2. ~~INVESTMENT~~BANKRUPTCY ~~IN ONCOR HOLDINGS~~FILING

WeOn ~~have~~the anPetition ~~equity investment in Oncor Holdings~~Date, ~~which~~EFH ~~holds an approximate 80% interest in Oncor~~Corp. ~~Oncor~~ ~~Holdings~~and isthe ~~considered~~substantial amajority ~~variable~~of ~~interest~~its ~~entity~~direct ~~(VIE). A~~and ~~VIE~~indirect issubsidiaries, anincluding ~~entity~~EFIH, ~~with~~EFCH ~~which~~and weTCEH ~~have~~but aexcluding ~~relationship or arrangement that indicates some level of control over~~ the ~~entity~~Oncor orRing-Fenced ~~results~~Entities, infiled ~~economic~~voluntary ~~risks~~petitions tofor ~~us. Accounting~~relief ~~standards~~under ~~require~~Chapter ~~consolidation~~11 of ~~a VIE if we have (a)~~ the ~~power~~United toStates ~~direct~~Bankruptcy ~~the~~Code ~~significant~~in ~~activities of~~ the ~~VIE~~United ~~and~~States ~~(b)~~Bankruptcy ~~the~~Court ~~right~~for ~~or obligation to absorb profit and loss from~~ the ~~VIE~~District ~~(primary~~of ~~beneficiary)~~Delaware. InDuring ~~determining~~ the ~~appropriateness~~pendency of ~~consolidation~~the ofBankruptcy ~~a VIE~~Filing, wethe ~~evaluate~~Debtors ~~its~~will ~~purpose,~~operate ~~governance~~their ~~structure,~~businesses ~~decision~~as ~~making~~"debtors-in-possession" ~~processes~~under ~~and risks that are passed on to its interest holders. We also examine~~ the ~~nature~~jurisdiction of ~~any related party relationships among~~ the ~~interest~~Bankruptcy ~~holders~~Court ~~of the VIE~~ and ~~the~~in ~~nature~~accordance ofwith ~~any special rights granted to~~ the ~~interest~~applicable ~~holders~~provisions of the ~~VIE~~Bankruptcy Code.

WeThe doBankruptcy ~~not~~Filing ~~consolidate~~resulted ~~Oncor~~primarily ~~Holdings~~from ~~and~~the ~~instead~~adverse ~~account~~effects ~~for~~on itEFH asCorp.'s ancompetitive ~~equity~~businesses ~~method~~of ~~investment~~lower ~~because~~wholesale electricity prices in ERCOT driven by the ~~structural~~sustained ~~and~~decline ~~operational~~in ~~"ring~~natural gas prices since mid-~~fencing"~~2008. Further, ~~measures~~the ~~discussed~~natural ingas ~~Note~~hedges 1that ~~prevent~~TCEH usentered ~~from~~into ~~having~~when ~~power~~forward tomarket ~~direct~~prices of natural gas were significantly higher than current prices had largely matured before the ~~significant~~remaining ~~activities~~positions ofwere ~~Oncor~~terminated ~~Holdings~~shortly orafter ~~Oncor~~the Bankruptcy Filing. InThese ~~accordance~~market ~~with~~conditions ~~accounting~~challenged ~~standards,~~the weprofitability ~~account~~and ~~for~~operating ~~our~~cash ~~investment~~flows inof ~~Oncor~~EFH ~~Holdings~~Corp.'s ~~under~~competitive ~~the~~businesses ~~equity~~and ~~method,~~resulted asin ~~opposed~~the inability to support their significant interest payments and debt maturities, including the ~~cost~~remaining ~~method~~debt obligations due in 2014, ~~based~~and onthe ~~our~~inability ~~level~~to ofrefinance ~~influence~~and/or ~~over~~extend ~~its~~the ~~activities~~maturities of their outstanding debt.

~~The~~Restructuring ~~carrying~~Support ~~value of our variable interest in Oncor Holdings totaled $5.950 billion~~ and ~~$5.842~~Lock-Up ~~billion~~Agreement at(RSA) September 30, 2013 and December 31, 2012, 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~~As ~~Note~~previously 6disclosed, ~~for~~after ~~discussion~~a series of ~~Oncor~~discussions ~~Holdings'~~with certain creditors that began in 2013 and ~~Oncor's~~in ~~transactions~~anticipation ~~with~~of ~~EFH~~the ~~Corp.~~Bankruptcy Filing, on April 29, 2014, the Debtors entered into a Restructuring Support and ~~its~~Lock-Up ~~other~~Agreement ~~subsidiaries~~(RSA) 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.

~~Distributions~~On ~~from~~July ~~Oncor Holdings — Oncor Holdings' distributions of earnings to us totaled $148 million and $100 million for the nine months ended September 30~~24, ~~2013 and 2012~~2014, ~~respectively. Distributions~~pursuant ~~may not be paid except~~ to the ~~extent~~RSA, ~~Oncor~~each ~~maintains~~of aEFH ~~required regulatory capital structure as discussed below~~Corp. At, ~~September 30~~EFIH, ~~2013~~EFCH, ~~$187~~TCEH, ~~million~~EFIH ~~was eligible to be distributed to Oncor's members after taking into account the regulatory capital structure limit~~Finance, ofInc. ~~which~~and ~~approximately~~TCEH ~~80%~~Finance ~~relates to our ownership interest in Oncor~~Inc. ~~The~~ ~~boards~~provided ofa ~~directors~~notice of ~~each~~termination of ~~Oncor and Oncor Holdings can withhold distributions to~~ the ~~extent~~RSA ~~the applicable board determines~~ in ~~good~~accordance ~~faith~~with ~~that~~its itterms ~~is necessary~~ to ~~retain~~the ~~such~~Consenting ~~amounts~~Parties. The toRSA ~~meet~~termination ~~expected~~became ~~future~~effective ~~requirements~~on ofJuly ~~Oncor~~31, ~~and/or Oncor Holdings~~2014.

~~Oncor's~~The ~~distributions~~Debtors ~~are~~believe ~~limited~~that bythe ~~its~~RSA ~~regulatory~~provided ~~capital~~significant ~~structure,~~benefit ~~which is required~~ to ~~be at or below~~ the ~~assumed~~Debtors, ~~debt-to-equity~~including, ~~ratio~~without ~~established~~limitation, ~~periodically~~(a) byenabling the ~~PUCT~~TCEH ~~for~~Debtors ~~ratemaking purposes, which is currently set at 60% debt~~ to ~~40%~~obtain ~~equity. At~~the ~~September 30,~~support ~~2013,~~of ~~Oncor's~~holders ~~regulatory~~of ~~capitalization~~the ~~ratio~~TCEH ~~was~~first ~~58.7%~~lien ~~debt~~secured ~~and~~claims ~~41.3%~~for ~~equity. The PUCT has~~ the ~~authority~~TCEH todebtor-in-possession ~~determine~~financing ~~what~~facility ~~types of debt~~ and ~~equity~~(b) ~~are~~providing ~~included in~~ a ~~utility's~~framework ~~debt-to-equity~~for ~~ratio. For~~the ~~purposes~~restructuring oftransactions ~~this~~involving ~~ratio,~~EFH ~~debt is calculated as long-term debt plus unamortized gains on reacquired debt less unamortized issuance expenses, premiums and losses on reacquired debt~~Corp. ~~The~~ ~~debt calculation excludes bonds issued by Oncor Electric Delivery Transition Bond Company LLC, which were issued in 2003~~ and ~~2004~~EFIH todescribed ~~recover specific generation-related regulatory assets and other qualified costs. Equity is calculated as membership interests determined~~ in ~~accordance~~the ~~with US GAAP~~RSA, ~~excluding~~which ~~the~~prompted ~~effects~~competing ofproposals ~~accounting for the Merger~~ (~~which~~including, ~~included~~among ~~recording~~others, ~~the~~an ~~initial~~alternative ~~goodwill~~proposal ~~and~~from ~~fair~~NextEra ~~value~~Energy, ~~adjustments and the subsequent related impairments and amortization~~Inc.).

Each of the Debtors remain committed to the tax-free spin of TCEH and its subsidiaries described in the RSA. Moreover, the TCEH first lien creditors who were party to the RSA have advised the Debtors that, notwithstanding the RSA termination, they intend to continue to work cooperatively with the Debtors and other parties in interest to pursue transactions that can be achieved expeditiously, including a possible tax-free spin of the TCEH Debtors, which will maximize the value of the TCEH Debtors' estates and resolve the Chapter 11 Cases.

In cooperation with various stakeholders, the Debtors have focused, and will continue to focus, 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 intend to conduct a court supervised bid process with respect to the restructuring of EFH Corp. and EFIH to maximize their respective enterprise values for all stakeholders. In addition, EFH Corp. and EFIH intend to negotiate with each party that has submitted or does submit a bid with respect to the reorganization of EFH Corp. and EFIH.

EFIH Settlement of First Lien Notes and Related Exchanges

Pursuant to the RSA, certain holders of EFIH First Lien Notes agreed to voluntary settlements of such notes. In June 2014, the Bankruptcy Court issued an order approving this settlement, the EFIH DIP Facility and the settlement of remaining EFIH First Lien Notes, all of which were completed as described in Note 5.

The RSA termination does not impact or cancel the EFIH First Lien Notes settlement since such settlement was completed prior to the RSA termination. See Note 9 for a discussion of litigation regarding alleged makewhole claims of holders of EFIH First Lien Notes in connection with the EFIH First Lien Notes settlement.

~~Oncor~~Private ~~Holdings~~Letter ~~Financial Statements — Condensed statements of consolidated income of Oncor Holdings and its subsidiaries for the three and nine months ended September 30, 2013 and 2012 are presented below:~~Ruling

	Three Months Ended September 30,						Nine Months Ended September 30,
	2013			2012			2013			2012
Operating revenues	$	966		$	925		$	2,640		$	2,536
Operation and maintenance expenses	(315		)	(292		)	(919		)	(873		)
Depreciation and amortization	(207		)	(201		)	(608		)	(577		)
Taxes other than income taxes	(112		)	(113		)	(315		)	(313		)
Other income	4			6			14			20
Other deductions	(2		)	(1		)	(11		)	(4		)
Interest income	—			3			2			24
Interest expense and related charges	(94		)	(96		)	(283		)	(279		)
Income before income taxes	240			231			520			534
Income tax expense	(97		)	(95		)	(199		)	(221		)
Net income	143			136			321			313
Net income attributable to noncontrolling interests	(29		)	(27		)	(66		)	(64		)
Net income attributable to Oncor Holdings	$	114		$	109		$	255		$	249

Pursuant to the RSA, on June 10, 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 to Reorganized TCEH, (ii) the transfer by the Debtors to Reorganized TCEH of certain operating assets and liabilities that are reasonably 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. Notwithstanding the termination of the RSA, the Debtors intend to continue to pursue the Private Letter Ruling in connection with any Chapter 11 plan of reorganization that is ultimately proposed.

Operation and Implications of the Chapter 11 Cases

The accompanying consolidated financial statements contemplate the realization of assets and the satisfaction of liabilities in the normal course of business. The Debtors' ability to continue as a going concern is contingent upon their ability to comply with the financial and other covenants contained in the debtor-in-possession financing (DIP Facilities), the Bankruptcy Court's approval of the Chapter 11 plan of reorganization ultimately proposed by the Debtors and their ability to successfully implement such Chapter 11 plan and obtain new financing, among other factors. As a result of the Chapter 11 Cases, the realization of assets and the satisfaction of liabilities are subject to uncertainty. While operating as debtors-in-possession under Chapter 11, the Debtors may sell or otherwise dispose of or liquidate assets or settle liabilities, subject to the approval of the Bankruptcy Court or as otherwise permitted in the ordinary course of business (and subject to restrictions contained in the DIP Facilities), for amounts other than those reflected in the accompanying consolidated financial statements.

In general, the Debtors have received final bankruptcy court orders with respect to "first day motions" that allow the Debtors to operate their businesses in the ordinary course of business, including, among others, providing for the payment of certain pre-petition employee and retiree expenses and benefits, the use of the Debtors' existing cash management system, the continuation of customer programs at its retail electricity sales operations, the payment of certain pre-petition amounts to certain critical vendors, the ability to perform under certain pre-petition hedging and trading arrangements and the ability to pay certain pre-petition taxes and regulatory fees. In June 2014, the Bankruptcy Court issued orders approving the TCEH and EFIH DIP Facilities and the exchange and settlement of the EFIH First Lien Notes as described in Note 5.

Pre-Petition Claims

Holders of pre-petition claims will be required to file proofs of claims by the "bar dates" 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 has not yet established the bar date. 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 condensed consolidated balance sheet will be recognized as reorganization items in the Debtors' condensed statement 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. 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.

~~Assets~~3. ~~and~~INVESTMENT ~~liabilities~~IN ofONCOR ~~Oncor Holdings at September 30, 2013 and December 31, 2012 are presented below:~~HOLDINGS

	September 30, 2013		December 31, 2012
ASSETS
Current assets:
Cash and cash equivalents	$	17	$	45
Restricted cash	61		55
Trade accounts receivable — net	404		338
Trade accounts and other receivables from affiliates	158		53
Inventories	67		73
Accumulated deferred income taxes	35		26
Prepayments and other current assets	82		82
Total current assets	824		672
Restricted cash	16		16
Other investments	85		83
Property, plant and equipment — net	11,794		11,318
Goodwill	4,064		4,064
Regulatory assets — net	1,512		1,788
Other noncurrent assets	70		78
Total assets	$	18,365	$	18,019
LIABILITIES
Current liabilities:
Short-term borrowings	$	860	$	735
Long-term debt due currently	129		125
Trade accounts payable — nonaffiliates	100		121
Income taxes payable to EFH Corp.	35		34
Accrued taxes other than income	134		153
Accrued interest	65		95
Other current liabilities	111		110
Total current liabilities	1,434		1,373
Accumulated deferred income taxes	1,881		1,736
Investment tax credits	22		24
Long-term debt, less amounts due currently	5,422		5,400
Other noncurrent liabilities and deferred credits	1,931		1,999
Total liabilities	$	10,690	$	10,532

EFIH has 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 EFIH has a relationship or arrangement that indicates some level of control over the entity or results in economic risks to it. Accounting standards require consolidation of a VIE if EFIH 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., EFIH is the primary beneficiary of the VIE). In determining the appropriateness of consolidation of a VIE, EFIH evaluates its purpose, governance structure, decision making processes and risks that are passed 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.

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

The carrying value of EFIH's variable interest in Oncor Holdings totaled $6.026 billion and $5.950 billion at June 30, 2014 and December 31, 2013, respectively, and is reported as investment in Oncor Holdings in EFIH's condensed consolidated balance sheets. EFIH's maximum exposure to loss from this investment does not exceed its carrying value.

See Note 11 for discussion of Oncor Holdings' and Oncor's transactions with EFH Corp. and its other subsidiaries.

Distributions from Oncor Holdings and Related Considerations — Oncor Holdings' distributions of earnings to EFIH totaled $77 million and $80 million for the six months ended June 30, 2014 and 2013, respectively. Distributions may not be paid except to the extent Oncor maintains a required regulatory capital structure as discussed below. At June 30, 2014, $108 million was eligible to be distributed to Oncor's members after taking into account the regulatory capital structure limit, of which approximately 80% 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.

Oncor's distributions are limited by its regulatory capital structure, which is required to be 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 June 30, 2014, Oncor's regulatory capitalization ratio, as defined by the PUCT, was 59.3% debt and 40.7% equity. For purposes of this ratio, debt is calculated as long-term debt plus unamortized gains 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 calculated as membership interests determined in accordance with US GAAP, excluding the effects of accounting for the Merger (which included recording the initial goodwill and fair value adjustments and the subsequent related impairments and amortization).

As a result of the Bankruptcy Filing, Oncor had credit risk exposure to trade accounts receivable from TCEH, which related to delivery services provided by Oncor to TCEH's retail electricity operations. At the Petition Date, these accounts receivable totaled $109 million. In June 2014, the Bankruptcy Court authorized the Debtors to pay all pre-petition delivery charges due Oncor, and such amounts were paid in full.

Oncor has additional credit risk exposure to EFH Corp. and certain of its subsidiaries totaling approximately $20 million at the Petition Date, including an $18 million federal income tax receivable from EFH Corp. under the Federal and State Income Tax Allocation Agreement. Additional income tax receivable amounts may arise in the normal course under that agreement.

Because Oncor would not seek regulatory rate recovery for such credit losses, Oncor's earnings could be reduced by the amount (after-tax) of any nonpayment by EFH Corp. and its subsidiaries of amounts owed to Oncor.

Oncor has not established any reserves related to this exposure.

3.Oncor ~~LONG-TERM~~Holdings ~~DEBT~~Financial Statements — Condensed statements of consolidated income of Oncor Holdings and its subsidiaries for the three and six months ended June 30, 2014 and 2013 are presented below:

At September 30, 2013 and December 31, 2012, long-term debt consisted of the following:



	Three Months Ended June 30,						Six Months Ended June 30,
	2014			2013			2014			2013
Operating revenues	$	912		$	857		$	1,829		$	1,674
Operation and maintenance expenses	(353		)	(307		)	(698		)	(605		)
Depreciation and amortization	(210		)	(202		)	(420		)	(401		)
Taxes other than income taxes	(106		)	(101		)	(215		)	(203		)
Other income	3			5			7			10
Other deductions	(4		)	(4		)	(7		)	(8		)
Interest income	1			1			2			2
Interest expense and related charges	(89		)	(95		)	(177		)	(189		)
Income before income taxes	154			154			321			280
Income tax expense	(63		)	(61		)	(129		)	(102		)
Net income	91			93			192			178
Net income attributable to noncontrolling interests	(19		)	(19		)	(40		)	(37		)
Net income attributable to Oncor Holdings	$	72		$	74		$	152		$	141

	September 30,			December 31,
	2013			2012
Debt issued by EFIH:
6.875% Fixed Senior Secured First Lien Notes due August 15, 2017	$	503		$	503
10% Fixed Senior Secured First Lien Notes due December 1, 2020	3,482			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			1,750
11.25/12.25% Senior Toggle Notes due December 1, 2018	1,476			1,304
9.75% Fixed Senior Notes due October 15, 2019	2			141
Unamortized premium	303			351
Unamortized discount	(149		)	(131		)
Total debt issued by EFIH	7,773			6,504
Pushed down debt (a):
10% EFH Corp. Fixed Senior Notes due January 15, 2020	—			331
9.75% EFH Corp. Fixed Senior Notes due October 15, 2019	—			57
10.875% EFH Corp. Fixed Senior Notes due November 1, 2017	17			32
11.25/12.00% EFH Corp. Senior Toggle Notes due November 1, 2017	13			30
Total pushed down debt	30			450
Total long-term debt (b)	$	7,803		$	6,954

Assets and liabilities of Oncor Holdings at June 30, 2014 and December 31, 2013 are presented below:

________________



	June 30, 2014		December 31, 2013
ASSETS
Current assets:
Cash and cash equivalents	$	6	$	28
Restricted cash	49		52
Trade accounts receivable — net	454		385
Trade accounts and other receivables from affiliates	140		135
Income taxes receivable from EFH Corp.	36		16
Inventories	75		65
Accumulated deferred income taxes	22		32
Prepayments and other current assets	89		82
Total current assets	871		795
Restricted cash	16		16
Other investments	93		91
Property, plant and equipment — net	12,163		11,902
Goodwill	4,064		4,064
Regulatory assets — net	1,156		1,324
Other noncurrent assets	76		71
Total assets	$	18,439	$	18,263
LIABILITIES
Current liabilities:
Short-term borrowings	$	822	$	745
Long-term debt due currently	635		131
Trade accounts payable — nonaffiliates	141		178
Income taxes payable to EFH Corp.	14		23
Accrued taxes other than income	99		169
Accrued interest	94		95
Other current liabilities	145		135
Total current liabilities	1,950		1,476
Accumulated deferred income taxes	1,885		1,905
Long-term debt, less amounts due currently	5,065		5,381
Other noncurrent liabilities and deferred credits	1,759		1,822
Total liabilities	$	10,659	$	10,584

(a) Represents 50% of the amount of these EFH Corp. securities guaranteed by EFIH and pushed down per the discussion below under "Guarantees and Push Down of EFH Corp. Debt."

(b) EFIH had no long-term debt due currently at September 30, 2013 and December 31, 2012.

