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~~MARCH 3031, ~~2015~~2016

— OR —

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

Commission File Number 1-34544

Energy Future Intermediate Holding Company LLC

(Exact Name of Registrant as Specified in its Charter)

Delaware		26-1191638
(State of Organization)		(I.R.S. Employer Identification No.)
1601 Bryan Street, Dallas, TX 75201		(214) 812-4600
1601 Bryan Street, Dallas, TX 75201-3411		(214) 812-4600
(Address of Principal Executive Offices) (Zip Code)		(Registrant's Telephone Number)

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 ~~November~~May 39, ~~2015~~2016, the outstanding membership interest in Energy Future Intermediate Holding Company LLC was directly held by Energy Future Holdings Corp.

Table of Contents

TABLE OF CONTENTS

		PAGE
GLOSSARY		ii
PART I.	FINANCIAL INFORMATION
Item 1.	Financial Statements (Unaudited)
	Condensed Statements of Consolidated Income (Loss) —Three and Nine Months Ended September 30, 2015 and 2014	1
	Condensed Statements of Consolidated Loss —Three Months Ended March 31, 2016 and 2015	1
	Condensed Statements of Consolidated Comprehensive Income (Loss) —Three and Nine Months Ended September 30, 2015 and 2014	1
	Condensed Statements of Consolidated Comprehensive Loss —Three Months Ended March 31, 2016 and 2015	1
	Condensed Statements of Consolidated Cash Flows —Nine Months Ended September 30, 2015 and 2014	2
	Condensed Statements of Consolidated Cash Flows —Three Months Ended March 31, 2016 and 2015	2
	Condensed Consolidated Balance Sheets —September 30, 2015 and December 31, 2014	3
	Condensed Consolidated Balance Sheets —March 31, 2016 and December 31, 2015	3
	Notes to Condensed Consolidated Financial Statements	4
Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	2723
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	3428
Item 4.	Controls and Procedures	3731
PART II.	OTHER INFORMATION
Item 1.	Legal Proceedings	3832
Item 1A.	Risk Factors	3832
Item 4.	Mine Safety Disclosures	3833
Item 5.	Other Information	38
Item 6.	Exhibits	34
Item 6.	Exhibits	39
SIGNATURE		35
SIGNATURE		41

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 EFIH has filed as an exhibit to this quarterly report on Form 10-Q, or that EFIH 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 "the ~~company~~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.

2014 Form 10-K		EFIH's Annual Report on Form 10-K for the year ended December 31, 2014
2015 Form 10-K		EFIH's Annual Report on Form 10-K for the year ended December 31, 2015
Chapter 11 Cases		Cases being heard in the US Bankruptcy Court for the District of Delaware (Bankruptcy Court) concerning voluntary petitions for relief under Chapter 11 of the US Bankruptcy Code (Bankruptcy Code) filed on April 29, 2014 by the Debtors
DIP Facilities		Refers, collectively, to EFIH's debtor-in-possession financing (see Note 8 to the Financial Statements) and TCEH's debtor-in-possession financing (TCEH DIP Facility).
Debtors		EFH Corp. and the substantial majority of its direct and indirect subsidiaries, including EFIH, EFCH and TCEH but excluding the Oncor Ring-Fenced Entities
Disclosure Statement		~~Fifth Amended~~ Disclosure Statement for the Debtors' ~~Fifth Amended~~ Joint Plan of Reorganization Pursuant to Chapter 11 of the Bankruptcy Code ~~approved~~filed by the Debtors with the Bankruptcy Court in ~~September~~May ~~2015~~2016
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 Debtors		EFH Corp. and its subsidiaries that are Debtors in the Chapter 11 Cases, excluding the TCEH Debtors
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 DIP Facility		EFIH's and EFIH Finance's $5.4 billion debtor-in-possession financing facility. See Note 8 to the Financial Statements.
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 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. exchanged or settled in June 2014 as discussed in Note 8 to the Financial Statements, collectively
EFIH PIK Notes		EFIH's $1.566 billion principal amount of 11.25%/12.25% Senior Toggle Notes.
EFIH Second Lien Notes		EFIH's and EFIH Finance's $322 million principal amount of 11% Senior Secured Second Lien Notes and $1.389 billion principal amount of 11.75% Senior Secured Second Lien Notes, collectively
EFIH Second Lien Notes		Refers, collectively, to EFIH's and EFIH Finance's $322 million principal amount of 11% Senior Secured Second Lien Notes and $1.389 billion principal amount of 11.75% Senior Secured Second Lien Notes.
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 onin May ~~15,~~ 2012 but effective as of January 1, 2010. EFH Corp., Oncor Holdings, Oncor, Texas Transmission, and Oncor Management Investment LLC are parties to a separate Federal and State Income Tax Allocation Agreement dated November 5, 2008. See Note 5 to the Financial Statements and Management's Discussion and Analysis, under Financial Condition.
GAAP		generally accepted accounting principles
IRS		US Internal Revenue Service
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
LSTC		liabilities subject to compromise
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
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, all largely in Texas
Merger		the transaction referred to in the Agreement and Plan of Merger 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 an indirect subsidiary of EFH Corp., and/or its 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
OPEB		postretirement employee benefits other than pensions
Petition Date		April 29, 2014, the date the Debtors made the Bankruptcy Filing
Plan of Reorganization		~~Fifth Amended~~ Joint Plan of Reorganization ~~Pursuant to Chapter 11 of the Bankruptcy Code~~ filed by the Debtors with the Bankruptcy Court in ~~September~~May ~~2015, as it may be amended, modified or supplemented from time to time~~2016
Plan Support Agreement		Third Amendment to the Amended and Restated Plan Support Agreement, entered into in December 2015, amending and restating the Plan Support Agreement
PUCT		Public Utility Commission of Texas
purchase accounting		The purchase method of accounting for a business combination as prescribed by US GAAP, whereby the cost or "purchase price" of a business combination, including the amount paid for the equity and direct transaction costs are allocated to identifiable assets and liabilities (including intangible assets) based upon their fair values. The excess of the purchase price over the fair values of assets and liabilities is recorded as goodwill.
REP		retail electric provider
SEC		US Securities and Exchange Commission
SG&A		selling, general and administrative
Settlement Agreement		Amended and Restated Settlement Agreement among the Debtors, the Sponsor Group, settling TCEH first lien creditors, settling TCEH second lien creditors, settling TCEH unsecured creditors and the official committee of unsecured creditors of TCEH (collectively, the Settling Parties), approved by the Bankruptcy Court in December 2015. See Note 2 to the Financial Statements.
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 market activities, and whose major subsidiaries include Luminant and TXU Energy
TCEH Debtors		TCEH and its subsidiaries that are Debtors in the Chapter 11 Cases
Terminated Plan		Sixth Amended Joint Plan of Reorganization filed by the Debtors in November 2015, as amended, confirmed by the Bankruptcy Court in December 2015, which became null and void in May 2016
Texas Holdings		Texas Energy Future Holdings Limited Partnership, a limited partnership controlled by the Sponsor Group, that owns substantially all of the common stock of EFH Corp.
Texas Holdings Group		Texas Holdings and its direct and indirect subsidiaries other than the Oncor Ring-Fenced Entities
Texas Transmission		Texas Transmission Investment LLC, a limited liability company that owns a 19.75% equity interest in Oncor and is not affiliated with EFH Corp., any of EFH Corp.'s subsidiaries or any member of the Sponsor Group
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



Texas Transmission		Texas Transmission Investment LLC, a limited liability company that owns a 19.75% equity interest in Oncor and is not affiliated with EFH Corp., any of EFH Corp.'s subsidiaries or any member of the Sponsor Group

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

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 March 31,
	2015			2014			2015			2014
	2016			2015
	(millions of dollars)
Selling, general and administrative expenses	$	(1	)	$	(2	)
Selling, general and administrative expenses	$	(2	)	$	(2	)	$	(5	)	$	(21	)
Other deductions (Note 4)	—			(70		)
Other deductions (Note 4)	(86		)	(12		)	(221		)	(211		)
Interest expense and related charges (Note 6)	(58		)	(292		)
Interest expense and related charges (Note 6)	(58		)	(58		)	(409		)	(381		)
Reorganization items (Note 7)	(35		)	(48		)
Reorganization items (Note 7)	(16		)	(7		)	(82		)	(235		)
Loss before income taxes and equity in earnings of unconsolidated subsidiaries	(94		)	(412		)
Loss before income taxes and equity in earnings of unconsolidated subsidiary	(162		)	(79		)	(717		)	(848		)
Income tax benefit (Note 5)	8			65
Income tax benefit (Note 5)	80			25			205			215
Equity in earnings of unconsolidated subsidiaries (net of tax) (Note 3)	62			75
Equity in earnings of unconsolidated subsidiary (net of tax) (Note 3)	127			123			278			276
Net loss	$	(24	)	$	(272	)
Net income (loss)	$	45		$	69		$	(234	)	$	(357	)

See Notes to the Financial Statements.

CONDENSED STATEMENTS OF CONSOLIDATED COMPREHENSIVE ~~INCOME (~~LOSS)

(Unaudited)

	Three Months Ended September 30,						Nine Months Ended September 30,
	Three Months Ended March 31,
	2015			2014			2015			2014
	2016			2015
	(millions of dollars)
Net income (loss)	$	45		$	69		$	(234	)	$	(357	)
Net loss	$	(24	)	$	(272	)
Other comprehensive income (loss) — net of tax effects:
Net effects related to Oncor — reported in equity in earnings of unconsolidated subsidiaries (net of tax expense of $— in all periods)	1			(1		)	2			—
Net effects related to Oncor — reported in equity in earnings of unconsolidated subsidiaries (net of tax )	—			1
Total other comprehensive income (loss)	1—			(1		)	2			—
Comprehensive income (loss)	$	46		$	68		$	(232	)	$	(357	)
Comprehensive loss	$	(24	)	$	(271	)

See Notes to the Financial Statements.

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

CONDENSED STATEMENTS OF CONSOLIDATED CASH FLOWS

(Unaudited)

	Nine Months Ended September 30,
	Three Months Ended March 31,
	2015			2014
	2016			2015
	(millions of dollars)
Cash flows — operating activities:
Net loss	$	(~~234~~24	)	$	(~~357~~272	)
Adjustments to reconcile net income to cash used in operating activities:
Adjustments to reconcile net loss to cash used in operating activities:
Equity in earnings of unconsolidated subsidiary	(~~278~~62		)	(~~276~~75		)
Distributions of earnings from unconsolidated subsidiary (Note 3)	206			128
Distributions of earnings from unconsolidated subsidiaries (Note 3)	40			74
Fees paid for EFIH DIP Facility (Notes 6 and 7) (reported as financing activities)	—			93
Fees paid on EFIH Second Lien Notes repayment and DIP Facility (Notes 8 and 9) (reported as financing activities)	14			28
Fees paid on EFIH Second Lien Notes repayment (Note 7) (reported as financing activities)	28			—
Reserve recorded for income tax receivable from EFH Corp. (Note 4)	—			70
Interest expense on toggle notes payable in additional principal (Notes 6 and 9)	—			65
Current taxes charged to membership interests (Note 11)	(8		)	—
Reserve recorded for income tax receivable from EFH Corp. (Note 4)	221			211
Loss on exchange and settlement of EFIH First Lien Notes (Notes 7 and 9)	—			108
Amortization of debt related balances (Note 6)	—			(17		)
Other, net	—			(19		)
Changes in operating assets and liabilities:
Pre-petition interest related to EFIH Second Lien Notes repayment (Note 9)	~~(55~~—		)	—(55		)
Accrued income taxes	(205		)	(194		)
Other changes in operating assets and liabilities, including liabilities subject to compromise	—			(62		)
Other changes in operating assets and liabilities, including liabilities subject to compromise	3			21
Cash used in operating activities	(40		)	(292		)
Cash used in operating activities	(314		)	(237		)
Cash flows — financing activities:
Proceeds from EFIH DIP Facility before fees paid (Note 8)	—			3,564
Fees paid on EFIH Second Lien Notes repayment and DIP Facility (Notes 8 and 9)	(14		)	(28		)
Fees paid for EFIH DIP Facility (Note 7)	—			(93		)
Repayments/repurchases of debt (Note 8)	—			(445		)
Fees paid on EFIH Second Lien Notes repayment (Note 7)	(28		)	—
Cash used in financing activities	(14		)	(473		)
Repayments/repurchases of debt (Note 8)	(445		)	(2,312		)
Cash provided by (used in) financing activities	(473		)	1,159
Cash flows — investing activities:
Cash provided by investing activities	—			—
Net change in cash and cash equivalents	(~~787~~54		)	~~922~~(765		)
Cash and cash equivalents — beginning balance	~~1,157~~354			~~242~~1,157
Cash and cash equivalents — ending balance	$	~~370~~300		$	~~1,164~~392

See Notes to the Financial Statements.

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

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited)

	September 30, 2015			December 31, 2014
	March 31, 2016			December 31, 2015
ASSETS	(millions of dollars)
Current assets:
Cash and cash equivalents	$	~~370~~300		$	~~1,157~~354
Other current assets	3			3
Receivables from affiliates	2			2
Total current assets	373			1,160
Other current assets	—			1
Investment in Oncor Holdings (Note 3)	6,126			6,050
Total current assets	302			357
Accumulated deferred income taxes	24			26
Investment in Oncor Holdings (Note 3)	6,081			6,059
Total assets	$	6,~~523~~383		$	76,~~236~~416
LIABILITIES AND MEMBERSHIP INTERESTS
Current liabilities:
Borrowings under debtor-in-possession credit facilities (Note 8)	$	5,400		$	—5,400
Trade accounts and other payables to affiliates	82			65
Accumulated deferred income taxes	24			26
Income taxes payable to EFH Corp. (Note 12)	—			1
Other current liabilities	20			19
Accrued interest	1			1
Total current liabilities	5,452			51
Other current liabilities	76			73
Borrowings under debtor-in-possession credit facilities (Note 8)	—			5,400
Total current liabilities	5,479			5,480
Liabilities subject to compromise (Note 9)	3,~~487~~354			3,~~988~~354
Total liabilities	8,~~939~~833			98,~~439~~834
Commitments and Contingencies (Note 10)
Membership interests (Note 11):
Capital account	(12,~~697~~359		)	(12,~~482~~327		)
Affiliate debt held by EFIH (Note 11)	(635		)	(635		)
Accumulated other comprehensive income (loss)	(91		)	(91		)
Accumulated other comprehensive income (loss)	(84		)	(86		)
Total membership interests	(2,450		)	(2,418		)
Total membership interests	(2,416		)	(2,203		)
Total liabilities and membership interests	$	6,383		$	6,416
Total liabilities and membership interests	$	6,523		$	7,236

See Notes to the 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 "the ~~company~~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 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 3).

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~~the ~~sale~~ownership of a 19.75% equity interest toin ~~Texas~~Oncor ~~Transmission~~by inTexas ~~November 2008~~Transmission; maintenance of separate books and records for the Oncor Ring-Fenced Entities; ~~the~~Oncor's 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, EFIH~~'s ~~debt obligations), and vice versa. Accordingly, Oncor Holdings'~~ operations are conducted, and its cash flows managed, independently from the Texas Holdings Group.

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

Bankruptcy Proceeding

On April 29, 2014 (the Petition Date), EFH Corp. and the substantial majority of its direct and indirect subsidiaries, including EFIH, EFCH and TCEH but excluding the Oncor Ring-Fenced Entities (collectively, 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). InSee ~~September~~Note ~~2015,~~2 ~~the~~for ~~Debtors~~further ~~filed~~discussion ~~the~~regarding ~~Plan of Reorganization and~~ the ~~Disclosure~~Chapter ~~Statement. The~~11 ~~Disclosure Statement was approved by the Bankruptcy Court in September 2015. In October 2015~~Cases, the ~~Debtors filed a plan supplement to the~~ Plan of Reorganization ~~that provides greater detail about the Plan of Reorganization~~ and the ~~Debtors~~Disclosure ~~post-emergence structure (the Plan Supplement)~~Statement.

Following the approval of the Disclosure Statement by the Bankruptcy Court, the Debtors solicited the vote of their required creditors for approval of the Plan of Reorganization. In October 2015, the required creditors voted to approve the Plan of Reorganization. The Bankruptcy Court hearing to review the Plan of Reorganization for confirmation is scheduled to begin on November 3, 2015. The Debtors cannot predict the outcome of the confirmation hearing. See Note 2 for further discussion regarding the Chapter 11 Cases and the Plan of Reorganization and the Disclosure Statement.

Basis of Presentation, Including Application of Bankruptcy Accounting

The condensed consolidated financial statements have been prepared in accordance with US GAAP. The condensed consolidated financial statements have been prepared as if EFIH is a going concern and contemplate the realization of assets and liabilities in the normal course of business. The condensed consolidated financial statements reflect the application of Financial Accounting Standards Board Accounting Standards Codification ~~(ASC)~~ 852, Reorganizations (ASC 852). During the pendency of 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. ASC 852 applies to entities that have filed a petition for bankruptcy under Chapter 11 of the Bankruptcy Code. The guidance requires that transactions and events directly associated with the reorganization be distinguished from the ongoing operations of the business. In addition, the guidance provides for changes in the accounting and presentation of liabilities. See Notes 7 and 9 for discussion of these accounting and reporting changes.

Investments in unconsolidated subsidiaries, which are 50% or less owned and/or do not meet accounting standards criteria for consolidation, are accounted for under the equity method (see Note 3). 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 EFIH's 2014 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.4

Investments in unconsolidated subsidiaries, which are 50% or less owned and/or do not meet accounting standards criteria for consolidation, are accounted for under the equity method (see Note 3). 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 EFIH's 2015 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.

Changes in Accounting Standards

In April 2014, the FASB issued Accounting Standards Update No. 2014-08 (ASU 2014-08), Presentation of Financial Statements (Topic 205) and Property Plant, and Equipment (Topic 360): Reporting Discontinued Operations and Disclosures of Disposals of Components of an Entity, which changes the requirements for reporting discontinued operations. The ASU states that a disposal of a component of an entity or a group of components of an entity is required to be reported in discontinued operations if the disposal represents a strategic shift that has or will have a major effect on an entity's operations and financial results when the component of an entity or group of components of an entity meets the criteria to be classified as held for sale, is disposed of by sale, or is disposed of other than by sale. The amendments in this ASU also require additional disclosures about discontinued operations. ASU 2014-08 is effective for the Company for the first quarter of 2015. This new requirement is relevant to EFIH's presentation of the equity method investment in Oncor. The new guidance eliminated a scope exception previously applicable to equity method investments, resulting in the requirement of further analysis of the presentation of the Oncor equity method investment. Based on EFIH's analysis, ASU 2014-08 will not materially affect its results of operations, financial position, or cash flows, unless a sale of EFIH's Oncor investment is approved by the Bankruptcy Court (see Note 2), at which time presentation as discontinued operations may be appropriate.

In February 2015, the FASB issued Accounting Standards Update 2015-02 (ASU 2015-02), Amendments to the Consolidation Analysis. The ASU is effective for annual reporting periods, including interim reporting periods within those periods, beginning after December 15, 2015. Early adoption is permitted. The new consolidation standard changes the criteria a reporting enterprise uses to evaluate if certain legal entities, such as limited partnerships and similar entities, should be consolidated. EFIH is in the process of assessing the effects of the application of the new guidance on its financial statements.

In April 2015, the FASB issued Accounting Standards Update 2015-03 (ASU 2015-03) Simplifying Balance Sheet Presentation by Presenting Debt Issuance Costs as a Deduction from Recognized Debt Liability. The ASU is effective for annual reporting periods, including interim reporting periods within those periods, beginning after December 15, 2015. Early adoption is permitted. The new standard requires debt issuance costs to be classified as reductions to the face value of the related debt. EFIH does not expect ASU 2015-03 to materially affect its financial position until it issues new debt. During the Chapter 11 Cases, debt issuance costs on prepetition debt subject to compromise will continue to be reported in liabilities subject to compromise. In August 2015, the FASB issued Accounting Standards Update 2015-15 (ASU 2015-15), Interest-Imputation of Interest (Topic 835-30) Presentation and Subsequent Measurement of Debt Issuance Costs Associated with Line of Credit Arrangements. ASU 2015-15 provides guidance on the presentation of debt issuance costs associated with line-of-credit arrangements. Given the absence of authoritative guidance within ASU 2015-03 for debt issuance costs related to line-of-credit arrangements, ASU 2015-15 allows an entity to defer and present debt issuance costs as an asset and subsequently amortize the deferred debt issuance costs ratably over the term of the line-of-credit.


2.	CHAPTER 11 CASES

On the Petition Date, EFH Corp. and the substantial majority of its direct and indirect subsidiaries, including EFIH, EFCH and TCEH but excluding the Oncor Ring-Fenced Entities, filed voluntary petitions for relief under Chapter 11 of the United States Bankruptcy Code in the United States Bankruptcy Court for the District of Delaware. During the pendency of 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.

~~The~~Plan ~~Bankruptcy Filing resulted primarily from the adverse effects on EFH Corp.'s competitive businesses~~ of lower wholesale electricity prices in ERCOT driven by the sustained decline in natural gas prices since mid-2008. Further, the natural gas hedges that TCEH entered into when forward market prices of natural gas were significantly higher than current prices had largely matured before the remaining positions were terminated shortly after the Bankruptcy Filing. These market conditions challenged the profitability and operating cash flows of EFH Corp.'s competitive businesses and resulted in the inability to support their significant interest payments and debt maturities, including the remaining debt obligations due in 2014, and the inability to refinance and/or extend the maturities of their outstanding debt.Reorganization

~~Proposed~~The Terminated Plan was confirmed by the Bankruptcy Court in December 2015. As described below, in May 2016, certain first lien creditors of ~~Reorganization~~TCEH delivered a Plan Support Termination Notice (as defined in the Plan Support Agreement) to the Debtors and the other parties to the Plan Support Agreement notifying such parties of the occurrence of a Plan Support Termination Event (as defined in the Plan Support Agreement). The delivery of the Plan Support Termination Notice caused the Terminated Plan to become null and void.

AFollowing ~~Chapter~~the 11occurrence ~~plan~~ of ~~reorganization, among other things, determines~~ the ~~rights~~Plan ~~and~~Support ~~satisfaction~~Termination ofEvent ~~claims~~as ofdescribed ~~various~~above ~~creditors~~ and ~~security~~termination ~~holders~~ of ~~an entity operating under~~ the ~~protection~~Merger ~~of the Bankruptcy Court~~ and isPurchase ~~subject~~Agreement to the ultimate outcome of stakeholder negotiations and Bankruptcy Court decisions ongoing through the date on which the Chapter 11 plan is confirmed. In order for the Debtors to emerge successfully from the Chapter 11 Cases as ~~reorganized~~described ~~companies~~below, ~~they must obtain approval from~~ the ~~Bankruptcy Court and certain of their respective creditors for a Chapter 11 plan of reorganization. In September 2015, the~~ Debtors filed the Plan of Reorganization and the Disclosure Statement~~. The~~ ~~Disclosure~~with ~~Statement was approved by~~ the Bankruptcy Court in ~~September~~May ~~2015~~2016. In October 2015, the Debtors filed the Plan Supplement. The Debtors have the exclusive right to solicit the appropriate votes for the Plan of Reorganization until December 29, 2015 (the exclusivity period). In October 2015, the Plan of Reorganization was approved by the required creditors.

