S-3/A

As filed with the Securities and Exchange Commission on October 20, 2009

REGISTRATION NO. 333-161911 and 333-161911-01

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

____________________________________

AMENDMENT NO. 1 TO FORM S-3
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933

____________________________________

ENTERGY TEXAS, INC.
(Exact name of Registrant and Sponsor as specified in its charter) TEXAS
(State or other jurisdiction of incorporation or organization) 61-1435798
(I.R.S. Employer Identification No.) 350 PINE STREET
BEAUMONT, TEXAS 77701
(409) 838-6631 ENTERGY TEXAS RESTORATION FUNDING, LLC
(Exact name of Registrant as specified in its charter) DELAWARE
(State or other jurisdiction of incorporation or organization) 27-0727900
(I.R.S. Employer Identification No.) CAPITAL CENTER
919 CONGRESS AVENUE, SUITE 840-C
AUSTIN, TEXAS 78701
(512) 487-3982

(Address, including zip code, and telephone number, including
area code, of Registrant's principal executive offices)

Theodore H. Bunting, Jr.
Senior Vice President and
Chief Accounting Officer
Entergy Texas, Inc.
639 Loyola Avenue
New Orleans, Louisiana 70113
(504) 576-2517 Steven C. McNeal
Vice President and Treasurer
Entergy Texas, Inc.
639 Loyola Avenue
New Orleans, Louisiana 70113
(504) 576-4363 Dawn A. Abuso
Entergy Services, Inc.
639 Loyola Avenue
New Orleans, Louisiana 70113
(504) 576-6755

(Name, address, including zip code, and telephone number,
including area code, of agent for service)

____________________________________

With a Copy to:

ERIC TASHMAN, ESQ.
SIDLEY AUSTIN LLP
555 CALIFORNIA STREET
SAN FRANCISCO, CALIFORNIA 94104
(415) 772-1214 JEFFREY J. DELANEY, ESQ.
PILLSBURY WINTHROP SHAW PITTMAN LLP
1540 BROADWAY
NEW YORK, NEW YORK 10036
(212) 858-1292

____________________________________

Approximate date of commencement of proposed sale to the public: From time to time after this Registration Statement becomes effective as determined by market conditions.

____________________________________

If the only securities being registered on this Form are being offered pursuant to dividend or interest reinvestment plans, please check the following box.

If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, other than securities offered only in connection with dividend or interest reinvestment plans, please check the following box. þ

If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act of 1933, please check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. __________________.

If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act of 1933, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. _________________.

If this Form is a registration statement pursuant to General Instruction I.D. or a post-effective amendment thereto that shall become effective upon filing with the Commission pursuant to Rule 462(e) under the Securities Act, please check the following box.

If this Form is a post-effective amendment to a registration statement filed pursuant to General Instruction I.D. filed to register additional securities or additional classes of securities pursuant to Rule 413(b) under the Securities Act, please check the following box.

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 the definition of "large accelerated filer," "accelerated filer" and "smaller reporting company" in Rule 12b-2 of the Exchange Act.

Large Accelerated Filer Accelerated Filer

Non-Accelerated Filer (do not check if smaller reporting company) Smaller reporting company

CALCULATION OF REGISTRATION FEE

Title of Each Class of Securities to Be Registered	Amount to Be Registered	Proposed Maximum Offering Price Per Unit	Proposed Maximum Aggregate Offering Price	Amount of Registration Fee
Senior Secured Transition Bonds	$550,000,000 (1)	100% (2)	$550,000,000 (2)	$30,690.00 (3)

(1) The Registration Statement relates to the offering of $550,000,000 of aggregate principal amount of Senior Secured Transition Bonds.

(2) Estimated pursuant to Rule 457 solely for the purpose of calculating the registration fee.

(3) A registration fee of $55.80 was previously paid with the filing of this Registration Statement on September 15, 2009 and $30,634.20 paid with the filing of this Amendment.

The information in this prospectus supplement and the prospectus is not complete and may be changed.  The transition bonds may not be sold until the registration statement filed with the Securities and Exchange Commission is effective.  This prospectus supplement and the prospectus are not an offer to sell nor do they seek an offer to buy transition bonds in any jurisdiction where the offer or sale is not permitted.

Subject to Completion
Preliminary Prospectus Supplement, Dated ______, 2009

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PRELIMINARY PROSPECTUS SUPPLEMENT
(To Prospectus dated ______, 2009)

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$____________
Entergy Texas Restoration Funding, LLC
Issuing Entity
Senior Secured Transition Bonds

Tranche Expected
Average Life
(Years) Principal
Amount Issued Scheduled
Final
Payment Date Final
Maturity
Date Interest
Rate Price to
Public Underwriting
Discounts and
Commissions Proceeds to
the Issuing
Entity (Before Expenses)

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The total price to the public is $_____________. The total amount of the underwriting discounts and commissions is $_________. The total amount of proceeds to the issuing entity before deduction of expenses (estimated to be $_________) is $_____________.

Investing in the Senior Secured Transition Bonds involves risks. Please read "Risk Factors" beginning on page [13] of the accompanying prospectus.

Entergy Texas Restoration Funding, LLC is issuing $____________ of Senior Secured Transition Bonds, referred to herein as the Transition Bonds, in [three] tranches. Entergy Texas, Inc. is the seller, initial servicer and sponsor with regard to the Transition Bonds. The Transition Bonds are senior secured obligations of the issuing entity secured by transition property, which includes the right to a special, irrevocable nonbypassable charge, known as a transition charge, paid by all retail electric customers in the service territory of the sponsor based on their consumption of electricity as discussed herein. The Public Utility Commission of Texas requires and guarantees that transition charges be adjusted annually, and semi-annually as necessary, to ensure the expected recovery of amounts sufficient to timely provide all scheduled payments of principal and interest on the Transition Bonds, as described further in this prospectus supplement and the accompanying pro spectus. Through this adjustment mechanism, all retail electric customers cross share in the liabilities of all other retail electric customers for the payment of transition charges. Credit enhancement for the Transition Bonds will be provided by such statutory true-up mechanism as well as by general, excess funds and capital subaccounts held under the indenture.

In April 2009, the Texas legislature enacted a special statute, Senate Bill (SB) 769, adding Subchapter I to Chapter 36 of the Public Utility Regulatory Act or PURA (Subchapter I of Chapter 36, together with Subchapter G of Chapter 39 of PURA are referred to collectively as the "Financing Act"), authorizing the Public Utility Commission of Texas to issue irrevocable financing orders supporting the issuance of transition bonds for the recovery of system restoration costs. One of the purposes of this act was to lower the cost to consumers for reconstruction after Hurricane Ike and future natural disasters. The Public Utility Commission of Texas issued an irrevocable financing order to the sponsor on September 11, 2009. Pursuant to the financing order, the sponsor established the issuing entity as a bankruptcy remote special purpose subsidiary company to issue the Transition Bonds. In the financing order, the Public Utility Commission of Texas authorized a transition charge to be imposed on all retail customers who purchase electricity in the sponsor's service territory to pay principal and interest on the Transition Bonds and other expenses relating to the Transition Bonds. Entergy Texas, Inc., as servicer, will collect transition charges on behalf of the issuing entity and remit the estimated transition charges daily to a trustee. Please read "The Bonds-The Transition Property" in this prospectus supplement.

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The Public Utility Commission of Texas guarantees that it will take specific actions pursuant to its irrevocable financing order as expressly authorized by the Financing Act to ensure that transition charge revenues are sufficient to pay on a timely basis scheduled principal and interest on the Transition Bonds. The Public Utility Commission of Texas' obligations relating to the Transition Bonds, including the specific actions that it has guaranteed to take, are direct, explicit, irrevocable and unconditional upon issuance of the Transition Bonds, and are legally enforceable against the Public Utility Commission of Texas, which is a United States public sector entity.

The Transition Bonds represent obligations only of the issuing entity, Entergy Texas Restoration Funding, LLC, and do not represent obligations of the sponsor or any of its affiliates other than the issuing entity. Please read "The Bonds-The Transition Property," "-The Collateral" and "Credit Enhancement" in this prospectus supplement. The Transition Bonds are not a debt or general obligation of the State of Texas, the Public Utility Commission of Texas or any other governmental agency or instrumentality and are not a charge on the full faith and credit or the taxing power of the State of Texas or any governmental agency or instrumentality.

All matters relating to the structuring and pricing of the Transition Bonds have been considered jointly by Entergy Texas, Inc. and the Public Utility Commission of Texas.

Additional information is contained in the accompanying prospectus. You should read this prospectus supplement and the accompanying prospectus carefully before you decide to invest in the Transition Bonds. This prospectus supplement may not be used to offer or sell the Transition Bonds unless accompanied by the prospectus.

THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS SUPPLEMENT OR THE ACCOMPANYING PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.

The underwriters expect to deliver the Transition Bonds through the book-entry facilities of The Depository Trust Company against payment in immediately available funds on or about [______ __, 2009]. Each bond will be entitled to interest on [__________] 1^st and [__________] 1^st of each year. The first scheduled payment date is ________ 1, 2010. There currently is no secondary market for the Transition Bonds, and we cannot assure you that one will develop.

Morgan Stanley		Citi
Goldman, Sachs & Co.			RBS
	Loop Capital Markets, LLC

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The date of this prospectus supplement is _______, 2009.

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TABLE OF CONTENTS

PROSPECTUS SUPPLEMENT

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READING THIS PROSPECTUS SUPPLEMENT AND THE ACCOMPANYING PROSPECTUS	S-1	Collection Account and Subaccounts	S-16
SUMMARY OF TERMS	S-2	How Funds in the Collection Account Will Be Allocated	S-17
THE BONDS	S-8	Retail Electric Provider Deposits and Other Credit Support	S-18
The Collateral	S-8	THE TRANSITION CHARGES	S-18
The Transition Property	S-9	Initial Transition charges	S-18
Financing Order	S-10	UNDERWRITING THE BONDS	S-19
Payment and Record Dates and Payment Sources	S-10	The Underwriters' Sales Price for the Bonds	S-19
Principal Payments	S-10	No Assurance as to Resale Price or Resale Liquidity for     the Bonds	S-19
Expected Sinking Fund Schedule	S-12	Various Types of Underwriter Transactions That May     Affect the Price of the Bonds	S-19
Expected Amortization Schedule	S-13	MATERIAL U.S. FEDERAL INCOME TAX   CONSEQUENCES	S-20
Weighted Average Life Sensitivity	S-13	WHERE YOU CAN FIND MORE INFORMATION	S-20
Assumptions	S-14	LEGAL PROCEEDINGS	S-20
Fees and Expenses	S-14	LEGAL MATTERS	S-20
Distribution Following Acceleration	S-14	OFFERING RESTRICTIONS IN CERTAIN   JURISDICTIONS	S-21
Interest Payments	S-15
Optional Redemption	S-15
THE TRUSTEE	S-15
CREDIT ENHANCEMENT	S-15
PUCT Guaranteed True-Up Mechanism for Payment     of Scheduled Principal and Interest	S-15

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READING THIS PROSPECTUS SUPPLEMENT AND THE ACCOMPANYING PROSPECTUS

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This prospectus supplement and the accompanying prospectus provide information about us, the Transition Bonds and Entergy Texas, Inc., or Entergy Texas, as seller, sponsor and initial servicer. This prospectus supplement describes the specific terms of the Transition Bonds. The accompanying prospectus describes terms that apply only to the transition bonds we may issue, including the Transition Bonds offered hereby.

References in this prospectus supplement and the accompanying prospectus to the terms we, us, Entergy Texas Funding or the issuing entity mean Entergy Texas Restoration Funding, LLC, the entity which will issue the Transition Bonds. References to Entergy Texas, ETI, the seller or the sponsor mean Entergy Texas, Inc. or to any successor to the rights and obligations of Entergy Texas under the sale agreement referred to in this prospectus supplement and the accompanying prospectus. References to the servicer mean Entergy Texas and any successor servicer under the servicing agreement referred to in this prospectus supplement and the accompanying prospectus. References to Entergy mean Entergy Corporation, the parent company of Entergy Texas.

Unless the context otherwise requires, the term customer, retail customer or retail electric customer means a retail customer within Entergy Texas' service territory. If retail competition is ever introduced into Entergy Texas' service territory, as described under "The Texas Electricity Market Restructuring Plan - - Entergy Texas' Service Territory Could Experience Deregulation in the Future" in the accompanying prospectus, then the terms customer, retail customer or retail electric customer shall mean a retail end user of electricity and related services provided by Entergy Texas or a retail electric provider via the transmission and distribution system of an electric utility such as Entergy Texas, within Entergy Texas' service territory. We refer to the Public Utility Commission of Texas as the Texas commission or the PUCT. You can find a glossary of some of the other defined terms we use in this prospectus supplement and the accompanying prospectus on page [92] of the accompanying prospectus.

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We have included cross-references to sections in this prospectus supplement and the accompanying prospectus where you can find further related discussions. You can also find references to key topics in the table of contents on the preceding page of this prospectus supplement and in the table of contents beginning on page i of the accompanying prospectus.

You should rely only on the information contained or incorporated by reference in this prospectus supplement and the accompanying prospectus. Neither we nor any underwriter, agent, dealer, salesperson, the Texas commission or Entergy Texas has authorized anyone else to provide you with any different information. If anyone provides you with different or inconsistent information, you should not rely on it. We are not offering to sell the Transition Bonds in any jurisdiction where the offer or sale is not permitted. The information in this prospectus supplement is current only as of the date of this prospectus supplement.

SUMMARY OF TERMS

The following section is only a summary of selected information and does not provide you with all the information you will need to make your investment decision. There is more detailed information in this prospectus supplement and in the accompanying prospectus. To understand all of the terms of the offering of the Transition Bonds, carefully read this entire document and the accompanying prospectus.