Debt Related Activity in 2013

EFIH Debt Exchanges and Distributions Involving EFH Corp. Debt — In exchanges in January 2013, EFIH and EFIH Finance issued $1.302 billion principal amount of EFIH 10% Senior Secured Notes due 2020 (New EFIH 10% Notes) in exchange for $1.310 billion total principal amount of EFH Corp. and EFIH senior secured notes consisting of: (i) $113 million principal amount of EFH Corp. 9.75% Senior Secured Notes due 2019 (EFH Corp. 9.75% Notes), (ii) $1.058 billion principal amount of EFH Corp. 10% Senior Secured Notes due 2020 (EFH Corp. 10% Notes), and (iii) $139 million principal amount of EFIH 9.75% Senior Secured Notes due 2019 (EFIH 9.75% Notes). The New EFIH 10% Notes have terms and conditions substantially the same as the existing EFIH 10% Notes discussed below. EFIH cancelled the EFIH notes it received in the exchanges.

In connection with these debt exchange transactions, EFH Corp. received the requisite consents from holders of the EFH Corp. 9.75% Notes and EFH Corp. 10% Notes and EFIH received the requisite consents from holders of the EFIH 9.75% Notes to certain amendments to the respective indentures governing such notes. These amendments, among other things, (i) eliminated EFIH's pledge of its 100% ownership of the membership interests it owns in Oncor Holdings as collateral for the EFIH 9.75% Notes, (ii) made EFCH and EFIH unrestricted subsidiaries under the EFH Corp. 9.75% Notes and EFH Corp. 10% Notes, thereby eliminating EFCH's unsecured and EFIH's secured guarantees of the notes, (iii) eliminated substantially all of the restrictive covenants in the indentures and (iv) eliminated certain events of default, modified covenants regarding mergers and consolidations and modified or eliminated certain other provisions in these indentures.

In additional exchanges in January 2013, EFIH and EFIH Finance issued $89 million principal amount of additional 11.25/12.25% Toggle Notes due 2018 (EFIH Toggle Notes) in exchange for $95 million total principal amount of EFH Corp. senior notes consisting of: (i) $31 million principal amount of EFH Corp. 10.875% Senior Notes due 2017 (EFH Corp. 10.875% Notes), (ii) $33 million principal amount of EFH Corp. 11.25%/12.00% Senior Toggle Notes due 2017 (EFH Corp. Toggle Notes), (iii) $2 million principal amount of EFH Corp. 5.55% Series P Notes due 2014 (EFH Corp. 5.55% Notes) and (iv) $29 million principal amount of EFH Corp. 6.50% Series Q Notes due 2024 (EFH Corp. 6.50% Notes). The additional EFIH Toggle Notes have the same terms and conditions as the existing EFIH Toggle Notes discussed below.

The aggregate principal amount of EFH Corp. debt received in the January 2013 exchanges totaled $1.266 billion.

Accounting and Income Tax Effects of the January 2013 Debt Exchanges — In consideration of the circumstances and terms of the exchanges, accounting rules require that the net loss on the exchanges, which totaled $21 million, be deferred and amortized to interest expense over the life of the debt issued4. ~~The~~ ~~deferred~~OTHER loss is reported as debt discount associated with the EFIH 10% Notes and EFIH Toggle Notes. The deferred loss and the related deferred tax liability were pushed down to EFIH as a membership interests transaction.DEDUCTIONS

~~Guarantee~~At June 30 and ~~Push~~March ~~Down~~31, of2014, EFIH had income tax receivables from EFH Corp. ~~Debt~~that arose under the Federal and State Income Tax Allocation Agreement totaling $122 million and $77 million, respectively. In consideration of the Bankruptcy Filing, EFIH fully reserved the income tax receivables because of the significant uncertainty regarding their ultimate settlement, resulting in charges of $122 million and $199 million in the three and six month period ended June 30, 2014, respectively.

~~Merger-related~~Further, ~~debt~~at ofDecember 31, ~~EFH~~2013, ~~Corp.~~EFIH ~~and~~had ~~its~~an ~~subsidiaries~~income ~~consists~~tax ofreceivable ~~debt~~from ~~issued~~EFH ~~or existing at the time of the Merger~~Corp. ~~Debt~~ ~~issued~~totaling in$110 ~~exchange for Merger-related debt is considered Merger-related~~million. ~~Debt~~In ~~issuances for cash are considered Merger-related debt to~~ the ~~extent~~fourth ~~the~~quarter ~~proceeds~~2013, ~~are used to repurchase Merger-related debt. EFCH and~~ EFIH ~~(excluding their subsidiaries)~~ fully ~~and~~reserved ~~unconditionally guarantee on a joint and several basis~~ the ~~Merger-related~~income ~~debt~~tax ofreceivable ~~EFH~~because ~~Corp. (parent). Such debt is subject to push down in accordance with SEC Staff Accounting Bulletin Topic 5-J, and as a result, a portion~~ of ~~such~~the ~~debt~~significant ~~and~~uncertainty ~~related~~regarding ~~interest expense is reflected in our financial statements. Merger-related debt of EFH Corp. held by~~ its ~~subsidiaries~~ultimate ~~is not subject to push down~~settlement.

~~As a result of transactions in the first quarter 2013 discussed above and in Note~~ 5~~, debt guaranteed and subject to push down at September 30, 2013 totals $60 million and consists of $33 million principal amount of EFH Corp~~. 10.875% Senior Notes and $27 million principal amount of EFH Corp. 11.25/12.00% Senior Toggle Notes. The amount reflected in our balance sheet as pushed down debt ($30 million and $450 million at September 30, 2013 and December 31, 2012, respectively, as shown in the longDEBTOR-~~term debt table above) represents 50% of the principal amount of the EFH Corp. Merger~~IN-~~related~~POSSESSION ~~debt~~BORROWING guaranteed. 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., we record the settlement of such amounts as noncash capital contributions from EFH Corp.FACILITIES

~~The~~EFIH ~~following~~DIP ~~table~~Facility ~~presents~~and anEFIH ~~analysis~~First ofLien ~~the~~Notes ~~total~~Settlement ~~outstanding~~— ~~principal~~The ~~amount~~Bankruptcy ofCourt ~~EFH~~approved ~~Corp.~~the ~~debt~~EFIH ~~guaranteed~~DIP byFacility ~~EFCH~~in ~~and~~June 2014. The EFIH atDIP ~~December~~Facility 31provides for a $5.4 billion first-lien debtor-in-possession financing facility, ~~2012~~all ~~and~~of ~~September~~ which was utilized as of June 30, ~~2013,~~2014 ~~respectively.~~as follows:

	December 31, 2012
Securities Guaranteed (principal amounts)	Held by EFIH		Subject to Push Down		Not Merger-Related		Total Guaranteed		Debt Cancelled in 2013 (c)		Total Guaranteed September 30, 2013 (d)
EFH Corp. 9.75% Senior Notes (a)	$	—	$	115	$	—	$	115	$	113	$	—
EFH Corp. 10% Senior Notes (a)	—		661		400		1,061		1,058		—
EFH Corp. 10.875% Senior Notes	1,685		64		—		1,749		1,715		33
EFH Corp. 11.25/12.00% Senior Toggle Notes	3,441		60		—		3,501		3,474		27
Subtotal	$	5,126	$	900	$	400	6,426		$	6,360	60
TCEH Demand Notes (b)							698				—
Total							$	7,124			$	60

•

$1.836 billion of loans issued under the facility were issued as an exchange to holders of $1.673 billion principal amount of EFIH First Lien Notes plus accrued and unpaid interest totaling $78 million. Holders of substantially all of the principal amount exchanged received as payment in full a principal amount of loans under the DIP facility equal to 105% of the principal amount of the notes held plus 101% of the accrued and unpaid interest at the non-default rate on such principal;

~~________________~~• $2.438 billion of cash borrowings were used to repay all remaining $2.312 billion principal amount of EFIH First Lien Notes (plus accrued and unpaid interest totaling $128 million), and

~~(a)~~• AsRemaining aborrowings ~~result~~under ~~of transactions completed in~~ the ~~first quarter 2013~~facility, asnet ~~discussed~~of ~~above~~fees, ~~the guarantees~~ of ~~the EFH Corp~~$1.038 ~~9.75%~~billion ~~Notes~~are ~~and~~held ~~EFH~~as ~~Corp.~~cash ~~10%~~and ~~Notes~~cash ~~were eliminated~~equivalents.

~~(b)~~ The ~~TCEH~~exchange ~~Demand~~and settlement of the EFIH First Lien Notes ~~were~~resulted ~~settled~~in a loss of $108 million, reported in ~~January~~reorganization ~~2013.~~items, ~~See~~which ~~Note~~represents 6the excess of the principal amounts of debt issued, cash repayments and deferred financing costs associated with the exchanged and settled debt over the carrying value of the exchanged and settled debt and related accrued interest.

~~(c)~~The ~~See~~principal ~~Note~~amounts outstanding under the EFIH DIP Facility bear interest based on applicable LIBOR rates, subject to a 1% floor, plus 3.25%. At June 30, 2014, outstanding borrowings under the EFIH DIP Facility totaled $5.4 billion at an annual interest rate of 4.25%. The EFIH DIP Facility is a non-amortizing loan that may, subject to certain limitations, be voluntarily prepaid by the EFIH Debtors, in whole or in part, without any premium or penalty.

The EFIH DIP Facility will mature on the earlier of (da) ~~These~~the ~~amounts~~effective ~~are~~date of any reorganization plan, (b) upon the event of the sale of substantially all of EFIH's assets or (c) June 2016. The maturity date may be extended to no later than December 2016 subject to ~~push~~the ~~down~~satisfaction of certain conditions, including the payment of a 25 basis point extension fee, a requirement that an acceptable plan of reorganization has been filed on or prior to such extension and the availability of certain metrics of liquidity applicable to EFIH and EFIH Finance.

EFIH's obligations under the EFIH DIP Facility are secured by a first lien covering substantially all of EFIH's assets, rights and properties, subject to certain exceptions set forth in the EFIH DIP Facility. The EFIH DIP Facility provides that all obligations thereunder constitute administrative expenses in the Chapter 11 Cases, with administrative priority and senior secured status under the Bankruptcy Code and, subject to certain exceptions set forth in the EFIH DIP Facility, will have priority over any and all administrative expense claims, unsecured claims and costs and expenses in the Chapter 11 Cases.

The EFIH DIP Facility provides for affirmative and negative covenants applicable to EFIH and EFIH Finance, including affirmative covenants requiring EFIH and EFIH Finance to provide financial information, budgets and other information to the agents under the EFIH DIP Facility, and negative covenants restricting EFIH's and EFIH Finance's ability to incur additional indebtedness, grant liens, dispose of assets, pay dividends or take certain other actions, in each case except as permitted in the EFIH DIP Facility. The EFIH DIP Facility also includes a minimum liquidity covenant pursuant to which EFIH cannot allow the amount of its unrestricted cash (as defined in the EFIH DIP Facility) to be less than $150 million. The Oncor Ring-Fenced Entities are not restricted subsidiaries for purposes of the EFIH DIP Facility.

~~Information~~The ~~Regarding~~EFIH ~~Other~~DIP ~~Significant~~Facility ~~Outstanding~~provides ~~Debt~~for certain customary events of default, including events of default resulting from non-payment of principal, interest or other amounts when due, material breaches of representations and warranties, material breaches of covenants in the EFIH DIP Facility or ancillary loan documents, cross-defaults under other agreements or instruments and the entry of material judgments against EFIH. Upon the existence of an event of default, the EFIH DIP Facility provides that all principal, interest and other amounts due thereunder will become immediately due and payable, either automatically or at the election of specified lenders.

The EFIH ~~6.875%~~DIP ~~Senior~~Facility ~~Secured Notes — At September 30~~permits, ~~2013,~~subject ~~the~~to ~~principal~~certain ~~amount of the EFIH 6.875% Notes totaled $503 million. These notes mature in August 2017~~terms, ~~with~~conditions ~~interest~~and ~~payable~~limitations inset ~~cash~~forth ~~semiannually~~ in ~~arrears~~the ~~on February 15 and August 15 at a fixed rate of 6.875% per annum. The~~ EFIH ~~6.875%~~DIP ~~Notes~~Facility, ~~are secured on a first-priority basis by~~ EFIH's ~~pledge~~to ofincur ~~its~~incremental ~~100%~~junior ~~ownership~~lien ofsubordinated ~~the~~debt ~~membership interests~~ in ~~Oncor Holdings (the EFIH Collateral) on~~ an ~~equal~~aggregate ~~and~~amount ~~ratable~~not ~~basis~~to ~~with~~exceed ~~the~~$3 ~~EFIH 10% Notes~~billion.

~~The EFIH~~ 6.~~875%~~ ~~Notes~~REORGANIZATION are senior obligations of EFIH and rank equally in right of payment with all senior indebtedness of EFIH and are senior in right of payment to any future subordinated indebtedness of EFIH. The EFIH 6.875% Notes are effectively senior to all second lien and unsecured indebtedness of EFIH, to the extent of the value of the EFIH Collateral, and are effectively subordinated to any indebtedness of EFIH secured by assets of EFIH other than the EFIH Collateral, to the extent of the value of such assets. Furthermore, the EFIH 6.875% Notes are structurally subordinated to all indebtedness and other liabilities of EFIH's subsidiaries (other than EFIH Finance), including Oncor Holdings and its subsidiaries. The holders of the EFIH 6.875% Notes vote as a separate class from the holders of the EFIH 10% Notes.ITEMS

~~The~~Expenses ~~EFIH 6.875% Notes were issued in private placements~~ and ~~are~~income ~~not~~directly ~~registered~~associated ~~under the Securities Act. EFIH has agreed to use its commercially reasonable efforts to register~~ with the ~~SEC~~Chapter ~~notes~~11 ~~having~~Cases ~~substantially~~are ~~identical~~reported ~~terms~~separately asin the ~~EFIH~~condensed ~~6.875%~~statements ~~Notes (except for provisions relating to transfer restrictions and payment~~ of ~~additional~~consolidated ~~interest~~income (loss) as ~~part~~reorganization ofitems anas ~~offer~~required toby ~~exchange~~ASC ~~freely~~852-10, ~~tradable notes for the EFIH 6~~Reorganizations.~~875% Notes.~~ ~~Because~~Reorganization ~~the~~items ~~exchange~~also ~~offer~~include ~~has~~adjustments ~~not~~to ~~yet~~reflect ~~been completed,~~ the ~~annual~~carrying ~~interest~~value ~~rate~~of onliabilities ~~the~~subject ~~EFIH~~to ~~6.875%~~compromise ~~Notes increased by 25 basis points~~ (~~to 7.125%~~LSTC) onat ~~August~~their ~~15,~~estimated ~~2013~~allowed ~~and~~claim ~~will~~amounts, ~~increase~~as bysuch anadjustments ~~additional~~are ~~25 basis points (to 7~~determined.~~375%) on November 15, 2013.~~ The ~~interest~~following ~~rate~~table onpresents ~~the~~reorganization ~~EFIH~~items ~~6.875%~~incurred ~~Notes~~since ~~will remain at that level until completion of~~ the ~~exchange~~Petition ~~offer,~~Date atas ~~which~~reported ~~time~~in the ~~interest~~condensed ~~rate~~statements onof ~~the~~consolidated ~~notes~~income ~~will revert to 6.875%.~~(loss):

EFIH 10% Senior Secured Notes — At September 30, 2013, the principal amount of the EFIH 10% Notes totaled $3.482 billion. The notes mature in December 2020, with interest payable in cash semiannually in arrears on June 1 and December 1 at a fixed rate of 10% per annum. The notes are secured by the EFIH Collateral on an equal and ratable basis with the EFIH 6.875% Notes.



	Post-Petition Period Through June 30, 2014
Loss on exchange and settlement of EFIH First Lien Notes (Note 5)	$	108
Fees associated with completion of EFIH DIP Facility	93
Expenses related to legal advisory and representation services	16
Expenses related to other professional consulting and advisory services	11
Total reorganization items	$	228

The EFIH 10% Notes are senior obligations of EFIH and rank equally in right of payment with all existing and future senior indebtedness of EFIH, including the EFIH 6.875% Notes. The EFIH 10% Notes have substantially the same terms, covenants and events of default as the EFIH 6.875% Notes. The holders of the EFIH 10% Notes vote as a separate class from the holders of the EFIH 6.875% Notes.

EFIH 11% Senior Secured Second Lien Notes — At September 30, 2013, the principal amount of the EFIH 11% Notes totaled $406 million. The notes mature in October 2021, with interest payable in cash semiannually in arrears on May 15 and November 15 at a fixed rate of 11% per annum. The EFIH 11% Notes are secured on a second-priority basis by the EFIH Collateral on an equal and ratable basis with the EFIH 11.75% Notes.

The EFIH 11% Notes are senior obligations of EFIH and EFIH Finance and rank equally in right of payment with all senior indebtedness of EFIH and are effectively senior in right of payment to all existing or future unsecured debt of EFIH to the extent of the value of the EFIH Collateral. The notes have substantially the same terms, covenants and events of default as the EFIH 11.75% Notes discussed below, and the holders of the EFIH 11% Notes will generally vote as a single class with the holders of the EFIH 11.75% Notes.

EFIH 11.75% Senior Secured Second Lien Notes — At September 30, 2013, the principal amount of the EFIH 11.75% Notes totaled $1.750 billion. These notes mature in March 2022, with interest payable in cash semiannually in arrears on March 1 and September 1 at a fixed rate of 11.75% per annum. The EFIH 11.75% Notes are secured on a second-priority basis by the EFIH Collateral on an equal and ratable basis with the EFIH 11% Notes. The EFIH 11.75% Notes have substantially the same covenants as the EFIH 11% Notes, and the holders of the EFIH 11.75% Notes will generally vote as a single class with the holders of the EFIH 11% Notes.

The EFIH 11.75% Notes were issued in private placements and are not registered under the Securities Act. EFIH has agreed to use its commercially reasonable efforts to register with the SEC notes having substantially identical terms as the EFIH 11.75% Notes (except for provisions relating to transfer restrictions and payment of additional interest) as part of an offer to exchange freely tradable notes for the EFIH 11.75% Notes. Because the exchange offer has not yet been completed, the annual interest rate on the EFIH 11.75% Notes increased by 25 basis points (to 12.00%) on February 5, 2013 and by an additional 25 basis points (to 12.25%) on May 6, 2013. The interest rate on the EFIH 11.75% Notes will remain at that level until completion of the exchange offer, at which time the interest rate on the notes will revert to 11.75%.

~~EFIH 11~~7.~~25/12.25%~~ ~~Senior~~LIABILITIES ~~Toggle~~SUBJECT ~~Notes~~TO — At September 30, 2013, the principal amount of the EFIH Toggle Notes totaled $1.476 billion. These notes mature in December 2018, with interest payable semiannually in arrears on June 1 and December 1 at a fixed rate of 11.25% per annum for cash interest and 12.25% per annum for PIK Interest. For any interest period until June 1, 2016, EFIH may elect to pay interest on the Toggle Notes (i) entirely in cash; (ii) by increasing the principal amount of the notes or by issuing new EFIH Toggle Notes (PIK Interest); or (iii) 50% in cash and 50% in PIK Interest. Once EFIH makes a PIK election, which it did effective with the June 1, 2013 interest payment, the election is valid for each succeeding interest payment period until EFIH revokes the election.COMPROMISE

The ~~EFIH~~amounts ~~Toggle~~classified ~~Notes~~as ~~were~~liabilities ~~issued~~subject into ~~private~~compromise ~~placements~~(LSTC) ~~and~~reflect ~~are not registered under~~ the ~~Securities~~company's ~~Act. EFIH~~estimate ~~has~~of ~~agreed~~pre-petition toliabilities ~~use its commercially reasonable efforts~~ to ~~register~~be ~~with~~addressed ~~the~~in ~~SEC notes having substantially identical terms as~~ the ~~EFIH~~Chapter ~~Toggle~~11 ~~Notes~~Cases ~~(except~~and ~~for~~may ~~provisions~~be ~~relating~~subject to ~~transfer~~future ~~restrictions~~adjustment ~~and payment of additional interest)~~ as ~~part~~the ofChapter an11 ~~offer~~Cases toproceed. Debt ~~exchange~~amounts ~~freely~~include ~~tradable~~related ~~notes~~unamortized ~~for~~deferred ~~the~~financing ~~EFIH~~costs ~~Toggle~~and ~~Notes~~discounts/premiums. IfAmounts anclassified ~~exchange~~to ~~offer~~LSTC ~~for~~do ~~the notes is~~ not ~~completed~~include within 365 days after the date (December 5, 2012) the initial EFIH Toggle notes were issued (a Registration Default), the annual interest rate on the notes will increase by 25 basis points for the first 90pre-~~day~~petition ~~period~~liabilities ~~during~~that ~~which~~are afully ~~Registration~~secured ~~Default continues, and thereafter, the annual interest rate on the notes will increase~~ by 50letters ~~basis~~of ~~points~~credit ~~for~~or ~~the~~cash ~~remaining period during which the Registration Default continues~~deposits. IfThe ~~the~~following ~~Registration~~table ~~Default~~presents isLSTC ~~cured,~~as ~~the~~reported ~~interest~~in ~~rate on~~ the ~~notes~~condensed ~~will~~consolidated ~~revert~~balance tosheets ~~the~~at ~~original~~June 30, ~~level.~~2014:

Fair Value of Long-Term Debt



	June 30, 2014
Notes, loans and other debt per the following table	$	3,843
Accrued interest on notes, loans and other debt	138
Advances and other payables to affiliates	3
Total liabilities subject to compromise	$	3,984

~~At September 30, 2013 and December 31, 2012, the estimated fair value of our long~~Pre-~~term~~Petition ~~debt (including pushed down debt) totaled $7.545 billion and $7.258 billion~~Notes, ~~respectively,~~Loans and ~~the~~Other ~~carrying~~Debt ~~amount~~Reported ~~totaled~~as ~~$7.803~~Liabilities ~~billion~~Subject and $6.954 billion, respectively. We determine fair value in accordance with accounting standards and at September 30, 2013 our debt fair value represents Level 2 valuations. We obtain security pricing from a vendor who uses broker quotes and third-party pricing services to ~~determine fair values. Where relevant, these prices are validated through subscription services such as Bloomberg.~~Compromise

4.All ~~COMMITMENTS~~amounts ~~AND~~of ~~CONTINGENCIES~~pre-petition notes, loans and other debt reported as liabilities subject to compromise represent principal amounts.