InThe ~~general, the~~ Plan of Reorganization ~~proposes~~provides ~~a structure~~ that ~~involves~~the aconfirmation ~~tax-free~~and ~~deconsolidation~~effective ordate ~~tax-free~~of ~~spin-off~~the Plan of ~~TCEH~~Reorganization ~~from~~with ~~EFH~~respect ~~Corp.~~to ~~(Reorganized~~the TCEH) Debtors may occur separate from, ~~immediately~~and ~~followed~~independent byof, the ~~acquisition~~confirmation and effective date of ~~reorganized~~the ~~EFH~~Plan ~~Corp.~~of ~~financed~~Reorganization bywith ~~existing~~respect ~~TCEH~~to ~~creditors~~the ~~and~~Debtors ~~third-party~~other ~~investors. Pursuant~~than tothe TCEH Debtors (the EFH Debtors). The Plan of Reorganization, ~~and~~ subject to certain conditions and required regulatory approvals, provides for, among other things:

• with respect to the TCEH ~~will~~Debtors, ~~execute~~either (i) a tax-free spin-off from EFH Corp. (the Reorganized TCEH Spin-Off), including a transaction that will result in a partial step-up in the tax basis of certain TCEH assets;, or (ii) a taxable transaction that results in the assets of the TCEH Debtors being distributed to Reorganized TCEH, and

• with respect to the EFH Debtors, the reorganization of EFH Corp. and EFIH (Reorganized ~~TCEH~~EFH) ~~Spin~~either pursuant to (a) an equity investment (which may be from existing creditors or third-~~Off~~party ~~will~~investors) ~~occur;~~or (b) pursuant to a standalone plan of reorganization, in which creditors receive certain allocated pro rata shares of common stock of Reorganized EFH.

•Information acontained ~~consortium~~in ~~(collectively,~~ the ~~Investor~~Plan ~~Group) consisting~~ of ~~certain~~Reorganization ~~TCEH~~and ~~creditors,~~the anDisclosure ~~affiliate~~Statement ofis ~~Hunt~~subject ~~Consolidated~~to change, ~~Inc.~~whether ~~(Hunt)~~as ~~and~~a ~~certain~~result ~~other~~of ~~investors~~amendments ~~designated~~to bythe ~~Hunt~~Plan ~~will~~of ~~acquire~~Reorganization, (requirements by the ~~EFH~~Bankruptcy ~~Acquisition)~~Court, ~~reorganized~~actions ~~EFH~~of ~~Corp.~~third ~~(Reorganized~~parties, ~~EFH);~~or otherwise.

• in connection with the EFH Acquisition, (i) the Investor Group will raise up to approximately $12.6 billion of equity and debt financing to invest in Reorganized EFH, (ii) a successor to Reorganized EFH will be converted to a real estate investment trust (REIT) under the Internal Revenue Code and (iii) all allowed claims against the EFH Debtors and the EFIH Debtors will receive treatment rendering them unimpaired (excluding any claims derived from or based upon make-whole, applicable premium, redemption premium or other similar payment provisions, or any other alleged premiums, fees, or claims relating to the repayment of claims and unsecured claims for post-petition interest in excess of the federal judgment rate of interest, each of which will be disallowed under the Plan of Reorganization), and5

•The Bankruptcy Code does not permit solicitation of acceptances of a plan of reorganization until the ~~Debtors,~~Bankruptcy Court approves the ~~Sponsor~~applicable ~~Group,~~disclosure ~~certain~~statement ~~settling~~relating ~~TCEH~~to ~~first~~such ~~lien~~plan ~~creditors~~of reorganization. Accordingly, ~~certain~~this ~~settling~~quarterly ~~TCEH~~report ~~second~~on ~~lien~~Form ~~creditors,~~10-Q ~~certain~~is ~~settling~~not ~~TCEH~~intended ~~unsecured~~to ~~creditors~~be ~~and~~a ~~the~~solicitation ~~official~~for ~~committee~~a ofvote ~~unsecured~~on ~~creditors~~the Plan of Reorganization. There can be no assurance that the ~~TCEH~~Bankruptcy ~~Debtors~~Court ~~(collectively~~will approve the Disclosure Statement, that the ~~Settling~~Debtors' ~~Parties)~~stakeholders ~~agreed~~will vote to ~~settle~~accept ~~certain~~the ~~disputes~~Plan of Reorganization, or that the Bankruptcy Court will confirm the Plan of Reorganization. The Debtors will emerge from bankruptcy if and when a plan of reorganization receives the requisite approval from holders of claims, the Bankruptcy Court enters an order confirming such plan of reorganization, and ~~causes~~certain conditions to the effectiveness of ~~action~~such plan of reorganization are satisfied.

Plan Support Agreement

In August 2015 (as amended in September 2015 and November 2015), each of the Debtors entered into a Plan Support Agreement (Plan Support Agreement) with various of their respective creditors, the Sponsor Group, the official committee of TCEH unsecured creditors ~~of the TCEH Debtors~~ and the Investor Group in order to effect an agreed upon restructuring of the Debtors pursuant to the ~~Plan~~Terminated ~~of Reorganization. Pursuant to the~~ Plan ~~Support~~along ~~Agreement~~with, ~~the~~upon ~~parties~~certain ~~agreed~~events, ~~subject~~an toAlternative ~~the~~Restructuring ~~terms~~(as ~~and~~defined ~~conditions contained~~ in the Plan Support Agreement), towhich ~~support~~includes the Plan of Reorganization. The Bankruptcy Court approved the Debtors' entry into the Plan ofSupport ~~Reorganization~~Agreement in September 2015.

~~Pursuant~~In May 2016, certain first lien creditors of TCEH (the Required TCEH First Lien Creditors) delivered a Plan Support Termination Notice to the Debtors and the other parties to the Plan Support Agreement, ~~certain~~notifying such parties of the ~~parties~~occurrence of a Plan Support Termination Event pursuant to Section 11(g) of the Plan Support Agreement. The ~~are~~Plan ~~required~~Support toTermination ~~not~~Notice ~~object~~stated tothat orthe ~~interfere~~Plan ~~with~~Support anOutside ~~alternative~~Date ~~plan~~can ofonly ~~reorganization~~be ~~even~~extended beyond April 30, 2016 if: (i) all required approvals from the ~~EFH~~PUCT ~~Acquisition~~with isrespect ~~not~~to ~~completed~~the soconsummation ~~long~~of asthe ~~such~~Terminated ~~plan~~Plan ~~meets~~had ~~certain~~been ~~minimum~~obtained ~~conditions. All~~before such date, or ~~part~~(ii) ofthe Required Investor Parties (as defined in the Plan Support Agreement) ~~may~~submit bea ~~terminated~~written ~~upon~~request, which is received by the ~~occurrence~~Required ofTCEH ~~certain~~First ~~events~~Lien ~~described~~Creditors inno later than April 30, 2016, to extend the Plan Support ~~Agreement~~Outside Date for thirty days. InThe ~~addition,~~Plan ~~under~~Support Termination Notice stated that neither of the foregoing extensions had been triggered as of the date of the Plan Support ~~Agreement,~~Termination Notice. The delivery of the ~~supporting~~Plan ~~parties~~Support ~~have~~Termination ~~committed~~Notice caused the Terminated Plan to ~~support~~become ~~the~~null ~~inclusion~~and void. The delivery of ~~releases~~the ~~with~~Plan ~~respect~~Support toTermination Notice does not terminate the ~~claims~~obligations ~~described~~of incertain of the ~~Settlement~~parties ~~Agreement~~thereto ~~(described~~to ~~below)~~not inobject ~~the~~to ~~context~~or ofinterfere with an ~~alternative~~Alternative ~~plan~~Restructuring (~~which~~including ~~would~~the ~~become~~Plan ~~effective~~of ~~when~~Reorganization), asubject ~~plan~~to ~~becomes~~certain ~~effective)~~conditions.

The parties' obligations with respect to such Alternative Restructuring, which remain in effect, may be terminated upon the occurrence of certain events described in the Plan Support Agreement. In addition, under the Plan Support Agreement, the supporting parties have committed to support the inclusion of releases with respect to the claims described in the Settlement Agreement (described below) in the context of an alternative plan (which would become effective when a plan of reorganization contemplating an Alternative Restructuring, such as the Plan of Reorganization, becomes effective).

Settlement Agreement

The Settling Parties entered into a settlement agreement (the Settlement Agreement) in August 2015 (as amended in September 2015) to compromise and settle, among other things (a) intercompany claims among the Debtors, (b) claims and causes of actions against holders of first lien claims against TCEH and the agents under the TCEH Senior Secured Facilities, (c) claims and causes of action against holders of interests in EFH Corp. and certain related entities and (d) claims and causes of action against each of the Debtors' current and former directors, the Sponsor Group, managers and officers, and other related entities. The Settlement Agreement ~~contemplates~~remains aeffective, ~~release~~notwithstanding ~~of such claims upon approval of~~ the ~~Settlement~~termination ~~Agreement by the Bankruptcy Court, which would remain effective regardless~~ of ~~whether~~ the ~~EFH~~Terminated ~~Acquisition is completed~~Plan. The ~~Debtors expect to seek~~ Bankruptcy Court ~~approval~~approved of the Settlement Agreement atin ~~the~~December ~~confirmation hearing for the Plan of Reorganization~~2015.

Termination of Merger and Purchase Agreement

In August 2015, EFH Corp. and EFIH entered into a Purchase Agreement and Agreement and Plan of Merger (Merger and Purchase Agreement) with two acquisition entities, Ovation Acquisition I, L.L.C. (OV1) and Ovation Acquisition II, L.L.C. (~~collectively~~together with OV1, the Purchasers), which are controlled by a consortium (collectively, the Investor Group) consisting of certain TCEH creditors, an affiliate of Hunt Consolidated, Inc. and certain other investors designated by Hunt Consolidated, Inc., pursuant to which the Purchasers agreed to acquire Reorganized EFH. ~~Pursuant~~In May 2016, following receipt of the Plan Support Termination Notice described above, EFH Corp. and EFIH delivered a written notice to the Purchasers terminating the Merger and Purchase Agreement, atdue to the ~~effective~~occurrence ~~time~~ of a Plan Support Termination Event under the Plan Support Agreement. EFH Corp. and EFIH are entitled to reimbursement by the Purchasers of ~~Reorganization~~certain fees and ~~immediately~~expenses ~~after~~incurred ~~consummation~~by EFH Corp. and EFIH or paid by EFH Corp. or EFIH to, or on behalf of, the ~~Reorganized~~Purchasers ~~TCEH~~prior ~~Spin-Off~~to, ~~the~~and ~~Investor~~as ~~Group~~a ~~will~~result ~~acquire~~of, ~~Reorganized~~the ~~EFH~~termination of the Merger Agreement.

The Merger and Purchase Agreement contemplates that funds received by the Purchasers pursuant to the Equity Commitment Letter, the Debt Commitment Letter and the Rights Offering and Backstop (each as defined below) will be used to facilitate the acquisition of Reorganized EFH and, as applicable, repay the allowed claims of holders of claims and interests in EFH Corp. and EFIH in full in cash (or otherwise render such claims unimpaired) pursuant to the Plan of Reorganization and, if applicable, to complete the Texas Transmission Acquisition (as defined below). The Merger and Purchase Agreement includes various conditions precedent to consummation of the transactions contemplated thereby, including a condition that certain approvals and rulings be obtained, including from the PUCT and the IRS, that are necessary to consummate the EFH Acquisition and convert Reorganized EFH into a REIT.6

~~The~~As ~~Merger~~a ~~and~~result ~~Purchase~~of ~~Agreement~~the ~~may~~termination beof ~~terminated~~the ~~upon~~Merger ~~certain~~and ~~events,~~Purchase ~~including~~Agreement, ~~among~~each ~~other~~of ~~things,~~the (ai) byequity ~~either~~commitment ~~party,~~letter ifdelivered ~~certain~~by ~~termination~~each ~~events~~member ~~occur~~of ~~under~~ the ~~Plan~~Investor ~~Support~~Group ~~Agreement,~~in ~~including~~favor ifof ~~the~~ EFH ~~Acquisition~~Corp., isEFIH ~~not~~and ~~completed~~the byPurchasers ~~April~~in ~~30,~~connection ~~2016,~~with ~~subject~~the toexecution ~~extension~~of tothe ~~June~~Merger ~~30,~~and ~~2016~~Purchase orAgreement ~~August~~and ~~31,~~(ii) ~~2016~~Backstop ~~under~~Agreement ~~certain conditions,~~ (bBackstop Agreement) bybetween EFH Corp. orand EFIH, ifand ~~their~~certain ~~respective~~investors ~~board~~named oftherein ~~directors~~and ortheir ~~managers~~permitted ~~determines~~assignees in(Backstop ~~good~~Purchasers) ~~faith~~and ~~that~~OV1, ~~proceeding~~pursuant ~~with~~to ~~the~~which ~~transactions contemplated by~~ the ~~Merger~~Backstop ~~and~~Purchasers ~~Purchase~~agreed ~~Agreement~~to ~~would~~backstop beapproximately ~~inconsistent~~$5.087 ~~with~~billion ~~its~~of ~~applicable~~equity ~~fiduciary~~rights ~~duties~~offered ~~or (c) by the Purchasers, if EFH Corp. or EFIH fails~~ to ~~meet~~certain ~~various~~holders ~~milestones~~of ~~related~~claims toagainst the Debtors', ~~Chapter~~automatically ~~11 Cases or otherwise materially breaches the Merger and Purchase Agreement~~terminated.

EFH Corp.'s and EFIH's respective obligations under the Merger and Purchase Agreement are subject in all respects to the prior approval of the Bankruptcy Court.

Rights Offering

As contemplated by the Plan of Reorganization, OV1 intends to conduct an offering of equity rights (each, a Right, and such offering, the Rights Offering) to holders of unsecured debt claims, second lien debt claims, general unsecured claims and first lien secured claims against TCEH (Rights Offering Participants) enabling the Rights Offering Participants to purchase an aggregate of $5.787 billion of common stock of OV1 (as the successor by merger of Reorganized EFH), of which $5.087 billion of such common stock will be offered to holders of unsecured debt claims, second lien debt claims, and general unsecured claims against TCEH, and $700 million of such common stock will be offered to holders of first lien secured claims against TCEH. In October 2015, OV1 filed a registration statement on Form S-11 with the SEC to register the equity rights under the Securities Act of 1933. This quarterly report on Form 10-Q does not constitute an offer to sell, or a solicitation of an offer to purchase, the Rights.

Pursuant to a Backstop Agreement (Backstop Agreement), among certain investors named therein and their permitted assignees (Backstop Purchasers), EFH Corp., EFIH and OV1, the Backstop Purchasers have agreed to backstop $5.087 billion of Rights offered to certain of the Rights Offering Participants (Backstop).

In connection with the execution of the Merger and Purchase Agreement, each member of the Investor Group (collectively, the Equity Commitment Parties) delivered (a) an equity commitment letter (Equity Commitment Letter) in favor of EFH Corp. (including Reorganized EFH), EFIH and the Purchasers pursuant to which the Equity Commitment Parties committed to invest in one or more of the Purchasers an aggregate amount of approximately $2.013 billion (assuming the Texas Transmission Acquisition (as described below) is completed) and (b) a limited guarantee (Guarantee) in favor of EFH Corp. (including Reorganized EFH) and EFIH pursuant to which each such Equity Commitment Party committed to pay its pro rata share of all fees, costs or expenses payable by the Purchasers under the Merger and Purchase Agreement or under the Plan of Reorganization if such fees, costs or expenses become payable pursuant thereto. The aggregate liability of the Equity Commitment Parties under the Guarantee for fees and expenses is capped at $35 million.

If the Merger and Purchase Agreement, the Backstop Agreement or the Equity Commitment Letter are terminated for any reason, EFH Corp. and EFIH have waived their rights to seek any legal or equitable remedies, except in connection with the reimbursement of certain fees and expenses capped at $35 million, against the Purchasers or the Investor Group, the Backstop Purchasers or the Equity Commitment Parties, respectively.

Debt Funding Arrangements

In August 2015, in connection with the execution of the Merger and Purchase Agreement, the Investor Group entered into a commitment letter (Debt Commitment Letter) with Morgan Stanley Senior Funding, Inc. (Debt Commitment Lender) pursuant to which the Debt Commitment Lender committed to fund up to $5.5 billion under a senior secured term loan facility and $250 million under a senior secured bridge loan facility to reorganized EFIH and its subsidiaries at the closing of the EFH Acquisition.

Texas Transmission Acquisition

~~In connection with the~~ EFH ~~Acquisition and the Rights Offering, the Purchasers, EFH~~ Corp. ~~and~~instituted ~~EFIH~~an ~~have~~adversary ~~formulated~~proceeding ain ~~plan~~the toBankruptcy ~~create~~Court ~~and~~to ~~implement~~enforce ancertain ~~IPO~~rights ~~Conversion~~against ~~(as~~Texas ~~such~~Transmission ~~term~~under ~~is defined in~~ the Investor Rights Agreement ~~(Investor Rights Agreement)~~, dated November 2008 among Oncor and certain of its direct and indirect equity holders, including EFH Corp. and Texas Transmission, ~~pursuant to which one of the Purchasers, as the successor to Reorganized EFH as a result of the EFH Acquisition, would serve as an IPO corporation~~ (~~as defined in the~~ Investor Rights Agreement)~~. In~~, ~~connection~~including with ~~the~~respect ~~execution of the Merger and Purchase Agreement, the Purchasers have delivered~~ to ~~EFH~~Texas ~~Corp.~~Transmission's anobligations ~~offer~~ to ~~purchase~~participate ~~substantially all of the outstanding IPO Units (as defined~~ in ~~the~~a ~~Investor~~sale ~~Rights Agreement) in the IPO corporation and all~~ of ~~the~~EFH ~~LLC~~Corp.'s ~~Units~~interests ~~(as defined~~ in ~~the Investor Rights Agreement) in~~ Oncor ~~held by Texas Transmission (the Texas Transmission Acquisition)~~. ~~EFH~~In ~~Corp.~~April ~~has~~2016, ~~instituted an adversary proceeding in~~ the Bankruptcy Court toruled ~~enforce~~in ~~certain~~favor ~~rights~~of ~~against~~EFH ~~Texas~~Corp. ~~Transmission~~in ~~under~~this ~~the~~proceeding ~~Investor Rights Agreement~~ (see Note 10).

Other

The Plan of Reorganization is subject to revision in response to creditor and/or stakeholder claims and objections and the requirements of the Bankruptcy Code and/or the Bankruptcy Court. Unless the Plan of Reorganization receives the requisite approval from the Bankruptcy Court, upon expiration of the exclusivity period (which has already been extended to the maximum period permitted by the Bankruptcy Code, but which has been, as described below, contractually extended with certain creditors), any creditor or stakeholder would have the ability to file in the Chapter 11 Cases one or more Chapter 11 plans of reorganization. Under an agreed stipulation approved by the Bankruptcy Court, if the exclusivity period has not been terminated by December 29, 2015, certain creditor constituencies have agreed that they will not file a chapter 11 plan of reorganization (or a disclosure statement) or cause such a filing until the Bankruptcy Court issues a final ruling regarding the confirmation of the Plan of Reorganization and that until the issuance of such a ruling, the Debtors will prosecute the Plan of Reorganization with reasonable diligence.

The Plan of Reorganization and the Disclosure Statement contain or discuss certain projections of certain of the Debtors' financial performance for fiscal years 2015 through 2020. The Debtors do not, as a matter of course, publish their business plans, budgets or strategies, or make external projections or forecasts of their anticipated financial position or results of operations. The projections reflected numerous assumptions concerning EFIH's anticipated future performance and prevailing and anticipated market and economic conditions at the time they were prepared that were and continue to be beyond its control and that may not materialize. Projections are inherently subject to uncertainties and to a wide variety of significant business, economic and competitive risks, including those risks discussed in Part I, Item 1A. Risk Factors in EFIH's 2014 Form 10-K and its subsequent quarterly reports on Form 10-Q. EFIH's actual results will vary from those contemplated by the projections and the variations may be material.

Nothing contained in this quarterly report on Form 10-Q is intended to be, nor should it be construed as, a solicitation for a vote on the Plan of Reorganization, as filed or as it may be amended. The Plan of Reorganization will become effective only if it is confirmed by the Bankruptcy Court and the conditions to consummation set forth therein are satisfied. There can be no assurance that the Bankruptcy Court will confirm the Plan of Reorganization or that the conditions to consummation of the Plan of Reorganization will be satisfied.

Scheduling Matters

InThe ~~August~~Debtors ~~2015,~~filed a proposed scheduling order with respect to the Disclosure Statement and the Plan of Reorganization in May 2016. The Bankruptcy Court ~~issued~~is anscheduled ~~order~~to ~~establishing~~hold ~~November~~a 3,hearing ~~2015~~later asin May 2016 to consider the ~~date~~Debtors' ~~for~~scheduling request with respect to the ~~commencement~~timing of the hearing to ~~confirm~~consider approval of the Disclosure Statement, confirmation of the Plan of Reorganization ~~(the~~and ~~Confirmation~~related ~~Hearing~~discovery ~~Commencement Date)~~protocols. The ~~Confirmation~~timelines ~~Hearing~~set ~~Commencement~~forth ~~Date~~in ~~could~~the beproposed ~~changed~~scheduling order are subject to revision by the Bankruptcy Court, and may change based on subsequent orders entered by the Bankruptcy Court (on its own, upon the motion of a party, or upon the Debtors' request).

Mediation

In May 2015, the Bankruptcy Court issued an order authorizing and establishing mediation between the Debtors and certain TCEH stakeholders with respect to Plan of Reorganization issues that affect the TCEH Debtors' estates. In October 2015, the parties to the mediation and the mediator agreed to extend mediation to January 15, 2016 unless otherwise extended or terminated by the Bankruptcy Court or the mediator.

Tax Matters

In June 2014, EFH Corp. filed a request with the IRS for a private letter ruling, which request has been supplemented from time to time in response to requests from the IRS for information or as required by changes in the contemplated transactions (as supplemented, the Private Letter Ruling). It is expected that, among other things, the Private Letter Ruling, if obtained, will provide ~~(A)~~ for certain rulings regarding the qualification of (i) the transfer of certain assets and ordinary course operating liabilities to a newly-formed entity wholly-owned by TCEH (Reorganized TCEH) and (ii) the distribution of the equity of Reorganized TCEH, the cash proceeds from Reorganized TCEH debt, the cash proceeds from the sale of preferred stock in a newly-formed entity, and the right to receive payments under a tax receivables agreement (if any), to holders of TCEH first lien claims ~~under~~as ~~Sections 368(~~a~~)(1)(G),~~ ~~355~~reorganization ~~and~~qualifying ~~356~~for oftax-free ~~the~~treatment ~~Code~~to ~~and (B) certain rulings regarding~~ the ~~eligibility~~extent of ~~EFH~~the ~~Corp.~~Reorganized toTCEH ~~qualify~~stock ~~as a REIT for federal income tax purposes~~received. The Debtors intend to continue to pursue the Private Letter Ruling to support the Plan of Reorganization.