Securities offered:	$______________Senior Secured Transition Bonds, or the Transition Bonds, scheduled to pay principal semi-annually and sequentially in accordance with the expected sinking fund schedule. Only the Transition Bonds are being offered through this prospectus supplement.
Issuing entity and capital structure:	Entergy Texas Restoration Funding, LLC is a direct, wholly owned subsidiary of Entergy Texas and a limited liability company formed under Delaware law. We were formed solely to purchase and own transition property, to issue transition bonds secured by transition property and to perform any activity incidental thereto. The Transition Bonds offered by this prospectus supplement and accompanying prospectus are the only bonds we are authorized to issue. Please read "Entergy Texas Restoration Funding, LLC, the Issuing Entity" in the accompanying prospectus.
	In addition to the transition property, the assets of the issuing entity include a capital investment by Entergy Texas in the amount of 0.5% of the Transition Bonds' principal amount issued. This capital contribution will be held in the capital subaccount. We have also created an excess funds subaccount to retain, until the next payment date, any amounts collected and remaining after all payments on the Transition Bonds have been made.
	We are responsible to the State of Texas and the Texas commission. Specifically, pursuant to the financing order of the Texas commission relating to the transition bonds,
	our organizational documents and transaction documents for the transition bonds prohibit us from engaging in any activities other than acquiring transition property, issuing transition bonds and performing other activities as specifically authorized by the financing order,
	the Texas commission or its designated representative has a decision-making role co-equal with Entergy Texas with respect to the structuring and pricing of the transition bonds and all matters related to the structuring and pricing of the transition bonds will be determined through a joint decision of Entergy Texas and the Texas commission or its designated representative,
	Entergy Texas is directed to take all necessary steps to ensure that the Texas commission or its designated representative is provided sufficient and timely information to allow the Texas commission or its designated representative to fully participate in, and exercise its decision making power over, the proposed securitization, and
	all required true up adjustments must be filed by the servicer on our behalf.
	We have also agreed that certain reports concerning transition charge collections will be provided to the Texas commission. Please read "Entergy Texas' Financing Order- Entergy Texas' Securitization Proceeding and Financing Order" in the accompanying prospectus.
Our address:	Capital Center, 919 Congress Avenue, Suite 840-C, Austin, Texas 78701
Our telephone number:	(512) 487 - 3982
<R> Our managers:	The following is a list of our managers as of the date of this prospectus supplement: Name Age Background Eddie Peebles 49 Vice President, Corporate Development for Entergy Services, Inc., a subsidiary of Entergy Corporation.  From July 2003 to July 2005, Director, Structured Transactions for Entergy Services, Inc.  Steven C. McNeal 52 Vice President and Treasurer for Entergy Services, Inc., a subsidiary of Entergy Corporation. Paul Schuerich 49 Assistant General Counsel for Entergy Services, Inc., a subsidiary of Entergy Corporation. Tom Wagner 52 Assistant General Counsel for Entergy Services, Inc., a subsidiary of Entergy Corporation. From January 2002 through December 2004, Assistant General Counsel for Entergy Enterprises, Inc., a subsidiary of Entergy Corporation. Thomas Strauss (Independent Manager) 44 Director, Client Services of Wilmington Trust SP Services and Vice President of Wilmington Trust Company since 2001.
Required ratings:	"Aaa"/"AAA"/"AAA" by Moody's, S&P and Fitch, respectively. Please read "Ratings for the Transition Bonds" in the accompanying prospectus.
The Seller, Sponsor and Servicer of the transition property:	Entergy Texas is a public utility engaged in the generation, transmission, distribution and sale of electric energy in the State of Texas. As of December 31, 2008 and as of June 30, 2009, Entergy Texas provided electric service to approximately 395,000 and 402,000 retail customers, respectively, in its service territory. Pursuant to a financing order issued by the Texas commission in April 2007, Entergy Gulf States, Inc., or EGSI, sold transition property to an affiliate, Entergy Gulf States Reconstruction Funding I, LLC. The affiliate, on June 29, 2007, issued $329,500,000 Senior Secured Transition Bonds or the prior transition bonds. Following the issuance of the prior transition bonds, EGSI was reorganized pursuant to a jurisdictional separation plan into two vertically integrated utility companies, Entergy Gulf States Louisiana, L.L.C. operating as a public utility in Louisiana and Entergy Texas operating as a public utility in Texas. Entergy Texas succeeded EGSI in the role of sponsor, seller and servicer for the prior transition bonds. The transition property securing the prior transition bonds does not secure the bonds. </R> Entergy Texas is an operating subsidiary of Entergy Corporation, a Delaware corporation based in New Orleans, Louisiana. Entergy is an integrated energy company engaged primarily in electric power production and retail distribution operations. Neither Entergy Texas nor Entergy nor any other affiliate (other than us) is an obligor of the Transition Bonds.
	<R> As described in the accompanying prospectus under "The Texas Electricity Market Restructuring Plan," the electric industry in Texas has undergone fundamental restructuring. Although retail competition and the unbundling of services has not been introduced into Entergy Texas' service territory, it is possible that it may occur during the term of the Transition Bonds. Please read "The Texas Electricity Market Restructuring Plan" in the accompanying prospectus. </R>
Entergy Texas' address:	350 Pine Street, Beaumont, Texas 77701
Entergy Texas' telephone number:	(409) 838-6631
Use of proceeds:	Paid to Entergy Texas to reduce debt. We may not use the net proceeds from the sale of the Transition Bonds for general corporate purposes or commercial purposes. Please read "Use of Proceeds" in the accompanying prospectus.
Bond structure:	<R> Sinking fund bond, [three] tranches; tranches A-l, expected average life ___ years, A-2, expected average life ____ years, and A-3, expected average life ____ years, are scheduled to pay principal semi-annually and sequentially. Please read "Expected Amortization Schedule" in this prospectus supplement.
Trustee:	The Bank of New York Mellon, a New York banking corporation.
Trustee's experience:	The Bank of New York Mellon currently serves as indenture trustee and trustee for numerous securitization transactions involving pools of utility company receivables that are structurally similar to the transition charges, including the prior transition bonds. </R>
Average life profile:	Stable. Prepayment is not permitted; there is no prepayment risk. Extension risk is possible but is expected to be statistically insignificant. Please read "Weighted Average Life Sensitivity" in this prospectus supplement and "Weighted Average Life and Yield Considerations for the Transition Bonds" in the accompanying prospectus.
Optional redemption:	None. Non-call for the life of the Transition Bonds.
Minimum denomination:	$100,000, or integral multiples of $1,000 in excess thereof, except for one bond of each tranche which may be of a smaller denomination.
Credit/security:	<R> Pursuant to the financing order issued by the Texas commission, the irrevocable right to impose, collect and receive a nonbypassable consumption-based transition charge from all retail electric customers (approximately 395,000 customers as of December 31, 2008 and approximately 402,000 customers as of June 30, 2009) who purchase electricity in Entergy Texas' service territory. Please read "The Financing Act- Entergy Texas and other utilities may securitize qualified costs-Transition Charges Are Nonbypassable" in the accompanying prospectus. The law and the PUCT require that transition charges be set and adjusted to collect amounts sufficient to pay principal and interest on a timely basis. Please read "Credit Enhancement-PUCT Guaranteed True-Up Mechanism for Payment of Scheduled Principal and Interest" in this prospectus supplement, as well as the chart entitled "Parties to the Transaction and Responsibilities," "The Financing Act" and "Description of the Transition Property-Creation of Transition Property; Financing Order" in the accompanying prospectus. </R>
	The transition property securing the Transition Bonds is not a pool of receivables. It consists of all of Entergy Texas' rights and interests under the financing order transferred to us in connection with the issuance of the Transition Bonds, including the irrevocable right to impose, collect and receive nonbypassable transition charges and the right to implement the true-up mechanism. Transition property is a present property right created by the Financing Act and the financing order and is protected by the State Pledge in the Financing Act described below.
	The Transition Bonds are secured only by our assets, consisting principally of the transition property relating to the Transition Bonds and funds on deposit in the collection account for the Transition Bonds and related subaccounts. The subaccounts consist of a capital subaccount, which will be funded at closing in the amount of 0.5% of the initial aggregate principal amount of the Transition Bonds, a general subaccount, into which the servicer will deposit all transition charge collections, and an excess funds subaccount, into which we will transfer any amounts collected and remaining on a payment date after all payments to bondholders and other parties have been made. Amounts on deposit in each of these subaccounts will be available to make payments on the Transition Bonds on each payment date. For a description of the transition property, please read "The Bonds-The Transition Property" in this prospectus supplement.
State Pledge:	The State of Texas has pledged in the Financing Act that it will not take or permit any action that would impair the value of the transition property, or reduce, alter or impair the transition charges until the Transition Bonds are fully repaid or discharged, other than specified true-up adjustments to correct any overcollections or undercollections. No voter initiative or referendum process exists in Texas, unlike in some other states. Please read "The Financing Act- Entergy Texas and Other Utilities May Securitize Qualified Costs" in the accompanying prospectus.
PUCT guaranteed true-up mechanism for payment of scheduled principal and interest:	The Financing Act and the irrevocable financing order together guarantee that transition charges on all retail electric customers will be adjusted annually, and, if necessary, semi-annually, to ensure the expected recovery of amounts sufficient to provide timely payment of scheduled principal and interest on the Transition Bonds. Pursuant to the financing order, adjustments other than the annual adjustments may be made generally not more than once in any six-month period (or quarterly in the fourteenth and fifteenth years). In the financing order, the Texas commission guarantees that it will act pursuant to the financing order as expressly authorized by the Financing Act to ensure that expected transition charge revenues are sufficient to timely pay scheduled principal and interest on the Transition Bonds.
	There is no "cap" on the level of transition charges that may be imposed on retail electric customers to pay on a timely basis scheduled principal and interest on the Transition Bonds. Through the true-up mechanism, all retail electric customers cross share in the liabilities of all other retail electric customers for the payment of transition charges.
	The financing order provides that the true-up mechanism and all other obligations of the State of Texas and the Texas commission set forth in the financing order are direct, explicit, irrevocable and unconditional upon issuance of the Transition Bonds, and are legally enforceable against the State of Texas and the Texas commission, a United States public entity. Please read "The Financing Act- Entergy Texas' and Other Utilities May Securitize Qualified Costs" and "The Servicing Agreement-The PUCT Guaranteed Transition Charge Adjustment Process" in the accompanying prospectus.
Nonbypassable transition charges:	<R> The PUCT has a guaranteed right from the government of the State of Texas to require the imposition on, and collection of transition charges from, all existing and future retail electric customers located within Entergy Texas' service territory, even if the utility goes out of business and its service area is acquired by another utility or is municipalized or, with exceptions, if customers choose to operate new on-site generation. Please read "Risk Factors-Other Risks Associated with an Investment in the Transition Bonds-Technological Change Might Make Alternative Energy Sources More Attractive in the Future", "The Financing Act-Entergy Texas and Other Utilities May Securitize Qualified Costs-Transition Charges Are Nonbypassable." The transition charges are also nonbypassable if retail competition is ever introduced into Entergy Texas' service territory within the term of the transition bonds. See "The Texas Electrici ty Market Restructuring Plan - - Entergy Texas' Service Territory Could Experience Deregulation in the Future" in the accompanying prospectus. The transition charges are applied to retail electric customers individually and are adjusted and reallocated among all customers as necessary under the PUCT guaranteed true-up mechanism. Please read "The Transition Charges" in this prospectus supplement and "Entergy Texas' Financing Order" and "The Servicing Agreement-The PUCT Guaranteed Transition Charge Adjustment Process" in the accompanying prospectus. </R>
Initial transition charge as a percentage of customer's total electricity bill:	<R> The initial transition charge would represent approximately 5.2% of the total bill received by a 1,000 kWh residential customer of Entergy Texas in its service territory as of September 11, 2009. When combined with the transition charges related to the prior transition bonds, the cumulative transition charges would represent approximately 8.9% of the total bill. </R>
Priority of distributions:	On each payment date for the Transition Bonds, the trustee will allocate or pay all amounts on deposit in the general subaccount of the collection account in the following order of priority:
	payment of the trustee's fees, expenses and any outstanding indemnity amounts not to exceed $1,000,000 in any 12-month period,
	payment of the servicing fee relating to the Transition bonds, plus any unpaid servicing fees from prior payment dates,
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	payment of the administration fee, and a pro rata portion of the fees of our independent manager(s), in each case with any unpaid administration or management fees from prior payment dates, </R>
	payment of all of our other ordinary periodic operating expenses relating to the Transition Bonds, such as accounting and audit fees, rating agency fees, legal fees and certain reimbursable costs of the servicer under the servicing agreement,
	payment of the interest then due on the Transition Bonds, including any past-due interest,
	payment of the principal then required to be paid on the Transition Bonds as a result of acceleration upon an event of default or at final maturity,
	payment of the principal then scheduled to be paid on the Transition Bonds in accordance with the expected sinking fund schedule, including any previously unpaid scheduled principal,
	payment of any of our remaining unpaid operating expenses and any remaining amounts owed pursuant to the basic documents, including all remaining indemnity amounts owed to the trustee,
	replenishment of any amounts drawn from the capital subaccount,
	if there is a positive balance after making the foregoing allocations, so long as no event of default has occurred and is continuing, release to us of an amount not to exceed the lesser of any remaining balance and the investment earnings on amounts in the capital subaccount,
	allocation of the remainder, if any, to the excess funds subaccount, and
	after the Transition Bonds have been paid in full and discharged, the balance, together with all amounts in the capital subaccount and the excess funds subaccount, to us free and clear of the lien of the indenture.
	<R> Please read "Credit Enhancement-How Funds in the Collection Account Will Be Allocated" in this prospectus supplement. The annual servicing fee for the Transition Bonds payable to Entergy Texas or any affiliate thereof while it is acting as servicer shall not at any time exceed $290,000. If a servicer not affiliated with Entergy Texas is appointed, the servicing fee will be negotiated by the successor servicer and us; however, the Texas commission must approve the appointment of, and any annual servicing fee in excess of 0.60% of the aggregate initial principal amount of all outstanding transition bonds for any replacement servicer. In addition, the servicing fee for any replacement servicer may not exceed 0.60% of the aggregate initial principal amount of all outstanding transition bonds unless the rating agency condition is satisfied. </R>
\ Currently outstanding series:	<R> The Transition Bonds are the first and only transition bonds we have issued. However, as described above, Entergy Texas has sold transition property to another related affiliate, which in 2007 issued the prior transition bonds. </R>
Relationship to the prior transition bonds:	<R> In June 2007, Entergy Gulf States Reconstruction Funding I, LLC, a special purpose wholly owned subsidiary of Entergy Texas, issued and sold $329,500,000 Senior Secured Transition Bonds, Series A, or the prior transition bonds, in accordance with a financing order issued by the PUCT in April 2007. Entergy Texas currently acts as servicer for the prior transition bonds. The transition property securing the prior transition bonds does not secure the Transition Bonds. The outstanding prior transition bonds are currently rated AAA/Aaa/AAA by S&P, Moody's and Fitch, respectively. Please read "Relationship to the Prior Transition Bonds" in the accompanying prospectus. </R>
Allocations as between transition bond issuances:	<R> Although the Transition Bonds issued by us will have its own transition property, transition charges relating to the Transition Bonds will be collected through single bills to individual retail customers and any future associated retail electric providers, if retail competition is ever introduced to the Entergy Texas service territory, that include all charges related to the purchase of electricity, without separately itemizing the transition charge component of the bill or the transition charge components. In the event a customer does not pay in full all amounts owed under any bill including transition charges, Entergy Texas, as servicer, is required to allocate any resulting shortfalls in transition charges ratably based on the amounts of transition charges owing in respect of the Transition Bonds, amounts owing to Entergy Gulf States Reconstruction Funding I, LLC with respect to the prior transition bonds and any amounts owing to any subsequently created affil iate of Entergy Texas which issues transition bonds. Please read "Description of the Transition Bonds-Allocations as Between Transition Bond Issuances", "The Texas Electricity Market Restructuring Plan - - Entergy Texas' Service Territory Could Experience Deregulation in the Future" and "The Servicing Agreement-Remittances to Collection Account" in the accompanying prospectus. </R>
Issuance of additional transition bonds:	<R> Entergy Texas has in the past and may in the future sell transition property to one or more entities other than us in connection with the issuance of a new issuance of transition bonds without your prior review or approval. Please read "Entergy Texas' Financing Order" in the accompanying prospectus. The aggregate outstanding amount of transition bonds that may be authenticated and delivered under the indenture may not exceed the aggregate amount of transition bonds that are authorized under the financing order. Any new issuance may include terms and provisions that would be unique to that particular issue. Entergy Texas will likely serve as servicer for any new issuance. We may not issue additional transition bonds in addition to the Transition Bonds offered hereby. Entergy Texas may not sell transition property to other entities issuing transition bonds if the issuance would result in the credit ratings on any outstanding issuance of transition bond s being reduced or withdrawn. It will be a condition of issuance for each new issuance of transition bonds that the new issuance be rated "Aaa" by Moody's, "AAA" by S&P and "AAA" by Fitch, Inc. Please read "Description of the Transition Bonds" in the accompanying prospectus. </R>
Enhanced continuing disclosure:	The indenture under which the Transition Bonds will be issued requires all of the periodic reports that the issuing entity or the sponsor files with the SEC, the principal transaction documents and other information concerning the transition charges and security relating to the Transition Bonds to be posted on the website associated with the issuing entity's parent, currently located at www.entergy.com.
	Furthermore, even if it would otherwise be permitted to suspend such filings, so long as any Transition Bonds are outstanding, the issuing entity or the sponsor on its behalf will continue filing periodic reports under the Securities Exchange Act of 1934 and the rules, regulations or orders of the SEC. Consequently, information will continue to be publicly available and accessible to bondholders through the SEC.
Tax treatment:	Transition Bonds will be treated as debt of Entergy Texas, our sole member, for U.S. federal income tax purposes. Please read "Material U.S. Federal Income Tax Consequences" in the accompanying prospectus.
ERISA eligible:	Yes; please read "ERISA Considerations" in the accompanying prospectus.
Payment dates and interest accrual:	<R> Semi-annually, ________and __________. Interest will be calculated on a 30/360 basis. The first scheduled payment date is __________, 2010.
Expected settlement:	______, 2009, settling flat. DTC, Clearstream and Euroclear. </R>
Risk factors:	You should consider carefully the risk factors beginning on page [13] of the accompanying prospectus before you invest in the Transition Bonds.