	June 30, 2014			December 31, 2013
Debt issued by EFIH:
6.875% Fixed Senior Secured First Lien Notes due August 15, 2017 (a)	$	—		$	503
10% Fixed Senior Secured First Lien Notes due December 1, 2020 (a)	—			3,482
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			1,750
11.25%/12.25% Senior Toggle Notes due December 1, 2018	1,566			1,566
9.75% Fixed Senior Notes due October 15, 2019	2			2
Unamortized premium	243			284
Unamortized discount	(121		)	(146		)
Total debt issued by EFIH	3,846			7,847
Pushed down pre-petition debt (b):
10.875% EFH Corp. Fixed Senior Notes due November 1, 2017	17			17
11.25%/12.00% EFH Corp. Senior Toggle Notes due November 1, 2017	13			13
Total pushed down debt	30			30
Deferred debt issuance and extension costs (c)	(33		)	—
Total debt	$	3,843		$	7,877

________________


(a)	The EFIH First Lien Notes were exchanged or settled in June 2014 (see Note 5).


(b)	Represents 50% of the amount of these EFH Corp. securities guaranteed by EFIH and pushed down per the discussion below under "Guarantees and Push Down of EFH Corp. Pre-Petition Debt."


(c)	Deferred debt issuance and extension costs were reported in other noncurrent assets at December 31, 2013.

Guarantees and Push Down of EFH Corp. Pre-Petition 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 for cash are considered Merger-related debt to the extent the proceeds are used to repurchase Merger-related debt. EFCH and EFIH (excluding their subsidiaries) fully and unconditionally guarantee on a joint and several basis the Merger-related debt of EFH Corp. (parent). Such debt 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 EFIH's financial statements. Merger-related debt of EFH Corp. held by its subsidiaries is not subject to push down.

Pre-petition debt guaranteed and subject to push down at June 30, 2014 totals $60 million and consists of $33 million principal amount of EFH Corp. 10.875% Notes and $27 million principal amount of EFH Corp. Toggle Notes. The amount reflected in EFIH's condensed consolidated balances sheets as pushed down pre-petition debt ($30 million at both June 30, 2014 and December 31, 2013, as shown in the debt table above) represents 50% of the principal amount of the EFH Corp. Merger-related debt guaranteed. 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., EFIH records the settlement of such amounts as noncash capital contributions from EFH Corp.

There were no payments of interest by EFH Corp. on pre-petition debt pushed down for the six months ended June 30, 2014. EFH Corp. payments of interest on debt pushed down totaled $21 million for the six months ended June 30, 2013.

Information Regarding Significant Pre-Petition Debt

The EFIH pre-petition debt described below is junior in right of priority and payment to the EFIH DIP Facility.

EFIH 6.875% Senior Secured First Lien Notes — There were no principal amounts of the EFIH 6.875% Notes outstanding at June 30, 2014 as the notes were exchanged or settled in June 2014 as discussed in Note 5. These notes had a maturity date in August 2017, with interest at a fixed rate of 6.875% per annum. The EFIH 6.875% Notes were secured on a first-priority basis by EFIH's pledge of its 100% ownership of the membership interests in Oncor Holdings (the EFIH Collateral) on an equal and ratable basis with the EFIH 10% Notes (discussed below).

The EFIH 6.875% Notes were senior obligations of EFIH and ranked equally in right of payment with all senior indebtedness of EFIH and were senior in right of payment to any future subordinated indebtedness of EFIH. The EFIH 6.875% Notes were effectively senior to all second lien and unsecured indebtedness of EFIH, to the extent of the value of the EFIH Collateral, and were effectively subordinated to any indebtedness of EFIH secured by assets of EFIH other than the EFIH Collateral, to the extent of the value of such assets. Furthermore, the EFIH 6.875% Notes were structurally subordinated to all indebtedness and other liabilities of EFIH's subsidiaries (other than EFIH Finance), including Oncor Holdings and its subsidiaries. The holders of the EFIH 6.875% Notes voted as a separate class from the holders of the EFIH 10% Notes.

The EFIH 6.875% Notes were issued in private placements and are not registered under the Securities Act. EFIH had agreed to use its commercially reasonable efforts to register with the SEC notes having substantially identical terms as the EFIH 6.875% Notes (except for provisions relating to transfer restrictions and payment of additional interest) as part of an offer to exchange freely tradable notes for the EFIH 6.875% Notes. Because the exchange offer was not completed, the annual interest rate on the EFIH 6.875% Notes increased by 25 basis points (to 7.125%) on August 15, 2013 and by an additional 25 basis points (to 7.375%) on November 15, 2013.

EFIH 10% Senior Secured First Lien Notes — There were no principal amounts of the EFIH 10% Notes outstanding at June 30, 2014 as the notes were exchanged or settled in June 2014 as discussed in Note 5. The notes had a maturity date in December 2020, with interest at a fixed rate of 10% per annum. The notes were secured by the EFIH Collateral on an equal and ratable basis with the EFIH 6.875% Notes.

The EFIH 10% Notes were senior obligations of EFIH and ranked equally in right of payment with all existing and future senior indebtedness of EFIH, including the EFIH 6.875% Notes. The EFIH 10% Notes had substantially the same terms as the EFIH 6.875% Notes. The holders of the EFIH 10% Notes voted as a separate class from the holders of the EFIH 6.875% Notes.

The $1.302 billion of EFIH 10% Notes issued in January 2013 were issued in private placements and are not registered under the Securities Act. EFIH had agreed to use its commercially reasonable efforts to register with the SEC notes having substantially identical terms as the EFIH 10% Notes (except for provisions relating to transfer restrictions and payment of additional interest) as part of an offer to exchange freely tradable notes for the EFIH 10% Notes. Because the exchange offer was not completed, the annual interest rate on the EFIH 10% Notes increased by 25 basis points (to 10.25%) on January 30, 2014 and by an additional 25 basis points (to 10.50%) on April 30, 2014.

EFIH 11% Senior Secured Second Lien Notes — The principal amount of the EFIH 11% Notes totals $406 million. The notes have a maturity date in October 2021, with interest at a fixed rate of 11% per annum. The EFIH 11% Notes are secured on a second-priority basis by the EFIH Collateral on an equal and ratable basis with the EFIH 11.75% Notes.

The EFIH 11% Notes are senior obligations of EFIH and EFIH Finance and rank equally in right of payment with all senior indebtedness of EFIH and are effectively senior in right of payment to all existing or future unsecured debt of EFIH to the extent of the value of the EFIH Collateral. The notes have substantially the same terms as the EFIH 11.75% Notes discussed below, and the holders of the EFIH 11% Notes will generally vote as a single class with the holders of the EFIH 11.75% Notes.

EFIH 11.75% Senior Secured Second Lien Notes — The principal amount of the EFIH 11.75% Notes totals $1.750 billion. These notes have a maturity date in March 2022, with interest at a fixed rate of 11.75% per annum. The EFIH 11.75% Notes are secured on a second-priority basis by the EFIH Collateral on an equal and ratable basis with the EFIH 11% Notes. The EFIH 11.75% Notes have substantially the same covenants as the EFIH 11% Notes, and the holders of the EFIH 11.75% Notes will generally vote as a single class with the holders of the EFIH 11% Notes.

The EFIH 11.75% Notes were issued in private placements and are not registered under the Securities Act. EFIH had agreed to use its commercially reasonable efforts to register with the SEC notes having substantially identical terms as the EFIH 11.75% Notes (except for provisions relating to transfer restrictions and payment of additional interest) as part of an offer to exchange freely tradable notes for the EFIH 11.75% Notes. Because the exchange offer was not completed, the annual interest rate on the EFIH 11.75% Notes increased by 25 basis points (to 12.00%) on February 6, 2013 and by an additional 25 basis points (to 12.25%) on May 6, 2013.

EFIH 11.25%/12.25% Senior Toggle Notes — The principal amount of the EFIH Toggle Notes totals $1.566 billion. These notes have a maturity date in December 2018, with interest at a fixed rate of 11.25% per annum for cash interest and 12.25% per annum for PIK Interest. The terms of the Toggle Notes include an election by EFIH, for any interest period until June 1, 2016, to pay interest on the Toggle Notes (i) entirely in cash; (ii) by increasing the principal amount of the notes or by issuing new EFIH Toggle Notes (PIK Interest); or (iii) 50% in cash and 50% in PIK Interest. EFIH made its pre-petition interest payments on the EFIH Toggle Notes by using the PIK feature of those notes.

The EFIH Toggle Notes were issued in private placements and are not registered under the Securities Act. EFIH had agreed to use its commercially reasonable efforts to register with the SEC notes having substantially identical terms as the EFIH Toggle Notes (except for provisions relating to transfer restrictions and payment of additional interest) as part of an offer to exchange freely tradable notes for the EFIH Toggle Notes. Because the exchange offer was not completed, the annual interest rate on the EFIH Toggle Notes increased by 25 basis points (to 11.50%) on December 6, 2013 and by an additional 25 basis points (to 11.75%) on March 6, 2014.

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 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.


8.	INTEREST EXPENSE AND RELATED CHARGES



	Three Months Ended June 30,						Six Months Ended June 30,
	2014			2013			2014			2013
Interest paid/accrued on debtor-in-possession financing	$	8		$	—		$	8		$	—
Interest paid/accrued on pre-petition debt	104			161			266			311
Interest expense related to pushed down debt	—			1			1			4
Interest expense on pre-petition toggle notes payable in additional principal (Note 7)	16			42			65			83
Amortization of debt exchange premiums	(6		)	(20		)	(24		)	(42		)
Amortization of debt exchange discounts and issuance costs	2			6			7			18
Total interest expense and related charges	$	124		$	190		$	323		$	374

Interest expense for the three and six months ended June 30, 2014 reflects interest paid and accrued on debtor-in-possession financing (see Note 5).

The Bankruptcy Code generally restricts payment of interest on pre-petition debt, subject to certain exceptions. However, the Bankruptcy Court ordered the payment of post-petition interest payments on EFIH First Lien Notes in connection with the settlement discussed in Note 5. Other than these amounts allowed by the Bankruptcy Court, effective April 29, 2014, EFIH discontinued recording interest expense on outstanding pre-petition debt classified as liabilities subject to compromise (LSTC). Interest expense as calculated under the contractual terms of EFIH's debt, all of which is subject to compromise, totaled $133 million for the post-petition period through June 30, 2014. This amount exceeded interest expense recorded, which represented $54 million in interest since the Bankruptcy Filing allowed by the Bankruptcy Court, by $79 million.


9.	COMMITMENTS AND CONTINGENCIES

Guarantees

See Notes 35 and 67 for discussion of ~~our~~EFIH's guarantees of certain ~~EFH Corp.~~ debt.

Legal Proceedings

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

Makewhole Claims — In May 2014, the indenture trustee for the EFIH 10% First Lien Notes initiated litigation in the Bankruptcy Court seeking, among other things, a declaratory judgment that EFIH is obligated to pay a redemption premium in connection with the cash repayment of the EFIH First Lien Notes as discussed in Note 5 and that such redemption premium is an allowed secured claim (EFIH First Lien Makewhole Claims). In ~~MEMBERSHIP~~the ~~INTERESTS~~EFIH First Lien Makewhole Claim, the amount of such claims is alleged to be equal to approximately $432 million plus reimbursement of expenses. In June 2014, the indenture trustee for the EFIH Second Lien Notes initiated litigation in the Bankruptcy Court seeking similar relief with respect to the EFIH Second Lien Notes, including among other things, that EFIH is obligated to pay a redemption premium in connection with any repayment of the EFIH Second Lien Notes and that such redemption premium would be an allowed secured claim (the EFIH Second Lien Makewhole Claims and, together with the EFIH First Lien Makewhole Claims, the Makewhole Claims). In the EFIH Second Lien Makewhole Claim, as of July 31, 2014, the amount of such claims alleged would have been equal to approximately $675 million plus reimbursement of expenses. The EFIH Debtors expect to seek to obtain entry of orders from the Bankruptcy Court disallowing each of the Makewhole Claims.

In addition, creditors may make additional claims in the Chapter 11 Cases for redemption premiums in connection with repayments or settlement of other pre-petition debt. There can be no assurance regarding the outcome of this litigation or the Bankruptcy Court's determination regarding the validity or the amounts payable in respect of each of the Makewhole Claims or other claims for redemption premiums.


10.	MEMBERSHIP INTERESTS

Cash Distributions

No cash distributions were made in the six months ended June 30, 2014. In January 2013, EFIH's board of directors declared, and EFIH paid, a cash distribution to EFH Corp. of $680 million ~~(which as of December 31~~, ~~2012 was recorded as restricted cash),~~ which was used by EFH Corp. to settle the TCEH Demand Notes (see Note 611).

InDistribution ~~February 2012, EFIH's board of directors declared, and EFIH paid, a cash distribution to EFH Corp. of $950 million, which was used by EFH Corp. to partially settle the TCEH Demand Notes.~~Restrictions

12The agreement governing the EFIH DIP Facility generally restricts EFIH's ability to make distributions or loans to any of its parent companies or their subsidiaries unless such distributions or loans are expressly permitted under the agreement governing such facility.

~~The~~Under ~~indentures~~applicable ~~governing~~law, ~~the~~ EFIH Notes include covenants that, among other things and subject to certain exceptions, restrict our ability to pay dividends or make other distributions with respect to our membership interests. Accordingly, our net income is ~~restricted~~prohibited from ~~being~~paying ~~used to make distributions with respect to our membership interests unless such distributions are expressly permitted under the indentures. The indentures further restrict us from making~~ any distribution to ~~EFH~~the ~~Corp.~~extent ~~for~~that ~~the~~immediately ~~ultimate~~following ~~purpose~~payment of ~~making a dividend on EFH Corp.'s common stock unless at the time, and after giving effect to~~ such distribution, ~~our~~it ~~consolidated~~would ~~leverage~~be ~~ratio is equal to or less than 6~~insolvent.~~0 to 1.0.~~ ~~Under~~In ~~the~~addition, ~~indentures~~due ~~governing~~to the ~~EFIH~~Bankruptcy ~~Notes~~Filing, ~~the~~no ~~term~~distributions ~~"consolidated~~are ~~leverage~~eligible ~~ratio"~~to isbe ~~defined~~paid aswithout the ~~ratio~~approval of ~~EFIH's consolidated total debt (as defined in~~ the ~~indentures)~~Bankruptcy ~~to EFIH's Adjusted EBITDA on a consolidated basis, including Oncor Holdings and its subsidiaries~~Court. ~~EFIH's consolidated leverage ratio was 7.7 to 1.0 at September 30, 2013.~~

InAffiliate ~~addition,~~Debt ~~under~~Held ~~applicable~~by ~~law, we are prohibited from paying any distribution to the extent that immediately following payment of such distribution, we would be insolvent.~~EFIH

~~Long~~As a result of debt exchanges in 2009 through 2013, EFIH holds debt securities of EFH Corp. and TCEH. In December 2012, management determined that some or all of these securities may be returned as dividends to EFH Corp.; accordingly, the balances were reclassified at that time from investment in debt of affiliates and reported as a reduction of membership interests. Interest received reduces the carrying value of the securities and thus increases membership interests. There was no interest received in the six months ended June 30, 2014. Interest received for the six months ended June 30, 2013 totaled $208 million after-~~Term~~tax ~~Debt~~and Ofrepresented ~~Affiliates~~accrued ~~Held~~interest byon notes distributed to EFH Corp. in first quarter 2013. As a result of the Bankruptcy Filing, EFIH does not expect to receive further interest payments on affiliate debt securities it holds.

AsIn athe ~~result~~first ofquarter ~~debt exchanges in 2009 through~~ 2013, weEFIH ~~held~~distributed ~~debt~~to ~~securities of~~ EFH Corp. ~~and TCEH as presented in the table below~~$6. In360 ~~December~~billion ~~2012,~~principal ~~management~~amount ~~determined that some or all~~ of ~~these securities may be returned as dividends to~~ EFH Corp.; ~~accordingly,~~debt ~~the~~held. As ~~balances~~a ~~were~~result ~~reclassified~~of atthis ~~that~~distribution, ~~time~~EFIH ~~from~~reclassified ~~investment~~to ininterest ~~long-term~~income ~~debt~~$284 ofmillion ~~affiliates~~(pretax) ~~and reported as a reduction~~ of ~~membership interests. The securities are no longer marked~~mark-to-market~~. Interest~~ ~~received~~gains ~~reduces~~previously ~~the~~reported ~~carrying~~in ~~value~~accumulated ofother ~~the~~comprehensive ~~securities and thus increases membership interests~~income.

~~Prior~~The toprincipal ~~December 2012~~amounts, ~~when~~coupon ~~the~~rates, ~~debt~~maturities ~~securities~~and ~~were~~carrying ~~reported~~value asof ~~investment in long-term~~ debt of affiliates, ~~the~~held ~~securities~~at ~~were~~both ~~classified~~June ~~as available for sale~~30, ~~interest~~2014 ~~was recorded in the income statement as interest income~~ and ~~unrealized~~December ~~gains or losses were recorded in other comprehensive income unless such losses were other than temporary~~31, in2013 ~~which~~are ~~case they were recorded~~ as ~~impairments in net income.~~follows:

In the first quarter 2013, EFIH distributed $6.360 billion principal amount of EFH Corp. debt that it previously received in debt exchanges as a dividend to EFH Corp., which cancelled the notes, leaving $1.361 billion principal amount of affiliate debt still held by EFIH. The $6.360 billion principal amount consisted of $5.125 billion of debt held at December 31, 2012 and $1.235 billion (of the $1.266 billion) received in debt exchanges in January 2013 (see Note 3). The dividend included $1.715 billion principal amount of EFH Corp. 10.875% Notes, $3.474 billion principal amount of EFH Corp. Toggle Notes, $1.058 billion principal amount of EFH Corp. 10% Notes and $113 million principal amount of EFH Corp. 9.75% Notes.



	Principal Amount		Carrying Value
EFH Corp. 5.55% Fixed Senior Notes Series P due November 15, 2014	$	281	$	185
EFH Corp. 6.50% Fixed Senior Notes Series Q due November 15, 2024	545		249
EFH Corp. 6.55% Fixed Senior Notes Series R due November 15, 2034	456		194
TCEH 10.25% Fixed Senior Notes due November 1, 2015 (both periods include $48 million principal amount of Series B Notes)	79		7
Balance reported as reduction in membership interests	$	1,361	$	635

The ~~principal~~indentures ~~amounts,~~governing ~~coupon~~the ~~rates,~~EFIH ~~maturities~~Notes ~~and~~do ~~carrying~~not ~~value~~limit ofEFIH's ~~holdings~~ability ofto ~~long-term~~distribute the EFH Corp. debt ofsecurities ~~affiliates~~that ~~are~~it holds to EFH Corp. so long as ~~follows:~~it received such securities in exchange for the issuance of EFIH debt, which applies to all the EFH Corp. debt EFIH currently holds.