Implications of the Chapter 11 Cases

EFIH's ability to continue as a going concern is contingent upon, among other factors, its ability to comply with the financial and other covenants contained in the DIP Facility described in Note 8, its ability to obtain new debtor- in- possession financing in the event the DIP Facility ~~was~~were to expire during the pendency of the Chapter 11 Cases, ~~and~~EFIH's ~~its~~ ability to complete a Chapter 11 plan of reorganization in a timely manner, including obtaining creditor and Bankruptcy Court approval of such plan, asobtaining ~~well as~~ applicable regulatory approvals required for such plan and ~~obtaining~~EFIH's ability to obtain any exit financing needed to implement such plan. These circumstances and uncertainties inherent in the bankruptcy proceedings raise substantial doubt about EFIH's ability to continue as a going concern.

Operations During the Chapter 11 Cases

In general, the Debtors have received final bankruptcy court orders with respect to first day motions and other operating motions that allow the Debtors to operate their businesses in the ordinary course, 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 segregation of certain cash balances which require further order of the Bankruptcy Court for distribution, the continuation of customer contracts and programs at its retail electricity 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 addition, the Bankruptcy Court has issued orders approving the DIP Facility discussed in Note 8.

Pre-Petition Claims

Holders of the substantial majority of pre-petition claims were required to file proofs of claims by the bar date established by the Bankruptcy Court. A bar date is the date by which certain claims against the Debtors must be filed if the claimants wish to receive any distribution in the Chapter 11 Cases. The Bankruptcy Court established a bar date of October 27, 2014 for the substantial majority of claims. In addition, in July 2015, the Bankruptcy Court entered an order establishing December 14, 2015 as the bar date for certain asbestos claims that arose or are deemed to have arisen before the Petition Date, except for certain specifically exempt claims.

The Debtors have received approximately 13,900 filed claims since the Petition Date. The Debtors are in the process of reconciling those claims to the amounts listed in its schedules of assets and liabilities, which includes communications with claimants to acquire additional information required for reconciliation. As of November 3, 2015, approximately 5,000 of those claims have been settled, withdrawn or expunged. To the extent claims related to EFIH are reconciled and resolved, EFIH has recorded them at the expected allowed amount. Claims that remain unresolved or unreconciled through the filing of this report have been estimated based upon management's best estimate of the likely claim amounts that the Bankruptcy Court will ultimately allow.7

~~Beginning~~Since ~~in November 2014,~~ the ~~Debtors~~Petition ~~began~~Date ~~the~~and ~~process~~prior to ~~request~~ the ~~Bankruptcy~~applicable ~~Court~~bar todates ~~disallow~~(which ~~claims~~have ~~that~~expired), ~~they~~the ~~believe~~Debtors ~~are duplicative,~~ have ~~been~~received ~~later~~approximately ~~amended or superseded~~41,300 ~~are~~filed ~~without~~pre-petition ~~merit~~claims, ~~are~~including ~~overstated~~approximately or30,900 ~~should~~asbestos beclaims. The ~~disallowed~~Debtors ~~for~~have ~~other~~substantially ~~reasons. Given~~completed the ~~substantial~~process ~~number~~ of reconciling all non-asbestos claims that were filed, ~~the~~and ~~claims~~have ~~resolution~~recorded ~~process~~such ~~will~~claims ~~take~~at ~~considerable~~the ~~time~~expected toallowed ~~complete~~amount. ~~Differences~~As ~~between~~of ~~liability~~May 9, ~~amounts~~2016, ~~recorded~~approximately by5,700 ~~the~~of ~~Debtors~~those asclaims ~~liabilities~~have ~~subject~~been tosettled, ~~compromise~~withdrawn ~~and~~or ~~claims~~expunged. The ~~filed~~Debtors bycontinue ~~creditors~~to ~~will~~work bewith ~~investigated~~creditors ~~and,~~regarding ifcertain ~~necessary,~~non-asbestos ~~the~~claims ~~Bankruptcy~~to ~~Court~~determine ~~will~~the ~~make~~ultimate aamount ~~final determination~~ of the ~~allowable~~allowed ~~claim~~claims. Differences between those final allowed claims and the liabilities recorded in the condensed consolidated balance sheets will be recognized as reorganization items in the Debtors' condensed statements of consolidated ~~income (~~loss) as they are resolved. The determination of how liabilities will ultimately be resolved cannot be made until the Bankruptcy Court approves a plan of reorganization or approves orders related to settlement of specific liabilities. Accordingly, the ultimate amount or resolution of such ~~liabilities is not determinable at this time. The resolution of such~~ claims could result in material adjustments to ~~EFIH's~~their financial statements.

11Certain claims filed or reflected in the Debtors schedules of assets and liabilities will be resolved on the effective date of the Plan of Reorganization, including certain claims filed by holders of funded debt and contract counterparties. Claims that remain unresolved or unreconciled through the filing of this report have been estimated based upon management's best estimate of the likely claim amounts that the Bankruptcy Court will ultimately allow.

PUCT Approval of Acquisition of Reorganized EFH

In March 2016, the PUCT approved the acquisition of Reorganized EFH contemplated by the Merger and Purchase Agreement. The order approving the acquisition is subject to a number of material conditions and commitments. The PUCT issued the final order related to the acquisition in March 2016. In April 2016, prior to the termination of the Merger and Purchase Agreement, the Investor Group requested a rehearing by the PUCT with respect to certain conditions and commitments set forth in the PUCT's final order. The PUCT will consider the Investor Group's request for a rehearing later in May 2016. We cannot predict the outcome of this request.


3.	INVESTMENT IN ONCOR HOLDINGS

EFIH has a wholly owned subsidiary, Oncor Holdings, which holds an approximate 80% equity 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 itEFIH. 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 ~~its~~it ~~investment~~ as an equity method investment because the structural and operational ring-fencing measures discussed in Note 1 prevent itEFIH 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 approximately $6.~~126~~081 billion and $6.~~050~~059 billion at ~~September~~March 3031, ~~2015~~2016 and December 31, ~~2014~~2015, 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 12 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 $~~206~~40 million and $~~128~~74 million for the ~~nine~~three months ended ~~September~~March 3031, ~~2015~~2016 and ~~2014~~2015, respectively. Distributions may not be paid except to the extent Oncor maintains a required regulatory capital structure as discussed below. At ~~September~~March 3031, ~~2015~~2016, $~~111~~54 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 ~~September~~March 3031, ~~2015~~2016, Oncor's regulatory capitalization ratio was 59.37% debt ~~and~~to 40.73% 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).

EFH Corp., Oncor Holdings, Oncor and Oncor's minority investor are parties to a Federal and State Income Tax Allocation Agreement. Additional income tax amounts receivable or payable may arise in the normal course under that agreement.

129

Oncor Holdings Financial Statements — Condensed statements of consolidated income of Oncor Holdings and its subsidiaries for the three ~~and nine~~ months ended ~~September~~March 3031, ~~2015~~2016 and ~~2014~~2015 are presented below:

	Three Months Ended September 30,						Nine Months Ended September 30,
	Three Months Ended March 31,
	2015			2014			2015			2014
	2016			2015
Operating revenues	$	~~1,072~~943		$	~~1,054~~946		$	~~2,957~~		$	~~2,883~~
Operation and maintenance expenses	(~~387~~401		)	(~~376~~380		)	~~(1,134~~		)	~~(1,074~~		)
Depreciation and amortization	(~~217~~211		)	(~~218~~217		)	~~(653~~		)	~~(638~~		)
Taxes other than income taxes	(~~116~~113		)	(~~115~~111		)	~~(336~~		)	~~(330~~		)
Other income	1			3			5			10
Other income and (deductions) — net	(5		)	(1		)
Other deductions	(9		)	(4		)	(21		)	(11		)
Interest expense and related charges	(84		)	(81		)
Interest income	(1		)	1			(1		)	3
Income before income taxes	129			156
Interest expense and related charges	(84		)	(89		)	(250		)	(266		)
Income tax expense	(51		)	(61		)
Income before income taxes	259			256			567			577
Net income	78			95
Income tax expense	(99		)	(101		)	(217		)	(230		)
Net income attributable to noncontrolling interests	(16		)	(20		)
Net income	160			155			350			347
Net income attributable to Oncor Holdings	$	62		$	75
Net income attributable to noncontrolling interests	(33		)	(32		)	(72		)	(71		)
Net income attributable to Oncor Holdings	$	127		$	123		$	278		$	276

Assets and liabilities of Oncor Holdings at ~~September~~March 3031, ~~2015~~2016 and December 31, ~~2014~~2015 are presented below:

	September 30, 2015		December 31, 2014
	March 31, 2016		December 31, 2015
ASSETS
Current assets:
Cash and cash equivalents	$	1821	$	526
Restricted cash	6260		5638
Trade accounts receivable — net	~~444~~382		~~407~~388
Trade accounts and other receivables from affiliates	~~156~~101		118
Income taxes receivable from EFH Corp.	—102		~~144~~107
Inventories	80100		7382
Accumulated deferred income taxes	7		10
Prepayments and other current assets	100		88
Prepayments and other current assets	93		91
Total current assets	866		847
Total current assets	860		904
Other investments	94		97
Restricted cash	—		16
Property, plant and equipment — net	13,234		13,024
Other investments	95		97
Property, plant and equipment — net	12,908		12,463
Goodwill	4,064		4,064
Regulatory assets — net	1,~~177~~163		1,~~429~~194
Other noncurrent assets	7141		6731
Total assets	$	19,~~175~~462	$	19,~~040~~257
LIABILITIES
Current liabilities:
Short-term borrowings	$	~~708~~1,054	$	~~711~~840
Long-term debt due currently	8641		~~639~~41
Trade accounts payable — nonaffiliates	~~164~~197		~~202~~150
Income taxes payable to EFH Corp.	3124		2420
Accrued taxes other than income	~~150~~67		~~174~~181
Accrued interest	67		9382
Other current liabilities	~~149~~141		~~156~~144
Total current liabilities	1,~~355~~591		1,~~999~~458
Accumulated deferred income taxes	12,~~918~~010		1,~~978~~985
Long-term debt, less amounts due currently	5,~~681~~648		45,~~997~~646
Other noncurrent liabilities and deferred credits	2,~~270~~310		2,~~245~~306
Total liabilities	$	11,~~224~~559	$	11,~~219~~395

1310


4.	OTHER DEDUCTIONS

In 2015 EFIH ~~has~~had income tax receivables from EFH Corp. that arose under the Federal and State Income Tax Allocation Agreement. In consideration of the Bankruptcy Filing, EFIH had fully reserved ~~the~~all ~~income~~amounts ~~tax~~under ~~receivables~~that agreement because of the significant uncertainty regarding their ultimate settlement, resulting in ~~charges~~a charge of $8670 million ~~and $12 million~~ for the three months ended ~~September 30~~March 31, 2015. In ~~and~~December ~~2014~~2015, ~~respectively~~the Bankruptcy Court approved the Settlement Agreement, ~~and~~which ~~$221~~settled ~~million~~the ~~and~~intercompany claims among the Debtors, including the $~~211~~173 million ~~for~~income ~~the~~tax ~~nine~~receivable ~~months~~from ~~ended~~EFH ~~September~~Corp. ~~30,~~that ~~2015~~had ~~and~~previously ~~2014,~~been ~~respectively~~fully reserved (see Note 2).


5.	INCOME TAXES

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

EFH Corp. and certain of its subsidiaries (including EFCH, EFIH, and TCEH, but not including Oncor Holdings and Oncor) are parties to a Federal and State Income Tax Allocation Agreement, which provides, among other things, that any corporate member or disregarded entity in the EFH Corp. group is required to make payments to EFH Corp. in an amount calculated to approximate the amount of tax liability such entity would have owed if it filed a separate corporate tax return. ~~Accordingly~~The Plan of Reorganization provides that upon the effective date of the plan the Debtors will reject this agreement. Additionally, ~~EFIH's~~under ~~income~~the ~~tax~~terms ~~expense~~of ~~and~~the ~~related~~Settlement ~~balance~~Agreement, ~~sheet~~no ~~amounts~~further ~~are~~cash ~~recorded~~payments asamong ifthe ~~EFIH~~Debtors ~~files~~will ~~its~~be ~~own~~made ~~corporate~~in ~~income~~respect ~~tax~~of ~~returns. Deferred~~federal income taxes. The ~~are~~EFH ~~provided~~Corp. ~~for~~group ~~temporary~~has ~~differences~~elected ~~between~~to continue to allocate federal income taxes among the ~~book~~entities ~~and~~that ~~tax~~are ~~basis~~parties ofto ~~assets~~the Federal and ~~liabilities~~State asIncome ~~required~~Tax ~~under~~Allocation ~~accounting rules~~Agreement. ~~Income~~The ~~tax~~Settlement ~~assets~~Agreement ~~and~~did ~~liabilities~~not ~~related~~alter tothe ~~pushed~~allocation ~~down~~and ~~debt~~payment ~~are~~for ~~settled~~state asincome ~~membership~~taxes, ~~interests~~which ~~transactions~~will continue to be settled.

InEFH ~~evaluating~~Corp., ~~EFIH's~~Oncor ~~ability~~Holdings, toOncor ~~utilize~~and ~~its~~Oncor's ~~deferred~~minority ~~tax~~investors ~~assets~~are ~~related~~parties to ~~its~~a ~~net~~separate ~~operating~~Federal ~~losses,~~and ~~EFIH~~State ~~considers~~Income ~~all~~Tax ~~available~~Allocation ~~positive and negative information~~Agreement, ~~including~~which ~~scheduled~~governs ~~reversals~~the computation of ~~deferred~~federal income tax ~~liabilities~~liability among such parties, ~~taxable~~and ~~income~~similarly provides, ~~tax-planning~~among ~~strategies~~other things, ~~and~~that ~~results~~each of ~~operations. In~~Oncor ~~2014,~~Holdings ~~due~~and toOncor ~~the~~will ~~uncertainty~~pay ofEFH ~~the~~Corp. ~~ultimate~~its ~~recovery~~share byof ~~EFIH~~an ofamount calculated to approximate the ~~benefit~~amount of ~~its~~tax ~~NOLs,~~liability asuch ~~valuation~~entity ~~allowance~~would ~~had~~have ~~been~~owed ~~recorded~~if onit ~~EFIH’s~~filed ~~net~~a ~~deferred~~separate corporate tax ~~assets~~return. AsThe ofSettlement ~~September 30,~~Agreement ~~2015~~had ~~that~~no ~~valuation~~impact ~~allowance~~on ~~totaled $22 million. During~~ the ~~three~~tax ~~months~~sharing ~~ended~~agreement ~~September 30,~~among ~~2015~~EFH, ~~the~~Oncor ~~taxable~~Holdings ~~income~~and ofOncor. Accordingly, EFIH's ~~increased~~income ~~enough~~tax toexpense ~~decrease~~and ~~the~~related ~~valuation~~balance ~~allowance~~sheet ~~that~~amounts ~~was~~are ~~previously~~ recorded byas ~~approximately~~if ~~$49~~EFIH ~~million. The~~files ~~valuation~~its ~~allowance~~own ~~adjustment~~corporate ~~increased~~income ~~the~~tax returns. Deferred income ~~tax~~taxes ~~benefit~~are provided for ~~the~~temporary ~~three~~differences ~~months~~between ~~ended~~the ~~September 30,~~book ~~2015~~and bytax ~~$57~~basis ~~million~~of assets and ~~increased~~liabilities ~~the~~as ~~income~~required under accounting rules. Income tax ~~benefit~~assets ~~for~~and ~~the~~liabilities ~~nine~~related ~~months~~to ~~ended~~pushed ~~September 30,~~down ~~2015~~debt byare ~~$49~~settled ~~million~~as membership interests transactions.

~~EFH~~In ~~Corp.,~~evaluating ~~Oncor~~EFIH's ~~Holdings,~~ability ~~Oncor~~to ~~and~~utilize ~~Oncor's~~its ~~third-party~~deferred ~~minority~~tax ~~investor~~assets ~~are~~related ~~parties~~ to aits ~~separate~~net ~~Federal~~operating ~~and~~losses, ~~State~~EFIH ~~Income~~considers ~~Tax~~all ~~Allocation~~available ~~Agreement,~~positive ~~which~~and ~~governs~~negative ~~the~~information, ~~computation~~including ofscheduled ~~federal~~reversals ~~income~~of deferred tax ~~liability~~liabilities, ~~among~~taxable ~~such~~income, ~~parties~~tax-planning strategies, and ~~similarly~~results ~~provides,~~of ~~among~~operations. Due ~~other~~to ~~things,~~the ~~that~~uncertainty ~~each~~ of ~~Oncor~~the ~~Holdings~~ultimate ~~and~~recovery ~~Oncor~~by ~~will~~EFIH ~~pay~~of ~~EFH~~the ~~Corp.~~benefit of its ~~share~~NOLs, ofa anvaluation ~~amount~~allowance ~~calculated~~had tobeen ~~approximate~~recorded ~~the~~on ~~amount~~EFIH’s ofnet deferred tax ~~liability~~assets. The ~~such~~income ~~entity~~tax ~~would~~benefit ~~have~~for ~~owed~~the ifthree itmonths ~~filed~~ended March 31, 2016 was offset by a ~~separate~~charge ~~corporate~~directly ~~tax~~to ~~return~~EFIH’s membership interests (see Note 11).

The calculation of EFIH's effective tax rate is as follows:

	Three Months Ended September 30,						Nine Months Ended September 30,
	Three Months Ended March 31,
	2015			2014			2015			2014
	2016			2015
Loss before income taxes and equity in earnings of unconsolidated subsidiaries	$	(~~162~~94	)	$	(79412	)	$	~~(717~~	)	$	~~(848~~	)
Income tax benefit	$	80		$	25		$	205		$	215
Exclude reserve against income tax receivable from EFH Corp. recorded without income tax benefit	—			70
Effective tax rate	49.4		%	31.6		%	28.6		%	25.4		%
Adjusted loss before income taxes and equity in earnings on unconsolidated subsidiaries	$	(94	)	$	(342	)
Income tax benefit	$	8		$	65
Effective tax rate	8.5		%	19.0		%

For the three months ended ~~September~~March 3031, 2016 and 2015, the effective tax rate was ~~higher~~lower than the US Federal statutory rate of 35% due primarily to the ~~decrease in~~ valuation allowance ~~recorded~~ against deferred tax assets, ~~partially offset by the effect of the reserve against the income tax receivable from EFH Corp. that was recorded without an income tax benefit~~ and nondeductible legal and other professional services costs related to the Chapter 11 Cases. ~~For~~ the three months ended September 30, 2014, the effective tax rate was different than the US Federal statutory rate of 35% primarily due to the effect of the reserve against the income tax receivable that was recorded without income tax benefit, partially offset by changes in nondeductible legal and other professional service costs related to EFIH's Chapter 11 Cases.

1411

For the nine months ended September 30, 2015, the effective tax rate was different than the US Federal statutory rate of 35% due primarily to the effect of the reserve against the income tax receivable from EFH Corp. that was recorded without an income tax benefit change and higher nondeductible legal and other professional services costs related to the Chapter 11 Cases, offset by the decrease in valuation allowance recorded against deferred tax assets. For the nine months ended September 30, 2014, the effective tax rate was different than the US Federal statutory rate of 35% primarily due to the effect of the reserve against the income tax receivable from EFH Corp. that was recorded without income tax benefit and nondeductible legal and other professional service costs related to EFIH's Chapter 11 Cases.


6.	INTEREST EXPENSE AND RELATED CHARGES

	Three Months Ended September 30,				Nine Months Ended September 30,
	Three Months Ended March 31,
	2015		2014		2015		2014
	2016		2015
Interest paid/accrued on debtor-in-possession financing	$	58	$	5857	$	~~174~~	$	66
Interest paid/accrued on pre-petition debt (a)	—		—235		~~235~~		~~266~~
Interest expense on pre-petition toggle notes payable in additional principal (Note 9)	—		—		—		65
Total interest expense and related charges	$	58	$	292
Amortization of debt exchange premiums	—		—		—		(24		)
Amortization of debt exchange discounts and issuance costs	—		—		—		7
Other	—		—		—		1
Total interest expense and related charges	$	58	$	58	$	409	$	381

____________

(a) For the nine months ended September 30, 2015, amounts include $235 million in post-petition interest related to the EFIH Second Lien Notes (see Note 9).

Interest expense for the nine months ended September 30, 2015 reflects interest paid on EFIH's pre-petition 11.00% Second Lien Notes due 2021 and 11.75% Second Lien Notes due 2022 as approved by the Bankruptcy Court in March 2015 (see Note 9).

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 on the EFIH First Lien Notes in connection with the settlement in June 2014 as discussed in Note 8. Additionally, the Bankruptcy Court approved post-petition interest payments on the EFIH Second Lien Notes in March 2015 as discussed in Note 9. Additional payments may also be made upon approval by the Bankruptcy Court, at the federal judgment rate (see Note 10). Other than these amounts ordered or approved 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). The table below shows contractual interest amounts, which are amounts due under the contractual terms of EFIH's outstanding debt, including debt subject to compromise during the Chapter 11 Cases. Interest expense reported in the condensed statements of consolidated income (loss) for the three months ended September 30, 2015 and 2014, the nine months ended September 30, 2015 and the post-petition period ended September 30, 2014 does not include $101 million, $114 million, $264 million and $194 million, respectively in contractual interest on pre-petition debt classified as LSTC, which has been stayed by the Bankruptcy Count effective on the Petition Date. Interest expense as calculated under the contractual terms of EFIH's debt classified as LSTC totaled $101 million, $114 million, $314 million and $248 million for the three months ended September 30, 2015 and 2014, the nine months ended September 30, 2015 and the post-petition period ended September 30, 2014, respectively. Of the $235 million of interest paid/accrued on pre-petition debt during the nine months ended September 30, 2015, $50 million is contractually related to 2015, which is $264 million lower than the contractual requirement for the period. The remaining $185 million of interest paid on pre-petition debt related to contractual interest from 2014, which was accrued and paid in 2015 upon Bankruptcy Court approval.

	Three Months Ended September 30, 2015		Three Months Ended September 30, 2014		Nine Months Ended September 30, 2015		Post-Petition Period Ended September 30, 2014
Contractual interest on debt classified as LSTC	$	101	$	114	$	314	$	248
Approved interest paid/accrued (a)	—		—		50		54
Contractual interest on debt classified as LSTC not paid/accrued	$	101	$	114	$	264	$	194

___________

(a) For the ~~nine~~three months ended ~~September~~March 3031, 2015, ~~represents~~amount ~~portion~~includes ~~of interest related to the EFIH Second Lien Notes that was repaid based on the approval of the Bankruptcy Court; however, excludes~~ $~~185~~235 million ofin post-petition interest ~~paid in 2015 that contractually~~ related to ~~2014 and default interest (see Note 9). For~~ the ~~post-petition period ended September 30, 2014, represents interest on~~ EFIH ~~First~~Second Lien Notes ~~exchanged and settled in June 2014~~ (see Note 89).