THE BONDS

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We will issue the Transition Bonds and secure their payment under an indenture that we will enter into with The Bank of New York Mellon, as trustee, referred to in this prospectus supplement and the accompanying prospectus as the trustee. We will issue the Transition Bonds in minimum denominations of $100,000 and in integral multiples of $1,000, except that we may issue one bond in each tranche in a smaller denomination. The expected average life in years, initial principal amount, scheduled final payment date, final maturity date and interest rate for each tranche of the Transition Bonds are stated in the table below.

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Tranche Expected
Average Life
(Years) Principal Amount
Issued Scheduled Final
Payment Date Final
Maturity Date Interest Rate

The scheduled final payment date for each tranche of the Transition Bonds is the date when the outstanding principal balance of that tranche will be reduced to zero if we make payments according to the expected amortization schedule for that tranche. The final maturity date for each tranche of Transition Bonds is the date when we are required to pay the entire remaining unpaid principal balance, if any, of all outstanding Transition Bonds of that tranche. The failure to pay principal of any tranche of Transition Bonds by the final maturity date for that tranche is an event of default under the indenture, but the failure to pay principal of any tranche of Transition Bonds by the respective scheduled final payment date will not be an event of default under the indenture. Please read "Description of the Transition Bonds-Interest and Principal on the Transition Bonds" and "-Events of Default; Rights Upon Event of Default" in the accompanying prospectus.

The Collateral

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The Transition Bonds will be secured under the indenture by all of our assets relating to the Transition Bonds. The principal asset pledged will be the transition property relating to the Transition Bonds, which is a present property right created under the Financing Act enacted by the Texas legislature in April 2009 and by the financing order issued by the Texas commission on September 11, 2009, referred to in this prospectus supplement as the financing order. The collateral also consists of:

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• our rights under the sale agreement pursuant to which we will acquire the transition property, under the administration agreement and under all bills of sale delivered by Entergy Texas pursuant to the sale agreement,
• our rights under the PUCT guaranteed true-up mechanism,
• our rights under the servicing agreement and any subservicing, agency, intercreditor or collection agreements executed in connection with the servicing agreement,
• the collection account for the Transition Bonds and all subaccounts of the collection account,

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• our rights in all deposits, guarantees, surety bonds, letters of credit and other forms of credit support provided by or on behalf of retail electric providers (if retail competition is ever introduced into Entergy Texas' service territory) pursuant to the financing order or any tariff,
• all of our other property related to the Transition Bonds, other than any cash released to us by the trustee on any payment date from earnings on amounts in the capital subaccount,

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• all present and future claims, demands, causes and choses in action in respect of any or all of the foregoing, and
• all payments on or under and all proceeds in respect of any or all of the foregoing.

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Please read "Security for the Transition Bonds" in the accompanying prospectus.

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The Transition Property

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In general terms, all of the rights and interests of Entergy Texas that relate to the Transition Bonds under the financing order, upon transfer to us pursuant to the sale agreement, are referred to in this prospectus supplement and the accompanying prospectus as the transition property. The transition property includes the right to impose, collect and receive, through the transition charges payable by retail electric customers within Entergy Texas' service territory which, subject to certain limitations specified in the financing order, continue to consume electricity that is delivered through the distribution system or produced in new on-site generation an amount sufficient to pay principal and interest and to make other deposits in connection with the Transition Bonds. During the twelve months ended December 31, 2008, approximately 38.3% of Entergy Texas' total retail electric deliveries in its service territory were to industrial customers, 26.3% were to commercial customers, 33.8% were to residential customers and 1.6% were to government and municipal customers. During the six months ended June 30, 2009, approximately 38.2% of Entergy Texas' total retail electric deliveries in its service territory were to industrial customers, 27.1% were to commercial customers, 33.0% were to residential customers and 1.7% were to government and municipal customers.

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We will purchase the transition property from Entergy Texas. The transition property is not a receivable, and the principal collateral securing the Transition Bonds is not a pool of receivables. Transition charges authorized in the financing order that relate to the Transition Bonds are irrevocable and not subject to reduction, impairment, or adjustment by further action of the Texas commission, except for annual and interim true-up adjustments to correct overcollections or undercollections and to provide the expected recovery of amounts sufficient to timely provide all payments of debt service and other required amounts and charges in connection with the Transition Bonds. Please read "Credit Enhancement-PUCT Guaranteed True-Up Mechanism for Payment of Scheduled Principal and Interest" in this prospectus supplement. All revenues and collections resulting from transition charges provided for in the financing order that relate to the Transition Bonds are part of the transition property.

The transition property relating to the Transition Bonds is described in more detail under "The Sale Agreement-Sale and Assignment of the Transition Property" in the accompanying prospectus.

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The servicer will bill and collect transition charges allocable to the Transition Bonds from retail electric customers and will remit the collections to the trustee. If the current provisions of PURA remain unchanged and Entergy Texas remains a member of SERC, it is possible, but not likely, that there will be any competing retail electric providers within the term that these transition bonds are outstanding. If retail competition is ever introduced into Entergy Texas' service territory, then "retail electric providers," which are entities certified under state law that provide electricity and related services to retail electric customers, will collect the transition charges from retail electric customers. In such event, the servicer would then bill and collect transition charges from the retail electric providers and then remit the collections to the trustee. Please read "The Texas Electricity Market Restructuring Plan - - Entergy Texas' Service Territory Could Experience Deregulation in the Future" and "Future Retail Electric Providers" in the accompanying prospectus.

Entergy Texas and any future retail electric provider will include the transition charges in their bills to their retail electric customers but are not required to show the transition charges as a separate line item or footnote. However, Entergy Texas and any future retail electric provider will be required to provide annual written notice to their customers that transition charges have been included in their customers' bills. Prior to the date on which Entergy Texas or any future retail electric provider remits the transition charges to the servicer, the transition charges may be commingled with Entergy Texas' or any retail electric provider's other funds, although Entergy Texas must remit estimated collections daily and within two business days of the expected date of receipt. Please read "Risk Factors-Risks Associated With Potential Bankruptcy Proceedings of Future Retail Electric Providers if and when Retail Competition is Introduced", "The Texas Electricity Market Restructuring Plan - - Entergy Texas' Service Territory Could Experience Deregulation in the Future" and "Future Retail Electric Providers" in the accompanying prospectus.

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For information on how electric service to retail electric customers may be terminated, please read "Risk Factors-Servicing Risks-Limits on rights to terminate service might make it more difficult to collect the transition charges" in the accompanying prospectus. Because the amount of transition charge collections will depend largely on the amount of electricity consumed by customers within Entergy Texas' service territory, the amount of collections may vary substantially from year to year. Please read "The Seller, Initial Servicer and Sponsor" in the accompanying prospectus.

Under the Financing Act and the indenture, the trustee or the holders of the Transition Bonds have the right to foreclose or otherwise enforce the lien on the transition property. However, in the event of foreclosure, there is likely to be a limited market, if any, for the transition property. Therefore, foreclosure might not be a realistic or practical remedy. Please read "Risk Factors-Risks Associated with the Unusual Nature of the Transition Property-Foreclosure of the trustee's lien on the transition property securing the transition bonds might not be practical, and acceleration of the transition bonds before maturity might have little practical effect" in the accompanying prospectus.

Financing Order

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On September 11, 2009, the Texas commission issued the financing order relating to the Transition Bonds to Entergy Texas. The financing order authorizes Entergy Texas to securitize and cause to be issued transition bonds in one or more tranches, with the aggregate principal amount consisting of: (i) $539,881,826 in system restoration costs (including carrying costs through October 26, 2009, which was the expected issuance date of the Transition Bonds used in the financing order), plus (ii) up-front qualified costs, plus or minus (iii) carrying costs for the number of days, as applicable, either greater or less than assumed in the calculation based on the projected issuance date for the Transition Bonds of October 26, 2009. The financing order became final and non-appealable on September 28, 2009. The amount actually securitized is subject to adjustment in the issuance advice letter to be provided by Entergy Texas to the Texas commission prior to issuance of the Transition Bonds to reflect updated upfront qualified costs and carrying costs. The financing order also authorizes transition charges in amounts sufficient to recover the principal and interest on the Transition Bonds plus an additional amount of ongoing qualified costs. The Texas commission guarantees that it will take specific actions pursuant to the irrevocable financing order as expressly authorized by the Financing Act to ensure that expected transition charge revenues are sufficient to timely pay scheduled principal and interest on the Transition Bonds. The financing order provides that the true-up mechanism and all other obligations of the State of Texas and the Texas commission set forth in the financing order are direct, explicit, irrevocable and unconditional upon issuance of the Transition Bonds, and are legally enforceable against the State of Texas and the Texas commission. Please read "Entergy Texas' Financing Order" in the accompanying prospectus.

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Payment and Record Dates and Payment Sources

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Beginning _________, 2010, we will make payments on the Transition Bonds semi-annually on _______ and __________ of each year, or, if that day is not a business day, the following business day (each, a payment date). So long as the Transition Bonds are in book-entry form, on each payment date, we will make interest and principal payments to the persons who are the holders of record as of the business day immediately prior to that payment date, which is referred to as the "record date." If we issue certificated Transition Bonds to beneficial owners of the Transition Bonds, the record date will be the last business day of the calendar month immediately preceding the payment date. On each payment date, we will pay amounts on outstanding Transition Bonds from amounts available in the collection account and the related subaccounts held by the trustee in the priority set forth under "Credit Enhancement-How Funds in the Collection Account Will Be Allocated" in this prospectus suppleme nt. These available amounts, which will include amounts collected by the servicer for us with respect to the transition charges, are described in greater detail under "Security for the Transition Bonds-How Funds in the Collection Account Will Be Allocated" and "The Servicing Agreement-Remittances to Collection Account" in the accompanying prospectus.

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Principal Payments

On each payment date, we will pay principal of the Transition Bonds to the bondholders equal to the sum, without duplication, of:

• the unpaid principal amount of any Transition Bond whose final maturity date is on that payment date, plus
• the unpaid principal amount of any Transition Bond upon acceleration following an event of default relating to the Transition Bonds, plus
• any overdue payments of principal, plus
• any unpaid and previously scheduled payments of principal, plus

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• the principal scheduled to be paid on any Transition Bond on that payment date,

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but only to the extent funds are available in the collection account (including all applicable subaccounts) after payment of certain of our fees and expenses and after payment of interest as described below under "-Interest Payments." To the extent funds are so available, we will make scheduled payments of principal of the Transition Bonds in the following order:

[1. to the holders of the tranche A-1 Transition Bonds, until the principal balance of that tranche has been reduced to zero,

2. to the holders of the tranche A-2 Transition Bonds, until the principal balance of that tranche has been reduced to zero, and

3. to the holders of the tranche A-3 Transition Bonds, until the principal balance of that tranche has been reduced to zero.]

However, we will not pay principal of any tranche of Transition Bonds on any payment date if making the payment would reduce the principal balance of that tranche to an amount lower than the amount specified in the expected amortization schedule below for that tranche on that payment date. Any excess funds remaining in the collection account after payment of principal, interest, applicable fees and expenses and payments to the applicable subaccounts of the collection account will be retained in the excess funds subaccount until applied on a subsequent payment date. The entire unpaid principal balance of each tranche of the Transition Bonds will be due and payable on the final maturity date for the tranche.

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If an event of default under the indenture has occurred and is continuing, the trustee or the holders of a majority in principal amount of the transition bonds then outstanding may declare the unpaid principal balance of the transition bonds, together with accrued interest thereon, to be due and payable. However, the nature of our business will result in payment of principal upon an acceleration of the Transition Bonds being made as funds become available. Please read "Risk Factors-Risks Associated With the Unusual Nature of the Transition Property-Foreclosure of the trustee's lien on the transition property securing the transition bonds might not be practical, and acceleration of the transition bonds before maturity might have little practical effect" and "Risk Factors - -You may experience material payment delays or incur a loss on your investment in the transition bonds because the source of funds for payment is limited" in the accompanying prospectus. If there is a shortfall in the amounts available to make principal payments on transition bonds that are due and payable, including upon an acceleration following an event of default under the indenture, the trustee will distribute principal from the collection account pro rata to each tranche of transition bonds based on the principal amount then due and payable on the payment date; and if there is a shortfall in the remaining amounts available to make principal payments on transition bonds that are scheduled to be paid, the trustee will distribute principal from the collection account pro rata to each tranche of transition bonds based on the principal amount then scheduled to be paid on the payment date.