	September 30, 2013				December 31, 2012
	Principal Amount		Carrying Value (a)		Principal Amount		Carrying Value
EFH Corp. 10.875% Fixed Senior Notes due November 1, 2017	$	—	$	—	$	1,685	$	1,502
EFH Corp. 11.25/12.00% Senior Toggle Notes due November 1, 2017	—		—		3,441		3,108
EFH Corp. 5.55% Fixed Senior Notes Series P due November 15, 2014	281		193		279		197
EFH Corp. 6.50% Fixed Senior Notes Series Q due November 15, 2024	545		267		516		260
EFH Corp. 6.55% Fixed Senior Notes Series R due November 15, 2034	456		209		456		221
TCEH 10.25% Fixed Senior Notes due November 1, 2015 (both periods include $48 million principal amount of Series B Notes)	79		11		79		13
Total	$	1,361	680		$	6,456	5,301
Accrued interest receivable			—				87
Balance reported as reduction in membership interests			$	680			$	5,388

_____________

(a) Changes from December 31, 2012 reflect the exchange transactions discussed in Note 3, the dividend discussed immediately below and cash interest received on the securities.

As a result of the distribution of all the EFH Corp. 10.875% Notes and EFH Corp. Toggle Notes EFIH held, we recorded a gain of $284 million (pretax) representing the reclassification to interest income of mark-to-market gains reported in accumulated other comprehensive income (AOCI). Prior to our issuance of the dividend, we received payment from EFH Corp. of the $163 million of accrued interest on the notes, which was recorded in membership interests.

The indentures governing the EFIH Notes do not limit our ability to dividend the EFH Corp. debt securities that we hold to EFH Corp. so long as we received such securities in exchange for the issuance of EFIH debt, which applies to all the EFH Corp. debt we currently hold.

Interest income recorded on these securities for the nine months ended September 30, 2013 and 2012 were as follows:

	Three Months Ended September 30,					Nine Months Ended September 30,
	2013		2012			2013		2012
Interest received/accrued	$	—	$	46		$	—	$	138
Accretion of purchase discount	—		23			—		71
PIK interest received/accrued related to EFH Corp. Toggle Notes	—		89			—		259
Mark-to-market gain reclassified from AOCI	—		—			284		—
Impairments related to issuer credit	—		(6		)	—		(6		)
Total interest	$	—	$	152		$	284	$	462

Membership Interests

The following table presents the changes (all after tax) to membership interests for the ~~nine~~six months ended ~~September~~June 30, ~~2013~~2014:

	Capital Accounts			~~Long-Term~~Affiliate Debt ~~of Affiliate~~ Held by EFIH			Accumulated Other Comprehensive Income (Loss)			Total Membership Interests
Balance at December 31, 2012	$	5,049		$	(5,388	)	$	160		$	(179	)
Balance at December 31, 2013	$	(1,148	)	$	(635	)	$	(39	)	$	(1,822	)
Net income	68(426		)	—			—			68(426		)
Cash distributions to EFH Corp.	(680		)	—			—			(680		)
Effect of debt push-down from EFH Corp.	11			—			—			11
Effect of debt push-down from EFH Corp. (a)	437			—			—			437
Dividend to EFH Corp. of long-term debt of affiliate ($6.360 billion principal amount)	(5,778		)	—			—			(5,778		)
Deferred net loss on debt exchanges, net of tax (Note 3)	13			—			—			13
EFH Corp. long-term debt distributed to EFH Corp. ($5.125 billion principal amount)	—			4,524			—			4,524
Net long-term debt of affiliate received in debt exchanges ($31 million principal amount)	—			(23		)	—			(23		)
Interest received on holdings of affiliate long-term debt (b)	—			208			—			208
Income tax on interest received on holdings of affiliate long-term debt	(73		)	—			—			(73		)
Recognition in interest income of mark-to-market valuations of investments in long-term debt of affiliate upon distribution to EFH Corp.	—			—			(185		)	(185		)
Net effects related to Oncor	—			—			1			1
Other	—			(1		)	—			(1		)
Balance at June 30, 2014	$	(1,563	)	$	(635	)	$	(38	)	$	(2,236	)
Balance at September 30, 2013	$	(964	)	$	(680	)	$	(24	)	$	(1,668	)

The following table presents the changes to membership interests for the six months ended June 30, 2013:



	Capital Accounts			Affiliate Debt Held by EFIH			Accumulated Other Comprehensive Income (Loss)			Total Membership Interests
Balance at December 31, 2012	$	5,049		$	(5,388	)	$	160		$	(179	)
Net income	82			—			—			82
Cash distributions to EFH Corp.	(680		)	—			—			(680		)
Push-down of deferred net loss on debt exchanges, net of tax	14			—			—			14
Effect of debt push-down from EFH Corp. (a)	435			—			—			435
Distribution to EFH Corp. of debt held as investment	(5,778		)	—			—			(5,778		)
EFH Corp. debt distributed to EFH Corp. ($5.125 billion principal amount)	—			4,524			—			4,524
Net effects related to Oncor	—			—			1			1
Net affiliate debt received in debt exchanges ($31 million principal amount)	—			(23		)	—			(23		)
Interest received on holdings of affiliate debt	—			208			—			208
Recognition in interest income of mark-to-market valuations of investments in affiliate debt upon distribution to EFH Corp.	—			—			(185		)	(185		)
Other	—			(1		)	—			(1		)
Balance at June 30, 2013	$	(878	)	$	(680	)	$	(24	)	$	(1,582	)

________________

(a) Represents the effect of a reduction of $420 million of debt pushed down from EFH Corp. ~~(see Note 3)~~ and related interest and income tax effects.

~~(b) Includes $204 million related to EFH Corp. long-term debt held and $4 million related to TCEH long-term debt held.~~17

The following table presents the changes to membership interests for the nine months ended September 30, 2012:

	Capital Accounts			Accumulated Other Comprehensive Income		Total Membership Interests
Balance at December 31, 2011	$	5,790		$	15	$	5,805
Net income	308			—		308
Cash distributions to EFH Corp.	(950		)	—		(950		)
Effect of debt push-down from EFH Corp.	30			—		30
Net effects of investment in long-term debt of affiliates	—			272		272
Net effects related to Oncor (a)	—			2		2
Other	(2		)	—		(2		)
Balance at September 30, 2012	$	5,176		$	289	$	5,465

________________

(a) Represents recognition in equity in earnings of unconsolidated subsidiary of previous losses on interest rate hedge transactions entered into by Oncor.

Accumulated Other Comprehensive Income (Loss)

The following table presents the changes to accumulated other comprehensive income (loss) for the ~~nine~~six months ended ~~September~~June 30, ~~2013~~2014. There was no other comprehensive income (loss) before reclassification for the period.

	Dedesignated Cash Flow Hedges - Oncor			Changes in Fair Values of Investment in Debt Securities of Affiliates			Pension and Other Postretirement Employee Benefit Liabilities Adjustments - Oncor			Total Accumulated Other Comprehensive Income (Loss)
Balance at December 31, 2012	$	(23	)	$	185		$	(2	)	$	160
Balance at December 31, 2013	$	(21	)	$	—		$	(18	)	$	(39	)
Amounts reclassified from accumulated other comprehensive income (loss) and reported in:
Interest income	—			(284		)	—			(284		)
Equity in earnings (losses) of unconsolidated subsidiaries	1			—			—			1
Equity in earnings of unconsolidated subsidiaries	2			—			(1		)	1
Total amount reclassified from accumulated other comprehensive income (loss) during the period	1			—			—			1
Income tax benefit	—			99			—			99
Balance at June 30, 2014	$	(20	)	$	—		$	(18	)	$	(38	)
Total amount reclassified from accumulated other comprehensive income (loss) during the period	2			(185		)	(1		)	(184		)
Balance at September 30, 2013	$	(21	)	$	—		$	(3	)	$	(24	)

15The following table presents the changes to accumulated other comprehensive income (loss) for the six months ended June 30, 2013. There was no other comprehensive income (loss) before reclassification for the period.

6. RELATED–PARTY TRANSACTIONS



	Dedesignated Cash Flow Hedges - Oncor			Changes in Fair Values of Investment in Debt Securities of Affiliates			Pension and Other Postretirement Employee Benefit Liabilities Adjustments - Oncor			Total Accumulated Other Comprehensive Income (Loss)
Balance at December 31, 2012	$	(23	)	$	185		$	(2	)	$	160
Amounts reclassified from accumulated other comprehensive income (loss) and reported in:
Interest income	—			(284		)	—			(284		)
Equity in earnings (losses) of unconsolidated subsidiaries	2			—			(1		)	1
Income tax benefit	—			99			—			99
Total amount reclassified from accumulated other comprehensive income (loss) during the period	2			(185		)	(1		)	(184		)
Balance at June 30, 2013	$	(21	)	$	—		$	(3	)	$	(24	)

~~The following represent our significant related-party transactions in addition to the EFH Corp. and TCEH debt securities held by EFIH as discussed in Note 5:~~18

~~• EFH Corp~~11. ~~files~~RELATED–PARTY consolidated federal income tax and Texas state margin tax returns, and under a tax sharing agreement, allocates income tax liabilities to us substantially as if we were filing our own corporate income tax returns. Our income tax receivable from EFH Corp. totaled $7 million and $1 million at September 30, 2013 and December 31, 2012, respectively. Our income tax payments to EFH Corp. totaled $3 million and $172 million for the nine months ended September 30, 2013 and 2012, respectively, which represented federal income taxes and Texas state margin taxes. See discussion below in this note regarding allocation of income tax liabilities to Oncor Holdings and Oncor.TRANSACTIONS

•The Atfollowing ~~December~~represent ~~31,~~EFIH's ~~2012,~~significant ~~EFH~~related-party ~~Corp~~transactions. Also ~~had~~see ~~demand notes payable (TCEH Demand Notes) to TCEH totaling $698 million arising from borrowings used to fund EFH Corp. debt principal and interest payments (P&I~~ Note) ~~and~~10 ~~net borrowings~~ for ~~general corporate purposes (SG&A Note). EFIH was~~ a ~~guarantor~~discussion of ~~these demand notes.~~ EFH Corp. ~~settled~~and ~~the balance of the~~ TCEH ~~Demand~~debt ~~Notes~~securities inheld ~~January~~by ~~2013 using the cash distribution from~~ EFIH ~~discussed in Note 5~~.

• InEFH ~~January~~Corp. ~~2013,~~allocates ~~fees~~expense ~~paid~~ to ~~Goldman,~~EFIH ~~Sachs~~for &management ~~Co.~~fees ~~(Goldman),~~owed anby ~~affiliate~~EFH ofCorp. GSto ~~Capital~~the ~~Partners~~Sponsor Group. This expense, ~~for~~which ~~services~~is ~~related~~reported toin ~~debt~~SG&A ~~exchanges~~expenses, totaled $21 million, ~~described~~and as$3 ~~follows:~~million ~~(i)~~for ~~Goldman~~the ~~acted~~three asand asix ~~dealer~~months ~~manager~~ended ~~for~~June ~~the~~30, ~~offers~~2014, byrespectively. ~~EFIH~~There ~~and~~was ~~EFIH~~no ~~Finance~~allocation toof ~~exchange~~fees ~~new~~to EFIH ~~10% Notes~~ for ~~EFH~~the ~~Corp.~~three ~~9.75%~~and ~~Notes,~~six ~~EFH~~months ~~Corp.~~ended ~~10%~~June ~~Notes~~30, ~~and EFIH 9~~2013.~~75%~~ ~~Notes~~Beginning ~~(collectively,~~with the ~~Old~~quarterly ~~Notes)~~management ~~and~~fee asdue aDecember ~~solicitation~~31, ~~agent~~2013, in the ~~solicitation~~Sponsor ofGroup, ~~consents~~while byreserving ~~EFH~~the ~~Corp.~~right ~~and~~to ~~EFIH~~receive ~~and~~the ~~EFIH~~fees, ~~Finance~~directed toEFH ~~amendments~~Corp. to ~~the~~suspend ~~Old~~payments ~~Notes~~of ~~and~~the ~~indentures~~management ~~governing~~fees ~~the~~for ~~Old~~an ~~Notes~~indefinite ~~and~~period. ~~(ii)~~Accordingly, ~~Goldman~~EFIH ~~acted~~did asnot areimburse ~~dealer~~EFH ~~manager~~Corp. for the ~~offers~~allocated bymanagement ~~EFIH~~fees. ~~and~~Effective ~~EFIH~~with ~~Finance~~the toPetition ~~exchange~~Date, ~~EFIH~~EFH ~~Toggle~~Corp. ~~Notes~~suspended ~~for~~allocations ~~EFH~~of ~~Corp.~~such 10fees to EFIH.~~875%~~ ~~Notes~~Fees ~~and~~accrued ~~EFH~~as ~~Corp.~~of ~~Toggle~~the ~~Notes.~~Petition ~~See~~Date ~~Note~~have 3been ~~for~~reclassified ~~further~~to ~~discussion~~liabilities ofsubject ~~these~~to ~~exchange~~compromise ~~offers~~(LSTC).

In ~~the~~addition ~~nine~~to ~~months~~amounts ~~ended~~paid ~~September 30,~~directly ~~2012~~by EFIH, ~~fees~~a ~~paid~~subsidiary toof ~~Goldman~~EFH ~~related~~Corp. toallocates ~~debt~~costs ~~issuances~~to ~~totaled~~EFIH ~~$10~~for ~~million,~~legal ~~described~~and asother ~~follows: (i)~~consulting ~~Goldman~~services ~~acted~~associated aswith aEFIH's ~~joint~~debt ~~book-running~~restructuring ~~manager~~activities, and ~~initial~~EFIH ~~purchaser~~reimburses in the ~~February~~subsidiary ~~2012~~for ~~issuance~~the ofallocated ~~$1.15~~costs ~~billion~~on ~~principal~~a ~~amount~~monthly ~~of EFIH 11~~basis.~~750% Notes; (ii)~~ ~~Goldman~~The ~~acted~~allocated asexpense, ~~joint~~which ~~book-running~~is ~~manager~~reported ~~and initial purchaser~~ in ~~the~~SG&A ~~August~~expenses, ~~2012~~totaled ~~issuance of~~ $~~600~~1 million ~~principal amount of 11.750% Notes~~ and $~~250~~4 million ~~principal~~for ~~amount~~the ofthree ~~EFIH~~and ~~6.875%~~six ~~Notes. A~~months ~~broker-dealer~~ended ~~affiliate~~June 30, of2014, ~~KKR~~respectively. There ~~served~~was asno aallocation ~~co-manager~~of ~~and~~legal ~~initial purchaser~~ and another ~~affiliate~~consulting ofservices ~~TPG~~costs ~~served~~to asEFIH ~~an advisor in both of these transactions,~~ for ~~which~~the ~~they~~three ~~each~~and ~~received~~six amonths ~~total~~ended ofJune 30, ~~$3 million~~2013.

•A ~~Affiliates~~subsidiary of ~~the~~EFH ~~Sponsor~~Corp. ~~Group~~bills ~~have~~EFIH ~~sold~~for oradministrative ~~acquired~~services at cost, and EFIH reimburses the subsidiary for the allocated costs on a monthly basis. This expense, which is reported in SG&A expenses, totaled $1 million for both the ~~future~~three ~~may~~and ~~sell~~six ormonths ~~acquire~~ended June 30, ~~debt~~2014. There orwas ~~debt~~no ~~securities~~allocation ~~issued~~of byadministrative usservice incosts ~~open~~to ~~market~~EFIH ~~transactions~~for orthe ~~through~~three ~~loan~~and ~~syndications~~six months ended June 30, 2013.

~~See~~• ~~Note~~EFH 3Corp. ~~regarding~~files ~~guarantees~~consolidated federal income tax and ~~push-down~~Texas ofstate ~~certain~~margin tax returns, and under a Federal and State Income Tax Allocation Agreement, allocates income taxes to EFIH substantially as if it were filing its own corporate income tax returns. At June 30, 2014 and December 31, 2013, EFIH had current income tax receivables from EFH Corp. ~~debt~~totaling $199 million and $110 million, respectively, both of which were fully reserved (see Note 54). ~~regarding~~EFIH ~~distributions~~made no income tax payments to, ~~and~~EFH ~~contributions~~Corp. ~~from~~for the six months ended June 30, 2014. EFIH's income tax payments to EFH Corp. totaled $3 million for the six months ended June 30, 2013. See discussion below in this note regarding allocation of income tax liabilities to Oncor Holdings and Oncor.

•

At December 31, 2012, EFH Corp. had demand notes payable (TCEH Demand Notes) to TCEH totaling $698 million arising from borrowings used to fund EFH Corp. debt principal and interest payments (P&I Note) and net borrowings for general corporate purposes (SG&A Note). EFIH was a guarantor of these demand notes. EFH Corp. settled the balance of the TCEH Demand Notes in January 2013 using the cash distribution from EFIH discussed in Note 10.


•	Affiliates of the Sponsor Group have sold or acquired, and in the future may sell or acquire, debt or debt securities issued by EFIH in open market transactions or through loan syndications.

See Note 7 regarding guarantees and push-down of certain EFH Corp. pre-petition debt and Note 10 regarding distributions to, and contributions from, EFH Corp.

Significant related-party transactions between Oncor Holdings (including its consolidated subsidiary Oncor) and EFH Corp., other affiliates of EFH Corp. and the Sponsor Group are as follows:

• Oncor receives payments from TCEH for services it provides, principally the delivery of electricity. Revenues recorded by Oncor for these services totaled $~~273~~225 million and $~~281~~230 million for the three months ended ~~September~~June 30, ~~2013~~2014 and ~~2012~~2013, respectively, and $~~728~~465 million and $~~746~~455 million for the ~~nine~~six months ended ~~September~~June 30, ~~2013~~2014 and ~~2012~~2013, respectively. The fees are based on rates regulated by the PUCT that apply to all REPs. These revenues from TCEH represented 2825% and 2927% of Oncor Holdings' operating revenues for the ~~nine~~six months ended ~~September~~June 30, ~~2013~~2014 and ~~2012~~2013, respectively. Oncor Holdings' condensed consolidated balance sheets at ~~September~~June 30, ~~2013~~2014 and December 31, ~~2012~~2013 reflect receivables from affiliates totaling $~~158~~140 million and $53135 million, respectively, consisting almost entirely of trade receivables from TCEH related to these electricity delivery fees.

• ~~In August 2012, TCEH and~~ Oncor ~~agreed~~pays toEFH ~~settle~~Corp. atsubsidiaries afor ~~discount~~financial ~~two~~and ~~agreements~~other ~~related~~administrative toservices ~~securitization~~and ~~(transition)~~shared ~~bonds~~facilities ~~issued~~at bycost. ~~Oncor's~~Such ~~bankruptcy-remote~~amounts ~~financing~~increased ~~subsidiary~~reported inoperation ~~2003~~ and ~~2004~~maintenance toexpense ~~recover~~by ~~generation-related~~$7 ~~regulatory~~million ~~assets.~~for ~~Under~~both the ~~agreements,~~three ~~TCEH~~months ~~had~~ended ~~been~~June ~~reimbursing~~30, ~~Oncor~~2014 asand ~~described~~2013 ~~immediately~~and ~~below.~~$16 ~~Under~~million ~~the~~for ~~settlement,~~both ~~TCEH~~the ~~paid,~~six ~~and~~months ~~Oncor~~ended ~~received~~June 30, ~~$159~~2014 ~~million~~and ~~in cash~~2013.

1619

~~Oncor~~• ~~collects~~Under ~~transition~~Texas ~~surcharges~~regulatory ~~from~~provisions, ~~its~~the ~~customers~~trust tofund ~~recover~~for decommissioning the ~~transition~~Comanche ~~bond~~Peak ~~payment~~nuclear ~~obligations. Oncor~~generation facility (reported on TCEH's ~~incremental~~condensed ~~income~~consolidated ~~taxes~~balance ~~related~~sheets) tois ~~the~~funded ~~transition~~by ~~surcharges~~a itdelivery ~~collects~~fee ~~had~~surcharge ~~been~~collected ~~reimbursed~~from REPs by ~~TCEH~~Oncor, ~~quarterly~~as ~~under~~collection aagent, ~~noninterest~~and ~~bearing~~remitted ~~note~~monthly ~~payable~~ to ~~Oncor~~TCEH. ~~that~~The ~~was~~delivery tofee ~~mature~~surcharges inremitted ~~2016.~~ to TCEH's ~~payments~~totaled on$4 million for both the ~~note~~three ~~prior~~months toended ~~the~~June ~~August~~30, ~~2012~~2014 ~~settlement~~and ~~totaled~~2013, ~~zero~~respectively, and $208 million for both the ~~three~~six ~~and nine~~ months ended ~~September~~ June 30, ~~2012,~~2014 ~~respectively~~and 2013.