Interest expense for the three months ended March 31, 2015 reflects interest paid and accrued on debtor in possession financing and post-petition interest paid on EFIH's Second Lien Notes as approved by the Bankruptcy Court in March 2015 (see Notes 8 and 9).

The Bankruptcy Code generally restricts payment of interest on pre-petition debt, subject to certain exceptions. The Bankruptcy Court approved post-petition interest payments on the EFIH Second Lien Notes in March 2015 as discussed in Note 9. Additional interest payments may also be made upon approval by the Bankruptcy Court (see Note 10). Other than amounts ordered or approved by the Bankruptcy Court, effective on the Petition Date, EFIH discontinued recording interest expense on outstanding pre-petition debt classified as LSTC. The table below shows contractual interest amounts, which are amounts due under the contractual terms of the outstanding debt, including debt subject to compromise during the Chapter 11 Cases. Interest expense reported in the condensed statements of consolidated loss for the three months ended March 31, 2016 and 2015 does not include $101 million and $61 million, respectively in contractual interest on pre-petition debt classified as LSTC, which has been stayed by the Bankruptcy Count effective on the Petition Date. Interest expense as calculated under the contractual terms of EFIH's pre-petition debt, all of which is subject to compromise, totaled $101 million and $111 million for the three months ended March 31, 2016 and 2015, respectively. Of the $235 million of interest paid/accrued on pre-petition debt during the three months ended March 31, 2015, $50 million is contractually related to 2015, which is $61 million lower than the contractual requirement for the period. The remaining $185 million of interest paid on pre-petition debt related to contractual interest from 2014, which was accrued and paid in 2015 upon Bankruptcy Court approval.



	Three Months Ended March 31,
	2016		2015
Contractual interest on debt classified as LSTC	$	101	$	111
Approved interest paid/accrued	—		50
Contractual interest on debt classified as LSTC not paid/accrued	$	101	$	61


7.	REORGANIZATION ITEMS

Expenses and income directly associated with the Chapter 11 Cases are reported separately in the condensed statements of consolidated ~~income (~~loss) as reorganization items as required by ASC 852, Reorganizations. Reorganization items also include adjustments to reflect the carrying value of ~~liabilities subject to compromise (~~LSTC) at their estimated allowed claim amounts, as such adjustments are determined. The following table presents reorganization items incurred in the three months ended ~~September~~March 3031, ~~2015~~2016 and ~~2014, the nine months ended September 30,~~ 2015 ~~and the post-petition period ended September 30~~, ~~2014~~ as reported in the condensed statements of consolidated ~~income (~~loss):

	Three Months Ended September 30, 2015		Three Months Ended September 30, 2014		Nine Months Ended September 30, 2015		Post-Petition Period Ended September 30, 2014
	Three Months Ended March 31,
Loss on exchange and settlement of EFIH First Lien Notes (Note 6)	$	—	$	—	$	—	$	108
	2016		2015
Fees associated with completion of EFIH DIP Facility	—		—		—		93
Fees associated with extension of the DIP Facility	$	14	$	—
Fees associated with repayment of EFIH Second Lien Notes (Note 9)	—		$	—	28		—
Fees associated with EFIH Second Lien Notes repayment	—		28
Expenses related to legal advisory and representation services	1311		514		46		22
Expenses related to other professional consulting and advisory services	310		26		8		12
Total reorganization items	$	1635	$	748	$	82	$	~~235~~

1613


8.	DEBTOR-IN-POSSESSION BORROWING FACILITIES

~~EFIH~~The DIP Facility, ~~EFIH First Lien Notes Settlement~~ and EFIH Second Lien Notes Repayment — The Bankruptcy Court approved the ~~EFIH~~ DIP Facility in June 2014. The ~~EFIH~~ DIP Facility provides for a $5.4 billion first-lien debtor-in-possession financing facility. ~~Since~~In ~~inception~~March 2015, ~~the~~$750 ~~facility~~million ~~has~~of ~~been~~cash ~~utilized~~borrowings aswere ~~follows:~~used to repay $445 million principal amount of EFIH Second Lien Notes (including accrued and unpaid pre-petition interest of $55 million and post-petition interest of $235 million) and certain fees (see Note 9).

•As Inof ~~June~~March 31, ~~2014~~2016, ~~$1.836~~remaining ~~billion~~cash ofon ~~loans~~hand ~~issued~~from borrowings under the ~~facility~~DIP ~~were~~Facility, ~~issued~~net asof anfees, ~~exchange~~totaled toapproximately ~~holders~~$300 ofmillion, ~~$1.673~~which ~~billion~~was ~~principal~~held ~~amount~~as ofcash ~~EFIH~~and ~~First~~cash ~~Lien~~equivalents. In ~~Notes~~the ~~plus~~March 31, ~~accrued~~2016 ~~and~~condensed ~~unpaid~~consolidated ~~interest~~balance ~~totaling~~sheet, ~~$78~~the ~~million.~~borrowings ~~Holders~~under ofthe ~~substantially~~DIP ~~all~~Facility ofare ~~the~~reported ~~principal~~as ~~amount~~current ~~exchanged~~liabilities. In ~~received~~January as2016, ~~payment~~the inDebtors ~~full~~paid a ~~principal~~$14 ~~amount~~million ofextension ~~loans~~fee ~~under~~to extend the ~~DIP~~maturity ~~facility~~date ~~equal~~of tothe ~~105%~~DIP ofFacility ~~the~~to ~~principal~~December ~~amount~~2016. The terms of the ~~notes~~DIP ~~held~~Facility ~~plus~~were ~~101%~~otherwise ofunchanged. The ~~the~~DIP ~~accrued~~Facility ~~and~~must ~~unpaid~~be ~~interest~~repaid atin full prior to the ~~non-default~~EFIH ~~rate~~Debtors onemergence ~~such~~from ~~principal;~~the Chapter 11 Cases.

•The Inprincipal ~~June~~amounts ~~2014~~outstanding under the DIP Facility bear interest based on applicable LIBOR rates, $2subject to a 1% floor, plus 3.~~438~~25%. At ~~billion~~both ofMarch 31, ~~cash~~2016 ~~borrowings~~and ~~were~~December 31, ~~used~~2015, tooutstanding ~~repay~~borrowings ~~all~~under ~~remaining~~the DIP Facility totaled $25.~~312~~4 billion ~~principal~~at ~~amount~~an annual interest rate of ~~EFIH~~4.25%. The ~~First~~DIP ~~Lien~~Facility ~~Notes~~is ~~(plus~~a ~~accrued~~non-amortizing ~~and~~loan ~~unpaid~~that ~~interest~~may, ~~totaling~~subject ~~$128~~to ~~million)~~certain limitations, ~~and~~be voluntarily prepaid by the EFIH Debtors, in whole or in part, without any premium or penalty.

•The InDIP ~~March~~Facility ~~2015,~~will ~~$750~~mature ~~million~~on ofthe ~~cash~~earlier ~~borrowings~~of ~~were~~(a) ~~used~~the toeffective ~~repay~~date ~~$445~~of ~~million~~any ~~principal~~plan ~~amount~~ of ~~EFIH~~reorganization, ~~Second Lien Notes~~ (~~including~~b) ~~accrued~~upon ~~and~~the ~~unpaid~~event ~~pre-petition interest~~ of ~~$55~~the ~~million~~sale ~~and~~of ~~post-petition~~substantially ~~interest~~all of ~~$235~~EFIH's ~~million)~~assets ~~and~~or ~~certain fees~~ (~~see~~c) ~~Note~~December 9)2016.

AsEFIH's obligations under the DIP Facility are secured by a first lien covering substantially all of ~~September 30~~EFIH's assets, ~~2015~~rights and properties, ~~remaining~~subject ~~cash~~to oncertain ~~hand~~exceptions ~~from~~set ~~borrowings~~forth ~~under~~in the ~~EFIH~~DIP Facility. The DIP Facility, ~~net~~provides ofthat ~~fees,~~all ~~totaled~~obligations ~~approximately~~thereunder ~~$370~~constitute ~~million,~~administrative ~~which~~expenses ~~was~~in ~~held~~the asChapter ~~cash~~11 Cases, with administrative priority and ~~cash~~senior ~~equivalents. In~~secured status under the ~~September 30,~~Bankruptcy ~~2015~~Code ~~condensed~~and, ~~consolidated~~subject ~~balance~~to ~~sheet,~~certain ~~the~~exceptions ~~borrowings~~set ~~under~~forth in the ~~EFIH~~ DIP Facility, ~~are~~will ~~reported~~have aspriority ~~current~~over ~~liabilities~~any ~~since~~and ~~the~~all ~~maturity~~administrative ~~date~~expense ofclaims, ~~the~~unsecured ~~facility~~claims isand ~~June~~costs ~~2016~~and expenses in the Chapter 11 Cases.

The ~~principal~~DIP ~~amounts~~Facility ~~outstanding~~provides ~~under~~for ~~the~~affirmative and negative covenants applicable to EFIH ~~DIP~~and ~~Facility~~EFIH ~~bear~~Finance, ~~interest~~including ~~based~~affirmative oncovenants ~~applicable~~requiring ~~LIBOR~~EFIH ~~rates,~~and ~~subject~~EFIH Finance to aprovide 1%financial ~~floor~~information, ~~plus~~budgets ~~3.25%. At~~and ~~both~~other ~~September 30~~information to the agents under the DIP Facility, ~~2015~~and negative covenants restricting EFIH's and ~~December 31~~EFIH Finance's ability to incur additional indebtedness, ~~2014~~grant liens, ~~outstanding~~dispose ~~borrowings~~of ~~under~~assets, ~~the~~pay ~~EFIH~~dividends ~~DIP~~or ~~Facility~~take ~~totaled~~certain ~~$5.4~~other ~~billion~~actions, atin aneach ~~annual~~case ~~interest~~except ~~rate~~as ofpermitted 4in the DIP Facility.~~25%.~~ The ~~EFIH~~ DIP Facility isalso includes a ~~non-amortizing~~minimum ~~loan~~liquidity ~~that~~covenant ~~may,~~pursuant ~~subject~~ to ~~certain~~which ~~limitations,~~EFIH becannot ~~voluntarily~~allow ~~prepaid~~the byamount of its unrestricted cash (as defined in the ~~EFIH~~DIP ~~Debtors~~Facility) to be less than $150 million. As of March 31, in2016, ~~whole~~EFIH orwas in ~~part,~~compliance ~~without~~with ~~any~~this ~~premium~~minimum orliquidity ~~penalty~~covenant. The Oncor Ring-Fenced Entities are not restricted subsidiaries for purposes of the DIP Facility.

The ~~EFIH~~ DIP Facility ~~will~~provides ~~mature~~for oncertain ~~the~~customary ~~earlier~~events of ~~(a)~~default, ~~the~~including ~~effective~~events ~~date~~ of ~~any~~default ~~reorganization~~resulting ~~plan~~from non-payment of principal, ~~(b)~~interest ~~upon~~or ~~the~~other ~~event~~amounts ofwhen ~~the~~due, ~~sale~~material breaches of ~~substantially~~representations ~~all~~and ofwarranties, ~~EFIH's~~material ~~assets~~breaches orof ~~(c)~~covenants ~~June~~in ~~2016. The~~the ~~maturity~~DIP ~~date~~Facility ~~may~~or beancillary ~~extended~~loan todocuments, nocross-defaults ~~later~~under ~~than~~other ~~December~~agreements ~~2016~~or ~~subject~~instruments toand the ~~satisfaction~~entry of ~~certain~~material ~~conditions,~~judgments ~~including~~against EFIH. Upon the ~~payment~~existence of aan 25event ~~basis~~of ~~point~~default, ~~extension~~the ~~fee,~~DIP aFacility ~~requirement~~provides that anall ~~acceptable~~principal, ~~plan~~interest ofand ~~reorganization~~other ~~has~~amounts ~~been~~due ~~filed~~thereunder onwill orbecome ~~prior~~immediately todue ~~such~~and ~~extension~~payable, ~~and~~either ~~the~~automatically ~~availability~~or ofat ~~certain~~the ~~metrics~~election of ~~liquidity~~specified ~~applicable to EFIH and EFIH Finance~~lenders.

~~EFIH's~~The ~~obligations under the EFIH~~ DIP Facility ~~are secured by a first lien covering substantially all of EFIH's assets~~permits, ~~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~~terms, ~~with~~conditions ~~administrative priority~~ and ~~senior~~limitations ~~secured status under the Bankruptcy Code and, subject to certain exceptions~~ set forth in the ~~EFIH~~ DIP Facility, ~~will~~EFIH ~~have~~to ~~priority~~incur ~~over~~incremental ~~any~~junior ~~and~~lien ~~all~~subordinated ~~administrative~~debt ~~expense~~in ~~claims,~~an ~~unsecured~~aggregate ~~claims~~amount ~~and~~not ~~costs~~to ~~and~~exceed ~~expenses~~$3 ~~in the Chapter 11 Cases~~billion.

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. As of September 30, 2015, EFIH was in compliance with this minimum liquidity covenant. The Oncor Ring-Fenced Entities are not restricted subsidiaries for purposes of the EFIH DIP Facility.14

The EFIH DIP Facility provides 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 EFIH9. ~~Upon~~ ~~the~~LIABILITIES ~~existence~~SUBJECT ofTO anCOMPROMISE 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.(LSTC)

The ~~EFIH~~amounts ~~DIP~~classified ~~Facility~~as ~~permits,~~LSTC ~~subject~~reflect tothe ~~certain~~company's ~~terms,~~estimate ~~conditions~~of pre-petition liabilities and ~~limitations~~other ~~set~~expected ~~forth~~allowed claims to be addressed in the ~~EFIH~~Chapter ~~DIP~~11 ~~Facility,~~Cases ~~EFIH~~and may be subject to ~~incur~~future ~~incremental~~adjustment ~~junior~~as ~~lien~~the ~~subordinated~~Chapter ~~debt~~11 Cases proceed. The following table presents LSTC as reported in anthe ~~aggregate~~condensed ~~amount~~consolidated ~~not~~balance tosheets ~~exceed~~at $3March 31, ~~billion.~~2016 and December 31, 2015:



	March 31, 2016		December 31, 2015
Notes, loans and other debt per the following table	$	3,273	$	3,273
Accrued interest on notes, loans and other debt	81		81
Total liabilities subject to compromise	$	3,354	$	3,354

9.Pre-Petition ~~LIABILITIES~~Notes, ~~SUBJECT~~Loans TOand ~~COMPROMISE~~Other Debt Reported as LSTC

~~The~~Amounts ~~amounts~~presented ~~classified~~below asrepresent ~~liabilities~~principal ~~subject~~amounts ~~to compromise (LSTC) reflect the company's estimate~~ of pre-petition ~~liabilities~~notes, loans and other ~~expected~~debt ~~allowed~~reported ~~claims to be addressed in the Chapter 11 Cases and may be subject to future adjustment~~ as ~~the Chapter 11 Cases proceed. Debt amounts include related unamortized deferred financing costs and discounts/premiums. Amounts classified to~~ LSTC ~~do not include pre-petition liabilities that are fully collateralized by letters of credit or cash deposits~~. ~~The following table presents LSTC as reported in the condensed consolidated balance sheets at September 30, 2015 and December 31, 2014:~~

	September 30, 2015		December 31, 2014
	March 31, 2016		December 31, 2015
Notes, loans and other debt per the following table	$	3,398	$	3,843
Debt issued by EFIH:
Accrued interest on notes, loans and other debt	82		138
11% Fixed Senior Secured Second Lien Notes due October 1, 2021	$	322	$	322
Advances and other payables to affiliates	7		7
11.75% Fixed Senior Secured Second Lien Notes due March 1, 2022	1,389		1,389
Total liabilities subject to compromise	$	3,487	$	3,988
11.25% / 12.25% Senior Toggle Notes due December 1, 2018	1,530		1,530
9.75% Fixed Senior Notes due October 15, 2019	2		2
Total debt issued by EFIH	3,243		3,243
Pushed down pre-petition debt (a):
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
Total debt	$	3,273	$	3,273

Pre-Petition Notes, Loans and Other Debt Reported as Liabilities Subject to Compromise

Amounts presented below represent principal amounts of pre-petition notes, loans and other debt reported as liabilities subject to compromise.

	September 30, 2015			December 31, 2014
Debt issued by EFIH:
11% Fixed Senior Secured Second Lien Notes due October 1, 2021	$	322		$	406
11.75% Fixed Senior Secured Second Lien Notes due March 1, 2022	1,389			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			243
Unamortized discount	(121		)	(121		)
Total debt issued by EFIH	3,401			3,846
Pushed down pre-petition debt (a):
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	(33		)	(33		)
Total debt	$	3,398		$	3,843

________________

(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. ~~Pre-Petition~~ Debt."

Repayment of EFIH ~~Second Lien~~ Notes

In March 2015, with the approval of the Bankruptcy Court, EFIH used some of its cash to repay (Repayment) $735 million, including interest at contractual rates, in amounts outstanding under EFIH's pre-petition 11.00% Fixed Senior Secured Second Lien Notes due October 1, 2021 (11.00% Notes) and 11.75% Fixed Senior Secured Second Lien Notes due March 1, 2022 (11.75% Notes) and $15 million in certain fees and expenses of the trustee for such notes. The Repayment resulted in an $84 million reduction in the principal amount of the 11.00% Notes, a $361 million reduction in the principal amount of the 11.75% Notes and the payment of $235 million and $55 million of accrued and unpaid post-petition and pre-petition interest, respectively, at contractual rates. The Repayment required the requisite consent of the lenders under ~~EFIH's~~the DIP Facility. EFIH received such consent from approximately 97% of the lenders under the ~~EFIH~~ DIP Facility in consideration of an aggregate consent fee equal to approximately $13 million. ~~As a result of the Repayment, as of September 30, 2015, the principal amount outstanding on the 11.00% Notes and 11.75% Notes are $322 million and $1.389 billion, respectively.~~

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 September 30, 2015 and December 31, 2014 totaled $60 million and consisted 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 September 30, 2015 and December 31, 2014, as shown in the 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 three and nine months ended September 30, 2015 and 2014.

Information Regarding Significant Pre-Petition Debt

~~The~~See Note 9 to the Financial Statements in EFIH's ~~pre~~2015 Form 10-~~petition~~K ~~debt~~for ~~described~~information ~~below~~regarding isits ~~junior~~pre-petition indebt. There ~~right~~have ofbeen ~~priority~~no ~~and~~changes ~~payment~~in topre-petition ~~the~~debt ~~EFIH~~since ~~DIP~~December ~~Facility~~31, 2015.

EFIH 6.875% Senior Secured First Lien Notes — There were no principal amounts of the EFIH 6.875% Notes outstanding at September 30, 2015 as the notes were exchanged or settled in June 2014 as discussed in Note 8. The notes bore 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).15

~~EFIH~~Guarantees ~~10%~~and ~~Senior~~Push ~~Secured~~Down ~~First Lien Notes — There were no principal amounts~~ of ~~the~~EFH ~~EFIH 10% Notes outstanding at September 30, 2015 as the notes were exchanged or settled in June 2014 as discussed in Note 8~~Corp. ~~The~~ ~~notes bore 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.~~Debt

~~EFIH~~Merger-related ~~11%~~debt ~~Senior~~of ~~Secured~~EFH ~~Second~~Corp. ~~Lien~~and ~~Notes~~its —subsidiaries ~~The~~consists ~~principal~~of ~~amount~~debt ofissued ~~the~~or ~~EFIH~~existing ~~11%~~at ~~Notes~~the ~~totals~~time ~~$322~~of ~~million~~the ~~with~~Merger. Debt ~~interest~~issued atin aexchange ~~fixed~~for ~~rate~~Merger-related ofdebt ~~11%~~is ~~per~~considered ~~annum~~Merger-related. ~~The~~Debt ~~EFIH~~issuances ~~11%~~for ~~Notes~~cash are ~~secured~~considered onMerger-related adebt ~~second-priority~~to ~~basis~~the byextent the proceeds are used to repurchase Merger-related debt. EFCH and EFIH ~~Collateral~~(excluding their subsidiaries) fully and unconditionally guarantee on ana ~~equal~~joint and ~~ratable~~several basis ~~with~~ the ~~EFIH~~Merger-related 11debt of EFH Corp.~~75%~~ ~~Notes~~(parent). ~~See~~Such ~~discussion~~debt ~~above~~is ~~related~~subject to ~~the~~push ~~Repayment~~down ofin accordance with SEC Staff Accounting Bulletin Topic 5-J, and as a result, a portion of ~~these~~such ~~notes~~debt and related interest expense is reflected in ~~March~~EFIH's ~~2015~~financial statements. Merger-related debt of EFH Corp. held by its subsidiaries is not subject to push down.

~~The~~Pre-petition ~~EFIH~~debt ~~11%~~guaranteed ~~Notes~~and ~~are~~subject ~~senior~~to ~~obligations~~push ofdown ~~EFIH~~at March 31, 2016 and ~~EFIH~~December ~~Finance~~31, 2015 totals $60 million and ~~rank~~consists ~~equally~~of in$33 ~~right~~million principal amount of ~~payment~~EFH ~~with~~Corp. ~~all~~10.875% ~~senior~~Notes ~~indebtedness~~and $27 million principal amount of ~~EFIH~~EFH ~~and~~Corp. ~~are~~Toggle ~~effectively~~Notes. The ~~senior~~amount reflected in ~~right~~EFIH's ofcondensed ~~payment~~consolidated tobalance ~~all~~sheets ~~existing~~as orpushed ~~future~~down ~~unsecured~~pre-petition debt of($30 ~~EFIH~~million toat both March 31, 2016 and December 31, 2015, as shown in the ~~extent~~debt table above) represents 50% of the ~~value~~principal amount of the ~~EFIH~~EFH ~~Collateral~~Corp. Merger-related debt guaranteed. ~~The~~This ~~notes~~percentage ~~have~~reflects ~~substantially~~the fact that at the ~~same~~time ~~terms~~of asthe Merger, the equity investments of EFCH and EFIH 11in their respective operating subsidiaries were essentially equal amounts.~~75%~~ Because ~~Notes~~payment ~~discussed~~of ~~below,~~principal and interest on the ~~holders~~debt ofis the ~~EFIH~~responsibility ~~11%~~of ~~Notes~~EFH ~~will~~Corp., ~~generally~~EFIH ~~vote~~records asthe asettlement ~~single~~of ~~class~~such ~~with~~amounts ~~the~~as ~~holders~~noncash ofcapital ~~the~~contributions ~~EFIH~~from ~~11.75%~~EFH ~~Notes~~Corp.

~~EFIH~~There ~~11.75%~~were ~~Senior~~no ~~Secured~~payments ~~Second Lien Notes — The principal amount~~ of ~~the EFIH 11.75% Notes totals $1.389 billion with~~ interest atby aEFH ~~fixed rate of 11~~Corp.~~75%~~ ~~per annum. The EFIH 11.75% Notes are secured~~ on ~~a second~~pre-~~priority~~petition ~~basis~~debt bypushed ~~the~~down ~~EFIH~~for ~~Collateral on an equal and ratable basis with~~ the ~~EFIH~~three ~~11%~~months ~~Notes. The~~ended ~~EFIH~~March ~~11.75% Notes have substantially the same covenants as the EFIH 11% Notes~~31, 2016 and ~~the holders of the EFIH 11.75% Notes will generally vote as a single class with the holders of the EFIH 11% Notes. See discussion above related to the Repayment of a portion of these notes in March~~ 2015.