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The expected sinking fund schedule below sets forth the corresponding principal payment that is scheduled to be made on each payment date for each tranche of the Transition Bonds from the issuance date to the scheduled final payment date. Similarly, the expected amortization schedule below sets forth the principal balance that is scheduled to remain outstanding on each payment date for each tranche of the Transition Bonds from the issuance date to the scheduled final payment date.

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Expected Sinking Fund Schedule*

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Semi-Annual Payment Date	Tranche [A-1] Principal Repayment	Tranche [A-2] Principal Repayment	Tranche [A-3] Principal Repayment
Initial Tranche Balance

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__________________
*Dollar amounts in the schedule are rounded to the nearest dollar.

We cannot assure you that the principal balance of any tranche of the Transition Bonds will be reduced at the rate indicated in the table above. The actual reduction in tranche principal balances may occur more slowly. The actual reduction in tranche principal balances will not occur more quickly than indicated in the above table, except in the case of acceleration due to an event of default under the indenture. The Transition Bonds will not be in default if principal is not paid as specified in the schedule above unless the principal of any tranche is not paid in full on or before the final maturity date of that tranche.

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Expected Amortization Schedule*

Outstanding Principal Balance Per Tranche

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Semi-Annual Payment Date	Tranche [A-1] Balance	Tranche [A-2] Balance	Tranche [A-3] Balance
Closing Date

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__________________
*Dollar amounts in the schedule are rounded to the nearest dollar.

On each payment date, the trustee will make principal payments to the extent the principal balance of each tranche of the Transition Bonds exceeds the amount indicated for that payment date in the table above and to the extent of funds available in the collection account after payment of certain of our fees and expenses and after payment of interest.

Weighted Average Life Sensitivity

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Weighted average life refers to the average amount of time from the date of issuance of a security until each dollar of principal of the security has been repaid to the investor. The rate of principal payments on each tranche of Transition Bonds, the aggregate amount of each interest payment on each tranche of Transition Bonds and the actual final payment date of each tranche of Transition Bonds will depend on the timing of the servicer's receipt of transition charges from retail electric consumers and, possibly but unlikely in the future, retail electric providers. Please read "Weighted Average Life and Yield Considerations for the Transition Bonds" in the accompanying prospectus for further information. Changes in the expected weighted average lives of the tranches of the Transition Bonds in relation to variances in actual energy consumption levels (retail electric sales) from forecast levels are shown below. Severe stress cases on electricity consumption result in no measurable changes in the weighted average lives of each tranche.

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Weighted Average Life Sensitivity

Tranche	Expected Weighted Avg. Life ("WAL") (yrs)	WAL
		-5% ([1.3] Standard Deviations from Mean)		-15% ([5.3] Standard Deviations from Mean)
		WAL (yrs)	Change (days)*	WAL (yrs)	Change (days)*

* Number is rounded to whole days.

Assumptions

[For the purposes of preparing the above chart, the following assumptions, among others, have been made: (i) the forecast error stays constant over the life of the Transition Bonds and is equal to an overestimate of electricity consumption of 5.0% (1.3 standard deviations from mean) or 15% (5.3 standard deviations from mean) and (ii) the Servicer makes timely and accurate filings to true-up the transition charges semi-annually. There can be no assurance that the weighted average lives of the Transition Bonds will be as shown.]

Fees and Expenses

As set forth in the table below, we are obligated to pay fees to the servicer, the trustee, our independent manager and Entergy Texas as administrator. The following table illustrates this arrangement.

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Recipient	Source of Payment	Fees and Expenses Payable
Servicer	Transition charge collections and investment earnings.	$290,000 per annum (so long as servicer is Entergy Texas or an affiliate), plus expenses
Trustee	Transition charge collections and investment earnings.	Approximately $5,150 per annum, plus expenses
Independent Manager	Transition charge collections and investment earnings.	$5,000 per annum, plus expenses
Administration Fee	Transition charge collections and investment earnings.	$100,000 per annum, plus expenses

If a servicer not affiliated with Entergy Texas is appointed, the servicing fee will be negotiated by the successor servicer and us; however, the Texas commission must approve the appointment of any replacement servicer, and the annual servicing fee may not exceed 0.60% of the aggregate initial principal amount of all outstanding transition bonds without the approval of the Texas commission and the satisfaction of the rating agency condition.

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The transition charges will also be used by the trustee for the payment of our other ordinary periodic operating expenses relating to the Transition Bonds, such as accounting and audit fees, rating agency fees, legal fees and certain reimbursable costs of the servicer under the servicing agreement.

Distribution Following Acceleration

Upon an acceleration of the maturity of the Transition Bonds, the total outstanding principal balance of and interest accrued on the Transition Bonds will be payable, without priority of interest over principal or principal over interest and without regard to tranche. Although principal will be due and payable upon acceleration, the nature of our business will result in principal being paid as funds become available. Please read "Risk Factors-Risks Associated with the Unusual Nature of the Transition Property-Foreclosure of the trustee's lien on the transition property securing the transition bonds might not be practical, and acceleration of the transition bonds before maturity might have little practical effect" and "Risk Factors-You may experience material payment delays or incur a loss on your investment in the transition bonds because the source of funds for payment is limited" in the accompanying prospectus.

Interest Payments

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Holders of transition bonds in each tranche of Transition Bonds will receive interest at the rate for that tranche as set forth in the table on page [S-8] of this prospectus supplement.

Interest on each tranche of Transition Bonds will accrue from and including the date of issuance to but excluding the first payment date, and thereafter from and including the previous payment date to but excluding the applicable payment date until the Transition Bonds have been paid in full, at the interest rate indicated in the table on page [S-8] of this prospectus supplement. Each of those periods is referred to as an "interest accrual period." On each payment date, we will pay interest on each tranche of the Transition Bonds equal to the following amounts:

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• if there has been a payment default, any interest payable but unpaid on any prior payment date, together with interest on such unpaid interest, if any, and
• accrued interest on the principal balance of each tranche of the Transition Bonds as of the close of business on the preceding payment date, or the date of the original issuance of the Transition Bonds, after giving effect to all payments of principal made on the preceding payment date, if any.

We will pay interest on the Transition Bonds before we pay principal on the Transition Bonds. Please read "Description of the Transition Bonds-Interest and Principal on the Transition Bonds" in the accompanying prospectus. If there is a shortfall in the amounts available in the collection account to make interest payments on the Transition Bonds, the trustee will distribute interest pro rata to each tranche of Transition Bonds based on the amount of interest payable on each such outstanding tranche. Please read "Credit Enhancement-Collection Account and Subaccounts" in this prospectus supplement. We will calculate interest on tranches of the Transition Bonds on the basis of a 360-day year of twelve 30-day months.

Optional Redemption

We may not voluntarily redeem any tranche of the Transition Bonds prior to the scheduled final payment date for such tranche.

THE TRUSTEE

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The Bank of New York Mellon is a New York banking corporation. The Bank of New York Mellon has acted as indenture trustee on numerous asset-backed securities transactions involving pools of utility company receivables that are structurally similar to the transition charges, including the prior transition bonds.

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CREDIT ENHANCEMENT

Credit enhancement for the Transition Bonds is intended to protect you against losses or delays in scheduled payments on your Transition Bonds. Please read "Risk Factors-You may experience material payment delays or incur a loss on your investment in the transition bonds because the source of funds for payment is limited" in the accompanying prospectus.

PUCT Guaranteed True-Up Mechanism for Payment of Scheduled Principal and Interest

The Financing Act mandates and the irrevocable financing order guarantees that transition charges on all retail electric customers will be adjusted at least annually to ensure the expected recovery of amounts sufficient to provide timely payment of scheduled principal and interest on the Transition Bonds. Additionally, transition charges are required to be adjusted semi-annually under the servicing agreement if necessary to ensure the expected recovery of amounts sufficient to timely provide all payments of debt service and other required amounts and charges in connection with the Transition Bonds. In the irrevocable financing order, the Texas commission guarantees that it will take specific action pursuant to the financing order as expressly authorized by the Financing Act.

There is no "cap" on the level of transition charges that may be imposed on consumers of electricity to pay on a timely basis scheduled principal and interest on the Transition Bonds. Through the true-up mechanism, all retail electric customers cross share in the liabilities of all other retail electric customers for the payment of transition charges.

The financing order provides that the true-up mechanism and all other obligations of the State of Texas and the Texas commission set forth in the financing order are direct, explicit, irrevocable and unconditional upon issuance of the Transition Bonds, and are legally enforceable against the State of Texas and the Texas commission. Please read "The Transition Charges" below and "Entergy Texas' Financing Order" and "The Servicing Agreement-The PUCT Guaranteed Transition Charge Adjustment Process" in the accompanying prospectus.

Collection Account and Subaccounts

We will establish a collection account for the Transition Bonds, to be held by the trustee, to hold the capital contribution from Entergy Texas and estimated transition charges daily remitted to the trustee by the servicer. The collection account will consist of various subaccounts, including the following:

• the general subaccount,
• the excess funds subaccount, and
• the capital subaccount.

For administrative purposes, the subaccounts may, but need not, be established as separate accounts which will be recognized individually as subaccounts and collectively as the collection account. Withdrawals from and deposits to these subaccounts will be made as described below in this prospectus supplement and under "Security for the Transition Bonds-Description of Indenture Accounts" and "-How Funds in the Collection Account Will Be Allocated" in the accompanying prospectus.

The General Subaccount. The trustee will deposit collected transition charges remitted to it by the servicer with respect to the Transition Bonds into the general subaccount. On each payment date, the trustee will allocate amounts in the general subaccount as described under "-How Funds in the Collection Account Will Be Allocated" below.

The Excess Funds Subaccount. The excess funds subaccount will be funded with collected transition charges and earnings on amounts in the collection account, other than earnings on amounts allocated to the capital subaccount, in excess of the amount necessary to pay on any payment date:

• fees and expenses, including any indemnity payments, of the trustee, our independent manager(s), the servicer and the administrator and other fees, expenses, costs and charges,
• principal and interest payments on the Transition Bonds required to be paid or scheduled to be paid on that payment date, and
• any amount required to replenish any amounts drawn from the capital subaccount.

The periodic adjustments of the transition charges will be calculated to eliminate any amounts held in the excess funds subaccount. These adjustments generally will occur annually but will occur semi-annually if the servicer forecasts that transition charge collections during the next semi-annual payment period will be insufficient to make all scheduled payments of principal, interest and other amounts in respect of the Transition Bonds and to replenish the capital subaccount to its required level. Under additional limited circumstances, these adjustments may occur more frequently, but not more frequently than every six months during the first thirteen years the transition charges are collected in respect of the Transition Bonds and every three months during the fourteenth and fifteenth years.

If amounts available in the general subaccount are not sufficient to pay the fees and expenses due on any payment date, to make required or scheduled payments to the bondholders and to replenish any amounts drawn from the capital subaccount, the trustee will first draw on any amounts in the excess funds subaccount to make those payments.

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The Capital Subaccount. On the date we issue the Transition Bonds, Entergy Texas will deposit $_________ into the capital subaccount as a capital contribution to us, which is equal to 0.5% of the initial outstanding principal balance of the Transition Bonds. The capital contribution has been set at a level sufficient to obtain the ratings on the Transition Bonds described in "Ratings for the Transition Bonds" in the accompanying prospectus. If amounts available in the general subaccount and the excess funds subaccount are not sufficient to make required or scheduled payments to the bondholders and to pay the fees and expenses specified in the indenture due on any payment date, the trustee will draw on amounts in the capital subaccount to make those payments.

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How Funds in the Collection Account Will Be Allocated

Amounts remitted by the servicer to the trustee with respect to the Transition Bonds, including any indemnity amounts, and all investment earnings on amounts in the subaccounts in the collection account will be deposited into the general subaccount of the collection account.

On each payment date, the trustee will allocate or pay all amounts on deposit in the general subaccount of the collection account for the Transition Bonds in the following priority:

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1. payment of the trustee's fees, expenses and any outstanding indemnity amounts, not to exceed $1,000,000 in any 12-month period;
2. payment of the servicing fee relating to the Transition Bonds described in the table on page [S-14] of this prospectus supplement, plus any unpaid servicing fees from prior payment dates,
3. payment of the administration fee and of the fees of our independent manager(s), each as described in the table on page [S-14] of this prospectus supplement in each case with any unpaid administration or management fees from prior payment dates,
4. payment of all of our other ordinary periodic operating expenses relating to the Transition Bonds, such as accounting and audit fees, rating agency fees, legal fees and certain reimbursable costs of the servicer under the servicing agreement,
5. payment of the interest then due on the Transition Bonds, including any past-due interest,
6. payment of the principal then required to be paid on the Transition Bonds as a result of acceleration upon an event of default or at final maturity,
7. payment of the principal then scheduled to be paid on the Transition Bonds in accordance with the expected sinking fund schedule set forth on page [S-__] of this prospectus supplement, including any previously unpaid scheduled principal,
8. payment of any of our remaining unpaid operating expenses and any remaining amounts owed pursuant to the basic documents, including all remaining indemnity amounts owed to the trustee,
9. replenishment of any amounts drawn from the capital subaccount,
10. if there is a positive balance after making the foregoing allocations, so long as no event of default has occurred and is continuing, release to us of an amount not to exceed the lesser of any remaining balance and the investment earnings on amounts in the capital subaccount,
11. allocation of the remainder, if any, to the excess funds subaccount, and
12. after the Transition Bonds have been paid in full and discharged, the balance, together with all amounts in the capital subaccount and the excess funds subaccount, to us free and clear of the lien of the indenture.

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If, on any payment date, funds in the general subaccount are insufficient to make the allocations or payments contemplated by clauses 1 through 9 of the first paragraph of this subsection, the trustee will draw from amounts on deposit in the following subaccounts in the following order up to the amount of the shortfall:

1. from the excess funds subaccount for allocations and payments contemplated in clauses 1 through 9, and
2. from the capital subaccount for allocations and payments contemplated in clauses 1 through 8.

If, on any payment date, available collections of transition charges allocable to the Transition Bonds, together with available amounts in the related subaccounts, are not sufficient to pay interest due on all outstanding Transition Bonds on that payment date, amounts available will be allocated pro rata based on the amount of interest payable on each tranche of the Transition Bonds. If, on any payment date, remaining collections of transition charges allocable to the Transition Bonds, together with available amounts in the subaccounts, are not sufficient to pay principal due and payable on all outstanding Transition Bonds on that payment date, amounts available will be allocated pro rata based on the principal amount of each tranche then due and payable. If, on any payment date, remaining collections of transition charges allocable to the Transition Bonds, together with available amounts in the subaccounts, are not sufficient to pay principal scheduled to be paid on all outstanding Transition Bonds, amou nts available will be allocated sequentially to each tranche then scheduled to be paid on the payment date. If the trustee uses amounts on deposit in the capital subaccount to pay those amounts or make those transfers, as the case may be, subsequent adjustments to the related transition charges will take into account, among other things, the need to replenish those amounts.