~~Under~~• anEFH ~~interest~~Corp. ~~reimbursement~~files ~~agreement,~~a ~~TCEH~~consolidated ~~had~~federal ~~reimbursed~~income tax return that includes Oncor onHoldings' results. Oncor is not a ~~monthly~~member ~~basis~~of ~~for~~EFH ~~interest~~Corp.'s ~~expense~~consolidated ontax ~~the~~group, ~~transition~~but ~~bonds~~EFH Corp. ~~Only~~'s ~~the~~consolidated ~~monthly~~federal ~~accrual~~income oftax ~~interest~~return ~~under~~includes ~~this~~EFH ~~agreement~~Corp.'s ~~was~~portion ~~reported~~of Oncor's results as a ~~receivable~~result byof EFH Corp.'s equity ownership in Oncor. ~~This~~ ~~interest~~EFH ~~income~~Corp. ~~prior~~also tofiles ~~the~~a ~~August~~consolidated ~~2012~~Texas ~~settlement~~state ~~totaled~~margin $2tax ~~million~~return that includes all of Oncor Holdings' and ~~$16~~Oncor's ~~million~~results. ~~for~~However, ~~the~~under ~~three~~a Federal and ~~nine~~State ~~months~~Income ~~ended~~Tax ~~September 30,~~Allocation ~~2012~~Agreement, ~~respectively~~Oncor Holdings and Oncor record their federal income and Texas state margin taxes substantially as if Oncor Holdings and Oncor were filing their own corporate income tax returns.

•At June 30, 2014, Oncor ~~pays~~Holdings had a current receivable from EFH Corp. ~~subsidiaries~~related ~~for~~to ~~certain~~federal ~~administrative services~~ and ~~shared~~state ~~facilities~~income attaxes ~~cost.~~totaling ~~These~~$22 ~~costs~~million, which ~~are~~included ~~primarily~~a ~~reported~~$23 inmillion ~~operation~~net ~~and~~receivable ~~maintenance~~related ~~expenses,~~to ~~totaled~~Oncor. The $8Oncor ~~million~~receivable ~~and~~from EFH Corp. represented a $1037 million ~~for~~federal ~~the~~income ~~three~~tax ~~months~~receivable ~~ended~~net ~~September~~of ~~30,~~a ~~2013~~$14 ~~and~~million ~~2012~~state margin tax payable. At December 31, ~~respectively~~2013, ~~and~~Oncor Holdings had a current payable totaling $247 million, ~~and~~which included $275 million ~~for~~payable ~~the~~by ~~nine~~Oncor. Oncor's ~~months~~liability ~~ended~~at ~~September 30~~December 31, 2013 ~~and~~consists ~~2012,~~of ~~respectively~~a $23 million state margin tax payable net of an $18 million federal income tax receivable.

•For ~~Under Texas regulatory provisions,~~ the ~~trust~~six ~~fund~~months ~~for~~ended ~~decommissioning~~June 30, ~~the~~2014, ~~Comanche~~Oncor ~~Peak~~Holdings ~~nuclear~~and ~~generation facility (reported on TCEH's balance sheet) is funded by a delivery fee surcharge collected from REPs by~~ Oncor, asmade ~~collection~~income ~~agent,~~tax ~~and~~payments ~~remitted monthly~~ to ~~TCEH.~~EFH ~~The~~Corp ~~delivery~~totaling ~~fee~~$12 ~~surcharges~~million ~~remitted~~and ~~to TCEH totaled~~ $5135 million, ~~for~~respectively. For ~~both~~ the ~~three~~six months ended ~~September~~June 30, 2013, ~~and~~Oncor ~~2012~~Holdings and ~~$12~~Oncor ~~million~~made ~~for~~income ~~both~~tax ~~the~~payments ~~nine~~to ~~months~~EFH ~~ended~~Corp. ~~September~~totaling ~~30,~~$17 ~~2013~~million and ~~2012~~$36 million, respectively.

• ~~EFH~~Oncor ~~Corp.~~has ~~files~~requirements ain ~~consolidated~~place ~~federal~~to ~~income~~assure ~~tax~~adequate ~~return~~creditworthiness ~~that~~of ~~includes~~any ~~Oncor~~REP ~~Holdings'~~to ~~results.~~support ~~Oncor~~the isREP's ~~not~~obligation ato ~~member~~collect ofsecuritization ~~EFH~~bond-related ~~Corp.'s~~(transition) ~~consolidated~~charges ~~tax~~on ~~group,~~behalf ~~but~~of ~~EFH~~Oncor ~~Corp.'s~~Electric ~~consolidated~~Delivery ~~federal~~Transition ~~income~~Bond ~~tax~~Company ~~return includes EFH Corp~~LLC.'s ~~portion~~Under ofthese ~~Oncor's~~requirements, ~~results~~ as a result of ~~EFH Corp.~~TCEH's ~~equity~~credit ~~ownership~~rating inbeing ~~Oncor.~~below ~~EFH~~investment ~~Corp.~~grade, ~~also~~TCEH ~~files~~is arequired ~~consolidated~~to ~~Texas~~post ~~state~~collateral ~~margin~~support ~~tax~~in ~~return~~an ~~that~~amount ~~includes~~equal ~~all~~to ofestimated ~~Oncor~~transition ~~Holdings'~~charges ~~and~~over ~~Oncor's~~specified ~~results~~time periods. ~~However~~Accordingly, ~~under~~at aJune ~~tax sharing agreement~~30, ~~Oncor~~2014 ~~Holdings~~ and ~~Oncor~~December ~~record~~31, ~~their~~2013, ~~federal~~TCEH ~~income~~had ~~and~~posted ~~Texas~~letters ~~state~~of ~~margin~~credit ~~taxes~~and/or ~~substantially~~cash asin ifthe ~~Oncor~~amount ~~Holdings~~of ~~and~~$10 ~~Oncor~~million ~~were~~and ~~filing~~$9 ~~their~~million, ~~own~~respectively, ~~corporate~~for ~~income~~Oncor's ~~tax returns~~benefit.

At September 30, 2013, Oncor Holdings had a current payable to EFH Corp. related to federal and state income taxes totaling $35 million, which includes $28 million from Oncor. At December 31, 2012, Oncor Holdings had a current payable totaling $34 million, which included $22 million from Oncor.

For the nine months ended September 30, 2013, Oncor Holdings and Oncor made net federal and state income tax payments to EFH Corp. totaling $24 million, and $60 million, respectively. The 2013 net payment included $33 million from Oncor related to the 1997 through 2002 IRS appeals settlement and a $10 million refund paid to Oncor related to the filing of amended Texas franchise tax returns for 1997 through 2001. For the nine months ended September 30, 2012, Oncor Holdings and Oncor made income tax payments to EFH Corp. totaling $24 million and $3 million, respectively, net of $21 million in federal income tax refunds paid to Oncor Holdings.

• Oncor has requirements in place to assure adequate creditworthiness of any REP to support the REP's obligation to collect securitization bond-related (transition) charges on behalf of Oncor Electric Delivery Transition Bond Company LLC. Under these requirements, as a result of TCEH's credit rating being below investment grade, TCEH is required to post collateral support in an amount equal to estimated transition charges over specified time periods. Accordingly, at September 30, 2013 and December 31, 2012, TCEH had posted letters of credit in the amount of $10 million and $11 million, respectively, for Oncor's benefit.

•

Oncor and Texas Holdings agreed to the terms of a stipulation with major interested parties to resolve all outstanding issues in the PUCT review related to the Merger. As part of this stipulation, TCEH would be required to post a letter of credit in an amount equal to $170 million to secure its payment obligations to Oncor in the event, which has not occurred, two or more rating agencies downgrade Oncor's credit rating below investment grade.

• Affiliates of the Sponsor Group have, ~~and from time-to-time in the future, may~~ (1) ~~sell,~~sold ~~acquire~~ or ~~participate~~acquired ~~in the offerings of~~ Oncor's debt or debt securities in open market transactions or through loan syndications, and (2) ~~perform~~performed various financial advisory, dealer, commercial banking and investment banking services for Oncor and certain of its affiliates for which they have received ~~or will receive~~ customary fees and expenses.

•

Oncor has participated in plans sponsored by EFH Corp. that provide pension, health care and other retiree benefits. Accordingly, Oncor Holdings' consolidated financial statements have reflected allocations to Oncor of amounts related to these retiree benefit plans. Certain regulatory provisions allow for the recovery by Oncor of retiree benefit costs for all applicable former employees of EFH Corp.'s regulated predecessor integrated electric utility, which in addition to Oncor's active and retired employees consists largely of active and retired personnel engaged in TCEH's activities, related to service of those additional personnel prior to the deregulation and disaggregation of EFH Corp.'s businesses effective January 1, 2002. Accordingly, Oncor and TCEH entered into an agreement whereby Oncor assumed responsibility for applicable retiree benefit costs related to those personnel.

InOncor's ~~the~~retained ~~fourth~~liability ~~quarter~~under ~~2012,~~the ~~EFH~~Employee ~~Corp.~~Retirement ~~implemented~~Income ~~certain~~Security ~~amendments~~Act toof ~~its~~1974 ~~pension~~(ERISA) ~~plan. These~~relates ~~amendments~~to ~~resulted, in part, in~~ the ~~splitting~~nonrecoverable ~~off~~portion of the ~~assets~~unfunded ~~and~~obligation ~~liabilities under the plan associated with employees~~ of ~~Oncor and all retirees and terminated vested employees of~~ EFH Corp.'s ~~and~~pension ~~its subsidiaries (including discontinued businesses) to a new~~ plan ~~that is sponsored and administered by Oncor (the Oncor Plan)~~. In ~~connection~~the ~~with~~first ~~this~~quarter ~~change~~2014, ~~EFH~~TCEH ~~Corp.~~contributed ~~fully~~$20 ~~funded~~million ~~the~~to ~~obligations being assumed by~~ the ~~Oncor~~EFH ~~Plan~~Corp. ~~that~~pension ~~relate~~plan toassets, ~~participants'~~resulting ~~benefits~~in ~~not~~the ~~recoverable~~plan bybeing ~~Oncor. The~~fully ~~change~~funded isas ~~not~~calculated ~~expected~~under tothe ~~materially~~provisions ~~affect Oncor's reported results~~ of ~~operations, financial condition or cash flows~~ERISA.

Under ERISA, EFH Corp. and Oncor are jointly and severally liable for the funding of the EFH Corp. and Oncor pension plans. EFH Corp. views the risk of this retained liability under ERISA related to the Oncor Plan to not be significant. Oncor's retained liability under ERISA relates to the nonrecoverable portion of the unfunded obligation for EFH Corp.'s active employees under collective bargaining, which totaled approximately $20 ~~million at December 31, 2012.~~

7In the second quarter 2014, Oncor and EFH Corp. ~~SUPPLEMENTARY~~entered ~~FINANCIAL~~into ~~INFORMATION~~an agreement whereby Oncor will cease participation in EFH Corp.'s OPEB Plan and establish its own OPEB plan for Oncor’s eligible retirees and their dependents effective July 1, 2014. Participants in the EFH Corp. OPEB plan with split service will become participants in the Oncor plan. The methodology for OPEB cost allocations between EFH Corp. and Oncor is not expected to change, and the agreement is not expected to have a material effect on the net assets or cash flows of EFH Corp.

~~Interest~~12. ~~Expense~~SUPPLEMENTARY ~~and~~FINANCIAL ~~Related Charges~~INFORMATION

	Three Months Ended September 30,					Nine Months Ended September 30,
	2013			2012		2013			2012
Interest paid/accrued	$	160		$	116	$	470		$	305
Interest expense related to pushed down debt	1			19		5			57
Interest payable with additional toggle notes (Note 3)	45			—		130			—
Amortization of debt exchange premiums	(20		)	—		(62		)	—
Amortization of debt exchange discounts and issuance costs	5			2		23			6
Total interest expense and related charges	$	191		$	137	$	566		$	368

Fair Value of Debt



	June 30, 2014				December 31, 2013
Debt:	Carrying Amount		Fair Value		Carrying Amount		Fair Value
Borrowings under debtor-in-possession credit facilities (Note 5)	$	5,400	$	5,434	$	—	$	—
Pre-petition notes, loans and other debt (excluding capital leases) (Note 7)	3,876		4,527		7,877		7,849

EFIH determines fair value in accordance with accounting standards, and at June 30, 2014 its debt fair value represents Level 2 valuations. EFIH obtains security pricing from an independent party who uses broker quotes and third-party pricing services to determine fair values. Where relevant, these prices are validated through subscription services such as Bloomberg.

Supplemental Cash Flow Information

	Nine Months Ended September 30,
	Six Months Ended June 30,
	2013			2012
	2014			2013
Cash payments (receipts) related to:
Cash payments related to:
Interest on EFIH debt	$	~~423~~252		$	~~217~~301
Interest on long-term debt of affiliates	—			(92		)
Income taxes	—			3
Income taxes	3			172
Reorganization items (a)	17			—
Noncash investing and financing activities:
Receipt of additional EFH Corp. Toggle Notes in lieu of cash interest	—			(167		)
Principal amount of toggle notes issued in lieu of cash interest	—			83
Principal amount of toggle notes issued in lieu of cash interest (Note 3)	83			—
Parent's payment of interest on pushed-down debt accounted for as a contribution of capital (net of tax) (Note 7)	—			20
Parent's payment of interest on pushed-down debt accounted for as a contribution of capital (net of tax) (Note 3)	21			30
Reduction of debt pushed down from EFH Corp. (b)	—			(420		)
Effect of push down of debt from EFH Corp.	(420		)	—
Debt exchange transactions (c)	(85		)	14
Debt exchange transactions (Note 5)	14			—
Distribution to EFH Corp. of debt held as an investment	—			(5,778		)
Effect of retirement of EFH Corp. debt acquired in debt exchange (Note 5)	(5,778		)	—
Income tax on interest received on holdings of affiliate long-term debt (Note 5)	(73		)	—

18____________


(a)	Represents cash payments for legal and other consulting services.


(b)	For the six months ended June 30, 2013, represents $838 million principal amount of EFH Corp. debt exchanged (at 50%) for EFIH debt.

(c)

For the six months ended June 30, 2014, represents $1.836 billion principal amount of loans issued under the EFIH DIP Facility in excess of $1.673 billion principal amount of EFIH First Lien Notes exchanged and $78 million of related accrued interest (see Note 5). For the six months ended June 30, 2013 represents $1.302 billion principal amount of EFIH debt issued in exchange for $1.310 billion principal amount of EFH Corp. and EFIH debt and $89 million principal amount of EFIH debt issued in exchange for $95 million principal amount of EFH Corp. debt.


Item 2.	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 three and ~~nine~~six months ended ~~September~~June 30, ~~2013~~2014 and ~~2012~~2013 should be read in conjunction with ~~our~~its condensed 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 ASC 852-10, 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 2825% and 2927% of Oncor's total reported consolidated revenues for the ~~nine~~six months ended ~~September~~June 30, ~~2013~~2014 and ~~2012~~2013, respectively. EFIH has no reportable business segments. See Notes 1 and 23 to 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. WeEFIH ~~believe~~believes, as several major credit rating agencies have acknowledged, that the likelihood of such substantive consolidation of the Oncor Ring-Fenced Entities' assets and liabilities is remote in consideration of the ring-fencing measures and applicable law.

Significant Activities and Events and Items Influencing Future Performance

~~See~~Filing ~~Note~~under 1Chapter to11 ~~Financial~~of ~~Statements~~the ~~for~~United ~~discussion~~States Bankruptcy Code — On the Petition Date, EFH Corp. and the substantial majority of its direct and indirect subsidiaries, including EFIH, ~~liquidity~~EFCH and ~~description~~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. EFH Corp.'s ~~discussions~~intends ~~with~~to ~~creditors~~conduct its business operations in the normal course and maintain its focus on achieving excellence in customer service and meeting the needs of electricity consumers in Texas.

~~Liability~~The ~~Management~~Bankruptcy ~~Activity~~Filing —resulted Inprimarily ~~October~~from ~~2009,~~the adverse effects on EFH Corp.'s ~~and~~competitive ~~its~~businesses ~~subsidiaries~~of ~~(excluding~~lower ~~Oncor~~wholesale ~~Holdings~~electricity ~~and~~prices ~~its~~in ~~subsidiaries)~~ERCOT ~~implemented~~driven aby ~~liability~~the ~~management~~sustained ~~program~~decline ~~designed~~in tonatural ~~reduce~~gas ~~debt~~prices since mid-2008. Further, ~~capture~~the ~~debt~~natural ~~discount~~gas ~~and~~hedges ~~extend~~that ~~debt~~TCEH ~~maturities~~entered ~~through~~into ~~debt~~when ~~exchanges,~~forward ~~repurchases~~market ~~and~~prices ~~extensions~~of natural gas were significantly higher than current prices had largely matured before the remaining positions were terminated shortly after the Bankruptcy Filing. AsThese amarket ~~result~~conditions ofchallenged ~~this~~the ~~program,~~profitability aand ~~substantial~~operating ~~majority~~cash flows of EFH Corp.'s ~~(parent~~competitive ~~entity)~~businesses and resulted in the inability to support their significant interest payments and debt ~~has~~maturities, ~~been~~including ~~exchanged~~the ~~for~~remaining debt ~~issued~~obligations bydue ~~EFIH~~in 2014, and the inability to refinance and/or extend the maturities of their outstanding debt.

InRestructuring ~~January~~Support ~~2013,~~and ~~EFIH~~Lock-Up ~~issued~~Agreement ~~$1.391~~(RSA) ~~billion~~As ~~principal~~previously ~~amount~~disclosed, ofafter ~~debt~~a inseries ~~exchange~~of ~~for~~discussions ~~$1.266~~with ~~billion~~certain ~~principal~~creditors ~~amount~~that ofbegan ~~EFH~~in ~~Corp.~~2013 ~~debt~~ and ~~$139~~in ~~million~~anticipation ~~principal amount~~ of ~~EFIH debt. In~~ the ~~first~~Bankruptcy ~~quarter 2013~~Filing, ~~EFIH~~on ~~distributed~~April ~~$6.360~~29, ~~billion~~2014, ~~principal~~the ~~amount~~Debtors ofentered ~~EFH~~into ~~Corp.~~a ~~debt~~Restructuring ~~that~~Support itand ~~previously~~Lock-Up ~~received~~Agreement in(RSA) ~~debt~~with ~~exchanges~~various asstakeholders a(Consenting ~~dividend~~Parties) ~~to EFH Corp., including $1.235 billion received~~ in ~~January~~order ~~2013,~~to ~~which~~effect ~~cancelled~~an ~~the~~agreed ~~notes,~~upon ~~leaving~~restructuring ~~$1.361 billion principal amount~~ of ~~affiliate~~the ~~debt~~Debtors ~~still~~through ~~held~~a bypre-arranged ~~EFIH. See~~Chapter ~~Note~~11 3plan ~~to Financial Statements for details~~ of ~~debt related activity in 2013 and Note 1 to Financial Statements regarding "Liquidity Considerations" and "EFH Corp~~reorganization. ~~Discussions with Creditors."~~

EFH Corp. and its subsidiaries (other than the Oncor Ring-Fenced Entities) continue to consider and evaluate possible transactions and initiatives to address their highly leveraged balance sheets and significant cash interest requirements and have entered into discussions with their lenders and bondholders with respect to such transactions and initiatives. These transactions and initiatives may include, among others, debt for debt exchanges, recapitalizations, amendments to and extensions of debt obligations and exchanges or conversions of debt for preferred or common equity or warrants, including exchanges or conversions of debt of EFH Corp., EFIH, EFCH and TCEH into preferred or common equity or warrants of EFH Corp., EFIH, EFCH, TCEH and/or any of their subsidiaries.

In evaluating whether to undertake any liability management transaction, EFH Corp. will take into account, among other things, liquidity requirements, prospects for future access to capital, contractual restrictions, tax consequences, the market price and maturity dates of its outstanding debt and potential transaction costs. Any liability management transaction, including any refinancing or extension, may occur on a stand-alone basis or in connection with, or immediately following, other liability management transactions.

Sunset Review/2013 Texas Legislative Session — Sunset review is the regular assessment of the continuing need for a state agency to exist, and is grounded in the premise that an agency will be abolished unless legislation is passed to continue its functions. On a specified time schedule, 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.