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%) in February 2013 and by an additional 25 basis points (to 12.25%) in May 2013.

EFIH 11.25%/12.25% Senior Toggle Notes — The principal amount of the EFIH Toggle Notes totals $1.566 billion 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%) in December 2013 and by an additional 25 basis points (to 11.75%) in March 2014.

Material Cross Default/Acceleration Provisions — Certain of EFIH's pre-petition 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.


10.	COMMITMENTS AND CONTINGENCIES

Guarantees

See ~~Notes~~Note 9 for discussion of EFIH's guarantees of certain EFH Corp. debt.

Legal Proceedings

From time to time, EFIH 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 its financial condition, results of operations or liquidity.

~~Litigation~~Make-whole 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 make-whole premium in connection with the cash repayment of the EFIH First Lien Notes and that such make-whole premium is an allowed secured claim, or in the alternative, an allowed secured or unsecured claim for breach of contract (EFIH First Lien Make-whole Claims). The indenture trustee has alleged that the EFIH First Lien Make-whole Claims are valued at approximately $432 million plus reimbursement of expenses. In separate rulings in March and July 2015, the Bankruptcy Court found that no make-whole premium is due with respect to the EFIH 10% First Lien Notes. In February 2016, the US District Court for the District of Delaware affirmed the Bankruptcy Court's rulings. In February 2016, the Indenture Trustee appealed the District Court's ruling to the US Court of Appeals for the Third Circuit. The EFIH Debtors intend to vigorously defend against this appeal. EFIH cannot predict the outcome of this appeal.

~~Make-whole Claims —~~ In ~~May~~June 2014, the indenture trustee for the EFIH ~~10%~~Second ~~First~~ Lien Notes initiated litigation in the Bankruptcy Court seeking similar relief with respect to the EFIH Second Lien Notes, including among other things, ~~a declaratory judgment~~ that EFIH is obligated to pay a make-whole premium in connection with ~~the~~any ~~cash~~ repayment of the EFIH ~~First~~Second Lien Notes ~~discussed in Note 8~~ and that such make-whole premium iswould be an allowed secured claim, or in the alternative, an allowed secured or unsecured claim for breach of contract (the EFIH ~~First~~Second Lien Make-whole Claims). ~~The~~If, ~~indenture~~as ~~trustee~~of ~~has~~March 31, ~~alleged~~2016, ~~that~~ the EFIH ~~First~~Second Lien Make-whole Claims ~~are~~were ~~valued~~allowed, atthe ~~approximately~~amount ~~$432 million plus reimbursement~~ of ~~expenses. The~~such ~~indenture~~claims ~~trustee~~would ~~also~~have ~~filed~~been aapproximately ~~motion~~$356 inmillion ~~May~~plus ~~2014~~reimbursement ~~asking the Bankruptcy Court to lift the automatic stay for cause in order to allow the trustee's notice purporting to rescind the automatic acceleration~~ of ~~the EFIH First Lien Notes to take effect~~expenses. ~~Following~~In ~~argument~~October ~~and briefing on cross motions for summary judgment, in March~~ 2015, the Bankruptcy Court issued a ruling and order in favor of the EFIH Debtors. The onorder ~~almost~~and ~~all~~ruling ~~issues,~~found ~~including~~that ~~denying~~no ~~the~~make-whole ~~indenture~~premium ~~trustee's~~is ~~motion~~due ~~for~~with ~~summary~~respect ~~judgment~~to ~~in full and granting~~ the EFIH ~~Debtors~~Second ~~summary~~Lien ~~judgment~~Notes. In onApril ~~all~~2016, ~~but~~ the ~~issue~~US ofDistrict ~~whether~~Court tofor ~~lift~~ the ~~automatic~~District ~~stay. In~~of ~~July~~Delaware ~~2015, the Bankruptcy Court~~ issued a ruling and order inaffirming ~~favor~~the ofBankruptcy ~~the~~Court's ~~EFIH~~decision. The ~~Debtors~~indenture ontrustee ~~the~~has ~~issue~~appealed ofthat ~~whether~~decision to ~~lift~~ the ~~automatic~~US ~~stay. The~~Court ~~result~~ of ~~these~~Appeals ~~two~~for ~~rulings~~the isThird ~~that~~Circuit, ~~the~~and ~~Bankruptcy~~that ~~Court~~court has ~~found~~consolidated ~~that~~the noappeal ~~make-whole~~with ~~premium~~the isappeal ~~due~~filed ~~with~~by ~~respect~~the toindenture trustee for the EFIH 10% First Lien Notes~~. In~~ ~~July~~described ~~2015,~~above ~~the~~for ~~first lien indenture trustee appealed~~ the ~~Bankruptcy~~purposes ~~Court's~~of ~~ruling~~oral toargument, ~~the~~if ~~United~~any, ~~States~~and ~~District~~final ~~Court for the District of Delaware~~disposition. The EFIH Debtors intend to vigorously defend against this appeal. EFIH cannot predict the outcome of this appeal.

2016

In ~~June~~July ~~2014~~2015, the ~~indenture~~EFIH ~~trustee~~Debtors ~~for~~filed a claim objection with the Bankruptcy Court regarding the EFIH ~~Second~~PIK ~~Lien~~noteholders' ~~Notes~~claims ~~initiated~~for ~~litigation~~a inredemption ~~the~~or ~~Bankruptcy~~make-whole ~~Court~~premium ~~seeking~~and ~~similar~~post-petition ~~relief~~interest ~~with~~at ~~respect~~the tocontract rate under the EFIH ~~Second~~PIK ~~Lien~~ Notes. In October 2015, ~~including~~the ~~among~~Bankruptcy ~~other~~Court ~~things,~~issued ~~that~~opinions in favor of the EFIH isDebtors. One ~~obligated~~opinion tofound ~~pay~~that ano make-whole premium inis ~~connection~~due with ~~any~~respect ~~repayment~~to of the EFIH ~~Second~~PIK ~~Lien~~ Notes. ~~and~~The ~~that~~second ~~such~~opinion ~~make-whole~~found ~~premium~~that ~~would~~the beEFIH anPIK noteholders' allowed ~~secured~~ claim does not, oras ina ~~the~~matter ~~alternative~~of law, aninclude ~~allowed~~post-petition ~~secured~~interest whether at the contract rate or ~~unsecured~~the ~~claim~~Federal ~~for~~Judgment ~~breach~~Rate. ofThis ~~contract~~opinion (did find, however, that, in connection with the ~~EFIH~~confirmation ~~Second~~of ~~Lien~~a ~~Make-whole~~plan ~~Claims). If~~of reorganization, asthe ofBankruptcy ~~September 30~~Court could, ~~2015~~at its discretion, grant post-petition interest as part of the EFIH ~~Second~~PIK ~~Lien~~noteholders' ~~Make-whole~~allowed ~~Claims~~claim ~~were~~under ~~allowed~~general principals of equity and that such grant could be at the contract rate, the ~~amount~~Federal ofJudgment ~~such~~Rate ~~claims~~or ~~would~~any ~~have~~other ~~been~~amount ~~approximately~~that ~~$455~~the ~~million~~Bankruptcy ~~plus~~Court ~~reimbursement~~determines ofto ~~expenses~~be equitable. In ~~December~~November ~~2014~~2015, a majority of the EFIH ~~Debtors~~PIK ~~filed~~Noteholders ~~counterclaims~~settled ~~for~~their ~~relief~~claims ~~against~~contingent on the ~~Second~~Terminated ~~Lien~~Plan ~~indenture~~becoming ~~trustee,~~effective. These ~~seeking~~settling ~~declaratory~~noteholders ~~relief~~have ~~that,~~appealed ~~among~~both ~~other~~of ~~things,~~the ~~EFIH~~Bankruptcy isCourt's ~~not~~rulings ~~obligated~~ to ~~pay~~the aUS ~~make-whole~~District ~~premium~~Court infor ~~connection~~the ~~with~~District ~~any~~of ~~repayment~~Delaware. Those ofappeals were stayed pending the ~~EFIH~~effective ~~Second~~date ~~Lien~~of ~~Notes~~the ~~and~~Terminated Plan. Now that ~~such~~the ~~make-whole~~Terminated ~~premium,~~Plan ifis ~~owing~~null and void, ~~would~~some ~~not~~or ~~constitute~~all anof ~~allowed~~these ~~secured~~appeals ~~claim~~may (be revived. Some EFIH ~~Second~~PIK ~~Lien~~Noteholders ~~Counterclaims)~~have not settled their claims. AsThey ahave ~~result~~appealed ofthe ~~EFIH~~Bankruptcy Court's ~~partial~~ruling ~~repayment~~on ofpost-petition interest to the ~~EFIH~~US ~~Second~~District ~~Lien~~Court ~~Notes,~~for the ~~indenture~~District ~~trustee~~of ~~for~~Delaware. That ~~the~~appeal ~~EFIH~~has ~~Second~~also ~~Lien~~been ~~Notes~~stayed ~~amended~~pending ~~its~~an ~~complaint~~equitable inproceeding. The ~~April~~non-settling ~~2015,~~EFIH ~~and~~PIK ~~the~~Noteholders ~~EFIH~~have ~~Debtors~~also ~~filed~~sought to be awarded post-petition interest through an ~~answer~~equitable toproceeding ~~such~~suggested ~~complaint~~by inthe ~~April~~Bankruptcy ~~2015~~Court’s second opinion. InNo ~~July~~briefing ~~2015,~~schedule ~~the~~has ~~EFIH~~been ~~Debtors~~set ~~filed~~for athat ~~motion~~equitable ~~for~~proceeding. The ~~summary~~non-settling ~~judgment~~EFIH PIK Noteholders' appeal may be revived in ~~the~~connection ~~adversary~~with an equitable proceeding. InThe ~~October~~EFIH ~~2015,~~Debtors ~~the~~intend ~~Bankruptcy~~to ~~Court~~vigorously ~~issued~~defend aagainst ~~ruling~~the ~~and~~award ~~order~~of inpost-petition ~~favor~~interest ofat a rate higher than the ~~EFIH~~Federal ~~Debtors~~Judgment Rate. ~~The~~EFIH ~~order~~cannot ~~and~~predict ~~ruling~~the ~~found~~outcome ~~that~~of noeither ~~make-whole~~of ~~premium~~these isappeals ~~due~~or ~~with~~any ~~respect~~equitable toproceeding seeking the ~~EFIH~~award ~~Second~~of ~~Lien~~post-petition ~~Notes~~interest.

In December 2014, the EFIH Debtors initiated litigation against the indenture trustee for the EFIH PIK Notes seeking, among other things, a declaratory judgment that EFIH is not obligated to pay a redemption premium in connection with the cash repayment of the EFIH PIK Notes and that any post-petition interest owing on these notes is to be paid at the statutory Federal Judgment Rate of interest. In June 2015, the Bankruptcy Court issued an opinion and entered an order dismissing the EFIH Debtors' adversary proceeding. However, in its opinion, the Bankruptcy Court noted that as an alternative the EFIH Debtors may file a claim objection to the EFIH PIK noteholders' claims made in the Chapter 11 Cases. In July 2015, the EFIH Debtors filed a claim objection with the Bankruptcy Court regarding the EFIH PIK noteholders' claims for a redemption premium and post-petition interest at the contract rate under the EFIH PIK Notes. In October 2015, the Bankruptcy Court issued opinions in favor of the EFIH Debtors. One opinion found that no make-whole premium is due with respect to the EFIH PIK Notes. The second opinion found that the EFIH PIK noteholders' allowed claim does not, as a matter of law, include post-petition interest whether at the contract rate or the Federal Judgment Rate. This opinion did find, however, that, in connection with the confirmation of a Plan of Reorganization, the Bankruptcy Court could, at its discretion, grant post-petition interest as part of the EFIH PIK noteholders' allowed claim under general principals of equity and that such grant could be at the contract rate, the Federal Judgment Rate or any other amount that the Bankruptcy Court determines to be equitable. EFIH cannot predict whether the Bankruptcy Court will decide to grant post-petition interest to the EFIH PIK noteholders as part of their allowed claim in connection with the confirmation of the Plan of Reorganization.

In addition, creditors may make additional claims in the Chapter 11 Cases for make-whole or redemption premiums in connection with repayments or settlement of other pre-petition debt. These claims could be material. There can be no assurance regarding the outcome of any of the litigation regarding the validity or, if deemed valid, the amount of these make-whole or redemption claims.

~~Potential~~Adversary ~~Inter/Intra~~Complaint ~~Debtor~~against ~~Claims~~Texas Transmission — In ~~August~~October ~~2014~~2015, ~~the~~EFH ~~Bankruptcy~~Corp. ~~Court~~filed ~~entered~~with ~~an order in~~ the ~~Chapter~~Bankruptcy 11Court ~~Cases~~an ~~establishing~~adversary ~~discovery~~complaint ~~procedures~~against ~~governing,~~Texas ~~among~~Transmission ~~other~~seeking ~~things,~~a ~~certain~~judgment ~~prepetition~~from ~~transactions among~~ the ~~various~~Bankruptcy ~~Debtors'~~Court ~~estates. In~~regarding ~~February 2015,~~ the adobligations ~~hoc group~~ of ~~TCEH~~Texas ~~unsecured~~Transmission ~~creditors;~~under the ~~official~~Investor ~~committee~~Rights ~~representing~~Agreement ~~unsecured~~to ~~interests~~participate atin ~~EFCH~~a ~~and~~sale ~~its~~of ~~direct~~EFH ~~subsidiary,~~Corp.'s ~~TCEH; and the official committee representing unsecured~~ interests atin ~~EFH~~Oncor. In ~~and~~April ~~EFIH~~2016, ~~filed motions with~~ the Bankruptcy Court ~~seeking~~announced ~~standing~~it towould ~~prosecute~~approve ~~derivative~~EFH ~~claims on behalf of TCEH relating to certain of these prepetition transactions~~Corp. ~~The~~ ~~claims asserted by the ad hoc group of TCEH unsecured creditors~~ and the ~~official~~Purchasers' ~~committee~~motion ~~representing~~for ~~unsecured~~summary ~~interests~~judgment atin ~~EFCH~~full and ~~its~~denied ~~direct~~Texas ~~subsidiary,~~Transmission's ~~TCEH,~~motion ~~are~~for ~~subject~~a todetermination ~~the~~that ~~Settlement Agreement and~~ the ~~Plan~~court ~~Support~~lacks ~~Agreement,~~authority to ~~which~~enter ~~both~~a ~~groups~~final ~~are~~judgment ~~party. The~~or ~~Bankruptcy Court entered an~~ order in ~~September 2015 (a) adjourning~~ the ~~motions~~proceeding. A ~~filed~~written byopinion ~~the ad hoc group of TCEH unsecured creditors~~ and ~~the official committee representing unsecured interests at EFCH and its direct subsidiary, TCEH, pending further~~ order ofregarding ~~the~~these ~~Bankruptcy~~rulings ~~Court and subject to the terms of the Plan Support Agreement and (b) adjourning the motion filed by the official committee representing unsecured interests at EFH and EFIH (who~~ is ~~not party to the Settlement Agreement or the Plan Support Agreement) to January 2016~~pending.

The Settlement Agreement is anticipated to be heard in connection with the hearing to consider confirmation of the Plan of Reorganization. EFIH cannot predict the timing or outcome of future proceedings, if any, related to these transactions. The outcome of any of these claims could be material and could affect the results of operations, liquidity or financial condition of a particular Debtor.17

Adversary Complaint against Texas Transmission — In October 2015, as contemplated by the Merger and Purchase Agreement, EFH Corp. filed with the Bankruptcy Court an adversary complaint against Texas Transmission seeking a judgment from the Bankruptcy Court ordering Texas Transmission to comply with its obligation under the Investor Rights Agreement in connection with the transactions contemplated by the Merger and Purchase Agreement, including (a) in connection with the closing of the merger, selling its interests in Oncor to the Investor Group at the same price that the Investor Group has agreed to purchase EFH Corp equity under the Merger and Purchase Agreement and (b) cooperating with Oncor and EFH Corp. in implementing the IPO Conversion Plan contemplated by the Merger and Purchase Agreement in order to effectuate the REIT.


11.	MEMBERSHIP INTERESTS

Cash Distributions

No cash distributions were made in either the three ~~or nine~~ months ended ~~September~~March 3031, 2016, or 2015.

Distribution Restrictions

The 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.

Under applicable law, EFIH is prohibited from paying any dividend to the extent that immediately following payment of such dividend, there would be no statutory surplus or EFIH would be insolvent. In addition, due to the Chapter 11 Cases, no dividends are eligible to be paid without the approval of the Bankruptcy Court.

Affiliate Debt Held by EFIH

AsThe aamounts ~~result~~ of affiliate debt ~~exchanges~~held inby ~~2009 through 2013,~~ EFIH ~~holds~~were ~~debt~~eliminated ~~securities~~as ofa ~~EFH~~result ~~Corp. and TCEH. In December 2012, management determined that some or all~~ of ~~these~~the ~~securities~~Settlement ~~may~~Agreement beapproved ~~returned~~by ~~as dividends to EFH Corp.; accordingly,~~ the ~~balances~~Bankruptcy ~~were~~Court ~~reclassified at that time from investment~~ in ~~debt~~December ~~of affiliates and reported as a reduction of membership interests~~2015. AsThe aelimination ~~result~~ of ~~the~~affiliate ~~Bankruptcy~~debt ~~Filing,~~created ~~EFIH~~a ~~does~~$635 ~~not~~million ~~expect~~pretax toloss ~~receive~~for ~~interest~~EFIH, ~~payments~~which onwas ~~affiliate~~recorded ~~debt~~within ~~securities~~membership ~~it holds~~interests.

The ~~principal~~indentures ~~amounts,~~governing ~~coupon~~EFIH's ~~rates,~~debt ~~maturities~~do ~~and~~not ~~carrying~~limit ~~value~~its ofability to dividend EFH Corp. debt ofsecurities ~~affiliates~~to ~~held~~EFH atCorp. ~~both~~so ~~September~~long ~~30,~~as ~~2015~~EFIH ~~and~~received ~~December~~such ~~31,~~securities ~~2014~~in ~~are~~exchange asfor ~~follows:~~the issuance of EFIH debt.

	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 indentures governing the EFIH Notes do not limit EFIH's ability to distribute the EFH Corp. debt securities that it holds to EFH Corp. so long as it received such securities in exchange for the issuance of EFIH debt, which applies to all the EFH Corp. debt EFIH currently holds.

Membership Interests

The following table presents the changes (all after tax) to membership interests for the ~~nine~~three months ended ~~September~~March 3031, ~~2015~~2016:

	Capital Accounts			Affiliate Debt Held by EFIH			Accumulated Other Comprehensive ~~Income (~~Loss)			Total Membership Interests
Balance at December 31, 2014	$	(1,482	)	$	(635	)	$	(86	)	$	(2,203	)
Balance at December 31, 2015	$	(2,327	)	$	—		$	(91	)	$	(2,418	)
Net income	(~~234~~24		)	—			—			(~~234~~24		)
Effect of debt push-down from EFH Corp.	16			—			—			16
Current taxes computed under separate return method (a)	(8		)	—			—			(8		)
Income tax adjustment related to AMT utilization	3			—			—			3
Balance at March 31, 2016	$	(2,359	)	$	—		$	(91	)	$	(2,450	)
Net effects related to Oncor	—			—			2			2
Balance at September 30, 2015	$	(1,697	)	$	(635	)	$	(84	)	$	(2,416	)

~~The following table presents the changes to membership interests for the nine months ended September 30, 2014:~~___________

	Capital Accounts			Affiliate Debt Held by EFIH			Accumulated Other Comprehensive Income (Loss)			Total Membership Interests
Balance at December 31, 2013	$	(1,148	)	$	(635	)	$	(39	)	$	(1,822	)
Net income	(357		)	—			—			(357		)
Effect of debt push-down from EFH Corp.	16			—			—			16
Balance at September 30, 2014	$	(1,489	)	$	(635	)	$	(39	)	$	(2,163	)


(a)	Under the Federal and State Income Tax Allocation Agreement and consistent with GAAP, the income tax provision is computed on a separate return basis. However, under the terms of the Settlement Agreement, no further cash payments among the Debtors will be made in respect of federal income taxes resulting in a charge directly to membership interests for any current federal taxes.

~~Accumulated~~The ~~Other~~following ~~Comprehensive~~table ~~Income~~presents ~~(Loss)~~the changes to membership interests for the three months ended March 31, 2015:

The following table presents the changes to accumulated other comprehensive income (loss) for the nine months ended September 30, 2015. There was no other comprehensive income (loss) before reclassification for the period.



	Capital Accounts			Affiliate Debt Held by EFIH			Accumulated Other Comprehensive Loss			Total Membership Interests
Balance at December 31, 2014	$	(1,482	)	$	(635	)	$	(86	)	$	(2,203	)
Net income	(272		)	—			—			(272		)
Effect of debt push-down from EFH Corp.	5			—			—			5
Net effects related to Oncor	—			—			1			1
Balance at March 31, 2015	$	(1,749	)	$	(635	)	$	(85	)	$	(2,469	)

	Dedesignated Cash Flow Hedges - Oncor			Pension and Other Postretirement Employee Benefit Liabilities Adjustments - Oncor			Total Accumulated Other Comprehensive Income (Loss)
Balance at December 31, 2014	$	(19	)	$	(67	)	$	(86	)
Amounts reclassified from accumulated other comprehensive income (loss) and reported in:
Equity in earnings (losses) of unconsolidated subsidiaries	2			—			2
Total amount reclassified from accumulated other comprehensive income (loss) during the period	2			—			2
Balance at September 30, 2015	$	(17	)	$	(67	)	$	(84	)

~~There~~Accumulated ~~were~~Other noComprehensive ~~material changes to accumulated other comprehensive income (loss) in the nine months ended September 30, 2014.~~Loss

23There were no material changes to accumulated other comprehensive income (loss) in the three months ended March 31, 2016.

The following table presents the changes to accumulated other comprehensive income (loss) for the three months ended March 31, 2015. There was no other comprehensive income (loss) before reclassification for the period.



	Dedesignated Cash Flow Hedges - Oncor			Pension and Other Postretirement Employee Benefit Liabilities Adjustments - Oncor			Accumulated Other Comprehensive Income (Loss)
Balance at December 31, 2014	$	(19	)	$	(67	)	$	(86	)
Amounts reclassified from accumulated other comprehensive loss and reported in:
Equity in earnings of unconsolidated subsidiaries (net of tax)	1			—			1
Total amount reclassified from accumulated other comprehensive loss during the period	1			—			1
Balance at March 31, 2015	$	(18	)	$	(67	)	$	(85	)


12.	RELATED–PARTY TRANSACTIONS

The following represent EFIH's significant related-party transactions. Also see Note 11 for a discussion of EFH Corp. and TCEH debt securities held by EFIH that were eliminated in December 2015 as a result of the Settlement Agreement approved by the Bankruptcy Court.