Retail Electric Provider Deposits and Other Credit Support

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There are no retail electric providers currently operating in Entergy Texas' service territory. If the current provisions of PURA remain unchanged and Entergy Texas remains a member of SERC, it is possible, but not likely, that there will be any competing retail electric providers within the term that the transition bonds are outstanding. However, if retail competition is introduced into its service territory, retail electric providers may begin to operate in Entergy Texas' service territory during the term in which the Transition Bonds are outstanding. Pursuant to the financing order, any future retail electric provider in Entergy Texas' service territory is obligated to collect and remit transition charges to the servicer as described under "Future Retail Electric Providers" in the accompanying prospectus. Please read "The Texas Electricity Market Restructuring Plan-Entergy Texas' Service Territory Could Experience Deregulation in the Future", "Future Retail Electric Provide rs-Credit Practices, Policies and Procedures of Retail Electric Providers-Rating, Deposit and Related Requirements," "-Remedies Upon Default" and "Risk Factors-Risks Associated With Potential Bankruptcy Proceedings of Future Retail Electric Providers if and when Retail Competition is Introduced" in the accompanying prospectus.

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THE TRANSITION CHARGES

Beginning on the date we issue the Transition Bonds, the initial transition charges listed in the table below will be imposed on retail electric customers in each transition charge customer class at the applicable rate for the class determined pursuant to the financing order. These transition charges may be adjusted annually, or more frequently under certain circumstances, by the servicer in accordance with its filings with the Texas commission. Please read "Description of the Transition Property-Creation of Transition Property; Financing Order" in the accompanying prospectus.

Initial Transition Charges

Transition charge Customer Class	Initial Transition charge Rate
Residential	$___________ per kWh
Small General Services	$___________ per kWh
General Services	$___________ per kWh
Large General Services	$___________ per kWh
Large Industrial Power Service	$___________ per kW
Standby and Maintenance Service	$___________ per kW
Experimental Economic As-Available Power Service	$___________ per kWh
Street and Outdoor Lighting	$___________ per kWh

UNDERWRITING THE BONDS

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Subject to the terms and conditions in the underwriting agreement among us, Entergy Texas and the underwriters, for whom Morgan Stanley & Co. Incorporated and Citigroup Global Markets Inc. are acting as representatives, we have agreed to sell to the underwriters, and the underwriters have severally agreed to purchase, the principal amount of the Transition Bonds listed opposite each underwriter's name below:

Underwriter	[Tranche A-1]	[Tranche A-2]	[Tranche A-3]
Morgan Stanley & Co. Incorporated	$	$	$
Citigroup Global Markets Inc.
Goldman, Sachs & Co.
RBS Securities Inc.
Loop Capital Markets, LLC
Total	$	$	$

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Under the underwriting agreement, the underwriters will take and pay for all of the Transition Bonds we offer, if any are taken. If an underwriter defaults, the underwriting agreement provides that the purchase commitments of the non-defaulting underwriters may be increased or the underwriting agreement may be terminated.

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The Underwriters' Sales Price for the Bonds

The Transition Bonds sold by the underwriters to the public will be initially offered at the prices to the public set forth on the cover of this prospectus supplement. The underwriters propose initially to offer the Transition Bonds to dealers at such prices, less a selling concession not to exceed the percentage listed below for each tranche. The underwriters may allow, and dealers may reallow, a discount not to exceed the percentage listed below for each tranche.

	Selling Concession	Reallowance Discount
[Tranche A-1
Tranche A-2
Tranche A-3]

After the initial public offering, the public offering prices, selling concessions and reallowance discounts may change.

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No Assurance as to Resale Price or Resale Liquidity for the Bonds

The Transition Bonds are a new issue of securities with no established trading market. They will not be listed on any securities exchange. The underwriters have advised us that they intend to make a market in the Transition Bonds, but they are not obligated to do so and may discontinue market making at any time without notice. We cannot assure you that a liquid trading market will develop for the Transition Bonds.

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Various Types of Underwriter Transactions That May Affect the Price of the Bonds

The underwriters may engage in overallotment transactions, stabilizing transactions, syndicate covering transactions and penalty bids with respect to the Transition Bonds in accordance with Regulation M under the Securities Exchange Act of 1934. Overallotment transactions involve syndicate sales in excess of the offering size, which create a syndicate short position. Stabilizing transactions are bids to purchase the Transition Bonds, which are permitted, so long as the stabilizing bids do not exceed a specific maximum price. Syndicate covering transactions involve purchases of the Transition Bonds in the open market after the distribution has been completed in order to cover syndicate short positions. Penalty bids permit the underwriters to reclaim a selling concession from a syndicate member when the Transition Bonds originally sold by the syndicate member are purchased in a syndicate covering transaction. These overallotment transactions, stabilizing transactions, syndicate covering tr ansactions and penalty bids may cause the prices of the Transition Bonds to be higher than they would otherwise be. Neither we, Entergy Texas, the trustee, our managers nor any of the underwriters represent that the underwriters will engage in any of these transactions or that these transactions, if commenced, will not be discontinued without notice at any time.

Certain of the underwriters and their affiliates have in the past provided, and may in the future from time to time provide, investment banking and general financing and banking services to Entergy Texas and its affiliates for which they have in the past received, and in the future may receive, customary fees. Morgan Stanley & Co. Incorporated, as financial advisor, has rendered certain financial advisory/structuring services to us and will receive an aggregate fee of $[__________] for such services, which is included in the expenses estimate below. In addition, each underwriter may from time to time take positions in the Transition Bonds.

We estimate that the total expenses of the offering to be paid from the proceeds of the sale of the Transition Bonds will be $[__________].

We and Entergy Texas have agreed to indemnify the underwriters against certain liabilities, including liabilities under the Securities Act of 1933, or to contribute to payments the underwriters may be required to make in respect of those liabilities.

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The underwriters are offering the Transition Bonds, subject to prior sale, when, as and if issued to and accepted by them, subject to approval of legal matters, including the validity of the Transition Bonds and other conditions contained in the underwriting agreement, such as receipt of ratings confirmations, officers' certificates and legal opinions. The underwriters reserve the right to withdraw, cancel or modify offers to the public and to reject offers in whole or in part.

MATERIAL U.S. FEDERAL INCOME TAX CONSEQUENCES

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In the opinion of Sidley Austin LLP, tax counsel to us and to Entergy Texas, interest paid on the Transition Bonds generally will be taxable to a U.S. Holder as ordinary interest income at the time it accrues or is received in accordance with the U.S. Holder's method of accounting for U.S. federal income tax purposes. Sidley Austin LLP has also issued an opinion, based on Revenue Procedure 2005-62, 2005-2 CB 507, that, for U.S. federal income tax purposes (1) we will not be treated as a taxable entity separate and apart from Entergy Texas, our sole member, and (2) the Transition Bonds will be treated as debt of Entergy Texas. Each beneficial owner of a bond, by acquiring a beneficial interest, agrees to treat such bond as debt of Entergy Texas, our sole member, for U.S. federal income tax purposes unless otherwise required by appropriate taxing authorities. Please read "Material U.S. Federal Income Tax Consequences" in the accompanying prospectus.

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WHERE YOU CAN FIND MORE INFORMATION

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We are incorporating into this prospectus supplement any future filing, which we or Entergy Texas, but solely in its capacity as our sponsor, make with the SEC under Sections 13(a), 13(c), 14 or 15(d) of the Exchange Act (excluding any annual reports on Form 10-K). These reports will be filed under our own name as issuing entity. Please read "Where You Can Find More Information" in the accompanying prospectus.

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LEGAL PROCEEDINGS

There are no legal or governmental proceedings pending against us, the sponsor, seller, trustee or servicer, or of which any property of the foregoing is subject, that is material to the holders of the Transition Bonds.

LEGAL MATTERS

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Certain legal matters relating to the Transition Bonds, including certain U.S. federal income tax matters, will be passed on by Sidley Austin LLP, counsel to Entergy Texas and the issuing entity, by Richards, Layton & Finger, P.A., special Delaware counsel to the issuing entity, by Clark, Thomas & Winters, a Professional Corporation, Austin, Texas, regulatory Texas counsel to Entergy Texas and the issuing entity, and by Pillsbury Winthrop Shaw Pittman LLP, counsel to the underwriters. Pillsbury Winthrop Shaw Pittman LLP regularly represents affiliates of Entergy Texas in connection with various legal matters not relating to the offering of the Transition Bonds.

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OFFERING RESTRICTIONS IN CERTAIN JURISDICTIONS

NOTICE TO RESIDENTS OF SINGAPORE

EACH UNDERWRITER ACKNOWLEDGES THAT THIS PRELIMINARY TERM SHEET HAS NOT BEEN REGISTERED AS A PROSPECTUS WITH THE MONETARY AUTHORITY OF SINGAPORE. ACCORDINGLY, EACH UNDERWRITER REPRESENTS, WARRANTS AND AGREES THAT IT HAS NOT OFFERED OR SOLD ANY BONDS OR CAUSED THE BONDS TO BE MADE THE SUBJECT OF AN INVITATION FOR SUBSCRIPTION OR PURCHASE, AND WILL NOT OFFER OR SELL ANY BONDS OR CAUSE THE BONDS TO BE MADE THE SUBJECT OF AN INVITATION FOR SUBSCRIPTION OR PURCHASE, AND HAS NOT CIRCULATED OR DISTRIBUTED, NOR WILL IT CIRCULATE OR DISTRIBUTE THIS PRELIMINARY TERM SHEET OR ANY OTHER DOCUMENT OR MATERIAL IN CONNECTION WITH THE OFFER OR SALE, OR INVITATION FOR SUBSCRIPTION OR PURCHASE, OF BONDS, WHETHER DIRECTLY OR INDIRECTLY, TO PERSONS IN SINGAPORE OTHER THAN (I) TO AN INSTITUTIONAL INVESTOR UNDER SECTION 274 OF THE SECURITIES AND FUTURES ACT, CHAPTER 289 OF SINGAPORE (THE "SFA") OR (II) TO A RELEVANT PERSON, OR ANY PERSON PURSUANT TO SECTION 275(1)(A) OF THE SFA AND IN ACCORDANC E WITH THE CONDITIONS SPECIFIED IN SECTION 275 OF THE SFA OR (III) OTHERWISE PURSUANT TO, AND IN ACCORDANCE WITH THE CONDITIONS OF, ANY OTHER APPLICABLE PROVISION OF THE SFA.

WHERE THE BONDS ARE SUBSCRIBED OR PURCHASED UNDER SECTION 275 BY A RELEVANT PERSON WHICH IS:

(A) A CORPORATION (WHICH IS NOT AN ACCREDITED INVESTOR (AS DEFINED IN SECTION 4A OF THE SFA)) THE SOLE BUSINESS OF WHICH IS TO HOLD INVESTMENTS AND THE ENTIRE SHARE CAPITAL OF WHICH IS OWNED BY ONE OR MORE INDIVIDUALS, EACH OF WHOM IS AN ACCREDITED INVESTOR; OR

(B) A TRUST (WHERE THE TRUSTEE IS NOT AN ACCREDITED INVESTOR) WHOSE SOLE PURPOSE IS TO HOLD INVESTMENTS AND EACH BENEFICIARY OF THE TRUST IS AN INDIVIDUAL WHO IS AN ACCREDITED INVESTOR,

SHARES, DEBENTURES AND UNITS OF SHARES AND DEBENTURES OF THAT CORPORATION OR THE BENEFICIARIES' RIGHTS AND INTEREST (HOWSOEVER DESCRIBED) IN THAT TRUST SHALL NOT BE TRANSFERRED WITHIN 6 MONTHS AFTER THAT CORPORATION OR THAT TRUST HAS ACQUIRED THE BONDS PURSUANT TO AN OFFER MADE UNDER SECTION 275 EXCEPT:

(1) TO AN INSTITUTIONAL INVESTOR (FOR CORPORATIONS, UNDER SECTION 274 OF THE SFA) OR TO A RELEVANT PERSON DEFINED IN SECTION 275(2) OF THE SFA, OR TO ANY PERSON PURSUANT TO AN OFFER THAT IS MADE ON TERMS THAT SUCH SHARES, DEBENTURE AND UNITS OF SHARES AND DEBENTURES OF THAT CORPORATION OR SUCH RIGHTS AND INTEREST IN THAT TRUST ARE ACQUIRED AT A CONSIDERATION OF NOT LESS THAN S$200,000 (OR ITS EQUIVALENT IN A FOREIGN CURRENCY) FOR EACH TRANSACTION, WHETHER SUCH AMOUNT IS TO BE PAID FOR IN CASH OR BY EXCHANGE OF SECURITIES OR OTHER ASSETS, AND FURTHER FOR CORPORATIONS, IN ACCORDANCE WITH THE CONDITIONS SPECIFIED IN SECTION 275 OF THE SFA;

(2) WHERE NO CONSIDERATION IS OR WILL BE GIVEN FOR THE TRANSFER;

(3) WHERE THE TRANSFER IS BY OPERATION OF LAW.

NOTICE TO RESIDENTS OF THE PEOPLE'S REPUBLIC OF CHINA

THE BONDS HAVE NOT BEEN AND WILL NOT BE REGISTERED UNDER THE SECURITIES LAW OF THE PEOPLE'S REPUBLIC OF CHINA (AS THE SAME MAY BE AMENDED FROM TIME TO TIME) AND ARE NOT TO BE OFFERED OR SOLD TO PERSONS WITHIN THE PEOPLE'S REPUBLIC OF CHINA, AND NO OFFERING MATERIAL OR INFORMATION CONTAINED HEREIN RELATING TO THE OFFERING OF THE BONDS MAY BE SUPPLIED TO THE PUBLIC IN THE PEOPLE'S REPUBLIC OF CHINA OR USED IN CONNECTION WITH ANY OFFER FOR THE SUBSCRIPTION OR SALE OF THE BONDS TO THE PUBLIC IN THE PEOPLE'S REPUBLIC OF CHINA. HOWEVER, THE FOREGOING RESTRICTIONS DO NOT PREVENT ANY ENTITY INCORPORATED WITHIN THE PEOPLE'S REPUBLIC OF CHINA THAT IS AUTHORIZED TO ENGAGE IN FOREIGN EXCHANGE BUSINESS AND OFFSHORE INVESTMENT FROM OUTSIDE OF CHINA FROM INVESTING IN THE BONDS THROUGH LEGITIMATE VEHICLES. SUCH ENTITIES MAY BE SUBJECT TO FOREIGN EXCHANGE CONTROL APPROVAL AND FILING REQUIREMENTS UNDER THE RELEVANT CHINESE FOREIGN EXCHANGE REGULATIONS WITH RESPECT OF ITS SUBSCRIPTIONS AND TRADING OF THE BONDS. FOR T HE PURPOSE OF THIS PARAGRAPH, REFERENCE TO THE PEOPLE'S REPUBLIC OF CHINA DOES NOT INCLUDE THE HONG KONG AND MACAU SPECIAL ADMINISTRATIVE REGIONS OR TAIWAN.