During the 2013 legislative session that ended in May 2013, the Texas Legislature passed the PUCT Sunset bill and extended the life of the PUCT for 10 years through 2023. The bill did not fundamentally change the management or operation of the PUCT related to electricity issues. The bill included various electric service regulation changes, including clarification on PUCT oversight of ERCOT, protections regarding customer privacy related to advanced meter data and new PUCT authority to issue cease and desist orders.

No legislation passed during the 2013 Texas legislative session, including the Sunset Review actions described above, is expected to have a material impact on our results of operations, liquidity or financial condition. The Texas Legislature is scheduled to convene its next legislative session in January 2015.

Oncor Matters with the PUCT — Competitive Renewable Energy Zones (CREZs) — In 2009, the 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 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. In addition to these projects, ERCOT completed a study in December 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 currently 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-related costs could change based on finalization of costs for the additional voltage support facilities and final detailed designs of subsequent project routes. At September 30, 2013, Oncor's cumulative CREZ-related capital expenditures totaled $1.842 billion, including $382 million in 2013. Oncor expects that all necessary permitting actions and other requirements and all line and station construction activities for Oncor's CREZ construction projects will be 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.

Transmission Cost Recovery and Rates (PUCT Docket Nos. 41543, 41002 and 40451) — In order to reflect increases or decreases in its wholesale transmission costs, including fees paid to other transmission service providers, Oncor is required to file an update to the transmission cost recovery factor (TCRF) component of its retail delivery rates charged to REPs twice a year. In June 2013, Oncor filed an application to update the TCRF, which became effective September 1, 2013. This application was designed to increase Oncor's billings for the period from September 2013 through February 2014 by $88 million. In November 2012, Oncor filed an application to update the TCRF, which became effective March 1, 2013. This application was designed to reduce Oncor's billings for the period from March 2013 through August 2013 by $47 million. In June 2012, Oncor filed an application to update the TCRF, which became effective in September 2012. This application was designed to increase Oncor's billings for the period from September 2012 through February 2013 by $129 million.

Transmission Interim Rate Update Applications (PUCT Docket Nos. 41706 and 41166) — 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 in a calendar 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 July 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 September 2013. Oncor's annualized revenues will increase 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.

Application for 2014 Energy Efficiency Cost Recovery Factor (PUCT Docket No. 41544) — In May 2013, Oncor filed an application with the PUCT to request approval of the energy efficiency cost recovery factor (EECRF) for 2014. PUCT rules require Oncor to make an annual EECRF filing by the first business day in June in each year for implementation on March 1 of the next calendar year. The requested 2014 EECRF was $73 million, which is the same amount established for 2013, and would result in a monthly charge for residential customers of $1.01 as compared to the 2013 residential charge of $1.23 per month. The requested 2014 EECRF is designed to recover $62 million of Oncor's costs for the 2014 program year, a $12 million performance bonus based on Oncor's 2012 results and a $1 million decrease for over-recovery of 2012 costs. A settlement has been reached, and PUCT approval is expected in the fourth quarter 2013.

Application for Reconciliation of Advanced Meter Surcharge (PUCT Docket No. 41814) — In September 2013, Oncor filed an application with the PUCT for reconciliation of all costs incurred and investments made from January 1, 2011 through December 31, 2012, in the deployment of Oncor's advanced metering system (AMS) pursuant to the AMS Deployment Plan approved in Docket No. 35718. During the 2011 to 2012 period, Oncor incurred approximately $300 million of capital expenditures and $34 million of operating and maintenance expense, and billed customers approximately $174 million through the AMS surcharge. In addition to the reconciliation, Oncor is seeking a finding from the PUCT that approximately $28 million of additional estimated capital expenditures and approximately $4 million of additional estimated annual operation and maintenance expense related to cyber security and disaster recovery protections are reasonable and necessary costs associated with the deployment of an advanced metering system are recoverable through the AMS surcharge. Oncor is not seeking a change in the AMS surcharge in this proceeding, and anticipates that the proceeding will be concluded in the second quarter of 2014.

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

RESULTS OF OPERATIONS

Financial Results — Three Months Ended September 30, 2013 Compared to Three Months Ended September 30, 2012

Selling, general, and administrative expenses totaled $5 million in 2013 representing legal and consulting costs associated with EFH Corp.'s liability management program.

Interest income – affiliates decreased $152 million to none in 2013. See Note 5 to Financial Statements for discussion of reclassification of long-term debt of affiliates we hold that resulted in interest received on such debt being recorded as an increase in membership interests instead of interest income.

Interest expense and related charges increased $54 million to $191 million in 2013. The increase was driven by the issuance of EFIH Notes in 2012 and 2013 (see Note 3 to Financial Statements).

Income tax benefit totaled $68 million in 2013 compared to income tax expense of $6 million in 2012. The effective tax rate on pretax loss was 34.7% in 2013 compared to 40.0% on pretax income in 2012. The change in the effective tax rate was driven by a decrease in Texas margin tax expense due primarily to lower interest income, and higher nondeductible interest on pushed down debt.

Equity in earnings of our Oncor Holdings unconsolidated subsidiary (net of tax) increased $5 million to $114 million in 2013. The increase in Oncor's earnings reflected higher revenues driven by higher transmission rates and growth in points of delivery, partially offset by higher depreciation and lower interest income. See Note 2 to Financial Statements.

Net loss increased $132 million to $14 million in 2013 driven by a decrease in interest income and an increase in interest expense.

Financial Results — Nine Months Ended September 30, 2013 Compared to Nine Months Ended September 30, 2012

Selling, general, and administrative expenses totaled $5 million in 2013 representing legal and consulting costs associated with EFH Corp.'s liability management program.

Interest income – affiliates decreased $178 million to $284 million in 2013. The 2013 amount represents previous mark-to-market gains on certain holdings of long-term debt of affiliates reclassified from accumulated other comprehensive income. As a result of EFIH's distribution of these securities to EFH Corp. in the first quarter, these gains were recognized as interest income in accordance with GAAP. See Note 5 to Financial Statements for discussion of reclassification of long-term debt of affiliates we hold that resulted in interest received on such debt being recorded as an increase in membership interests instead of interest income.

Interest expense and related charges increased $198 million to $566 million in 2013. The increase was driven by the issuance of EFIH Notes in 2012 and 2013 (see Note 3 to Financial Statements).

Income tax benefit totaled $100 million in 2013 compared to income tax expense of $35 million in 2012. The effective tax rate on pretax loss was 34.8% in 2013 compared to 37.2% on pretax income in 2012. The change in the effective tax rate was driven by a decrease in Texas margin tax expense due primarily to lower interest income, and higher nondeductible interest on pushed down debt.

Equity in earnings of our Oncor Holdings unconsolidated subsidiary (net of tax) increased $6 million to $255 million in 2013. Equity in earnings in 2013 included an $11 million favorable tax effect due to resolution of certain income tax positions at Oncor. The change in Oncor's earnings also reflected higher depreciation, lower interest income and higher operation and maintenance expenses, partially offset by higher revenues reflecting higher transmission rates and growth in points of delivery. See Note 2 to Financial Statements.

Net income decreased $240 million to $68 million in 2013 driven by a decrease in interest income and an increase in interest expense.

~~FINANCIAL~~On ~~CONDITION~~July 24, 2014, pursuant to the RSA, each of EFH Corp., EFIH, EFCH, TCEH, EFIH Finance, Inc. and TCEH Finance Inc. provided a notice of termination of the RSA in accordance with its terms to the Consenting Parties. The RSA termination became effective on July 31, 2014.

~~Cash~~The ~~Flows~~Debtors —believe ~~Nine~~that ~~Months~~the ~~Ended~~RSA ~~September 30,~~provided ~~2013~~significant ~~Compared~~benefit to ~~Nine~~the ~~Months~~Debtors, ~~Ended September 30~~including, ~~2012~~without —limitation, ~~Cash~~(a) ~~used~~enabling inthe ~~operating~~TCEH ~~activities~~Debtors ~~totaled~~to ~~$297~~obtain ~~million~~the insupport ~~2013~~of ~~compared~~holders toof ~~$196~~the ~~million~~TCEH infirst ~~2012. The~~lien ~~$101~~secured ~~million~~claims ~~increase~~for ~~reflected~~the ~~$206~~TCEH ~~million~~ debtor-in-possession ~~higher~~financing ~~interest~~facility ~~payments~~ and a(b) ~~decrease~~providing ~~of $92 million in interest received on affiliate debt, partially offset by~~ a ~~decrease~~framework offor ~~$169~~the ~~million~~restructuring intransactions ~~income~~involving ~~taxes paid to~~ EFH Corp. ~~(2012 payments included amounts related to prior years)~~ and ~~$48~~EFIH ~~million~~described in ~~higher cash distributions from Oncor Holdings. See Note 5 to Financial Statements for discussion of~~ the ~~distribution of EFH Corp. debt as a dividend to EFH Corp.~~RSA, which ~~has~~prompted ~~resulted~~competing inproposals ~~lower~~(including, ~~cash~~among ~~interest~~others, ~~received~~an inalternative ~~2013~~proposal asfrom ~~compared~~NextEra toEnergy, ~~2012~~Inc.).

~~Amortization~~Each of ~~debt~~the ~~issuance~~Debtors ~~costs~~remain ~~reported~~committed into the ~~statement~~tax-free spin of ~~consolidated~~TCEH ~~cash~~and ~~flows~~its ~~relates~~subsidiaries todescribed ~~both~~in the ~~debt~~RSA. Moreover, ~~pushed~~the ~~down~~TCEH ~~from~~first ~~EFH~~lien ~~Corp.~~creditors ~~and~~who ~~the~~were ~~debt~~party weto the RSA have ~~issued~~advised ~~(see~~the ~~Note~~Debtors 3that, notwithstanding the RSA termination, they intend to ~~Financial~~continue ~~Statements)~~to work cooperatively with the Debtors and isother ~~reported~~parties in interest ~~expense~~to ~~and~~pursue ~~related~~transactions ~~charges~~that incan be achieved expeditiously, including a possible tax-free spin of the ~~statement~~TCEH Debtors, which will maximize the value of ~~consolidated~~the ~~income~~TCEH Debtors' estates and resolve the Chapter 11 Cases.

~~Cash~~In ~~used~~cooperation inwith ~~financing~~various ~~activities~~stakeholders, ~~totaled~~the ~~$478~~Debtors ~~million~~have infocused, ~~2013~~and ~~compared~~will continue to ~~cash~~focus, ~~provided~~on ~~totaling~~formulating ~~$1.0~~and ~~billion~~implementing inan ~~2012. Activity~~effective inand ~~2013~~efficient ~~reflects~~plan aof ~~$680~~reorganization ~~million~~for ~~cash~~each ~~distribution~~of tothe ~~EFH~~Debtors ~~Corp.~~under ~~(see~~Chapter ~~Note~~11 5of the Bankruptcy Code that maximizes enterprise value. The Debtors intend to ~~Financial~~conduct ~~Statements),~~a ~~partially~~court ~~offset~~supervised bybid ~~interest~~process ~~received~~with onrespect ~~holdings~~to the restructuring of ~~affiliate~~EFH ~~long-term~~Corp. ~~debt~~and ~~totaling~~EFIH ~~$208~~to ~~million. Activity~~maximize intheir ~~2012~~respective ~~reflected~~enterprise ~~the~~values ~~issuances~~for ofall $2stakeholders.0 In ~~billion~~addition, ofEFH Corp. and EFIH ~~Notes~~intend ~~and~~to ~~distributions~~negotiate ofwith ~~$950~~each ~~million~~party ofthat ~~the~~has ~~proceeds~~submitted or does submit a bid with respect to the reorganization of EFH Corp. and EFIH.

~~Cash~~EFIH ~~provided~~Settlement byof ~~investing~~First ~~activities~~Lien ~~totaled~~Notes ~~$680~~and ~~million~~Related inExchanges ~~2013~~— ~~compared~~Pursuant to ~~cash~~the ~~used~~RSA, ~~totaling~~certain ~~$680~~holders inof ~~2012. Amounts~~EFIH ~~represent~~First aLien ~~portion~~Notes ofagreed ~~the~~to ~~net~~voluntary ~~proceeds~~settlements ~~from~~of ~~the~~such ~~issuance~~notes. In ofJune ~~EFIH~~2014, ~~Notes~~the inBankruptcy ~~August~~Court ~~2012~~issued ~~that~~an ~~EFIH~~order ~~removed~~approving ~~from~~this ~~escrow~~settlement, ~~(reported~~the asEFIH ~~restricted~~DIP ~~cash~~Facility atand ~~December~~the ~~31,~~settlement ~~2012)~~of toremaining ~~pay~~EFIH aFirst ~~dividend~~Lien inNotes, ~~this~~all ~~amount~~of towhich ~~EFH~~were ~~Corp.~~completed inas ~~January~~described ~~2013~~in ~~(see~~ Note 5 to Financial Statements).

~~Liquidity~~The ~~Needs~~RSA —termination ~~Our~~does ~~substantial~~not ~~debt,~~impact ~~resulting~~or incancel ~~part~~the ~~from~~EFIH ~~debt~~First ~~issued~~Lien inNotes ~~exchange~~settlement ~~for~~since ~~outstanding~~such ~~EFH~~settlement ~~Corp.~~was ~~debt,~~completed ~~requires~~prior ~~significant cash flows~~ to bethe ~~dedicated~~RSA ~~to interest payments~~termination. ~~Our~~See ~~liquidity~~Note ~~depends~~9 on, among other things, receiving dividends from Oncor Holdings and receiving interest payments on EFH Corp. and TCEH debt we hold. The interest we receive from EFH Corp. has decreased from 2012 following the January 2013 distribution to ~~EFH Corp. of debt previously held by us (see Notes 3 and 5 to~~ Financial Statements~~). EFIH~~ ~~has~~for ~~sufficient~~a ~~liquidity~~discussion toof ~~meet~~litigation ~~its~~regarding ~~obligations~~alleged ~~for~~makewhole ~~approximately~~claims ~~the~~of ~~next~~holders ~~twelve~~of ~~months. See~~EFIH ~~Note~~First 1Lien toNotes ~~Financial~~in ~~Statements~~connection ~~regarding EFH Corp.'s discussions~~ with ~~creditors~~the ~~that~~EFIH ~~included~~First ~~proposals~~Lien toNotes ~~restructure EFIH's debt~~settlement.

~~Long-Term~~Private ~~Debt~~Letter ~~Activity~~Ruling — InPursuant ~~January~~to ~~2013~~the RSA, ~~EFIH~~on ~~issued~~June ~~$1.391~~10, ~~billion~~2014 ~~principal~~EFH ~~amount~~Corp. offiled ~~debt~~a inrequest ~~exchange~~with the IRS for ~~$1.266~~a ~~billion~~private ~~principal~~letter ~~amount~~ruling (Private Letter Ruling) that, among other things, will provide (a) that (i) the transfer by TCEH of ~~EFH~~all ~~Corp.~~of ~~debt~~its assets and ~~$139~~its ~~million~~ordinary ~~principal~~course ~~amount~~operating liabilities to Reorganized TCEH, (ii) the transfer by the Debtors to Reorganized TCEH of ~~EFIH~~certain ~~debt. See~~operating ~~Note~~assets 3and liabilities that are reasonably necessary to ~~Financial~~the ~~Statements~~operation ~~for~~of ~~details~~Reorganized TCEH and (iii) the distribution by TCEH of ~~debt~~(A) ~~related~~the ~~activity~~equity it holds in ~~2013,~~Reorganized ~~including~~TCEH ~~EFH~~and ~~Corp.~~(B) ~~debt~~the ~~returned~~cash byproceeds ~~EFIH~~TCEH asreceives ~~dividends~~from Reorganized TCEH to ~~EFH~~the ~~Corp~~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. Notwithstanding the termination of the RSA, ~~which~~the ~~cancelled~~Debtors itintend to continue to pursue the Private Letter Ruling in connection with any Chapter 11 plan of reorganization that is ultimately proposed.

~~Debt~~Operation ~~Capacity~~and Implications of the Chapter 11 Cases — WeThe ~~believe~~accompanying ~~that~~consolidated wefinancial ~~(excluding~~statements contemplate the ~~Oncor~~realization ~~Ring-Fenced~~of ~~Entities)~~assets and ~~EFH~~the ~~Corp.~~satisfaction ~~collectively~~of ~~are~~liabilities ~~permitted~~in ~~under~~the ~~our~~normal ~~applicable~~course ~~debt~~of ~~agreements~~business. The Debtors' ability to ~~issue~~continue ~~(subject~~as a going concern is contingent upon their ability to ~~certain~~comply ~~exceptions~~with the financial and ~~conditions~~other ~~set~~covenants ~~forth~~contained in ~~our~~the ~~applicable~~debtor-in-possession ~~debt~~financing ~~documents~~(DIP Facilities), upthe toBankruptcy ~~approximately~~Court's ~~$250~~approval ~~million~~ of ~~additional~~the ~~aggregate~~Chapter ~~principal~~11 ~~amount~~plan of ~~debt~~reorganization ~~secured~~ultimately proposed by ~~EFIH's~~the ~~equity~~Debtors ~~interest~~and intheir ~~Oncor~~ability ~~Holdings~~to onsuccessfully implement such Chapter 11 plan and obtain new financing, among other factors. As a ~~second~~result of the Chapter 11 Cases, the realization of assets and the satisfaction of liabilities are subject to uncertainty. While operating as debtors-~~priority~~in-possession ~~basis~~under Chapter 11, the Debtors may sell or otherwise dispose of or liquidate assets or settle liabilities, subject to the approval of the Bankruptcy Court or as otherwise permitted in the ordinary course of business (and subject to restrictions contained in the DIP Facilities), for amounts other than those reflected in the accompanying consolidated financial statements.

In addition, EFIH is permitted under its debt agreements to issue up to approximately $375 million of additional principal amount of senior unsecured debt (subject to certain exceptions and conditions set forth in its debt agreements). Such unsecured debt may be incurred for, among other things, exchanges for EFH Corp. unsecured debt.

Investment Capacity — We believe that we (excluding the Oncor Ring-Fenced Entities) are permitted under applicable debt agreements to make "investments" that could result in, among other things, additional liquidity through financings secured by existing assets (subject to certain exceptions and conditions set forth in the applicable debt documents) of up to approximately $435 million of which approximately $210 million is for investment in similar businesses and approximately $225 million is a general investment basket.

~~These~~A ~~debt~~Chapter ~~capacity~~11 ~~and~~plan ~~investment~~of ~~capacity~~reorganization ~~amounts~~determines ~~are~~the ~~estimates~~rights ~~based~~and onsatisfaction ~~our~~of ~~current~~claims ~~interpretation~~ of ~~the~~various ~~covenants~~creditors ~~set~~and ~~forth~~security inholders ~~our~~and ~~debt~~is ~~agreements~~subject to the ultimate outcome of negotiations and doBankruptcy ~~not~~Court ~~take~~decisions ~~into~~ongoing ~~account~~through ~~exceptions~~the indate on which the ~~debt~~Chapter ~~agreements~~11 plan is confirmed. The Debtors currently expect that ~~may~~any ~~allow~~proposed ~~for~~Chapter ~~the~~11 ~~incurrence~~plan of ~~(i)~~reorganization ~~additional~~will ~~secured~~provide, oramong ~~unsecured~~other ~~debt~~things, ~~including,~~mechanisms ~~but~~for ~~not~~settlement ~~limited~~of ~~to,~~claims ~~acquisition~~against ~~debt,~~the ~~refinancing~~Debtors' ~~debt~~estates, ~~capital~~treatment ~~leases~~of ~~and~~EFH ~~hedging~~Corp.'s ~~obligations~~existing ~~and~~equity ~~(ii)~~holders ~~additional~~and ~~investments,~~the ~~including~~Debtors' ~~but~~respective ~~not~~existing ~~limited~~debt toholders, ~~permitted~~potential ~~investments. Moreover,~~income ~~such~~tax ~~amounts~~liabilities ~~could~~and ~~change~~certain ~~from~~corporate ~~time~~governance toand ~~time~~administrative asmatters pertaining to a ~~result~~reorganized ~~of,~~EFH ~~among~~Corp. Any ~~other~~proposed ~~things,~~Chapter ~~the~~11 ~~termination~~plan of ~~any~~reorganization ~~debt~~will ~~agreement~~be ~~(or~~subject ~~specific~~to ~~terms~~revision ~~therein)~~prior orto ~~amendments~~submission to the ~~debt~~Bankruptcy ~~agreements~~Court ~~that~~based ~~result~~upon ~~from~~discussions ~~negotiations~~ with ~~new~~the orDebtors' ~~existing~~creditors ~~lenders. In~~and ~~addition~~other interested parties, ~~covenants~~and ~~included~~thereafter in ~~agreements~~response ~~governing~~to ~~additional~~creditor ~~future~~claims ~~debt~~and ~~may~~objections ~~impose~~and ~~greater~~the ~~restrictions~~requirements onof ~~our~~the ~~incurrence~~Bankruptcy ofCode ~~secured~~ or ~~unsecured~~the ~~debt~~Bankruptcy Court. ~~Consequently,~~There can be no assurance that the ~~actual~~Debtors ~~amount~~will ofbe ~~senior~~able ~~secured~~to orsecure ~~unsecured~~approval ~~debt~~for ~~that~~any weChapter ~~are~~11 ~~permitted~~plan toof ~~incur~~reorganization ~~and~~it ~~the~~ultimately ~~investments~~proposes wefrom ~~are~~the ~~permitted~~Bankruptcy toCourt ~~make~~or ~~under~~that ~~our~~any ~~debt~~Chapter ~~agreements~~11 ~~could~~plan will be ~~materially~~accepted ~~different~~by ~~than~~ the ~~amounts~~Debtors' ~~provided above~~creditors.