• ~~EFH~~A ~~Corp.~~subsidiary ~~allocates~~of ~~expense to EFIH for management fees owed by~~ EFH Corp. tobills ~~the~~EFIH ~~Sponsor~~for ~~Group.~~administrative ~~This~~services ~~expense,~~such ~~which~~as isaccounting ~~reported in SG&A expenses, totaled zero for both the three~~ and ~~nine~~finance ~~months~~at ~~ended September 30~~cost, ~~2015~~ and $0EFIH ~~million~~reimburses ~~and $3 million for~~ the ~~three~~subsidiary and nine months ended September 30, 2014, respectively. Beginning with the quarterly management fee due December 31, 2013, the Sponsor Group, while reserving the right to receive the fees, directed EFH Corp. to suspend payments of the management fees for ~~an indefinite period. Accordingly, EFIH did not reimburse EFH Corp. for~~ the allocated ~~management~~costs ~~fees.~~on ~~Effective~~a ~~with~~monthly ~~the~~basis. ~~Petition~~This ~~Date~~expense, ~~EFH~~which ~~Corp.~~is ~~suspended~~reported allocations of such fees to EFIH. Fees accrued as of the Petition Date have been reclassified to liabilities subject to compromise (LSTC). Pursuant to the Settlement Agreement and the Plan of Reorganization discussed in ~~Note~~SG&A 2expenses, astotaled of$1 ~~the~~million ~~effective date of the Plan of Reorganization, (a) the Sponsor Group has agreed to forego any and all claims under the management agreement in exchange~~ for ~~releases~~both ~~of liability against~~ the ~~causes~~three ofmonths ~~actions~~ended ~~brought~~March ~~forth~~31, by2016 ~~various creditor groups~~ and ~~(b) EFH Corp~~2015. ~~has proposed to reject the management agreement pursuant to the Bankruptcy Code.~~

In• ~~addition~~EFH toCorp. ~~amounts~~files ~~incurred~~consolidated ~~directly~~federal byincome ~~EFIH~~tax and Texas state margin tax returns, and under a ~~subsidiary~~Federal ofand ~~EFH~~State ~~Corp.~~Income ~~allocated~~Tax ~~costs~~Allocation Agreement, allocates income taxes to EFIH ~~for~~substantially ~~legal~~as ~~and~~if ~~other~~it ~~consulting~~were ~~services~~filing ~~associated~~its ~~with~~own ~~EFIH's~~corporate ~~debt~~income ~~restructuring~~tax ~~activities~~returns. ~~prior~~In toDecember 2015, the ~~Petition~~Bankruptcy ~~Date,~~Court ~~and~~approved ~~EFIH~~the ~~reimbursed~~Settlement Agreement which settled the ~~subsidiary~~intercompany ~~for~~claims among the ~~allocated~~Debtors, ~~costs~~including on$173 amillion ~~monthly~~fully-reserved ~~basis~~income tax receivables from EFH Corp. ~~The~~ ~~allocated~~Pursuant ~~expense,~~to ~~which~~the ~~was~~Settlement ~~reported~~Agreement inEFIH ~~SG&A~~has ~~for~~not ~~the~~made ~~three~~any ~~and~~federal ~~nine~~income tax payments to EFH Corp. or received any tax refunds from EFH Corp in the three months ended ~~September 30~~March 31, ~~2014~~2016 ~~totaled~~(see $0Note ~~million~~2). ~~and~~EFIH made state income tax payments to EFH Corp. of $41 million in the three months ended March 31, ~~respectively~~2016. ~~Beginning~~ atEFIH has also not made any income tax payments to EFH Corp. or received any tax refunds from EFH Corp. in the ~~Petition~~three ~~Date~~months ended March 31, ~~legal~~2015. ~~and~~See ~~other~~discussion ~~consulting~~below ~~services~~regarding ~~associated~~allocation ~~with~~of ~~EFIH's~~income ~~Chapter~~tax 11liabilities ~~Cases~~to ~~were~~Oncor ~~directly~~Holdings ~~billed~~and toOncor ~~EFIH~~under the Federal and ~~are~~State ~~reported~~Income inTax ~~reorganization~~Allocation ~~items~~Agreement.

A subsidiary of EFH Corp. bills EFIH for administrative services such as accounting and finance 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 and $2 million for the three months ended September 30, 2015 and 2014 and $4 million and $3 million for the nine months ended September 30, 2015 and 2014, respectively.

• EFH Corp. files consolidated federal income tax and Texas state 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 September 30, 2015 and December 31, 2014, EFIH had current income tax receivables from EFH Corp. totaling $221 million and $125 million, respectively, both of which were fully reserved (see Note 4). EFIH made no income tax payments to EFH Corp. for both the nine months ended September 30, 2015 and 2014. EFIH received no income tax refunds from EFH Corp. for both the nine months ended September 30, 2015 and 2014. See discussion below in this Note regarding allocation of income tax liabilities to Oncor Holdings and Oncor under the Federal and State Income Tax Allocation Agreement.


•	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 9 regarding guarantees and push-down of certain EFH Corp. pre-petition debt and Note 11 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 subsidiaries of TCEH for services it provides, principally the delivery of electricity. Revenues recorded by Oncor for these services totaled $~~279~~220 million and $~~281~~236 million for the three months ended ~~September~~March 3031, ~~2015~~2016 and ~~2014, respectively, and $739 million and $746 million for the nine months ended September 30,~~ 2015 ~~and 2014~~, respectively. The fees are based on rates regulated by the PUCT that apply to all REPs. These revenues from subsidiaries of TCEH represented 2523% and 2625% of Oncor Holdings' operating revenues for the ~~nine~~three months ended ~~September~~March 3031, ~~2015~~2016 and ~~2014~~2015, respectively. Oncor Holdings' condensed consolidated balance sheets at ~~September~~March 3031, ~~2015~~2016 and December 31, ~~2014~~2015 reflect current receivables from affiliates totaling $~~156~~101 million and $118 million, respectively, consisting almost entirely of trade receivables from subsidiaries of TCEH related to these electricity delivery fees.

24• Oncor pays EFH Corp. subsidiaries for financial and other administrative services and shared facilities at cost. Such amounts increased Oncor's reported operation and maintenance expense by $1 million and $6 million for the three months ended March 31, 2016 and 2015, respectively.

• ~~Oncor~~Under ~~pays~~Texas ~~EFH~~regulatory ~~Corp.~~provisions, ~~subsidiaries~~the ~~for~~trust ~~financial~~fund ~~and~~for ~~other~~decommissioning ~~administrative~~the ~~services~~Comanche ~~and~~Peak ~~shared~~nuclear ~~facilities~~generation atfacility ~~cost.~~(reported ~~Such~~on ~~amounts increased Oncor~~TCEH's ~~reported~~consolidated ~~operation~~balance ~~and~~sheets) ~~maintenance~~is ~~expense~~funded by $6a ~~million~~delivery ~~and~~fee $8surcharge ~~million~~collected ~~for~~from ~~the~~REPs ~~three~~by ~~months~~Oncor, ~~ended~~as ~~September~~collection 30agent, ~~2015~~ and ~~2014,~~remitted ~~respectively,~~monthly ~~and~~to ~~$16~~TCEH. ~~million~~The ~~and~~delivery fee surcharges remitted to TCEH totaled $234 million for both the ~~nine~~three months ended ~~September~~March 3031, ~~2015~~2016 and ~~2014, respectively~~2015.

• EFH Corp. files a consolidated federal income tax return that includes Oncor Holdings' results. Oncor is not a member of EFH Corp.'s consolidated tax group, but EFH Corp.'s consolidated federal income tax return includes EFH Corp.'s portion of Oncor's ~~results~~as ~~due~~a toresult of EFH Corp.'s equity ownership in Oncor. EFH Corp. also files a consolidated Texas state margin tax return that includes all of Oncor Holdings' and Oncor's results. However, under a Federal and State Income Tax Allocation Agreement, Oncor Holdings' and Oncor's record their federal income tax and Texas state margin ~~tax expense and related balance sheet amounts, including EFH Corp.'s income~~ taxes ~~receivable from or payable to Oncor Holdings and Oncor, are recorded~~ as if Oncor Holdings and Oncor ~~file~~were filing their own corporate income tax returns.

At September 30, 2015, Oncor Holdings had a net current payable to EFH Corp. related to federal and state income taxes totaling $31 million, $29 million of which related to Oncor. The $29 million net payable to EFH Corp. included a $15 million federal income tax payable and a $14 million state margin tax payable. Additionally, at September 30, 2015 Oncor had a noncurrent tax receivable from EFH Corp. of $65 million and a noncurrent tax payable to Oncor Holdings of $2 million. At December 31, 2014, Oncor Holdings' net current receivable from EFH Corp. totaled $120 million, all of which related to Oncor. The $120 million net receivable from EFH Corp. included a $144 million federal income tax receivable offset by a $24 million state margin tax payable. Additionally, at December 31, 2014 Oncor had a noncurrent tax receivable from EFH Corp. of $64 million.20

~~For~~At ~~the nine months ended September~~March 3031, ~~2015~~2016, Oncor Holdings' net current amount receivable from EFH Corp. related to federal and state income taxes totaled $78 million, $81 million of which related to Oncor. The ~~made~~$81 million net receivable from EFH Corp. included a $105 million federal income tax ~~payments~~receivable tooffset by a $24 million state margin tax payable. Additionally, at March 31, 2016 Oncor had a noncurrent tax receivable from EFH Corp. ~~totaling~~of $2065 million and Oncor Holdings had a $632 million, ~~respectively. For~~noncurrent ~~the~~tax ~~nine~~payable ~~months~~to ~~ended~~EFH ~~September~~Corp. At December 3031, ~~2014~~2015, Oncor Holdings' net current amount receivable from EFH Corp. related to federal and state income taxes totaled $87 million, $89 million of which related to Oncor. The ~~made~~$89 million net receivable from EFH Corp. included a $109 million federal income tax ~~payments~~receivable tooffset by a $20 million state margin tax payable. Additionally, at December 31, 2015 Oncor had a noncurrent tax receivable from EFH Corp. ~~totaling~~of $1765 million and Oncor Holdings had a $~~163~~2 million, ~~respectively~~noncurrent tax payable to EFH Corp.

•For ~~Oncor~~the ~~has~~three ~~participated~~months inended ~~plans sponsored by EFH Corp. that provide pension~~March 31, ~~health care and other retiree benefits. Accordingly~~2016, Oncor Holdings' ~~consolidated~~and ~~financial~~Oncor ~~statements~~made ~~have~~income ~~reflected~~tax ~~allocations~~payments to ~~Oncor~~EFH ofCorp ~~amounts~~totaling ~~related~~$5 tomillion ~~these retiree benefit plans. In accordance with an agreement between EFH Corp.~~ and ~~Oncor~~zero, ~~Oncor ceased participation in EFH Corp~~respectively.'s For ~~OPEB~~the ~~plan~~three ~~effective~~months ~~July~~ended 1March 31, ~~2014~~2015, ~~and established its own OPEB plan for~~ Oncor's ~~eligible~~Holdings ~~existing~~ and ~~future retirees and their dependents. Additionally, the~~ Oncor ~~plan~~made ~~participants~~income ~~include~~tax ~~those~~payments ~~former~~to ~~participants in the~~ EFH Corp. ~~OPEB~~totaling ~~plan~~$6 ~~whose~~million ~~employment included service with both Oncor (or a predecessor regulated electricity business)~~ and ~~EFH Corp.'s competitive businesses (split service participants). Under the agreement~~zero, ~~EFH Corp~~respectively. will retain the liability for split service participants' benefits related to their years of service with the competitive business. The methodology for OPEB cost allocations between EFH Corp. and Oncor has not changed, and the plan separation does not materially affect the net assets or cash flows of EFIH.

• ~~Until~~Oncor ~~June~~has ~~30,~~requirements ~~2014,~~in ~~Oncor~~place ~~employees~~to ~~participated~~assure inadequate acreditworthiness ~~health~~of ~~and~~any ~~welfare~~REP ~~benefit~~to ~~program~~support ~~offered~~the byREP's ~~EFH~~obligation ~~Corp.~~to Incollect ~~connection~~securitization ~~with~~bond-related (transition) charges on behalf of Oncor ~~establishing~~Electric ~~its~~Delivery ~~own~~Transition ~~health~~Bond ~~and~~Company ~~welfare~~LLC. ~~benefits~~Under ~~program~~these requirements, ~~Oncor~~and ~~agreed~~as toa ~~pay~~result ~~EFH~~of ~~Corp.~~TCEH's $1credit ~~million~~rating being below investment grade, TCEH is required to ~~reimburse~~post ~~EFH~~collateral ~~Corp.~~support ~~for~~in ~~its~~an ~~increased~~amount ~~costs~~equal ofto ~~providing~~estimated ~~benefits~~transition ~~under~~charges ~~the~~over ~~EFH~~specified ~~Corp~~time periods. ~~program~~Accordingly, asat aboth ~~result~~March of31, ~~Oncor's~~2016 ~~withdrawal~~ and toDecember ~~compensate~~31, ~~EFH~~2015, ~~Corp.~~TCEH ~~for~~had ~~the~~posted ~~administrative~~letters ~~work~~of ~~related~~credit toand/or ~~the~~cash ~~transition.~~in ~~This~~the amount ~~was~~of ~~paid~~$6 inmillion ~~June~~for ~~2014~~Oncor's benefit.

Oncor's retained liability under the Employee Retirement Income Security Act of 1974 (ERISA) relates to the nonrecoverable portion of the unfunded obligation of EFH Corp.'s pension plan. In the first quarter of 2014, a cash contribution totaling $84 million was made to the EFH Corp. retirement plan, of which $64 million was contributed by Oncor and $20 million was contributed by TCEH, which resulted in the EFH Corp. retirement plan being fully funded as calculated under the provisions of ERISA.

•

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.

2521


13.	SUPPLEMENTARY FINANCIAL INFORMATION

Fair Value of Debt

	September 30, 2015				December 31, 2014
	March 31, 2016				December 31, 2015
Debt:	Carrying Amount		Fair Value		Carrying Amount		Fair Value
Borrowings under debtor-in-possession credit facilities (Note 8)	$	5,400	$	5,393	$	5,400	$	5,~~400~~393
Pre-petition notes, loans and other debt reported as liabilities subject to compromise (Note 9) (a)	3,431		3,545		3,876		4,336

~~____________~~EFIH determines fair value in accordance with accounting standards, and at March 31, 2016, EFIH's 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. The fair value estimates of EFIH's pre-petition notes, loans and other debt reported as liabilities subject to compromise have been excluded from the table above. As a result of EFIH's ongoing Chapter 11 Cases, obtaining the fair value estimates of its pre-petition debt subject to compromise is impractical, and the fair values will ultimately be decided through the Chapter 11 Cases.

(a) Carrying amount excludes deferred debt issuance and extension costs.

EFIH determines fair value in accordance with accounting standards, and at September 30, 2015, EFIH's fair value for debt and liabilities subject to compromise represent 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,
	Three Months Ended March 31,
	2015		2014
	2016		2015
Cash payments related to:
Interest on EFIH debt	$	~~464~~58	$	~~316~~347
Reorganization items (a)	80		19
Income taxes	1		—
Noncash investing and financing activities:
Reorganization items (a)	34		46
Debt exchange transactions (b)	—		(85		)
Income tax adjustment related to AMT utilization (c)	3		—

____________

(a) Represents cash payments for legal and other consulting services, including amounts paid under the Merger and Purchase Agreement and the Backstop Agreement, and extension fees for the DIP Facility.

(b) For the nine months ended September 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 8).22

(c) Represents a reduction to EFIH's investment in Oncor Holdings due to an income tax adjustment related to alternative minimum tax (AMT) utilization by Oncor.


Item 2.	MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion and analysis of EFIH's financial condition and results of operations for the three ~~and nine~~ months ended ~~September~~March 3031, ~~2015~~2016 and ~~2014~~2015 should be read in conjunction with its condensed consolidated financial statements and the notes to those statements. ~~Comparisons~~Results ~~of year-over-year results~~ are impacted by the effects of the Bankruptcy Filing and the application of Financial Accounting Standards Board Accounting Standards Codification (ASC) 852, Reorganizations.

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

Business

EFIH, a direct, wholly owned subsidiary of EFH Corp., is a Dallas, Texas-based holding company whose wholly owned subsidiary, Oncor Holdings, holds a majority interest (approximately 80%) in Oncor. Oncor is aengaged in regulated electricity transmission and distribution ~~company~~operations ~~principally engaged~~ in ~~providing~~Texas. Oncor ~~delivery~~provides distribution services to REPs, including subsidiaries of TCEH, ~~that~~which sell electricity to residential, business and other consumers ~~in Texas~~. Revenues from services provided to TCEH represented 2523% and 2625% of Oncor's total reported consolidated revenues for the ~~nine~~three months ended ~~September~~March 3031, ~~2015~~2016 and ~~2014~~2015, respectively. EFIH has no reportable business segments. See Notes 1 and 3 to the Financial Statements for a discussion of the reporting of EFIH's investment in Oncor Holdings as an equity method investment and 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. Consistent with these ring-fencing measures, the assets and liabilities of the Oncor Ring-Fenced Entities have not been, and are not expected to be, substantively consolidated with the assets and liabilities of the Debtors in the Chapter 11 Cases.

Significant Activities and Events and Items Influencing Future Performance

Filing under Chapter 11 of the United States Bankruptcy Code — On ~~April 29, 2014 (~~the Petition Date), EFH Corp. and the substantial majority of its direct and indirect subsidiaries, including EFIH, EFCH and TCEH but excluding the Oncor Ring-Fenced Entities, (the Debtors) filed voluntary petitions for relief (the Bankruptcy Filing) under Chapter 11 of the United States Bankruptcy Code (the Bankruptcy Code) in the United States Bankruptcy Court for the District of Delaware (the Bankruptcy Court). During the pendency of the ~~Bankruptcy Filing (the~~ Chapter 11 Cases), the Debtors have operated and will continue to 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.

For additional discussion of the Bankruptcy Filing and its effects, see Note 2 to the Financial Statements.

~~Proposed~~Extension ~~Plan~~ of ~~Reorganization~~the ~~and~~DIP ~~Confirmation~~Facility ~~Hearing~~ — In ~~September~~January ~~2015~~2016, the EFIH Debtors ~~filed~~paid ~~the~~a ~~Plan~~$14 ofmillion ~~Reorganization~~extension fee and ~~Disclosure~~extended ~~Statement with~~ the ~~Bankruptcy~~maturity ~~Court. In~~date ~~October~~of ~~2015,~~ the ~~Debtors~~EFIH ~~filed~~DIP ~~the~~Facility ~~Plan~~to ~~Supplement.~~the Inearlier ~~August~~of ~~2015,~~(a) ~~the~~December ~~Bankruptcy~~2016 ~~Court~~or ~~issued~~(b) anthe ~~order~~effective ~~establishing~~date ~~November~~of 3,any ~~2015~~reorganization asplan ~~the~~of ~~date~~EFIH. The ~~for~~terms ~~the commencement~~ of the ~~hearing~~facility towere ~~confirm~~otherwise ~~the~~unchanged ~~Plan~~by ~~of Reorganization (~~the ~~Confirmation Hearing Commencement Date)~~extension. ~~For~~See ~~additional discussion see~~ Note 28 to the Financial Statements for discussion of the DIP Facility.

~~Repayment~~Oncor ofMatters ~~EFIH Second Lien Notes — In March 2015,~~ with the ~~approval~~PUCT of— ~~the~~Change ~~Bankruptcy~~in ~~Court,~~Control ~~EFIH~~Review ~~used some of its cash to repay~~ (~~Repayment)~~PUCT ~~$735~~Docket ~~million, including interest at contractual rates, in amounts outstanding under EFIH's pre-petition 11~~No.~~00%~~ ~~Fixed Senior Secured Second Lien Notes due October 1, 2021 (11.00% Notes~~45188) ~~and~~— In ~~11.75% Fixed Senior Secured Second Lien Notes due~~ March 12016, ~~2022~~the ~~(11.75%~~PUCT ~~Notes)~~approved ~~and~~the ~~$15~~acquisition ~~million~~of inReorganized ~~certain~~EFH ~~fees~~contemplated ~~and~~by ~~expenses of~~ the ~~trustee~~Merger ~~for~~and ~~such~~Purchase ~~notes~~Agreement. The ~~Repayment~~order ~~resulted~~approving inthe anacquisition ~~$84~~is ~~million~~subject ~~reduction~~to ina ~~the~~number ~~principal~~of ~~amount~~material ofconditions ~~the~~and 11commitments.~~00%~~ In ~~Notes~~April 2016, aprior ~~$361~~to ~~million reduction in~~ the ~~principal~~termination ~~amount~~ of the ~~11.75%~~Merger ~~Notes~~ and ~~the~~Purchase ~~payment~~Agreement, ofthe ~~$235~~Investor ~~million~~Group ~~and~~requested ~~$55~~a ~~million~~rehearing ofby ~~accrued~~the ~~and~~PUCT ~~unpaid~~with ~~post-petition~~respect ~~and~~to ~~pre-petition~~certain ~~interest,~~conditions ~~respectively,~~and atcommitments ~~contractual~~set ~~rates. The~~forth ~~Repayment~~in ~~required~~ the ~~requisite consent of the lenders under EFIH~~PUCT's ~~DIP~~final ~~Facility~~order. ~~EFIH~~The ~~received~~PUCT ~~such~~will ~~consent~~consider ~~from approximately 97% of~~ the ~~lenders~~Investor ~~under~~Group's ~~the~~request ~~EFIH~~for ~~DIP~~a ~~Facility~~rehearing ~~and~~later ~~paid~~in anMay ~~aggregate consent fee equal to approximately $13 million~~2016. AsEFIH acannot ~~result~~predict of the ~~Repayment,~~outcome as of ~~the~~this ~~date hereof, the principal amount outstanding on the 11~~request.~~00% Notes and 11.75% Notes are $322 million and $1.389 billion, respectively.~~

2723

~~Credit~~2008 ~~Risk~~Rate ~~Exposure~~Review Filing (PUCT Docket No. 35717) — In August 2009, the PUCT issued a final order with respect to ~~EFH~~Oncor's ~~Corp~~June 2008 rate review filing with the PUCT and 204 cities based on a test year ended December 31, 2007, and new rates were implemented in September 2009. Oncor and ~~its~~four ~~Subsidiaries~~other —parties ~~EFH~~appealed ~~Corp~~various portions of the rate review final order to a state district court. In January 2011, the district court signed its judgment reversing the PUCT with respect to two issues: the PUCT's disallowance of certain franchise fees and the PUCT's decision that the Texas Public Utility Regulatory Act (PURA) no longer requires imposition of a rate discount for state colleges and universities. Oncor ~~Holdings~~filed an appeal with the Texas Third Court of Appeals (Austin Court of Appeals) in February 2011 with respect to the issues it appealed to the district court and did not prevail upon, ~~Oncor~~as well as the district court's decision to reverse the PUCT with respect to discounts for state colleges and universities. In August 2014, the Austin Court of Appeals reversed the district court and affirmed the PUCT with respect to the PUCT's disallowance of certain franchise fees and the PUCT's decision that PURA no longer requires imposition of a rate discount for state colleges and universities. The Austin Court of Appeals also reversed the PUCT and district court's rejection of a proposed consolidated tax savings adjustment arising out of EFH Corp.'s ability to offset Oncor's ~~minority~~taxable ~~investor~~income ~~are~~against ~~parties~~losses from other investments and remanded the issue to the PUCT to determine the amount of the consolidated tax savings adjustment. Oncor filed a ~~Federal~~motion on rehearing with the Austin Court of Appeals with respect to certain appeal issues on which Oncor was not successful, including the consolidated tax savings adjustment. In December 2014, the Austin Court of Appeals issued its opinion, clarifying that it was rendering judgment on the rate discount for state colleges and ~~State~~universities ~~Income~~issue ~~Tax~~(affirming ~~Allocation~~that ~~Agreement~~PURA no longer requires imposition of the rate discount) rather than remanding it to the PUCT, and dismissing the motions for rehearing regarding the franchise fee issue and the consolidated tax savings adjustment. ~~Additional~~Oncor ~~income~~filed a petition for review with the Texas Supreme Court in February 2015. In February 2016, the Texas Supreme Court granted the petition for review, with the date and time of oral arguments to be set at a later date. There is no deadline for the court to act. If Oncor's appeals efforts are unsuccessful and the proposed consolidated tax ~~amounts~~savings ~~receivable~~adjustment oris ~~payable~~implemented, ~~may~~Oncor ~~arise~~estimates that on remand the impact on earnings of the consolidated tax savings adjustment's value could range from zero, as originally determined by the PUCT in Docket No. 35717, to a $135 million loss (after-tax) including interest. Interest accrues at the ~~normal~~PUCT ~~course~~approved ~~under~~rate for over-collections, which is 0.18% for 2016. Oncor does not believe that ~~agreement~~any of the other issues ruled upon by the Austin Court of Appeals would result in a material impact to its results of operations or financial condition.