NOTICE TO RESIDENTS OF JAPAN

THE BONDS HAVE NOT BEEN AND WILL NOT BE REGISTERED UNDER THE FINANCIAL INSTRUMENTS AND EXCHANGE LAW OF JAPAN (THE "FIEL") (LAW NO. 25 OF 1948, AS AMENDED), AND MAY NOT BE OFFERED OR SOLD IN JAPAN OR TO, OR FOR THE ACCOUNT OR BENEFIT OF, ANY RESIDENT OF JAPAN (WHICH TERM AS USED HEREIN MEANS ANY PERSON RESIDENT IN JAPAN, INCLUDING ANY CORPORATION OR OTHER ENTITY ORGANIZED UNDER THE LAWS OF JAPAN) OR TO, OR FOR THE ACCOUNT OR BENEFIT OF, OTHERS FOR RE-OFFERING OR RESALE, DIRECTLY OR INDIRECTLY, IN JAPAN OR TO, OR FOR THE ACCOUNT OR BENEFIT OF, ANY RESIDENT OF JAPAN, EXCEPT PURSUANT TO AN EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF, AND OTHERWISE IN COMPLIANCE WITH, THE FIEL, AND IN COMPLIANCE WITH THE OTHER RELEVANT LAWS, REGULATIONS, AND MINISTERIAL GUIDELINES OF JAPAN.

NOTICE TO RESIDENTS OF HONG KONG

NO PROSPECTUS IN RELATION TO THE BONDS HAS BEEN OR WILL BE REGISTERED WITH THE COMPANIES REGISTRY IN HONG KONG. EACH UNDERWRITER HAS REPRESENTED, WARRANTED AND AGREED THAT:

IT HAS NOT OFFERED OR SOLD AND WILL NOT OFFER OR SELL IN HONG KONG, BY MEANS OF ANY DOCUMENT, ANY BONDS OTHER THAN (A) TO PROFESSIONAL INVESTORS WITHIN THE MEANING OF THE SECURITIES AND FUTURES ORDINANCE (CAP. 571) OF THE LAWS OF HONG KONG ("SFO") AND ANY RULES MADE THEREUNDER; OR (B) IN CIRCUMSTANCES THAT DO NOT RESULT IN THE DOCUMENT BEING A "PROSPECTUS" AS DEFINED IN THE COMPANIES ORDINANCE (CAP. 32) OF THE LAWS OF HONG KONG ("CO") OR THAT DO NOT CONSTITUTE AN OFFER OR AN INVITATION TO THE PUBLIC FOR THE PURPOSES OF THE CO AND THE SFO;

IT HAS NOT ISSUED OR HAD IN ITS POSSESSION FOR THE PURPOSES OF ISSUE, AND WILL NOT ISSUE OR HAVE IN ITS POSSESSION FOR THE PURPOSE OF ISSUE, WHETHER IN HONG KONG OR ELSEWHERE, ANY ADVERTISEMENT, INVITATION OR DOCUMENT RELATING TO THE BONDS, WHICH IS DIRECTED AT, OR THE CONTENTS OF WHICH ARE LIKELY TO BE ACCESSED OR READ BY, THE PUBLIC OF HONG KONG (EXCEPT IF PERMITTED TO DO SO UNDER THE LAWS OF HONG KONG) OTHER THAN WITH RESPECT TO BONDS THAT ARE INTENDED TO BE DISPOSED OF ONLY TO PERSONS OUTSIDE HONG KONG OR ONLY TO "PROFESSIONAL INVESTORS" AS DEFINED UNDER THE SFO AND ANY RULES MADE UNDER THAT ORDINANCE.

NOTICE TO RESIDENTS OF THE EUROPEAN ECONOMIC AREA

IN RELATION TO EACH MEMBER STATE OF THE EUROPEAN ECONOMIC AREA WHICH HAS IMPLEMENTED THE PROSPECTUS DIRECTIVE (EACH, A "RELEVANT MEMBER STATE"), EACH UNDERWRITER HAS REPRESENTED AND AGREED THAT WITH EFFECT FROM AND INCLUDING THE DATE ON WHICH THE PROSPECTUS DIRECTIVE IS IMPLEMENTED IN THAT RELEVANT MEMBER STATE (THE "RELEVANT IMPLEMENTATION DATE") IT HAS NOT MADE AND WILL NOT MAKE AN OFFER OF BONDS WHICH ARE THE SUBJECT OF THE OFFERING CONTEMPLATED BY THIS OFFERING CIRCULAR TO THE PUBLIC IN THAT RELEVANT MEMBER STATE OTHER THAN:

(A) TO LEGAL ENTITIES WHICH ARE AUTHORIZED OR REGULATED TO OPERATE IN THE FINANCIAL MARKETS OR, IF NOT SO AUTHORIZED OR REGULATED, WHOSE CORPORATE PURPOSE IS SOLELY TO INVEST IN SECURITIES;

(B) TO ANY LEGAL ENTITY WHICH HAS TWO OR MORE OF (I) AN AVERAGE OF AT LEAST 250 EMPLOYEES DURING THE LAST FINANCIAL YEAR; (II) A TOTAL BALANCE SHEET OF MORE THAN 43,000,000 AND (III) AN ANNUAL NET TURNOVER OF MORE THAN 50,000,000, AS SHOWN IN ITS LAST ANNUAL OR CONSOLIDATED ACCOUNTS;

(C) TO FEWER THAN 100 NATURAL OR LEGAL PERSONS (OTHER THAN QUALIFIED INVESTORS AS DEFINED IN THE PROSPECTUS DIRECTIVE) SUBJECT TO OBTAINING THE PRIOR CONSENT OF THE LEAD MANAGER; OR

(D) IN ANY OTHER CIRCUMSTANCES FALLING WITHIN ARTICLE 3(2) OF THE PROSPECTUS DIRECTIVE.

FOR THE PURPOSES OF THIS PROVISION, THE EXPRESSION AN "OFFER OF BONDS TO THE PUBLIC" IN RELATION TO ANY BONDS IN ANY RELEVANT MEMBER STATE MEANS THE COMMUNICATION IN ANY FORM AND BY ANY MEANS OF SUFFICIENT INFORMATION ON THE TERMS OF THE OFFER AND THE BONDS TO BE OFFERED SO AS TO ENABLE AN INVESTOR TO DECIDE TO PURCHASE OR SUBSCRIBE THE BONDS, AS THE SAME MAY BE VARIED IN THAT MEMBER STATE BY ANY MEASURE IMPLEMENTING THE PROSPECTUS DIRECTIVE IN THAT MEMBER STATE AND THE EXPRESSION "PROSPECTUS DIRECTIVE" MEANS DIRECTIVE 2003/71/EC AND INCLUDES ANY RELEVANT IMPLEMENTING MEASURE IN EACH RELEVANT MEMBER STATE.

NOTICE TO RESIDENTS OF THE UNITED KINGDOM

EACH UNDERWRITER HAS REPRESENTED AND AGREED THAT:

(A) IT HAS ONLY COMMUNICATED OR CAUSED TO BE COMMUNICATED AND WILL ONLY COMMUNICATE OR CAUSE TO BE COMMUNICATED AN INVITATION OR INDUCEMENT TO ENGAGE IN INVESTMENT ACTIVITY (WITHIN THE MEANING OF SECTION 21 OF THE FINANCIAL SERVICES AND MARKETS ACT (THE "FSMA")) RECEIVED BY IT IN CONNECTION WITH THE ISSUE OR SALE OF THE BONDS IN CIRCUMSTANCES IN WHICH SECTION 21(1) OF THE FSMA DOES NOT APPLY TO THE ISSUING ENTITY; AND

(B) IT HAS COMPLIED AND WILL COMPLY WITH ALL APPLICABLE PROVISIONS OF THE FSMA WITH RESPECT TO ANYTHING DONE BY IT IN RELATION TO THE BONDS IN, FROM OR OTHERWISE INVOLVING THE UNITED KINGDOM.

[THE REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK]

Entergy Texas Restoration Funding, LLC

Until 90 days after the date of the prospectus supplement, all dealers that effect transactions in these securities, whether or not participating in the offering described in this prospectus supplement, may be required to deliver a prospectus supplement and prospectus. This is in addition to the dealers' obligation to deliver a prospectus supplement and prospectus when acting as underwriters and with respect to their unsold allotments or subscriptions.

The information in this prospectus is not complete and may be changed.  The transition bonds may not be sold until the registration statement filed with the Securities and Exchange Commission is effective.  This prospectus is not an offer to sell nor does it seek an offer to buy these securities in any jurisdiction where the offer or sale is not permitted.

Subject to Completion
Preliminary Prospectus, Dated ______, 2009

PROSPECTUS

Entergy Texas Restoration Funding, LLC
Issuing Entity

Senior Secured Transition Bonds

Entergy Texas, Inc.
Seller, Initial Servicer and Sponsor

________________

You should carefully consider the Risk Factors beginning on page [13] of this prospectus before you invest in the transition bonds.

We, the issuing entity, may, in the future, issue the transition bonds as described in this prospectus. The bonds may have one or more tranches. The transition bonds represent only our obligations and are backed only by our assets. Entergy Texas, Inc. and its affiliates, other than us, are not liable for any payments on the transition bonds. The transition bonds are not a debt or general obligation of the State of Texas, the Public Utility Commission of Texas or any other governmental agency or instrumentality and are not a charge on the full faith and credit or the taxing power of the State of Texas or any governmental agency or instrumentality.

We are a special purpose entity and own no property other than the collateral described in this prospectus. The collateral is the sole source of payment for the transition bonds.

We may offer and sell the transition bonds by use of this prospectus. We will provide the specific terms of any offerings in one or more supplements to this prospectus. You should read this prospectus and the related prospectus supplement carefully before you invest in the transition bonds. This prospectus may not be used to offer and sell the transition bonds unless accompanied by a prospectus supplement.

________________

THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS OR THE ACCOMPANYING PROSPECTUS SUPPLEMENT. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.

________________

The date of this prospectus is ______ __, 2009.