~~EFIH~~In ~~Toggle~~order ~~Notes~~for ~~Interest~~the ~~Election~~Debtors —to Weemerge ~~have~~successfully from the ~~option~~Chapter ~~every~~11 ~~six~~Cases ~~months~~as atreorganized ~~our discretion~~companies, ~~ending~~they ~~with~~must obtain approval from the ~~interest~~Bankruptcy ~~payment~~Court ~~due~~and ~~June~~certain ~~2016,~~of totheir ~~use~~respective ~~the~~creditors ~~payment-in-kind~~for ~~(PIK)~~a ~~feature~~Chapter of11 ~~our~~plan, ~~toggle~~which ~~notes~~will ~~($1.393~~enable ~~billion~~each ~~aggregate~~of ~~principal~~the ~~amount~~Debtors ~~issued~~to intransition ~~December~~from ~~2012~~the ~~and~~Chapter ~~January~~11 ~~2013)~~Cases ininto ~~lieu~~reorganized ofcompanies ~~making~~conducting ~~cash~~ordinary ~~interest~~course ~~payments~~operations outside of bankruptcy. ~~Once~~In weconnection ~~make~~with aan ~~PIK~~exit ~~election~~from bankruptcy, ~~the~~TCEH ~~election~~and isEFIH ~~valid~~will ~~for~~require ~~each~~a ~~succeeding~~new ~~interest~~credit ~~payment~~facility, ~~period~~or ~~until~~"exit wefinancing." TCEH's ~~revoke~~and ~~the~~EFIH's ~~applicable~~ability ~~election. Use~~to ofobtain ~~the~~such ~~PIK~~approval, ~~feature~~and ~~will~~TCEH's beand ~~evaluated~~EFIH's atability ~~each~~to ~~election~~obtain ~~period~~such financing will depend on, ~~taking~~among ~~into~~other ~~account~~things, ~~market~~the ~~conditions~~timing and ~~other~~outcome ~~relevant~~of ~~factors~~various atongoing ~~such~~matters ~~time~~in the Chapter 11 Cases.

WeIn ~~made~~general, ~~our~~the ~~June~~Debtors ~~2013~~have ~~interest~~received ~~payment~~final ~~and~~bankruptcy ~~expect~~court toorders ~~make~~with ~~our~~respect ~~December~~to ~~2013~~"first ~~interest~~day ~~payment~~motions" onthat allow the ~~EFIH~~Debtors ~~Toggle~~to ~~Notes~~operate bytheir ~~using~~businesses in the ~~PIK~~ordinary ~~feature~~course of ~~those~~business, ~~notes. During~~including, among others, providing for the ~~applicable~~payment ~~PIK~~of ~~interest~~certain ~~periods~~pre-petition employee and retiree expenses and benefits, the ~~interest~~use ~~rate~~of onthe ~~these~~Debtors' ~~notes~~existing iscash ~~increased~~management ~~from~~system, ~~11.25%~~the tocontinuation ~~12.25%. As~~of acustomer ~~result~~programs ofat ~~the~~its ~~PIK~~retail ~~election,~~electricity wesales ~~increased~~operations, the ~~aggregate~~payment ~~principal~~of ~~amount~~certain ofpre-petition amounts to certain critical vendors, the ~~notes~~ability byto ~~$83~~perform ~~million~~under incertain ~~June~~pre-petition ~~2013~~hedging and ~~expect~~trading toarrangements ~~issue~~and anthe ~~additional~~ability ~~$90~~to ~~million~~pay incertain ~~December~~pre-petition ~~2013~~taxes and regulatory fees. ~~See~~In ~~Note~~June 32014, tothe ~~Financial~~Bankruptcy ~~Statements~~Court ~~for~~issued ~~further~~orders ~~discussion~~approving the TCEH and EFIH DIP Facilities and the exchange and settlement of the EFIH ~~Toggle~~First Lien Notes as described in Note 5 to Financial Statements.

~~Distributions~~Pre-Petition Claims — Holders of ~~Earnings~~pre-petition ~~from~~claims ~~Oncor~~will ~~Holdings~~be —required ~~Oncor~~to ~~Holdings'~~file ~~distributions~~proofs of ~~earnings~~claims by the "bar dates" 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 usreceive ~~totaled~~any ~~$148~~distribution ~~million~~in ~~and~~the ~~$100~~Chapter ~~million~~11 ~~for~~Cases. The Bankruptcy Court has not yet established the ~~nine~~bar ~~months~~date. Differences ~~ended~~between ~~September 30,~~liability ~~2013~~amounts recorded by the company as liabilities subject to compromise and ~~2012~~claims filed by creditors will be investigated and, ~~respectively~~if necessary, the Bankruptcy Court will make a final determination of the allowable claim. ~~Oncor~~Differences ~~Holdings~~between those final allowed claims and the liabilities recorded in the condensed consolidated balance sheet will be recognized as reorganization items in the Debtors' ~~board~~condensed statement of ~~directors~~consolidated ~~also~~income ~~declared~~(loss) aas ~~distribution~~they toare usresolved. The ~~totaling~~determination ~~$65~~of ~~million~~how ~~payable~~liabilities onwill ~~October~~ultimately ~~31,~~be ~~2013~~resolved cannot be made until the Bankruptcy Court approves a plan of reorganization. ~~See~~Accordingly, ~~Note~~the 2ultimate toamount ~~Financial~~or ~~Statements~~resolution ~~for~~of ~~discussion~~such liabilities is not determinable at this time. The resolution of ~~limitations~~such onclaims ~~amounts~~could ~~Oncor~~result ~~can~~in ~~distribute~~material adjustments to ~~its~~the ~~members~~company’s financial statements.

~~Oncor~~Regulatory ~~has~~Requirements ~~credit~~Related ~~risk~~to ~~exposure~~the toBankruptcy ~~trade~~Filing ~~accounts~~— ~~receivable~~Pursuant ~~from~~to ~~TXU~~the ~~Energy~~Bankruptcy Code, ~~which~~the ~~relate~~Debtors intend to ~~delivery~~comply ~~services~~with ~~provided~~all byapplicable ~~Oncor~~regulatory torequirements, ~~TXU~~including ~~Energy. This~~all ~~exposure~~requirements ~~totals~~related ~~$154~~to ~~million~~environmental atand ~~September~~safety 30law compliance, ~~2013~~during ~~and~~the ~~represents~~pendency ~~$162~~of ~~million~~the inChapter ~~accounts~~11 ~~receivable~~Cases. Further, ~~including~~the ~~$53~~Debtors ~~million~~have inbeen ~~unbilled~~complying, ~~accounts~~and intend to continue to comply, ~~net~~with ofthe $8various ~~million~~reporting ~~secured~~obligations that are required by ~~letters~~the Bankruptcy Court during the pendency of ~~credit~~the ~~posted~~Chapter by11 ~~TCEH~~Cases. ~~Because~~In ~~Oncor~~addition, ~~had~~the ~~committed~~Debtors will seek all necessary and appropriate regulatory approvals necessary to ~~the~~complete ~~PUCT,~~any intransactions ~~connection~~proposed ~~with~~in the ~~Merger~~Chapter 11 plan. Moreover, ~~that~~to itthe ~~would~~extent ~~not~~the ~~seek~~Debtors ~~regulatory~~either ~~rate~~maintain ~~recovery~~insurance ~~for~~policies ~~credit~~or ~~losses~~self-insure ~~associated~~their ~~with~~regulatory ~~affiliated~~compliance ~~REPs~~obligations, ~~Oncor's~~the ~~earnings~~Debtors ~~would~~intend beto ~~reduced~~continue bysuch ~~the~~insurance ~~amount~~policies ~~(after~~or self-~~tax)~~insurance ofin ~~any~~the ~~default~~ordinary bycourse ~~TXU~~of ~~Energy~~business.

~~Financial Covenants,~~ Credit ~~Rating~~Risk ~~Provisions~~Exposure ~~and Cross Default Provisions — Covenants and Restrictions Related~~ to ~~EFIH~~EFH ~~Notes~~Corp. and ~~Pushed~~its ~~Down~~Subsidiaries ~~Debt~~ — ~~The~~As ~~indentures~~a ~~governing~~result of the ~~EFIH~~Bankruptcy ~~Notes~~Filing, ~~EFH~~Oncor ~~Corp.~~had ~~10.875%~~credit ~~Notes~~risk ~~and~~exposure ~~EFH~~to ~~Corp.~~trade ~~Toggle~~accounts ~~Notes~~receivable ~~contain~~from ~~covenants~~TCEH, ~~that~~which ~~could~~related ~~have~~to adelivery ~~material~~services ~~impact~~provided onby ~~our~~Oncor ~~liquidity~~to ~~and~~TCEH's retail electricity operations. ~~See~~At ~~Note~~the 3Petition toDate, ~~Financial~~these ~~Statements~~accounts ~~for~~receivable ~~discussion~~totaled of$109 ~~our~~million. In ~~long-term~~June ~~debt~~2014, ~~including~~the ~~EFH~~Bankruptcy ~~Corp.~~Court ~~debt~~authorized ~~pushed~~the ~~down~~Debtors to uspay asall apre-petition ~~result~~delivery ofcharges ~~our~~due ~~guarantee~~Oncor, ofand ~~the~~such ~~debt~~amounts were paid in full.

~~Adjusted~~Oncor ~~EBITDA~~has ~~(as~~additional ~~used~~credit inrisk ~~the~~exposure ~~restricted~~to ~~payments covenants contained in the indentures governing the EFIH Notes and the~~ EFH Corp. ~~Notes)~~and ~~for~~certain ~~the~~of ~~twelve~~its ~~months~~subsidiaries ~~ended~~totaling ~~September 30,~~approximately ~~2013 totaled~~ $~~1.797~~20 ~~billion~~million ~~and~~at ~~$4.622~~the ~~billion~~Petition Date, ~~respectively. See~~including ~~Exhibits~~an ~~99(b)~~$18 ~~and~~million ~~99(c)~~federal ~~for~~income atax ~~reconciliation~~receivable offrom ~~net~~EFH ~~income~~Corp. ~~(loss)~~under tothe ~~Adjusted~~Federal ~~EBITDA~~and ~~for~~State ~~EFIH~~Income ~~and~~Tax ~~EFH~~Allocation ~~Corp~~Agreement., Additional ~~respectively,~~income ~~for~~tax ~~the~~receivable ~~nine~~amounts ~~and~~may ~~twelve~~arise ~~months~~in ~~ended~~the ~~September 30,~~normal ~~2013~~course ~~and~~under ~~2012~~that agreement.

Oncor has not established any reserves related to this exposure.

~~The~~RESULTS ~~table~~OF below summarizes various financial ratios of EFIH and EFH Corp. that are applicable under the indentures governing the EFIH Notes, EFH Corp. 10.875% Notes and EFH Corp. Toggle Notes at September 30, 2013 and December 31, 2012 and the corresponding covenant threshold levels at September 30, 2013. The debt incurrence and restricted payments/limitations on investments covenants thresholds presented below represent levels that must be met in order for EFH Corp. and EFIH to incur certain 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. 9.75% Senior Notes due 2019 and EFH Corp. 10% Notes due 2020 and their governing indentures, restrictive covenants under those notes were removed (see Note 3 to Financial Statements).OPERATIONS

	June 30,2013	December 31,2012	Threshold Level atJune 30, 2013
Debt Incurrence Thresholds:
EFIH Notes:
EFIH fixed charge coverage ratio (a)	0.3 to 1.0	0.3 to 1.0	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	12.3 to 1.0	10.1 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)(b)	1.8 to 1.0	2.1 to 1.0	At least 2.0 to 1.0
General restrictions (EFH Corp. payments):
EFIH fixed charge coverage ratio (a)(b)	0.3 to 1.0	0.3 to 1.0	At least 2.0 to 1.0
EFIH leverage ratio	7.7 to 1.0	7.0 to 1.0	Equal to or less than 6.0 to 1.0

Financial Results — Three Months Ended June 30, 2014 Compared to Three Months Ended June 30, 2013

~~_____________~~Selling, general, and administrative expenses totaled $8 million in 2014, and no amounts were recorded in 2013. The 2014 amount includes $6 million for legal and other professional services associated with EFIH's debt restructuring activities prior to the Petition Date, of which $1 million was allocated by EFH Corp. The 2014 amount also includes $1 million in allocated Sponsor Group management fees and $1 million in other allocated shared services costs. Payments of Sponsor Group management fees and associated cost allocations have been suspended. See Note 11 to Financial Statements for discussion of allocations from EFH Corp.

~~(a)~~Other ~~Calculation~~deductions ~~excludes~~totaled ~~interest~~$122 ~~income~~million onin ~~the~~2014, ~~EFH~~reflecting ~~Corp.~~the ~~10.875%~~recording ~~Notes~~of ~~and~~a ~~Toggle~~reserve ~~Notes~~against ~~that~~ EFIH's ~~distributed~~income astax areceivable ~~dividend~~from to EFH Corp. ~~in January 2013~~ (see Note 54 to Financial Statements).

~~(b)~~Interest ~~The~~expense ~~EFIH~~and ~~fixed~~related ~~charge~~charges ~~coverage~~decreased ~~ratio~~$66 ~~for~~million ~~paying~~to ~~dividends~~$124 ormillion ~~repurchasing~~in or2014. The ~~making~~decrease ~~distributions~~reflected $84 million in ~~respect~~lower ofinterest ~~capital~~expense ~~stock~~on ~~(EFH~~pre-petition ~~Corp.~~debt ~~payments)~~due ~~excludes~~to the ~~results~~cessation of ~~Oncor~~interest ~~Holdings~~upon ~~and~~the ~~its~~Bankruptcy ~~subsidiaries.~~Filing, ~~The~~partially ~~EFIH~~offset ~~fixed~~by ~~charge~~$10 ~~coverage~~million ~~ratio~~in ~~for~~lower ~~making~~amortization ~~investments~~of ~~(non~~pre-~~EFH~~petition ~~Corp.~~debt ~~payments)~~premiums, ~~includes~~discounts ~~the~~and ~~results~~issuance costs due to reclassification of ~~Oncor~~such ~~Holdings~~amounts to liabilities subject to compromise and ~~its~~$8 ~~subsidiaries~~million in interest expense on debtor-in-possession financing.

~~Material~~Reorganization ~~Cross~~items ~~Default/Acceleration~~in ~~Provisions~~the —quarter ~~Certain~~and ofyear-to-date ~~our~~totaled ~~financing~~$228 ~~arrangements~~million ~~contain~~and ~~provisions~~included ~~that~~a ~~could~~$108 ~~result~~million innet anloss ~~event~~on ofexchange ~~default~~and ifsettlement ~~there~~of ~~were~~the aEFIH ~~failure~~First ~~under~~Lien ~~other~~Notes ~~financing~~and ~~arrangements~~$93 tomillion ~~meet~~in ~~payment~~fees ~~terms~~associated orwith tocompletion ~~observe~~of ~~other~~the ~~covenants~~EFIH ~~that~~First ~~could~~Lien orDIP ~~does~~Facility ~~result~~(see inNote an5 ~~acceleration~~to ofFinancial ~~payments due~~Statements). ~~Such~~See ~~provisions~~Note ~~are~~6 ~~referred~~ to asFinancial ~~"cross~~Statements ~~default"~~for oradditional ~~"cross acceleration" provisions~~discussion.

~~The~~Income ~~indentures~~tax ~~governing~~benefit ~~the~~totaled ~~EFIH~~$118 ~~Notes~~million ~~contain~~and a$67 ~~cross~~million ~~acceleration~~in ~~provision~~2014 ~~whereby~~and a2013, ~~payment~~respectively. Excluding ~~default~~the ateffect ~~maturity~~of orthe onreserve ~~acceleration~~against ofthe ~~principal~~income ~~indebtedness~~tax ~~under~~receivable ~~any~~that ~~instrument~~was orrecorded ~~instruments~~without ofincome ~~EFIH~~tax orbenefit, ~~any~~the ofeffective ~~its~~tax ~~restricted~~rate ~~subsidiaries~~was or32.8% ofand ~~any~~35.3% ~~debt~~in ~~that~~2014 ~~EFIH~~and ~~guarantees~~2013, respectively. The decrease in anthe ~~aggregate~~effective ~~amount~~income ~~equal~~tax torate orwas ~~greater~~driven ~~than~~by ~~$250~~higher ~~million~~nondeductible ~~may~~legal ~~cause~~and ~~the~~other ~~acceleration~~professional ofservices costs related to the ~~EFIH~~Chapter ~~Notes~~11 Cases.

~~Long-Term~~Equity ~~Contractual~~in ~~Obligations~~earnings ~~and~~of ~~Commitments~~EFIH's —Oncor Holdings unconsolidated subsidiary (net of tax) decreased $2 million to $72 million in 2014. The ~~following~~decrease ~~table~~in ~~summarizes~~equity ~~our~~earnings ~~contractual~~of ~~cash~~Oncor ~~obligations~~reflected atdecreased ~~September 30~~revenue from lower average consumption driven by the effects of milder weather and higher depreciation and property taxes, ~~2013~~partially ~~(see~~offset ~~Note~~by 3increased torevenue ~~Financial~~from ~~Statements~~higher ~~for~~transmission ~~additional~~rates ~~disclosures~~and ~~regarding~~growth ~~these~~in ~~long-term~~points ~~debt~~of ~~obligations):~~delivery and lower interest expense. See Note 3 to Financial Statements.

Contractual Cash Obligations (a)	Less ThanOne Year		One toThreeYears		Three toFiveYears		MoreThan FiveYears		Total
Long-term debt – principal	$	—	$	—	$	533	$	7,116	$	7,649
Long-term debt – interest	637		1,626		1,612		2,201		6,076
Total contractual cash obligations	$	637	$	1,626	$	2,145	$	9,317	$	13,725

Net loss totaled $292 million and $49 million in 2014 and 2013, respectively. The $243 million change was driven by reorganization items and the reserve against the income tax receivable, partially offset by lower interest expense on pre-petition debt.

~~_____________~~Financial Results — Six Months Ended June 30, 2014 Compared to Six Months Ended June 30, 2013

~~(a)~~Selling, ~~Includes~~general, and administrative expenses totaled $3019 million ~~principal~~in ~~amount~~2014, and ~~related~~no ~~interest~~amounts ofwere ~~EFH~~recorded ~~Corp~~in 2013. The ~~notes~~2014 ~~pushed~~amount ~~down~~includes to$15 million for legal and other professional services associated with EFIH's ~~(see~~debt ~~Note~~restructuring 3activities prior to ~~Financial~~the ~~Statements.)~~Petition ~~Excludes~~Date, of which $904 million ofwas ~~additional~~allocated ~~principal~~by ~~amount~~EFH ofCorp. The 2014 ~~notes~~amount ~~expected~~also toincludes be$3 ~~issued~~million in ~~December~~allocated ~~2013~~Sponsor Group management fees and ~~due~~$1 million in ~~2018,~~allocated ~~reflecting~~other ~~the~~shared ~~PIK~~services ~~feature~~costs. Payments onof ~~toggle~~Sponsor ~~notes~~Group ~~discussed~~management ~~above~~fees ~~under~~and ~~"EFIH~~associated ~~Toggle~~cost ~~Notes~~allocations ~~Interest~~have ~~Election~~been suspended." See Note 11 to Financial Statements for discussion of allocations from EFH Corp.

~~Guarantees~~Other —deductions ~~See~~totaled ~~Note~~$199 4million toin ~~Financial~~2014, ~~Statements~~reflecting ~~for~~the ~~discussion~~recording of ~~guarantees~~a reserve against EFIH's income tax receivable from EFH Corp. (see Note 4 to Financial Statements).