~~Oncor~~Transmission ~~Matters~~Cost ~~with~~Recovery ~~the~~and ~~PUCT~~Rates — ~~Change~~In inorder ~~Control~~to ~~Review~~reflect ~~(PUCT~~increases ~~Docket~~or ~~No.~~decreases ~~45188)~~in —its Inwholesale ~~connection~~transmission ~~with~~costs, ~~the~~including ~~EFH~~fees ~~Acquisition~~it ~~contemplated~~pays byto ~~the~~other ~~Plan~~transmission ofservice ~~Reorganization~~providers, inPUCT ~~September~~rules ~~2015~~allow Oncor ~~and~~to update the ~~Purchasers~~transmission incost ~~the~~recovery ~~proposed~~factor ~~EFH~~(TCRF) ~~Acquisition~~component ~~filed~~of aits ~~joint~~retail ~~report~~delivery ~~and~~rates ~~application~~charged ~~for~~to ~~regulatory~~REPs ~~approvals~~on ~~pursuant~~March to1 ~~the~~and ~~Texas~~September ~~Public~~1 ~~Utility~~each ~~Regulation Act~~year. The ~~See~~table ~~Note~~below 2lists ~~for~~TCRF ~~further~~filings ~~discussion~~impacting ~~regarding~~Oncor's cash flows for the ~~EFH~~three ~~Acquisition~~months ended March 31, 2016 and 2015, as well as filings that will impact Oncor's cash flows for the ~~Plan~~year ofended ~~Reorganization~~December 31, 2016.

2008 Rate Review Filing (PUCT Docket No. 35717) — In August 2009, the PUCT issued a final order with respect to Oncor's June 2008 rate review filing with the PUCT and 204 cities based on a test year ended December 31, 2007, and new rates were implemented in September 2009. Oncor and four other parties appealed various portions of the rate review final order to a state district court. In January 2011, the district court signed its judgment reversing the PUCT with respect to two issues: the PUCT's disallowance of certain franchise fees and the PUCT's decision that the Texas Public Utility Regulatory Act no longer requires imposition of a rate discount for state colleges and universities. Oncor filed an appeal with the Texas Third Court of Appeals (Austin Court of Appeals) in February 2011 with respect to the issues it appealed to the district court and did not prevail upon, as well as the district court's decision to reverse the PUCT with respect to discounts for state colleges and universities. In August 2014, the Austin Court of Appeals reversed the district court and affirmed the PUCT with respect to the PUCT's disallowance of certain franchise fees and the PUCT's decision that PURA no longer requires imposition of a rate discount for state colleges and universities. The Austin Court of Appeals also reversed the PUCT and district court's rejection of a proposed consolidated tax savings adjustment arising out of EFH Corp.'s ability to offset Oncor's taxable income against losses from other investments and remanded the issue to the PUCT to determine the amount of the consolidated tax savings adjustment. Oncor filed a motion on rehearing with the Austin Court of Appeals with respect to certain appeal issues on which Oncor was not successful, including the consolidated tax savings adjustment. In December 2014, the Austin Court of Appeals issued its opinion, clarifying that it was rendering judgment on the rate discount for state colleges and universities issue (affirming that PURA no longer requires imposition of the rate discount) rather than remanding it to the PUCT, and dismissing the motions for rehearing regarding the franchise fee issue and the consolidated tax savings adjustment. Oncor filed a petition for review with the Texas Supreme Court in February 2015. At the request of the court the parties filed responses to the petitions for review and replies in June and July 2015, respectively. The Texas Supreme Court subsequently requested full briefing on the merits, with the briefing period ending on December 9, 2015. There is no deadline for the court to act. If Oncor's appeals efforts are unsuccessful and the proposed consolidated tax savings adjustment is implemented, Oncor estimates that on remand the impact on earnings of the consolidated tax savings adjustment's value could range from zero, as originally determined by the PUCT in Docket No. 35717, to an approximate $130 million loss (after-tax). Oncor does not believe that any of the other issues ruled upon by the Austin Court of Appeals would result in a material impact to its results of operations or financial condition.



Docket No.	Filed	Effective	Semi-Annual Billing Impact Increase (Decrease)
45406	December 2015	March 2016 – August 2016	$	(64	)
44771	May 2015	September 2015 – February 2016	$	47
43858	December 2014	March 2015 – August 2015	$	(27	)
42558	May 2014	September 2014 – February 2015	$	71

Transmission Cost Recovery and Rates (PUCT Docket Nos. 44771 and 43858) — In order to reflect increases or decreases in its wholesale transmission costs, including fees it pays to other transmission service providers, PUCT rules allow Oncor to update the transmission cost recovery factor (TCRF) component of its retail delivery rates charged to REPs on March 1 and September 1 each year. In May 2015, Oncor filed an application to update the TCRF, which became effective September 1, 2015. This application was designed to increase Oncor's billings for the period from September 2015 through February 2016 by $47 million. In December 2014, Oncor filed an application to update the TCRF, which became effective March 1, 2015. This application was designed to reduce Oncor's billings for the period from March 2015 through August 2015 by $27 million.24

Transmission Interim Rate Update Applications (PUCT Docket Nos. 44968 and 44363) — 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. TCOS revenues are collected from load serving entities benefiting from Oncor's transmission system. REPs serving customers in Oncor's service territory are billed through the TCRF mechanism discussed above while other load serving entities are billed directly. In July 2015, 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 2015. Oncor's expected annualized revenues increased by an estimated $21 million with approximately $14 million of this increase recoverable through transmission costs charged to wholesale customers and $7 million recoverable from REPs through the TCRF component of Oncor's delivery rates. In January 2015, 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 2015. Oncor's expected annualized revenues increased by an estimated $35 million with approximately $23 million of this increase recoverable through transmission costs charged to wholesale customers and $12 million recoverable from REPs through the TCRF component of Oncor's delivery rates.

Application for 2016 Energy Efficiency Cost Recovery Factor Surcharge (PUCT Docket No. 44784) — In June 2015, Oncor filed an application with the PUCT to request approval of the energy efficiency cost recovery factor (EECRF) for 2016. 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 2016 EECRF was $67 million as compared to $68 million established for 2015, and would result in an average monthly charge for residential customers of $1.19 as compared to the 2015 average monthly residential charge of $1.23 per month. Average monthly charges are for a residential customer using 1,200 kilowatt-hours. In September 2015, the PUCT issued a final order approving the 2016 EECRF, which is designed to recover $61 million of Oncor's costs for the 2016 program year, a $10 million performance bonus based on Oncor's 2014 results and a $4 million decrease for over-recovery of 2014 costs.

RESULTS OF OPERATIONS

Financial Results — Three Months Ended ~~September~~March 3031, ~~2015~~2016 Compared to Three Months Ended ~~September~~March 3031, ~~2014~~2015

~~Selling,~~Consolidated ~~general,~~net ~~and~~loss ~~administrative~~for ~~expenses~~EFIH ~~totaled~~decreased by $2248 million in ~~both~~2016 ~~2015~~driven ~~and 2014.~~by:

~~Other~~• ~~deductions~~a ~~totaled~~ $86234 million ~~and~~pretax ~~$12~~decrease ~~million~~in ~~for~~interest ~~the~~expense ~~three~~related ~~months~~to ~~ended~~the ~~September~~$235 ~~30,~~million ~~2015~~in ~~and~~post-petition ~~2014,~~interest ~~respectively,~~paid ~~reflecting~~on the ~~recording~~EFIH ofSecond ~~reserves~~Lien ~~against~~Notes ~~EFIH's~~in ~~income~~2015. ~~tax~~See ~~receivable~~Note ~~from~~6 ~~EFH~~to ~~Corp.~~the ~~(see~~Financial ~~Notes~~Statements 4for ~~and~~details 5of tointerest ~~the~~expense ~~Financial~~and ~~Statements).~~related charges

~~Interest~~• ~~expense~~a ~~and~~$70 million pretax decrease in other deductions related ~~charges~~to ~~totaled~~the ~~$58~~reserve ~~million~~recorded inagainst ~~both~~EFIH’s ~~2015~~income ~~and~~tax ~~2014~~receivable ~~(see~~from EFH Corp. in 2015. See Note 64 to the Financial Statements). for details of other deductions

~~Reorganization~~• ~~items~~partially ~~totaled~~offset ~~$16~~by ~~million~~a ~~and~~ $757 million decrease in ~~2015~~income ~~and~~tax ~~2014,~~benefit ~~respectively. The~~related $9to ~~million~~elimination ~~increase~~of inthe ~~activity~~tax ~~included~~benefit $8by ~~million~~a inhigher ~~legal~~valuation ~~advisory~~allowance ~~and~~in ~~representation~~2016. ~~services~~The ~~fees~~effective ~~and~~tax $1rate ~~million~~was in8.5% ~~other~~and ~~professional~~19.0% ~~consulting~~in 2016 and ~~advisory~~2015, ~~services fees~~respectively. See Note 75 to the Financial Statements for ~~additional~~details ~~discussion~~of income taxes.

~~Income~~Equity ~~tax benefit totaled $80 million and $25 million~~ in ~~2015~~earnings ~~and 2014, respectively. Excluding the effect~~ of ~~the~~EFIH's ~~reserve~~Oncor ~~against~~Holdings ~~the~~unconsolidated ~~income~~subsidiary ~~tax~~(net ~~receivable~~of ~~from EFH Corp. that was recorded without income~~ tax) ~~benefit~~decreased ~~(see~~$13 ~~Note~~million 4 to ~~the~~$62 ~~Financial~~million ~~Statements) and the decrease~~ in ~~the valuation allowance against deferred tax assets in 2015, the effective tax rate was 30~~2016.~~3% and 37.3% in 2015 and 2014, respectively.~~ The decrease in ~~the~~equity ~~effective~~earnings ~~income~~of ~~tax~~Oncor ~~rate~~primarily isreflected ~~driven~~lower ~~primarily~~distribution bybase ~~higher~~revenues ~~nondeductible~~driven ~~legal~~by ~~and~~milder ~~other~~weather ~~professional~~conditions, ~~services~~partially ~~costs~~offset ~~related~~by tolower ~~the~~operations ~~Chapter~~and 11maintenance ~~Cases~~expenses inand ~~2015~~lower ~~(see~~income taxes. See Note 53 to the Financial Statements).

Equity in earnings of unconsolidated subsidiary (net of tax) increased $4 million to $127 million in 2015. The increase in equity earnings of Oncor primarily reflected increased revenue from higher distribution base revenues driven by favorable weather and growth in points of delivery partially offset by higher operating expenses. See Note 3 to the Financial Statements.25

Net income decreased $24 million to $45 million in 2015. The change reflects $48 million ($74 million pre-tax) in higher reserves recorded for EFIH's income tax receivable from EFH Corp. in 2015 as discussed above and $5 million ($9 million pre-tax) in higher reorganization costs.

Financial Results — Nine Months Ended September 30, 2015 Compared to Nine Months Ended September 30, 2014

Selling, general, and administrative expenses decreased $16 million to $5 million in 2015. The 2014 amount includes $15 million for legal and other consulting services associated with EFIH's debt restructuring activities, of which $4 million was allocated by EFH Corp. The 2014 amount also includes $3 million in allocated management fees owed to the Sponsor Group by EFH Corp. and $3 million in allocated other shared services costs. The decrease is the result of legal and other professional costs associated with the Chapter 11 Cases since the Petition Date now being reported in reorganization items in EFIH's condensed statements of consolidated income (loss) (see Note 7 to the Financial Statements). Payments of Sponsor Group management fees and associated cost allocations were also suspended in 2014. See Note 12 to the Financial Statements for discussion of allocations from EFH Corp.

Other deductions totaled $221 million and $211 million in 2015 and 2014, respectively, reflecting the recording of reserves against EFIH's income tax receivable from EFH Corp. (see Notes 4 and 5 to the Financial Statements).

Interest expense and related charges increased $28 million to $409 million in 2015. The increase reflected $108 million in interest expense on debtor-in-possession financing including interest paid in conjunction with the repayment of the EFIH Second Lien Notes, partially offset by $97 million in lower interest expense on pre-petition debt due to the discontinuance of interest due to the Chapter 11 Cases (see Note 6 to the Financial Statements).

Reorganization items totaled $82 million and $235 million in 2015 and 2014, respectively. Activity in 2015 included $46 million in legal advisory and representation services fees and $28 million in fees associated with the repayment of EFIH Second Lien Notes in March 2015. The 2014 amount included a $108 million net loss on exchange and settlement of the EFIH First Lien Notes and $93 million in fees associated with completion of the EFIH DIP Facility (see Note 8 to Financial Statements). See Note 7 to the Financial Statements for additional discussion.

Income tax benefit totaled $205 million and $215 million in 2015 and 2014, respectively. Excluding the effect of the reserve against the income tax receivable from EFH Corp. that was recorded without income tax benefit (see Note 4 to the Financial Statements) and the decrease in the valuation allowance against deferred tax assets in 2015, the effective tax rate was 31.5% and 33.8% in 2015 and 2014, respectively. The decrease in the effective income tax rate is driven primarily by higher nondeductible legal and other professional services costs related to the Chapter 11 Cases in 2015 (see Note 5 to the Financial Statements).

Equity in earnings of EFIH's Oncor Holdings unconsolidated subsidiary (net of tax) increased $2 million to $278 million in 2015. The increase in equity earnings of Oncor primarily reflected increased revenue from higher distribution base revenues driven by favorable weather and growth in points of delivery, higher transmission base revenues, lower interest expense and lower income taxes partially offset by higher operating and maintenance expense, and higher depreciation and amortization. See Note 3 to the Financial Statements.

Net loss decreased $123 million to $234 million in 2015. The change reflects $99 million ($153 million pre-tax) for lower reorganization costs offset by $18 million ($28 million pre-tax) in higher interest expense and related changes in 2015 as discussed above.

FINANCIAL CONDITION

Cash Flows — ~~Nine~~Three Months Ended ~~September~~March 3031, ~~2015~~2016 Compared to ~~Nine~~Three Months Ended ~~September~~March 3031, ~~2014~~2015 — Cash used in operating activities totaled $~~314~~40 million and $~~237~~292 million in ~~2015~~2016 and ~~2014~~2015, respectively. The ~~increase~~decrease in cash used of $77252 million was primarily driven by $289 million in lower cash interest payments as a result of the ~~EFIH Second Lien~~ repayment ~~(see~~on ~~Notes 9 and 13 to~~ the ~~Financial~~EFIH ~~Statements)~~Second ~~and~~Lien ~~higher~~Notes ~~cash~~in ~~used to pay for reorganization costs~~2015, partially offset by ~~higher~~$34 million in lower distributions received from Oncor.

Cash used in financing activities totaled $~~473~~14 million inand ~~2015~~$473 ~~compared~~million toin ~~cash~~2016 ~~provided~~and by2015, ~~financing activities of $1~~respectively.~~159 billion in 2014.~~ Activity in ~~2015~~2016 reflected ~~the repayment of~~ $~~445~~14 million ~~principal amount and $28 million~~ in fees related to the ~~repayment~~extension of ~~EFIH Second Lien Notes (see Note 9 to~~ the ~~Financial~~EFIH ~~Statements)~~DIP Facility. ~~Cash~~Activity ~~provided by financing activities~~ in ~~2014~~2015 ~~included~~reflected ~~$3.564 billion in borrowings under~~ the ~~EFIH~~repayment ~~DIP~~of ~~Facility, partially offset by~~ $~~2.312~~445 ~~billion~~million inprincipal ~~repayments~~amount of ~~the~~ EFIH ~~First~~Second Lien Notes and $9328 million in ~~payments for~~ fees ~~associated~~related ~~with~~to the ~~completion~~repayment of(see ~~the~~Note ~~EFIH~~9 ~~DIP~~to ~~Facility~~the Financial Statements).

There was no cash used in or provided by investing activities in ~~2015~~2016 and ~~2014~~2015.

Available Liquidity — InAs ~~March 2015, with the approval~~ of ~~the Bankruptcy Court~~March 31, ~~EFIH used some of its cash to repay (Repayment) $735 million~~2016, ~~including interest at contractual rates, in amounts outstanding under~~ EFIH's ~~pre-petition~~had ~~11.00% Second Lien Notes due 2021 (11.00% Notes) and 11.75% Second Lien Notes due 2022 (11.75% Notes) and~~ $15300 million in ~~certain~~liquidity ~~fees~~consisting ~~and~~entirely ~~expenses~~ of ~~the~~cash trustee for such notes (see Note 9). The Repayment required the requisite consent of the lenders under the EFIH DIP Facility. EFIH received such consent from approximately 97% of the lenders under the EFIH DIP Facility and ~~paid~~cash ~~an aggregate consent fee equal to approximately $13 million~~equivalents. ~~As a result of the Repayment, as of the date hereof, the principal amount outstanding on the 11.00% Notes and 11.75% are $322 million and $1.389 billion, respectively.~~

EFIH believes that the EFIH DIP facility, plus cash distributions received from Oncor Holdings, will be sufficient to fund its anticipated cash requirements through at least the maturity date of the EFIH DIP facility. As a result of ~~September 30,~~the ~~2015~~Chapter 11 Cases, EFIH ~~had~~does ~~$370~~not ~~million~~expect into ~~liquidity~~receive ~~consisting~~further ~~entirely~~interest ofpayments ~~cash~~on ~~and~~affiliate ~~cash~~debt ~~equivalents~~securities it holds.

~~Liquidity~~Debt ~~After~~Capacity ~~the Bankruptcy Filing~~ — ~~Subject~~The toEFIH ~~certain~~DIP ~~exceptions~~Facility ~~under the Bankruptcy Code~~permits, ~~the~~subject ~~Bankruptcy~~to ~~Filing~~certain ~~automatically enjoined~~terms, orconditions ~~stayed, the continuation of most pending judicial or administrative proceedings~~ and ~~the~~limitations, ~~filing of other actions against the~~ EFIH ~~Debtors or their property~~ to ~~recover~~incur ~~on,~~incremental ~~collect~~junior orlien ~~secure~~subordinated adebt ~~claim~~in ~~arising~~an ~~prior~~aggregate toamount ~~the~~not ~~Petition Date (including with respect~~ to ~~EFIH's~~exceed ~~pre-petition~~$3 ~~debt instruments)~~billion.

~~The~~Distributions ~~Bankruptcy~~of ~~Court~~Earnings ~~approved~~from ~~final~~Oncor ~~orders~~Holdings inand ~~June~~Related ~~2014~~Considerations ~~authorizing~~— ~~the~~Oncor Holdings' distributions of earnings to EFIH ~~DIP~~totaled ~~Facility~~$40 ~~(see~~million ~~Note~~and 8$74 tomillion for the ~~Financial~~three ~~Statements)~~months ended March 31, 2016 and 2015, respectively. ~~The~~In May 2016, EFIH ~~First~~is ~~Lien~~expected ~~DIP~~to ~~Facility~~receive ~~provides~~a ~~for~~distribution up to approximately $546 million from Oncor Holdings with the exact amount to be determined by Oncor Holdings' management.4 See ~~billion~~Note in3 ~~senior~~to ~~secured,~~the ~~super-priority~~Financial ~~financing~~Statements for discussion of limitations on amounts Oncor can distribute to its members.

~~EFIH~~EFH ~~believes that the EFIH DIP facility~~Corp., ~~plus cash distributions received from~~ Oncor Holdings, ~~will~~Oncor beand ~~sufficient~~Oncor's tominority ~~fund~~investors ~~its~~are ~~anticipated~~parties ~~cash~~to ~~requirements~~a ~~through~~Federal atand ~~least~~State ~~the~~Income ~~June~~Tax ~~2016~~Allocation ~~maturity date of the EFIH DIP facility~~Agreement. AsAdditional aincome ~~result~~tax ofamounts ~~the~~receivable ~~Chapter~~or 11payable ~~Cases,~~may ~~EFIH~~arise ~~does~~in ~~not~~the ~~expect~~normal tocourse ~~receive~~under ~~further~~that ~~interest payments on affiliate debt securities it holds~~agreement.

~~The~~Income ~~EFIH~~Tax ~~DIP~~Matters ~~Facility~~— ~~permits,~~EFH ~~subject~~Corp. toand certain ~~terms~~of its subsidiaries (including EFCH, ~~conditions~~EFIH and ~~limitations~~TCEH, ~~EFIH~~but not including Oncor Holdings and Oncor) are parties to ~~incur~~a ~~incremental~~Federal ~~junior~~and ~~lien~~State ~~subordinated~~Income ~~debt~~Tax Allocation Agreement, which provides, among other things, that any corporate member or disregarded entity in the EFH Corp. group is required to make payments to EFH Corp. in an ~~aggregate~~amount calculated to approximate the amount ~~not~~of tax liability such entity would have owed if it filed a separate corporate tax return. The Plan of Reorganization provides that the Debtors will reject this agreement at the effective time of the Plan of Reorganization. Under the terms of the Settlement Agreement, no further cash payments among the Debtors will be made in respect of federal income taxes. However, the EFH Corp. group continues to ~~exceed~~allocate $3federal ~~billion~~income taxes among the entities that are parties to the Federal and State Income Tax Allocation Agreement. The Settlement Agreement did not alter the allocation and payment for state income taxes, which will continue to be settled.