TABLE OF CONTENTS

READING THIS PROSPECTUS AND THE ACCOMPANYING SUPPLEMENT	1
CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING INFORMATION	1
PROSPECTUS SUMMARY	3
Summary of the Transition Bonds	3
Parties to Transaction and Responsibilities	7
Flow of Funds	7
The Collateral	8
The Transition Property	8
Interest Payments	9
Principal Payments and Record Dates and Payment Sources	9
Priority of Distributions	9
Credit Enhancement	10
Allocations as Between Transition Bond Issuances	11
State Pledge	11
Optional Redemption	11
Scheduled Final Payment Dates and Final Maturity Dates	11
Ratings for the Transition Bonds	11
Reports to Transition Bondholders	11
Servicing Compensation	11
U.S. Federal Income Tax Status	12
ERISA Considerations	12
RISK FACTORS	13
You may experience material payment delays or incur a loss on your investment in the transition bonds because the     source of funds for payment is limited.	13
RISKS ASSOCIATED WITH POTENTIAL JUDICIAL, LEGISLATIVE OR REGULATORY ACTIONS	13
We are not obligated to indemnify you for changes in law.	13
Future judicial action could reduce the value of your investment in the transition bonds.	13
Future state legislative action might attempt to reduce the value of your investment in the transition bonds.	14
The Texas commission might attempt to take actions that could reduce the value of your investment in the transition     bonds.	14
SERVICING RISKS	14
Inaccurate consumption forecasting or unanticipated delinquencies or charge-offs might reduce scheduled payments     on the transition bonds.	14
Changes to billing and collection practices may reduce the amount of funds available for payments on the bonds.	15
Your investment in the transition bonds depends on Entergy Texas or its successor or assignee, acting as servicer     of the transition property.	15
If we replace Entergy Texas as the servicer, we may experience difficulties finding and using a replacement servicer.	15
It might be difficult to collect transition charges from retail electric providers.	16
Competitive metering services might result in unexpected problems in receiving accurate metering data.	16
Limits on rights to terminate service might make it more difficult to collect the transition charges.	17
Future adjustments to transition charges by customer class might result in insufficient collections.	17
RISKS ASSOCIATED WITH THE UNUSUAL NATURE OF THE TRANSITION PROPERTY	17
We will not receive transition charges in respect of electric service provided more than 15 years from the date of     issuance of the transition bonds.	17
Foreclosure of the trustee's lien on the transition property securing the transition bonds might not be practical, and     acceleration of the transition bonds before maturity might have little practical effect.	17
STORM-RELATED RISKS	18
Storm damage to Entergy Texas' service territory could impair payment of the Bonds.	18
RISKS ASSOCIATED WITH POTENTIAL BANKRUPTCY PROCEEDINGS OF THE SELLER OR THE SERVICER	18
The servicer will commingle the transition charges with other revenues it collects, which might obstruct access to the     transition charges in case of the servicer's bankruptcy and reduce the value of your investment in the transition bonds.	18
The bankruptcy of Entergy Texas or any successor seller might result in losses or delays in payments on the transition     bonds.	18
The sale of the transition property might be construed as a financing and not a sale in a case of Entergy Texas'     bankruptcy which might delay or limit payments on the transition bonds.	20
If the servicer enters bankruptcy proceedings, the collections of the transition charges held by the servicer as of the     date of bankruptcy might constitute preferences, which means these funds might be unavailable to pay amounts owing     on the transition bonds.	20
Claims against Entergy Texas or any successor seller might be limited in the event of a bankruptcy of the seller.	20
The bankruptcy of Entergy Texas or any successor seller might limit the remedies available to the trustee.	20
RISKS ASSOCIATED WITH POTENTIAL BANKRUPTCY PROCEEDINGS OF FUTURE RETAIL ELECTRIC PROVIDERS IF AND WHEN RETAIL COMPETITION IS INTRODUCED	21
If retail competition is introduced into Entergy Texas' service territory, REPs, and not Entergy Texas, will collect the     transition charges from customers. In such event, the following risks may arise. Please read "Future Retail Electric     Providers."	21
If retail competition is introduced into Entergy Texas' service territory, retail electric providers will collect the transition     charges and may commingle such charges with other revenues they collect. This may cause losses on or reduce the     value of your investment in the transition bonds in the event a retail electric provider enters bankruptcy proceedings.	21
If a retail electric provider enters bankruptcy proceedings, any cash deposit of the retail electric provider held by the     trustee might not be available to cover amounts owed by the retail electric provider.	21
If a retail electric provider enters bankruptcy proceedings, transition charge payments made by that retail electric     provider to the servicer might constitute preferences, and the servicer may be required to return such funds to the     bankruptcy estate of the retail electric provider.	21
OTHER RISKS ASSOCIATED WITH AN INVESTMENT IN THE TRANSITION BONDS	22
Entergy Texas' indemnification obligations under the sale and servicing agreements are limited and might not be     sufficient to protect your investment in the transition bonds.	22
Entergy Texas may cause the issuance of additional transition bonds through another affiliated entity.	22
Entergy Texas' ratings might affect the market value of the transition bonds.	22
Technological change might make alternative energy sources more attractive in the future.	22
The absence of a secondary market for the transition bonds might limit your ability to resell your transition bonds.	23
You might receive principal payments for your transition bonds later than you expect.	23
THE FINANCING ACT	23
The Financing Act and other provisions of PURA authorize utilities to recover hurricane-related costs through the     issuance of bonds.	23
Entergy Texas and other utilities may securitize qualified costs	24
ENTERGY TEXAS' FINANCING ORDER	27
Entergy Texas' Securitization Proceeding and Financing Order	27
Collection of Transition Charges	28
Issuance Advice Letter	28
Tariff	28
PUCT Guaranteed True-Ups	28
PUCT Guaranteed True-Ups-Credit Risk	29
Allocation	29
Adjustments to Allocation of Transition Charges	29
Servicing Agreement	29
Binding on Successors	29
DESCRIPTION OF THE TRANSITION PROPERTY	30
Creation of Transition Property; Financing Order	30
Tariff; Transition Charges	30
Transition Charge Retail Customer Class Allocation Percentages	31
Billing and Collection Terms and Conditions	32
THE SELLER, INITIAL SERVICER AND SPONSOR	32
General	32
Municipalization	33
Entergy Texas Customer Base and Electric Energy Consumption	33
Percentage Concentration Within Entergy Texas' Large Commercial Customers	34
Forecasting Electricity Consumption	34
Credit Policy; Billing Process; Collections Process; Termination of Service	35
Write-off and Delinquency Experience	37
Delinquencies	38
Average Days Sales Outstanding	38
ENTERGY TEXAS RESTORATION FUNDING, LLC, THE ISSUING ENTITY	39
Restricted Purpose	39
Our Relationship with Entergy Texas	39
Our Relationship with the State of Texas and the Texas Commission	39
Our Management	40
Manager Fees and Limitation on Liabilities	40
We Are a Separate and Distinct Legal Entity from Entergy Texas	41
Administration Agreement	41
THE TEXAS ELECTRICITY MARKET RESTRUCTURING PLAN	41
Entergy Texas' Service Territory Could Experience Deregulation in the Future	41
General Structure of Utility Deregulation in Texas	41
Recovery of Stranded Costs and Regulatory Assets for Texas Utilities Subject to PURA	42
FUTURE RETAIL ELECTRIC PROVIDERS	43
Credit Practices, Policies and Procedures of Retail Electric Providers	43
USE OF PROCEEDS	46
RELATIONSHIP TO THE PRIOR TRANSITION BONDS	46
DESCRIPTION OF THE TRANSITION BONDS	46
General	46
Interest and Principal on the Transition Bonds	47
Payments on the Transition Bonds	48
Registration and Transfer of the Transition Bonds	49
Transition Bonds Will Be Issued in Book-Entry Form	49
Definitive Transition Bonds	51
Optional Redemption	52
Allocations as Between Transition Bond Issuances	52
Access of Bondholders	52
Reports to Bondholders	52
Enhanced Continuing Disclosure	53
We and the Trustee May Modify the Indenture	54
Our Covenants	56
Events of Default; Rights Upon Event of Default	58
Actions by Bondholders	60
Annual Report of Trustee	60
Annual Compliance Statement	61
Satisfaction and Discharge of Indenture	61
Our Legal and Covenant Defeasance Options	61
THE TRUSTEE	62
SECURITY FOR THE TRANSITION BONDS	63
General	63
Pledge of Collateral	63
Security Interest in the Collateral	63
Right of Foreclosure	64
Description of Indenture Accounts	64
How Funds in the Collection Account Will Be Allocated	66
State Pledge	67
WEIGHTED AVERAGE LIFE AND YIELD CONSIDERATIONS FOR THE TRANSITION BONDS	67
THE SALE AGREEMENT	67
Sale and Assignment of the Transition Property	67
Conditions to the Sale of Transition Property	68
Seller Representations and Warranties	69
Covenants of the Seller	71
Indemnification	74
Successors to the Seller	74
Amendment	75
THE SERVICING AGREEMENT	75
Servicing Procedures	75
Servicing Standards and Covenants	75
The PUCT Guaranteed Transition Charge Adjustment Process	76
Remittances to Collection Account	77
Servicing Compensation	77
Servicer Representations and Warranties; Indemnification	78
The Servicer Will Indemnify Us, Other Entities and the Texas Commission in Limited Circumstances	79
Evidence as to Compliance	79
Matters Regarding the Servicer	80
Servicer Defaults	81
Rights Upon a Servicer Default	81
Waiver of Past Defaults	82
Successor Servicer	82
Amendment	82
HOW A BANKRUPTCY MAY AFFECT YOUR INVESTMENT	82
MATERIAL U.S. FEDERAL INCOME TAX CONSEQUENCES	85
General	85
Taxation of the Issuing Entity and Characterization of the Transition Bonds	86
Tax Consequences To U.S. Holders	86
Tax Consequences to Non-U.S. Holders	87
Backup Withholding	87
ERISA CONSIDERATIONS	88
General	88
Regulation of Assets Included in a Plan	89
Prohibited Transaction Exemptions	89
Consultation with Counsel	90
PLAN OF DISTRIBUTION	90
RATINGS FOR THE TRANSITION BONDS	90
WHERE YOU CAN FIND MORE INFORMATION	90
LEGAL MATTERS	91
GLOSSARY OF DEFINED TERMS	92

READING THIS PROSPECTUS AND THE ACCOMPANYING SUPPLEMENT

This prospectus is part of a registration statement we and Entergy Texas have filed with the SEC using a "shelf" registration process. By using this process, we may offer the transition bonds in the future. This prospectus provides you with a general description of the transition bonds we may offer. When we offer the transition bonds, we will provide a supplement to this prospectus. The prospectus supplement will describe the specific terms of the offering. The prospectus supplement may also contain information that supplements the information contained in this prospectus, and you should rely on the supplementary information in that prospectus supplement. Please read carefully this prospectus, the prospectus supplement and the information, if any, contained in the documents we refer to in this prospectus under the heading "Where You Can Find More Information."

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References in this prospectus and the prospectus supplement to the terms we, us, Entergy Texas Funding or the issuing entity mean Entergy Texas Restoration Funding, LLC. References to Entergy Texas, ETI, the seller or the sponsor refer to Entergy Texas, Inc. or to any successor to the rights and obligations of Entergy Texas under the sale agreement referred to in this prospectus. References to the servicer refer to Entergy Texas and any successor servicer under the servicing agreement referred to in this prospectus. Unless the context otherwise requires, the term customer, retail customer or retail electric customer means a retail customer within Entergy Texas' service territory. If retail competition is ever introduced into Entergy Texas' service territory, as described under "The Texas Electricity Market Restructuring Plan - - Entergy Texas' Service Territory Could Experience Deregulation in the Future", then the terms customer, retail customer or retail electric customer shall mean a retail end user of electricity and related services provided by Entergy Texas or a retail electric provider via the transmission and distribution system of an electric utility such as Entergy Texas, within Entergy Texas' service territory. References to the Texas commission or PUCT refer to the Public Utility Commission of Texas. You can find a glossary of some of the other defined terms we use in this prospectus on page [92] of this prospectus.

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We have included cross-references to sections in this prospectus where you can find further related discussions. You can also find key topics in the table of contents on the preceding pages. Check the table of contents to locate these sections.

You should rely only on the information contained or incorporated by reference in this prospectus and the prospectus supplement. We have not authorized anyone else to provide you with any different information. If anyone provides you with different or inconsistent information, you should not rely on it. We are not making an offer to sell the transition bonds in any jurisdiction where the offer or sale is not permitted. The information in this prospectus is current only as of the date of this prospectus.

CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING INFORMATION

Some statements contained in this prospectus and the prospectus supplement concerning expectations, beliefs, plans, objectives, goals, strategies, future events or performance and underlying assumptions and other statements which are not historical facts, including statements in the documents that are incorporated by reference as discussed in this prospectus under the heading "Where You Can Find More Information," are forward-looking statements within the meaning of the federal securities laws. Actual results may differ materially from those expressed or implied by these statements. In some cases, you can identify our forward-looking statements by the words "anticipate," "believe," "continue," "could," "estimate," "expect," "forecast," "goal," "intend," "may," "objective," "plan," "potential," "predict," " projection," "should," "will," or other similar words.

We have based our forward-looking statements on our management's belief, expectations and assumptions based on information available to our management at the time the statements are made. We caution you that assumptions, beliefs, expectations, intentions and projections about future events may and often do vary materially from actual results. Therefore, we cannot assure you that actual results will not differ materially from those expressed or implied by our forward-looking statements.

The following are some of the factors that could cause actual results to differ from those expressed or implied by our forward-looking statements:

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• state and federal legislative and regulatory actions or developments, including deregulation, re-regulation and restructuring of the electric utility industry, and changes in, or changes in application of, laws or regulations applicable to other aspects of our business;
• weather variations and other natural phenomena, including hurricanes, tropical storms, ice or snow storms, floods and other weather-related events and natural disasters, affecting retail electric customer energy usage in Entergy Texas' service territory;
• non-payment of transition charges due to financial distress of retail electric customers, Entergy Texas or any future retail electric providers;
• the accuracy of the servicer's estimates of market demand and prices for energy;
• the accuracy of the servicer's estimates of industrial, commercial and residential growth in Entergy Texas' service territory;
• changes in market demand and demographic patterns;
• the operating performance of Entergy Texas' facilities and, if competition is ever introduced into Entergy Texas' service territory, the facilities of potential future third-party suppliers of electric energy in Entergy Texas' service territory;
• the accuracy of the servicer's forecast of electrical consumption or the payment of transition charges;
• the reliability of the systems, procedures and other infrastructure necessary to operate the retail electric business in Entergy Texas' service territory, including the systems owned and operated by any future retail electric providers;
• national or regional economic conditions affecting retail electric customer energy usage in Entergy Texas' service territory;
• acts of war or terrorism or other catastrophic events affecting retail electric customer energy usage in Entergy Texas' service territory; and
• other factors we discuss in this prospectus, any prospectus supplement and any of our SEC filings.

You should not place undue reliance on forward-looking statements. Each forward-looking statement speaks only as of the date of the particular statement, and we undertake no obligation to update or revise any forward-looking statement, except as may be required by the federal securities laws.

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PROSPECTUS SUMMARY

This summary contains a brief description of the transition bonds we may offer by use of this prospectus. You will find a more detailed description of the terms of the offering of the transition bonds following this summary.

You should carefully consider the Risk Factors beginning on page [13] of this prospectus before you invest in the transition bonds.