Interest income - affiliates decreased $284 million to none in 2014. The decline reflects reclassification in 2013 of mark-to-market gains on certain holdings of affiliate debt from accumulated other comprehensive income to interest income. See Note 10 to Financial Statements.

Interest expense and related charges decreased $51 million to $323 million in 2014. The decrease reflected $66 million in lower interest expense on pre-petition debt due to the cessation of interest upon the Bankruptcy Filing, partially offset by $7 million in lower amortization of pre-petition debt premiums, discounts and issuance costs due to reclassification of such amounts to liabilities subject to compromise and $8 million in interest expense on debtor-in-possession financing.

Income tax benefit totaled $191 million and $31 million in 2014 and 2013, respectively. Excluding the effect of the reserve against the income tax receivable that was recorded without income tax benefit, the effective tax rate was 33.5% and 34.4% in 2014 and 2013, respectively. The decrease in the effective income tax rate was driven by higher nondeductible legal and other professional services costs related to the Chapter 11 Cases.

Equity in earnings of EFIH's Oncor Holdings unconsolidated subsidiary (net of tax) increased $11 million to $152 million in 2014. The increase in equity earnings of Oncor reflected increased revenue from higher transmission rates, higher average consumption driven by the effects of colder winter weather in the first quarter and growth in points of delivery. These favorable effects were partially offset by higher income taxes reflecting the $11 million favorable tax effect in 2013 due to resolution of certain income tax positions and an increase in non-deductible amortization of regulatory assets, higher depreciation and higher property taxes. See Note 3 to Financial Statements.

Net loss totaled $426 million in 2014 compared to net income of $82 million in 2013. The $508 million change was driven by a decrease in interest income, reorganization items and the reserve against the income tax receivable, partially offset by lower interest expense on pre-petition debt and higher equity in earnings of Oncor Holdings.

FINANCIAL CONDITION

Cash Flows — Six Months Ended June 30, 2014 Compared to Six Months Ended June 30, 2013 — Cash used in operating activities totaled $221 million and $237 million in 2014 and 2013, respectively. The decrease in cash used of $16 million was driven by $49 million in lower cash interest payments, partially offset by higher legal and other professional services costs.

Amortization of debt issuance costs reported in the condensed statements of consolidated cash flows relates to the debt pushed down from EFH Corp. and the debt issued by EFIH, including EFIH's debtor-in-possession financing. Remaining unamortized costs at the Petition Date were reclassified to liabilities subject to compromise (LSTC) and amortization ceased (see Note 7 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).

Cash provided by financing activities totaled $1.164 billion in 2014 and cash used in financing activities totaled $478 million in 2013. Cash provided by financing activities in 2014 included $3.564 billion in borrowings under the EFIH DIP Facility, partially offset by $2.312 billion in repayments of EFIH First Lien Notes and $88 million in payments for fees associated with the completion of the EFIH DIP Facility. Cash used in financing activities in 2013 reflected a cash distribution to EFH Corp. of $680 million for the purpose of EFH Corp. repaying the balance of the TCEH Demand Notes (see discussion below of investing cash flows), partially offset by $208 million of interest received on holdings of affiliate debt.

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 escrow 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.

Subject to certain exceptions under the Bankruptcy Code, the Bankruptcy Filing automatically enjoined, or stayed, the continuation of most pending judicial or administrative proceedings and the filing of other actions against the Debtors or their property to recover on, collect or secure a claim arising prior to the date of the Bankruptcy Filing (including with respect to EFIH's pre-petition debt instruments).

The Bankruptcy Court approved final orders in June 2014 authorizing the EFIH DIP Facility (see Note 5 to Financial Statements). The EFIH DIP Facility provides for up to $5.4 billion in senior secured, super-priority financing.

Available Liquidity — At June 30, 2014, available liquidity consisted of cash and cash equivalents totaling $1.185 billion, $1.038 billion of which represents remaining borrowings under the EFIH DIP facility.

EFIH believes that the 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 DIP facility. As a result of the Bankruptcy Filing, EFIH does not expect to receive further interest payments on affiliate debt securities it holds.

The EFIH DIP Facility permits, subject to certain terms, conditions and limitations set forth in the EFIH DIP Facility, 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 $77 million and $80 million for the six months ended June 30, 2014 and 2013, respectively. On July 31, 2014, EFIH received a distribution from Oncor Holdings totaling $51 million. See Note 3 to Financial Statements for discussion of limitations on amounts Oncor can distribute to its members.

Income Tax Matters — 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 any corporate member or disregarded entity in the 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.

Financial Covenants — The Bankruptcy Filing constituted an event of default under the agreements governing the pre-petition debt of EFH Corp. and its subsidiaries, including EFIH, EFCH and TCEH but excluding the Oncor Ring-Fenced Entities. The creditors are, however, stayed from taking any action against the Debtors as a result of such defaults 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.

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.

Guarantees — See Note 9 to Financial Statements for discussion of guarantees.

OFF-BALANCE SHEET ARRANGEMENTS

See Notes 23 and 49 to Financial Statements regarding VIEs and guarantees, respectively.

COMMITMENTS AND CONTINGENCIES

See Note 49 to Financial Statements for discussion of commitments and contingencies.

CHANGES IN ACCOUNTING STANDARDS

There have been no recently issued accounting standards effective after ~~September~~ June 30, ~~2013~~2014 that are expected to materially impact ~~our~~EFIH's financial statements.

2628


Item 3.	QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Market risk is the risk that wein the ordinary course of business EFIH may experience a loss in value as a result of changes in market conditions that affect economic factors such as interest rates. All ~~that~~of ~~may~~EFIH's bepre-petition ~~experienced~~debt inwas ~~the~~subject ~~ordinary~~to ~~course~~fixed ofinterest ~~business~~rates. WeThe ~~may~~principal ~~transact~~amounts inoutstanding ~~financial~~under ~~instruments~~the toEFIH ~~hedge~~First Lien DIP Facility bear interest ~~rate~~based ~~risk~~on ~~related~~applicable LIBOR rates, subject to ~~our~~a ~~debt~~1% floor, ~~but~~plus ~~there~~3.25%. EFIH ~~are~~expects ~~currently~~LIBOR norates ~~such~~to ~~hedges~~remain inbelow ~~place. All~~the of1% ~~our~~interest ~~long-term~~rate ~~debt~~floor atspecified ~~September~~in ~~30,~~its ~~2013~~DIP ~~and~~debtor-in-possession ~~December~~financing ~~31,~~during ~~2012~~the ~~carried~~pendency ~~fixed~~of ~~interest~~the ~~rates~~Chapter 11 Case.

Except as discussed ~~below~~herein, the information required hereunder is not significantly different from the information set forth in Item 7A, "Quantitative and Qualitative Disclosures About Market Risk" included in ~~our~~EFIH's ~~2012~~2013 Form 10-K and is therefore not presented herein. ~~See Note 3 to Financial Statements for discussion of debt issued and retired in 2013.~~

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 ~~September~~June 30, ~~2013~~2014, Oncor's exposure to credit risk associated with accounts receivable from nonaffiliate customers totaled $~~407~~457 million. The nonaffiliated customer receivable amount is before the allowance for uncollectible accounts, which totaled $3 million, and includes trade accounts receivable from REPs totaling $~~310~~317 million, which are almost entirely ~~noninvestment~~below investment grade. At ~~September~~June 30, ~~2013~~2014, REP subsidiaries of one nonaffiliated entity collectively represented approximately 1413% 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 "Management's Discussion and Analysis of Financial Condition —and ~~Distributions~~Results of ~~Earnings~~Operations ~~from~~– ~~Oncor~~Significant ~~Holdings~~Activities and 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.

See Note 611 to Financial Statements for discussion of transactions between Oncor and TCEH and EFH Corp.

2729

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 may occur in the future, including such matters as activities ~~under~~related ~~our~~to ~~liability~~EFIH's ~~management program~~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" in ~~our~~EFIH's ~~2012~~2013 Form 10-K, 2014 Form 10-Q for the quarterly period ended March 31, 2014 and this report, and the discussion under Item 2, "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:


•	the termination of the RSA as well as any one or more of the Debtors entering into of any new agreement for alternative restructuring transactions;


•	EFIH's ability to propose a Chapter 11 restructuring plan that will receive the necessary votes from the required creditors and stakeholders and the approval from the Bankruptcy Court;


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


•	the effectiveness of the overall restructuring activities pursuant to the Bankruptcy Filing and any additional strategies EFIH employs to address its liquidity and capital resources;


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


•	the significant time and effort required to be spent by EFIH's senior management in dealing with the bankruptcy and restructuring activities rather than focusing exclusively on the business;


•	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 or to fund any bankruptcy plan and meet future obligations;


•	the actions and decisions of creditors, regulators and other third parties that have an interest in the bankruptcy proceedings that may be inconsistent with EFIH's plans;


•	the length of time that the Debtors will be debtors-in-possession under the Bankruptcy Code;


•	the actions and decisions of regulatory authorities relative to EFIH's bankruptcy plan;


•	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 a bankruptcy plan;


•	the outcome of potential litigation regarding whether note holders are entitled to make-whole premiums in connection with the treatment of their claims in bankruptcy;

•

prevailing governmental policies and regulatory actions, including those of the Texas Legislature, the Governor of Texas, the US Congress, the US Federal Energy Regulatory Commission, the North American Electric Reliability Corporation, the Texas Reliability Entity, Inc., the PUCT, the Environmental Protection Agency, and the Texas Commission on Environmental Quality, with respect to, among other things:


◦	allowed rate of return;


◦	permitted capital structure;


◦	industry, market and rate structure;


◦	recovery of investments;


◦	acquisition and disposal of assets and facilities;


◦	operation and construction 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 bankruptcy;


•	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 and financial 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 credit markets;

• ~~willingness~~activity ofin ~~EFH~~the ~~Corp.'s~~credit ~~and~~default ~~TCEH's~~swap ~~lenders~~market related to ~~extend~~EFIH's ~~the~~debt ~~maturities~~securities ofor ~~their~~ debt ~~instruments~~securities ~~and~~of ~~the~~EFH ~~terms~~Corp. ~~and~~that ~~conditions~~EFIH ~~of any such extensions~~guarantees;

• ~~activity~~restrictions inplaced ~~the~~on ~~credit~~EFIH ~~default~~by ~~swap~~the ~~market~~agreements ~~related~~governing toits ~~our~~ debt ~~securities or debt securities of EFH Corp. that we guarantee~~instruments;

• ~~restrictions~~EFIH's ~~placed~~ability onto usgenerate bysufficient ~~the~~cash ~~agreements~~flow ~~governing~~to ~~our~~make interest payments on, or refinance, its debt instruments;

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

• our ability to successfully execute our liability management program, reach agreement with our creditors on the terms of any change in our capital structure, or otherwise address our significant interest payments and debt maturities, including through the potential exchange of debt securities for debt or equity securities or potential waiver of any covenants contained in our debt agreements;

• 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;

28• defaults under EFIH's debt agreements that could trigger cross default or cross acceleration provisions under other debt agreements;

• ~~our~~EFH Corp.'s or its subsidiaries', including, in particular, TCEH's, ability to ~~generate~~make principal and interest payments on their debt EFIH holds as an investment or to provide sufficient ~~cash~~capital ~~flow~~contributions or loans to EFIH to make interest payments on ~~our~~its 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;

• actions by credit rating agencies;, and

• 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, weEFIH ~~undertake~~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. New factors emerge from time to time, and it is not possible for usEFIH to predict all of them; nor can weEFIH 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.


Item 4.	CONTROLS AND PROCEDURES

An evaluation was performed under the supervision and with the participation of EFIH's management, including the principal executive officer and principal financial officer, of the effectiveness of the design and operation of the disclosure controls and procedures in effect at the end of the current period included in this quarterly report. Based on the evaluation performed, EFIH's management, including the principal executive officer and principal financial officer, concluded that the disclosure controls and procedures were effective. During the most recent fiscal quarter covered by this quarterly report, there has been no change in EFIH's internal control over financial reporting that has materially affected, or is reasonably likely to materially affect, EFIH's internal control over financial reporting.

PART II. OTHER INFORMATION


Item 1.	LEGAL PROCEEDINGS

Reference is made to the discussion in Note 49 to Financial Statements regarding legal proceedings.


Item 1A.	RISK FACTORS

InThere ~~addition~~have tobeen ~~the~~no ~~other~~material ~~information~~changes ~~set~~from ~~forth~~the risk factors discussed in ~~this~~Part ~~report~~I, ~~you~~"Item ~~should~~1A. ~~carefully~~Risk ~~consider~~Factors" ~~the~~in ~~risk~~EFIH's ~~factors~~2013 ~~discussed~~Form ~~under~~10-K, ~~Item~~as 1Aamended, and in Part II, "Item 1A. Risk Factors" in ~~our~~EFIH's ~~2012~~Form 10-Q for the period ended March 31, 2014 except for the risk factors discussed more fully below and the information disclosed elsewhere in this Form 10-Q that provides factual updates to risk factors contained in EFIH's 2013 Form 10-K, as amended, and Form 10-Q for the period ended March 31, 2014. The risks described in such ~~report~~reports are not the only risks facing ~~our~~the ~~Company~~company.

There is no assurance regarding the outcome of any litigation regarding whether note holders are entitled to makewhole premiums in connection with the treatment of their claims in bankruptcy.

On May 15, 2014, the indenture trustee for the EFIH 10% First Lien Notes initiated litigation in the Bankruptcy Court seeking, among other things, a declaratory judgment that EFIH is obligated to pay a redemption premium in connection with the cash repayment of the EFIH First Lien Notes and that such redemption premium is an allowed secured claim (EFIH First Lien Makewhole Claims). In the EFIH First Lien Makewhole Claim, the amount of such claims is alleged to be equal to approximately $432 million plus reimbursement of expenses. On June 16, 2014, the indenture trustee for the EFIH Second Lien Notes initiated litigation in the Bankruptcy Court seeking similar relief with respect to the EFIH Second Lien Notes, including among other things, that EFIH is obligated to pay a redemption premium in connection with any repayment of the EFIH Second Lien Notes and that such redemption premium would be an allowed secured claim (the EFIH Second Lien Makewhole Claims and, together with the EFIH First Lien Makewhole Claims, the Makewhole Claims). In the EFIH Second Lien Makewhole Claim, as of July 31, 2014, the amount of such claims alleged would have been equal to approximately $675 million plus reimbursement of expenses. The EFIH Debtors expect to seek to obtain entry of orders from the Bankruptcy Court disallowing each of the Makewhole Claims.

Due to the termination of the RSA, the Debtors are now subject to a bankruptcy proceeding which, without the contractual support of key creditors, could ultimately result in a more lengthy, costly and contentious Chapter 11 Case.

As a result of the termination of the RSA, the Debtors are now subject to a bankruptcy proceeding, which could be more lengthy, costly and contentious, and have a more pronounced adverse effect on the Debtors' business than the pre-arranged plan contemplated by the RSA. Such bankruptcy proceeding could involve contested issues with multiple stakeholders.

The uncertainty surrounding a prolonged restructuring could also have other adverse effects on the Debtors. For example, it could also adversely affect:


•	their ability to raise additional capital;


•	their liquidity;


•	how their business is viewed by regulators, investors, lenders, credit ratings agencies and other stakeholders, and


•	their enterprise value.


Item 4.	MINE SAFETY DISCLOSURES

Not applicable.

2933


Item 5.	OTHER INFORMATION

None.


Item 6.	EXHIBITS


(a)	Exhibits filed or furnished as part of Part II are:

Exhibits	Previously Filed With File Number*	AsExhibit
(3(i))	Articles of Incorporation
3(a)	333-153529Form S-4(filed September 17, 2008)	3(c)	—	Certificate of Formation of Energy Future Intermediate Holding Company LLC, as amended
(3(ii))	By-laws
3(b)	1-34544Form 10-K(filed February 21, 2012)	3(b)	—	Second Amended and Restated Limited Liability Company Agreement of Energy Future Intermediate Holding Company LLC
(10)	Material Contracts
	Credit Agreements and Related Agreements
10(a)	1-12833Form 8-K (filed May 13, 2014)	99.1	—	First Amendment to the Restructuring Support and Lock-Up Agreement dated May 7, 2014, among EFH Corp. and the parties thereto.
10(b)	1-12833Form 8-K (filed May 27, 2014)	99.2	—	Second Amendment to the Restructuring Support and Lock-Up Agreement dated May 16, 2014, among the Reorganizing Entities and the other parties thereto.
10(c)	1-12833Form 8-K (filed June 25, 2014)	10(a)	—	Senior Secured Superpriority Debtor-In-Possession Credit Agreement, dated as of June 19, 2014, among the EFIH Debtors, the lenders party thereto, Deutsche Bank AG New York Branch, as Administrative Agent and Collateral Agent, Citibank, N.A., Bank of America, N.A. and Morgan Stanley Senior Funding, Inc., as Co-Syndication Agents, Barclays Bank PLC, Royal Bank of Canada and Union Bank, N.A., as Co-Documentation Agents, Deutsche Bank Securities Inc., Citigroup Global Markets Inc., Merrill Lynch, Pierce, Fenner & Smith Incorporated, Morgan Stanley Senior Funding, Inc., Barclays Bank PLC, RBC Capital Markets and Union Bank, N.A., as Joint Lead Arrangers and Joint Bookrunners, and Loop Capital Markets, LLC and Williams Capital Group, LLC, as Co-Managers.
10(d)	1-12833Form 8-K (filed June 25, 2014)	10(b)	—	Pledge Agreement, dated as of June 19, 2014, by and among the EFIH Debtors and Deutsche Bank AG New York Branch, as collateral agent.
10(e)	1-12833Form 8-K (filed June 25, 2014)	10(c)	—	Security Agreement, dated as of June 19, 2014, by and among the EFIH Debtors and Deutsche Bank AG New York Branch, as collateral agent.
(31)	Rule 13a - 14(a)/15d - 14(a) Certifications.
31(a)			—	Certification of John F. Young, chair, president and chief executive of Energy Future Intermediate Holding Company LLC, pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31(b)			—	Certification of Paul M. Keglevic, executive vice president and chief financial officer of Energy Future Intermediate Holding Company LLC, pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
(32)	Section 1350 Certifications.
32(a)			—	Certification of John F. Young, chair, president and chief executive of Energy Future Intermediate Holding Company LLC, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
32(b)			—	Certification of Paul M. Keglevic, executive vice president and chief financial officer of Energy Future Intermediate Holding Company LLC, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
(99)	Additional Exhibits
99(a)			—	Condensed Statement of Consolidated Income - Twelve Months Ended September 30, 2013.
99(b)			—	Energy Future Intermediate Holding Company LLC Consolidated Adjusted EBITDA reconciliation for the six and twelve months ended September 30, 2013 and 2012.
99(c)			—	Energy Future Holdings Corp. Consolidated Adjusted EBITDA reconciliation for the six and twelve months ended September 30, 2013 and 2012.
	XBRL Data Files
101.INS			—	XBRL Instance Document
101.SCH			—	XBRL Taxonomy Extension Schema Document
101.CAL			—	XBRL Taxonomy Extension Calculation Document
101.DEF			—	XBRL Taxonomy Extension Definition Document
101.LAB			—	XBRL Taxonomy Extension Labels Document
101.PRE			—	XBRL Taxonomy Extension Presentation Document



Exhibits	Previously Filed With File Number*	As Exhibit

32(a)			—	Certification of John F. Young, chair, president and chief executive of Energy Future Intermediate Holding Company LLC, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

32(b)			—	Certification of Paul M. Keglevic, executive vice president and chief financial officer of Energy Future Intermediate Holding Company LLC, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

(99)	Additional Exhibits

99(a)			—	Condensed Statement of Consolidated Income - Twelve Months Ended March 31, 2014.

	XBRL Data Files

101.INS			—	XBRL Instance Document

101.SCH			—	XBRL Taxonomy Extension Schema Document

101.CAL			—	XBRL Taxonomy Extension Calculation Document

101.DEF			—	XBRL Taxonomy Extension Definition Document

101.LAB			—	XBRL Taxonomy Extension Labels Document

101.PRE			—	XBRL Taxonomy Extension Presentation Document

____________


*	Incorporated herein by reference

3035

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 hereunto duly authorized.

ENERGY FUTURE INTERMEDIATE HOLDING COMPANY LLC By: /s/ ~~STAN~~STANLEY J. SZLAUDERBACH ~~Stan~~Name: Stanley J. Szlauderbach Title: Senior Vice President and Controller(Principal Accounting Officer)

Date: ~~October~~August 311, ~~2013~~2014

3136

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