~~Distributions~~EFH ofCorp., ~~Earnings from~~ Oncor Holdings, — Oncor ~~Holdings~~and Oncor's ~~distributions~~third-party ofminority ~~earnings~~investors toare ~~EFIH~~parties ~~totaled~~to ~~$206~~a ~~million~~separate Federal and ~~$128~~State ~~million~~Income ~~for~~Tax Allocation Agreement, which governs the ~~nine~~computation ~~months~~of ~~ended~~federal ~~September 30,~~income ~~2015~~tax liability among such parties, and ~~2014~~similarly provides, ~~respectively. In~~among ~~October~~other ~~2015~~things, that each of Oncor Holdings' ~~board~~and ofOncor ~~directors~~will ~~declared~~pay aEFH ~~cash distribution~~Corp. In ~~November~~its ~~2015,~~share ~~EFIH~~of isan ~~expected~~amount calculated to ~~receive~~approximate athe ~~distribution~~amount ~~from~~of ~~Oncor~~tax ~~Holdings~~liability ~~for~~such anentity ~~amount~~would uphave toowed ~~$109~~if ~~million. See~~it ~~Note~~filed 3a toseparate ~~the~~corporate ~~Financial~~tax ~~Statements~~return. The ~~for~~Settlement ~~discussion~~Agreement ofhad ~~limitations~~no impact on ~~amounts~~the ~~Oncor~~tax ~~can~~sharing ~~distribute~~agreement toamong ~~its~~EFH ~~members~~Corp., Oncor Holdings and Oncor.

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

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

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

The ~~EFIH~~ DIP Facility includes a minimum liquidity covenant pursuant to which EFIH cannot allow unrestricted cash (as defined in the ~~EFIH~~ DIP Facility) to be less than $150 million. EFIH is in compliance with this covenant. In the event that EFIH is unable to refinance or extend the EFIH DIP Facility prior to its maturity in December 2016, based on the current and projected liquidity requirements of EFIH, EFIH's liquidity may fall beneath the amount required by the minimum liquidity covenant in the EFIH DIP Facility, and if this were to occur, it would be in default of the EFIH DIP Facility unless it obtains a waiver from the required lenders under such facility.

~~Material~~See ~~Cross~~Note ~~Default/Acceleration~~8 ~~Provisions~~to —the ~~Certain~~Financial ofStatements ~~EFIH's~~for ~~financing~~discussion ~~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~~related ~~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~~ the ~~EFIH~~DIP ~~Debtors' 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~~Facility.

Guarantees — See Note 10 to the Financial Statements for discussion of guarantees.

OFF–BALANCE SHEET ARRANGEMENTS

See Notes 3 and 9 to the Financial Statements regarding VIEs and guarantees, respectively.

COMMITMENTS AND CONTINGENCIES

See Note 10 to the Financial Statements for discussion of commitments and contingencies.

CHANGES IN ACCOUNTING STANDARDS

See Note 1 to the Financial Statements for discussion of changes in accounting standards.

3327


Item 3.	QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Market risk is the risk that in the ordinary course of business that EFIH may experience a loss in value as a result of changes in market conditions that affect economic factors such as interest rates. All of EFIH's pre-petition debt was subject to fixed interest rates. The principal amounts outstanding under the EFIH DIP Facility bear interest based on applicable LIBOR rates, subject to a 1% floor, plus 3.25%. EFIH expects LIBOR rates to remain below the 1% interest rate floor specified in its DIP Facility during the pendency of the Chapter 11 Cases.

Except as discussed 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 EFIH's ~~2014~~2015 Form 10-K and is therefore not presented herein.

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~~March 3031, ~~2015~~2016, Oncor's exposure to credit risk associated with accounts receivable from ~~non-affiliate~~nonaffiliate customers totaled $~~447~~385 million. The ~~non-affiliated~~nonaffiliated customer receivable amount is before the allowance for uncollectible accounts, which totaled $3 million, and includes trade accounts receivable from REPs totaling $~~351~~258 million, which are almost entirely ~~below~~noninvestment ~~investment~~ grade. At ~~September~~March 3031, ~~2015~~2016, REP subsidiaries of one ~~non-affiliated~~nonaffiliated entity collectively represented approximately 1612% of the ~~non-affiliated~~nonaffiliated trade receivable amount. No other ~~non-affiliated~~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 Results of Operations – Significant 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 12 to the Financial Statements for discussion of transactions between Oncor and TCEH and EFH Corp.

3428

FORWARD-LOOKING STATEMENTS

This report and other presentations made by EFIH 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 related to EFIH's bankruptcy, financial or operational projections, capital allocation, future capital expenditures, business strategy, competitive strengths, goals, future acquisitions or dispositions, development or operation of ~~facilities~~power generation assets, market and industry developments and the growth of 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 EFIH believes that in making any such forward-looking statement 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 ~~herein and~~ in EFIH's ~~2014~~2015 Form 10-K 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 EFIH's actual results to differ materially from those projected in such forward-looking statements:

• The Debtors' (including the EFIH Debtors) ability to obtain the necessary votes from the required creditors and stakeholders and the approval from the Bankruptcy Court for the Plan of Reorganization;

• The Debtors' (including the EFIH debtors) ability to ~~satisfy~~obtain ~~the~~Bankruptcy ~~terms~~Court ~~and~~approval ~~conditions~~with ~~set~~respect ~~forth~~to its motions in, ~~and~~the toChapter ~~receive~~11 ~~the~~Cases, ~~required~~including such approvals ~~required~~not ~~under,~~being ~~the~~overturned ~~Merger~~on ~~and~~appeal ~~Purchase~~or ~~Agreement~~being ~~and~~stayed ~~the~~for ~~Plan~~any ~~Support~~extended ~~Agreement~~period of time;

• the ~~breach~~filing byof ~~one~~an oralternative ~~more~~plan of ~~the~~reorganization ~~Debtors~~by ~~counterparties~~one ~~under~~or ~~the~~more ~~Merger~~creditors ~~and~~of ~~Purchase Agreement and/or~~ the ~~Plan Support Agreement~~Debtors;

• ~~EFIH's~~the ~~ability~~breach toby ~~obtain~~one ~~Bankruptcy~~or ~~Court~~more ~~approval~~of ~~with respect to the~~ EFIH ~~Debtors~~'s ~~motions~~counterparties inunder the ~~Chapter~~Plan 11Support ~~Cases, including such approvals not being overturned on appeal or being stayed for any extended period of time~~Agreement;

• the ~~terms~~effectiveness ~~and~~of ~~conditions~~the ofoverall ~~any~~restructuring activities pursuant to the Chapter 11 ~~plan~~Cases, including the Plan of ~~reorganization~~Reorganization, ~~that~~and isany ~~ultimately~~additional ~~approved~~strategies byEFIH ~~the~~employs ~~Bankruptcy~~to ~~Court~~address its liquidity and capital resources;

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


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


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

• the duration and related costs of the Chapter 11 Cases;

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

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


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

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

• prevailing governmental policies and regulatory actions, including those of the ~~outcome~~Texas Legislature, the Governor of ~~current~~Texas, orthe ~~potential~~US ~~litigation~~Congress, ~~regarding~~the ~~intercompany~~FERC, ~~claims~~the North American Electric Reliability Corporation, the Texas Reliability Entity, Inc., the PUCT, the EPA and~~/or~~ ~~derivative~~the ~~claims;~~TCEQ, with respect to, among other things:

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


◦	allowed rates of return;


◦	permitted capital structure;


◦	industry, market and rate structure;


◦	recovery of investments;


◦	acquisition and disposal of assets and facilities;


◦	development, construction and operation of facilities;


◦	changes in tax laws and policies, and


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

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


•	general industry trends;


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

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


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

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


•	changes in interest rates or rates of inflation;


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


•	commercial bank market and capital market conditions and the potential impact of disruptions in US and international credit markets;


•	the amount and timing of dividends received from Oncor;


•	access to capital, the cost of such capital, and the results of financing and refinancing efforts, including availability of funds in capital markets;


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


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

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


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

• ~~changes~~hazards incustomary ~~assumptions~~to ~~used~~the industry and the possibility that EFIH may not have adequate insurance to ~~estimate~~cover ~~future~~losses ~~executive~~resulting ~~compensation~~from ~~payments~~such hazards; and

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

• significant changes in critical accounting policies, and


•	actions by credit rating agencies.

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

3630


Item 4.	CONTROLS AND PROCEDURES

~~Evaluation~~An evaluation was performed under the supervision and with the participation of ~~Disclosure~~EFIH's ~~Controls~~management, including the principal executive officer and ~~Procedures~~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 on Form 10-Q. Based on the evaluation performed, its 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 its internal control over financial reporting that has materially affected, or is reasonably likely to materially affect, its internal control over financial reporting.

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 on Form 10-Q. Based on the evaluation performed as of September 30, 2015, its principal executive officer and principal financial officer concluded that, due to the material weakness in its internal control over financial reporting related to accounting for deferred income taxes, as previously disclosed in EFIH's 2014 Form 10-K, its disclosure controls and procedures were not effective as of September 30, 2015. In light of the material weakness in internal control over financial reporting, management completed substantive procedures, including validating the completeness and accuracy of the underlying data used for accounting for deferred income taxes, prior to filing this quarterly report on Form 10-Q.31

These additional procedures have allowed EFIH to conclude that, notwithstanding the material weakness in internal control over financial reporting related to accounting for deferred income taxes, the consolidated financial statements included in this report fairly present, in all material respects, EFIH's financial position, results of operations and cash flows for the periods presented in conformity with GAAP. Additionally, no restatement of EFIH's previously issued consolidated financial statements was required.

Previously Reported Material Weakness

As previously disclosed in EFIH's 2014 Form 10-K, its management concluded that EFIH's internal control over financial reporting and its disclosure controls and procedures were ineffective as of December 31, 2014 due to a material weakness in accounting for deferred income taxes. Pursuant to SEC rules and regulations, a material weakness is "a deficiency, or a combination of deficiencies, in internal control over financial reporting such that there is a reasonable possibility that a material misstatement of the registrant's annual or interim financial statements will not be prevented or detected on a timely basis".

In response to the material weakness described above, during the nine months ended September 30, 2015, EFIH began implementing a plan of remediation to strengthen its overall internal control over accounting for deferred income taxes. The remediation plan includes the following steps:

• enhancing the formality and rigor of review and documentation related to EFIH's deferred income tax reconciliation procedures,

• implementing additional oversight and monitoring controls over EFIH's deferred income tax review processes that are designed to operate at a level of precision to detect an error resulting from a related control failure before it results in a material misstatement of its financial statements, and

• hiring key personnel in EFH Corp.'s tax department and further evaluating staffing levels to ensure the execution of timely and rigorous control procedures.

Management is currently implementing these steps. Specifically, during the nine months ended September 30, 2015, EFH Corp. hired permanent and temporary resources to supplement its current staffing levels in its tax department and implemented additional oversight and monitoring controls. Additionally, during the three months ended September 30, 2015, EFH Corp. implemented and tested new and refined interim controls (controls executed on a quarterly basis). Its testing of these interim controls has indicated that they operate effectively. During the remainder of the year, EFH Corp. will be implementing and testing new annual controls related to accounting for deferred income taxes.

EFIH is committed to maintaining a strong internal control environment and believe that these remediation efforts will represent improvements in its controls.

Changes in Internal Control over Financial Reporting

With the oversight of senior management and EFIH's audit committee, EFIH has continued to remediate the underlying causes of the material weakness. Other than with respect to the ongoing plan for remediation of the material weakness, there has been no change to its internal control over financial reporting during its most recent fiscal quarter 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 10 to the Financial Statements regarding legal proceedings.


Item 1A.	RISK FACTORS

There have been no material changes from the risk factors discussed in Part I, Item 1A. Risk Factors in EFIH's ~~2014~~2015 Form 10-K ~~and Part II~~, ~~Item 1A. Risk Factors in its Form 10-Q for the period ended March 31, 2015,~~ except for the risk ~~factor~~factors ~~discussed~~described below and the information disclosed elsewhere in this quarterly report on Form 10-Q that provides factual updates to risk factors contained in ~~EFIH's~~its ~~2014~~2015 Form 10-K ~~and EFIH's Form 10-Q for the period ended March 31, 2015~~. The risks described in such reports are not the only risks facing the company.

~~The~~EFIH ~~consummation~~may ofnot ~~the~~be ~~EFH~~able ~~Acquisition~~to ~~contemplated~~obtain by the ~~Plan~~requisite acceptances of ~~Reorganization~~constituencies isin ~~subject to various conditions precedent. If~~ the ~~Merger~~Chapter ~~and~~11 ~~Purchase~~Cases ~~Agreement is terminated~~for, ~~the~~or ~~Purchasers~~confirmation ~~and~~by the ~~Investor~~Bankruptcy ~~Group~~Court ~~will have no liability to the Debtors thereunder except for certain expense reimbursement obligations. As a result~~of, ~~even if~~ the Plan of Reorganization, isand ~~confirmed~~it bymay ~~the~~not ~~Bankruptcy~~be ~~Court,~~able ~~there~~to isconsummate ~~no certainty that~~ the ~~EFH~~Plan ~~Acquisition~~of ~~will be completed~~Reorganization.

The ~~Merger~~Debtors ~~and~~filed ~~Purchase~~the ~~Agreement~~Plan ~~includes various conditions precedent to consummation~~ of ~~the~~Reorganization ~~transactions~~in ~~contemplated~~May ~~thereby~~2016. The ~~Purchasers'~~Debtors ~~conditions~~may ~~precedent~~not ~~include,~~receive ~~among~~the ~~other~~requisite ~~things,~~acceptances aof ~~condition~~constituencies ~~that~~in ~~certain approvals and rulings be obtained, including from, among others,~~ the ~~PUCT~~Chapter ~~and~~11 ~~the~~Cases ~~IRS,~~for ~~that are necessary to consummate~~ the ~~acquisition~~Plan ~~and~~of ~~convert a successor to Reorganized EFH into a REIT~~Reorganization. InEven ~~addition,~~if the ~~Merger~~requisite ~~and~~acceptances ~~Purchase~~of ~~Agreement may be terminated upon certain events, including, among other things, by either party, if certain termination events occur under~~ the Plan ~~Support~~of ~~Agreement,~~Reorganization ~~including~~are ifreceived, the ~~EFH~~Bankruptcy ~~Acquisition~~Court ismay not ~~completed~~confirm bythe ~~April~~Plan ~~30,~~of ~~2016, subject to extension to June 30, 2016 or August 31, 2016 under certain conditions~~Reorganization. IfIn ~~the Merger and Purchase Agreement is terminated for any reason (including~~addition, ~~among~~completion ~~other~~of ~~things, due to failure to complete~~ the ~~EFH~~Plan ~~Acquisition~~of ~~within~~Reorganization ~~the~~is ~~timeframes~~subject ~~described therein), the Purchasers and the Investor Group will effectively have no liability~~ to the ~~Debtors~~satisfaction ~~thereunder. EFH~~of ~~Corp.~~certain ~~and~~conditions EFIH have effectively waived their respective rights under the Merger and Purchase Agreement to seek any legal or equitable remedies (including money damages and specific performance) against the Purchasers or the Investor Groupprecedent. AsThere acan ~~result,~~be ~~even~~no ifassurance ~~the~~that ~~Plan~~such ofacceptance ~~Reorganization is confirmed by the Bankruptcy Court~~ and ~~the~~confirmation ~~applicable~~will ~~regulatory~~be ~~approvals are~~ obtained, ~~there~~or ~~is no certainty~~ that ~~the~~such ~~EFH~~conditions ~~Acquisition~~ will be ~~completed. If it is not completed for any reason~~satisfied, ~~the Debtors will have no recourse against the Purchasers~~ and ~~the Investor Group~~therefore, ~~except~~that ~~for certain expense reimbursement obligations. If this were to occur,~~ the ~~Debtors~~Plan ~~would need to formulate a new plan~~ of ~~reorganization~~Reorganization ~~and~~will ifbe ~~the exclusivity period has expired, then other stakeholders could file their own plan of reorganization~~completed.

Furthermore, even if the requisite acceptances of constituencies in the Chapter 11 Cases for the Plan of Reorganization are received and the Plan of Reorganization is confirmed by the Bankruptcy Court, there can be no assurance as to the timing or as to whether the effective date of the reorganization contemplated therein will occur. If the Plan of Reorganization does not receive the requisite acceptances, or is not confirmed, or if it does receive the requisite acceptances and is confirmed but the effective date of the reorganization contemplated therein does not occur, it may become necessary to amend the Plan of Reorganization to provide for alternative treatment of claims and interests which may result in holders of claims and interests receiving significantly less, or no value, for their claims and interests in the Chapter 11 Cases. If any modifications to the Plan of Reorganization are material, it may be necessary to re-solicit votes from holders of claims and interests adversely affected by the modifications with respect to such Plan of Reorganization.

EFIH no longer has the exclusive right to propose a plan of reorganization in the Chapter 11 Cases.

The Debtors no longer have the exclusive right to propose a plan of reorganization in the Chapter 11 Cases. Accordingly, any creditor of the Debtors can propose a plan of reorganization with respect to any one or more of the Debtors. Any new plan of reorganization would require the approval of the Bankruptcy Court and the acceptance of the required creditors, which could subject us to more lengthy Chapter 11 Cases. Any resulting delay could require EFIH to extend or refinance its DIP Facility and could adversely impact its liquidity and results of operations. In addition, EFIH may not believe that an alternative plan of reorganization proposed by a creditor is in its stakeholders' best interests or fully values the benefits that can be achieved by the Plan of Reorganization. However, EFIH would have limited ability to prevent an alternative plan of reorganization from being approved by the Bankruptcy Court. There can be no assurance that recoveries under any such alternative plan of reorganization would be as favorable to creditors as the Plan of Reorganization. In addition, the proposal of competing plans of reorganization may entail significant litigation and significantly increase the expenses of administration of the Chapter 11 Cases, which could deplete creditor recoveries under any plan of reorganization and adversely impact EFIH's liquidity and results of operations.

It is possible that the TCEH Debtors and the EFH Debtors may emerge from the Chapter 11 Cases at different times.

The Plan of Reorganization provides that the confirmation and effective date of the Plan of Reorganization with respect to the TCEH Debtors may occur separate from, and independent of, the confirmation and effective date of the Plan of Reorganization with respect to the EFH Debtors. As a result, it is possible that the TCEH Debtors and the EFH Debtors may emerge from the Chapter 11 Cases at different times, and the difference in the timing of emergence between the two groups of Debtors may be significant. In such case, any Debtors that remain in bankruptcy may incur increased expenses associated with the Chapter 11 Cases as a result of the loss of synergies from services currently provided to the TCEH Debtors and EFH Debtors, and such expenses may be material. For example, the Debtors that remain in bankruptcy will continue to incur fees and expenses for legal representation, financial advisory and other professional services, which would no longer be shared among all the Debtors. Additionally, if the TCEH Debtors emerge from the Chapter 11 Cases prior to the EFH Debtors, the EFH Debtors will need to replace certain administrative and other services that are currently provided by employees and assets that would remain with the TCEH Debtors, whether through a services agreement with the TCEH Debtors or a third party. Further, a Private Letter Ruling from the IRS with respect to an earlier emergence of the TCEH Debtors may be based upon certain assumptions with respect to the structure of the emergence of the EFH Debtors. Additional submissions to the IRS and/or a supplemental Private Letter Ruling from the IRS may be required once the structure of the emergence of the EFH Debtors is determined

If the effective date of the Plan of Reorganization with respect to the TCEH Debtors occurs prior to the effective date of the Plan of Reorganization with respect to the EFH Debtors pursuant to the Reorganized TCEH Spin-Off, the Reorganized TCEH Spin-Off may not be grandfathered under the PATH Act.

Because the Private Letter Ruling was filed with the IRS prior to December 7, 2015 and has not been subsequently withdrawn (and because no ruling had been issued or denied in its entirety prior to such date), the Reorganized TCEH Spin-Off is grandfathered from a provision in the Protecting Americans from Tax Hikes Act of 2015 (the PATH Act) that prevents companies, such as EFH Corp., involved in tax-free spin-offs from electing REIT status.

The Plan of Reorganization contemplates that the effective date of the Plan of Reorganization with respect to the TCEH Debtors may occur prior to the effective date of the Plan of Reorganization with respect to the EFH Debtors, and has no closing conditions relating to the conversion of Reorganized EFH or one of its subsidiaries into a real estate investment trust (REIT) under the Internal Revenue Code (a REIT Reorganization) with respect to the EFH Debtors. It may be possible that, by consummating the Plan of Reorganization with respect to the TCEH Debtors prior to the Plan of Reorganization with respect to the EFH Debtors, and by getting a Private Letter Ruling that does not contain REIT rulings (though it will continue to contemplate that a REIT Reorganization may occur in the future), there may be a risk that the grandfathering provision of the PATH Act will no longer apply to EFH Corp. EFIH believes the stronger view is that EFH Corp. would continue to be grandfathered, but no guarantees can be made in this regard.


Item 4.	MINE SAFETY DISCLOSURES

Not applicable.

~~Item 5. OTHER INFORMATION~~33

None.


Item 6.	EXHIBITS


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

Exhibits	Previously Filed With File Number*	AsExhibit
(2)
2(a)	1-12833Form 8-K/A(filed May 3, 2016)	99.1	—	The Debtors' Joint Plan of Reorganization Pursuant to Chapter 11 of the Bankruptcy Code filed with the Bankruptcy Court on May 1, 2016
(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
10(a)	1-12833Form 8-K/A (filed September 17, 2015)	10(a)	—	Amended and Restated Plan Support Agreement dated September 11, 2015 among the Debtors and the other parties thereto.
10(b)	1-12833Form 8-K/A (filed September 17, 2015)	10(b)	—	Amended and Restated Settlement Agreement dated September 11, 2015 among the Debtors and the other parties thereto.
10(c)	1-12833Form 8-K (filed August 10, 2015)	10(c)	—	Purchase Agreement and Plan of Merger by and among Ovation Acquisition I, L.L.C., Ovation Acquisition II, L.L.C., Energy Future Intermediate Holding Company L.L.C. and Energy Future Holdings Corp. dated as of August 9, 2015.
10(d)	1-12833Form 8-K (filed August 10, 2015)	10(d)	—	Backstop Agreement, dated as of August 9, 2015, by and among Ovation Acquisition I, L.L.C., Energy Future Holdings Corp., Energy Future Intermediate Holding Company L.L.C. and the Investors party thereto.
(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~~Loss - Twelve Months Ended ~~September~~March 3031, ~~2015~~2016.
99(b)	1-12833Form 8-K/A (filed August 10, 2015)	99(a)	—	Debtors' Third Amended Joint Plan of Reorganization filed on August 9, 2015 pursuant to Chapter 11 of the United States Bankruptcy Code with the United States Bankruptcy Court for the District of Delaware in Case No. 14-10979 (Jointly Administered)
	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*	AsExhibit
	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

4034

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/ TERRY L. NUTT
	Name:	Terry L. Nutt
	Title:	Senior Vice President and Controller (Principal Accounting Officer)

Date: ~~November~~May 39, ~~2015~~2016

4135

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