Summary of the Transition Bonds

The issuing entity:	Entergy Texas Restoration Funding, LLC is a direct, wholly owned subsidiary of Entergy Texas and a limited liability company formed under Delaware law. We were formed solely to purchase and own transition property, to issue the transition bonds secured by the transition property and to perform any activity incidental thereto. The transition bonds offered by this prospectus are the only bonds we are authorized to issue.
	We are responsible to the State of Texas and the Texas commission. Specifically, pursuant to the financing order of the Texas commission relating to the transition bonds,
	our organizational documents and transaction documents for the transition bonds prohibit us from engaging in any activities other than acquiring transition property, issuing transition bonds and performing other activities as specifically authorized by that financing order,
	the Texas commission or its designated representative has a decision-making role co-equal with Entergy Texas with respect to the structuring and pricing of the transition bonds and all matters related to the structuring and pricing of the transition bonds will be determined through a joint decision of Entergy Texas and the Texas commission or its designated representative,
	Entergy Texas is directed to take all necessary steps to ensure that the Texas commission or its designated representative is provided sufficient and timely information to allow the Texas commission or its designated representative to fully participate in, and exercise its decision making power over, the proposed securitization, and
	the servicer will file periodic adjustments to transition charges with the Texas commission on our behalf.
	We have also agreed that certain reports concerning transition charge collections will be provided to the Texas commission.
	Please read "Entergy Texas' Financing Order-Entergy Texas' Securitization Proceeding and Financing Order."
Our address:	Capital Center, 919 Congress Avenue, Suite 840-C, Austin, Texas 78701
Our telephone number:	(512) 487-3982
<R> Seller, initial servicer and sponsor:	Entergy Texas is a public utility engaged in the generation, transmission, distribution and sale of electric energy in the State of Texas. As of December 31, 2008, Entergy Texas provided electric service to approximately 395,000 retail customers in its service territory. During the 12 months ended December 31, 2008, Entergy Texas' total retail electric deliveries were approximately 33.8% residential, 26.3% commercial, 38.3% industrial, and 1.6% government and municipal. As of June 30, 2009, Entergy Texas provided electric service to approximately 402,000 retail customers in its service territory. During the six-months ended June 30, 2009, Entergy Texas' total retail electric deliveries were approximately 33.0% residential, 27.1% commercial, 38.2% industrial, and 1.7% government and municipal. Pursuant to a financing order issued by the Texas commission in April 2007 under Subchapters G and J of Chapter 39 of the Texas Public Utility Regulatory Act, Entergy Gulf States, Inc., or EGSI, sold transition property to an affiliate, Entergy Gulf States Reconstruction Funding I, LLC. The affiliate, on June 29, 2007, issued $329,500,000 Senior Secured Transition Bonds, Series A, or the prior transition bonds. Following the issuance of the prior transition bonds, EGSI was reorganized pursuant to a jurisdictional separation plan into two vertically integrated utility companies, Entergy Gulf States Louisiana, L.L.C. operating as a public utility in Louisiana and Entergy Texas operating as a public utility in Texas. Entergy Texas succeeded EGSI in the role of sponsor, seller and servicer for the prior transition bonds. Neither the transition charges which are authorized to be collected to repay the prior transition bonds, nor any other security held for the benefit of such bonds, constitute secur ity for the transition bonds offered by this prospectus. Please read "Relationship to the Prior Transition Bonds" and "The Financing Act-The Financing Act and other provisions of PURA authorize utilities to recover hurricane-related costs through the issuance of bonds." Entergy Texas is an operating subsidiary of Entergy Corporation, referred to as Entergy, a Delaware corporation based in New Orleans, Louisiana. Entergy is an integrated energy company engaged primarily in electric power production and retail distribution operations. Neither Entergy Texas nor Entergy nor any other affiliate (other than us) is an obligor of the transition bonds. As described below under "The Texas Electricity Market Restructuring Plan," the electric industry in Texas has undergone fundamental restructuring. Although retail competition and the unbundling of services has not been introduced into Entergy Texas' service territory it is possible that it may occur during the term of the transition bonds. Please read "The Texas Electricity Market Restructuring Plan". </R>
Entergy Texas' address:	350 Pine Street, Beaumont, Texas 77701
Entergy Texas' phone number:	(409) 838 - 6631
The servicer of the transition property:	<R> Entergy Texas, acting as the initial servicer, and any successor servicer, including any entity that succeeds to the ownership and operation of all or a portion of the distribution facilities of Entergy Texas within its service territory, whether through any merger, division, conversion, consolidation, reorganization, sale, transfer, lease, management contract or otherwise, referred to in this prospectus as the servicer, will service the transition property under the servicing agreement with us. </R>
The trustee:	The trustee for the transition bonds will be named in the prospectus supplement.
Transaction overview:	In September 2008, Texas was struck by Hurricane Ike, which caused widespread damage to infrastructure and power outages throughout Entergy Texas' service territory. Earlier in the month the service territory of several Texas utilities had been affected by Hurricane Gustav. In response to the damage to utility infrastructure, the Texas legislature passed Subchapter I of Chapter 36 of the Public Utility Regulatory Act, or PURA, which, together with Subchapter G of Chapter 39 of PURA, is referred to as the Financing Act. The Financing Act authorizes electric utilities in Texas, including Entergy Texas, to finance the recovery of certain costs incurred as a result of any tropical storm or hurricane, ice or snow storm, flood or other weather-related event or natural disaster that occurred in 2008 or thereafter, which are referred to under the Financing Act and in this prospectus as system restoration costs, as well as the costs expensed or charged to the storm reserve and the costs of issuing, supporting, and servicing transition bonds, through the issuance of transition bonds. A Texas utility must apply to the Texas commission for a financing order under the Financing Act to authorize the issuance of transition bonds We sometimes refer to transition bonds as bonds and when we refer to transition bonds or bonds we mean bonds issued under the Financing Act unless otherwise specified. <R> In order to recover system restoration costs associated with Hurricanes Ike and Gustav which affected Entergy Texas' service area in 2008, Entergy Texas applied for a financing order under the Financing Act. The financing order was issued by the Texas commission on September 11, 2009. This financing order authorizes the issuance of up to $539,881,826 in bonds, subject to certain adjustments described below. Any references in this prospectus to the financing order, unless the context indicates otherwise, are to this financing order issued on September 11, 2009. Please refer to "Entergy Texas' Financing Order" in this prospectus.
	Pursuant to the Financing Act, the Texas commission may adopt a financing order that imposes, for payment of the transition bonds, an irrevocable, nonbypassable transition charge on all retail customers within a utility's certificated Texas service area as it existed on September 11, 2009. We refer to this area in this prospectus and the prospectus supplement, with regard to Entergy Texas, as Entergy Texas' service territory. The amount and terms for collections of these transition charges are governed by one or more financing orders issued by the Texas commission. The Financing Act permits an electric utility to transfer its rights and interests under a financing order, including the right to impose, collect and receive transition charges, to a special purpose entity formed by the electric utility to issue debt securities secured by the right to receive revenues arising from the transition charges. The electric utility's right to receive the transition charges, all revenues and collections resulting from the transition charges and its other rights and interests under a financing order, upon transfer to the issuing entity, constitute transition property. Under the Financing Act, transition property does not come into existence until an electric utility first transfers to an assignee or pledges in connection with the issuance of transition bonds its rights under a related financing order. However, for convenience of reference in this prospectus and the prospectus supplement, the transfer of Entergy Texas' rights under such a financing order is sometimes referred to as the sale or purchase of transition property.
	On September 11, 2009, the Texas commission issued its financing order to Entergy Texas authorizing the issuance of transition bonds, with the aggregate principal amount consisting of: (i)  $539,881,826 in system restoration costs (including carrying costs through October 26, 2009, which was the expected issuance date of the transition bonds used for the financing order) plus (ii) up-front qualified costs. The financing order became final and non-appealable on September 28, 2009. Please read "Entergy Texas' Financing Order." To the extent the transition bonds are issued on a date other than October 26, 2009, the financing order requires Entergy Texas to adjust the carrying costs for the difference in the number of days either greater than or less than assumed in the calculation based on the projected issuance date of October 26, 2009. The financing order further requires Entergy Texas to update the up-front qualified costs in the issuance advice letter referred to in this prospectus to reflect the amount actually securitized and other more current information. The qualified costs authorized in the financing order, which we refer to in this prospectus and any applicable prospectus supplement as qualified costs, include Entergy Texas' system restoration costs as found by the Texas commission in the applicable financing order, costs of issuing, supporting and servicing the transition bonds and certain costs of retiring some of Entergy Texas' existing debt in connection with the issuance of the transition bonds. The Texas commission guarantees that it will take specific actions pursuant to the irrevocable financing order as expressly authorized by the Financing Act to ensure that expected transition charge revenues are sufficient to timely pay scheduled principal and interest on the of transition bonds. </R>
	The primary transactions underlying the offering of the transition bonds are as follows:
	Entergy Texas will sell transition property to us in exchange for the net proceeds from the sale of the transition bonds,
	we will sell the transition bonds, which will be secured primarily by the transition property, to the underwriters named in the prospectus supplement, and
	Entergy Texas will act as the initial servicer of the transition property.
	The transition bonds are not obligations of the trustee, our managers (who, under our limited liability company agreement, manage us), Entergy Texas, Entergy or of any of their affiliates other than us. The transition bonds are also not obligations of the State of Texas or any governmental agency, authority or instrumentality of the State of Texas.

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Parties to Transaction and Responsibilities

The following chart represents a general summary of the parties to the transactions underlying the offering of the transition bonds, their roles and their various relationships to the other parties:

Flow of Funds

The following chart represents a general summary of the flow of funds following issuance of bonds:

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* As of December 31, 2008 and as of June 30, 2009, Entergy Texas had, respectively, approximately 395,000 and 402,000 retail customers in its service territory.

** Currently, there are no retail electric providers. Further, if the provisions of PURA remain unchanged and Entergy Texas remains a member of SERC, it is possible, but not likely, that there will be any competing retail electric providers within the term that the transition bonds are outstanding. See "The Texas Electricity Market Restructuring Plan - - Entergy Texas' Service Territory Could Experience Deregulation in the Future".

*** Payments of principal and interest will follow payment of certain fees and operating expenses.

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The Collateral

The transition bonds will be secured by the collateral. The principal asset pledged will be transition property, which is a present property right created under the Financing Act by a financing order issued by the Texas commission. The collateral will also consist of:

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• our rights under the sale agreement pursuant to which we will acquire the related transition property, under an administration agreement and under all bills of sale delivered by Entergy Texas pursuant to the sale agreement,
• our rights under the PUCT guaranteed true-up mechanism,
• our rights under the servicing agreement and any subservicing, agency, intercreditor or collection agreements executed in connection with the servicing agreement,
• the collection account for the transition bonds and all related subaccounts,
• our rights in all deposits, guarantees, surety bonds, letters of credit and other forms of credit support provided by or on behalf of retail electric providers (if retail competition is ever introduced into Entergy Texas' service territory) pursuant to the financing order or any tariff,
• all of our other property related to the transition bonds, other than any cash released to us by the trustee on any payment date from earnings on amounts in the capital subaccount,
• all present and future claims, demands, causes and choses in action in respect of any or all of the foregoing, and
• all payments on or under and all proceeds in respect of any or all of the foregoing.

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Please read "Security for the Transition Bonds."

The Transition Property

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In general terms, all of the rights and interests of Entergy Texas under a financing order that are transferred to us pursuant to the sale agreement are referred to in this prospectus and the prospectus supplement as transition property. Transition property includes the right to impose, collect and receive transition charges in amounts sufficient to pay principal and interest and to make other deposits in connection with the transition bonds. Transition charges are payable by retail customers within Entergy Texas' service territory who consume electricity that is delivered through the distribution system. Customers who produce and deliver on-site generation from a generation facility with a rated capacity of greater than 10 MW without using Entergy Texas' distribution lines must also pay the transition charge. During the twelve months ended December 31, 2008, approximately 38.3% of Entergy Texas' total retail electric deliveries in its service territory were to industrial customers, 26.3% were to commercial customers, 33.8% were to residential customers and 1.6% were to government and municipal customers. During the six months ended June 30, 2009, approximately 38.2% of Entergy Texas' total retail electric deliveries in its service territory were to industrial customers, 27.1% were to commercial customers, 33.0% were to residential customers and 1.7% were to government and municipal customers.

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The transition property is not a receivable, and the principal collateral securing the transition bonds will not be a pool of receivables. Transition charges authorized in a financing order are irrevocable and not subject to reduction, impairment, or adjustment by further action of the Texas commission, except for annual and interim true-up adjustments to correct overcollections or undercollections and to provide for the expected recovery of amounts sufficient to timely provide all payments of debt service and other required amounts and charges in connection with the transition bonds. Please read "The Servicing Agreement-The PUCT Guaranteed Transition Charge Adjustment Process." All revenues and collections resulting from transition charges are part of the transition property with respect to the transition bonds.

We will purchase the transition property from Entergy Texas to support the issuance of the transition bonds. Entergy Texas, as the servicer, will collect the applicable transition charges through billing and collecting the transition charge from retail electric consumers. Entergy Texas will then remit the estimated collections to the trustee.

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Unlike other electric utilities in Texas, Entergy Texas is not currently subject to the provisions of PURA which mandated competition in the retail electric market and the separation (or unbundling) of a utility's energy services business into separate business units. Further, if the provisions of PURA remain unchanged and Entergy Texas remains a member of SERC, it is possible, but not likely, that there will be any competing retail electric providers within the term that the transition bonds are outstanding. See "The Texas Electricity Market Restructuring Plan - - Entergy Texas' Service Territory Could Experience Deregulation in the Future." Nonetheless, it is possible that retail competition may be introduced into Entergy Texas' service territory, in which case Entergy Texas would not be the sole provider of electric services in its service territory. However, with the exception of the parts of Entergy Texas' service territory that are multiply certificated, so long as retail competition has not been introduced into Entergy Texas' service territory, Entergy Texas remains the sole provider of electric services in its service territory. Entergy Texas bills and collects all electric service charges from its customers, which will include the transition charges that will be imposed pursuant to the Financing Act and the financing order. Please read "The Texas Electricity Market Restructuring Plan-Entergy Texas' Service Territory Could Experience Deregulation in the Future."

If, Entergy Texas' service territory becomes subject to retail competition, Entergy Texas, as servicer, will collect the applicable transition charge from retail electric providers, which are entities certified under Texas law that will provide electricity and related services to retail electric customers within Entergy Texas' service territory, and will remit the estimated collections to the trustee. The retail electric providers, which we also refer to as REPs, will in turn bill and collect the transition charges from retail electric customers. These REPs will be subject to billing and collection standards imposed in the financing order and the tariff. Please read "Future Retail Electric Providers-Credit Practices, Policies and Procedures of Retail Electric Providers."

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Interest Payments

Interest on each tranche of transition bonds will accrue from the date we issue the tranche of transition bonds at the interest rate stated in the prospectus supplement. On each payment date, we will pay interest on each tranche of transition bonds equal to the following amounts:

• if there has been a payment default, any interest payable but unpaid on any prior payment dates, together with interest on such unpaid interest, if any, and
• accrued interest on the principal balance of each tranche of transition bonds as of the close of business on the preceding payment date (or, in the case of the first payment date, on the date of the original issuance of each tranche of transition bonds) after giving effect to all payments of principal made on the preceding payment date, if any.

We will pay interest on each tranche of transition bonds before we pay the principal of each tranche of transition bonds. Please read "Description of the Transition Bonds-Interest and Principal on the Transition Bonds." If there is a shortfall in the amounts available in the applicable collection account to make interest payments, the trustee will distribute interest pro rata to each tranche of the transition bonds based on the amount of interest payable on each outstanding tranche. We will calculate interest on the basis of a 360-day year of twelve 30-day months.

Principal Payments and Record Dates and Payment Sources

On each payment date specified in the prospectus supplement for the transition bonds, we will pay amounts then due or scheduled to be paid on outstanding transition bonds from amounts available in the collection account and the subaccounts held by the trustee. We will make these payments to the holders of record of the transition bonds on the related record date specified in the prospectus supplement.

Amounts available to make these payments will include the applicable transition charges collected by the servicer for us since the last payment date, as described in greater detail under "Security for the Transition Bonds-How Funds in the Collection Account Will Be Allocated" and "The Servicing Agreement-Remittances to Collection Account." The trustee will pay the principal of each tranche of transition bonds in the amounts and on the payment dates specified in the expected sinking fund schedule described in the prospectus supplement, but only to the extent transition charge collections received from the servicer and amounts available from trust accounts held by the trustee are sufficient to make principal payments after payment of amounts having a higher priority of payment. Please read "Security for the Transition Bonds-How Funds in the Collection Account Will Be Allocated."

Priority of Distributions

On each payment date for the transition bonds, the trustee will allocate or pay all amounts on deposit in the general subaccount of the collection account in the following order of priority:

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1. payment of the trustee's fees, expenses and any outstanding indemnity amounts, the total amount of which may be paid in any 12-month period may be capped as set forth in the prospectus supplement,
2. payment of the servicing fee, which will be a fixed amount specified in the servicing agreement, plus any unpaid servicing fees from prior payment dates,
3. payment of the administration fee, which will be a fixed amount specified in the administration agreement between us and Entergy Texas, and of the fees of our independent manager(s), which will be in an amount specified in an agreement between us and our independent manager(s), in each case with any unpaid administration or management fees from prior payment dates,
4. payment of all of our other ordinary periodic operating expenses, such as accounting and audit fees, rating agency fees, legal fees and certain reimbursable costs of the servicer under the servicing agreement,
5. payment of the interest then due on the transition bonds, including any past-due interest,
6. payment of the principal then required to be paid on the transition bonds at final maturity or upon acceleration,
7. payment of the principal then scheduled to be paid on the transition bonds, including any previously unpaid scheduled principal,
8. payment of any of our remaining unpaid operating expenses and any remaining amounts owed pursuant to the basic documents, including all remaining indemnity amounts owed to the trustee,
9. replenishment of any amounts drawn from the capital subaccount,
10. if there is a positive balance after making the foregoing allocations, so long as no event of default has occurred and is continuing, release to us of an amount not to exceed the lesser of any remaining balance and the investment earnings on amounts in the capital subaccount,
11. allocation of the remainder, if any, to the excess funds subaccount, and
12. after the transition bonds have been paid in full and discharged, the balance, together with all amounts in the capital subaccount and the excess funds subaccount, to us free and clear of the lien of the indenture.

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The trustee's fees, expenses and indemnity amounts referred to in clause 1 above and the amount of the servicer's fee referred to in clause 2 above will be described in the prospectus supplement. The priority of distributions for the collected transition charges, as well as available amounts in the subaccounts, are described in more detail under "Security for the Transition Bonds-How Funds in the Collection Account Will Be Allocated," as well as in the prospectus supplement.

Credit Enhancement

Credit enhancement for the transition bonds, which is intended to protect you against losses or delays in scheduled payments on the transition bonds, will be as follows:

• The Texas commission will approve adjustments to the transition charges, but only upon petition of the servicer, to make up for any shortfall or reduce any excess in collected transition charges. We sometimes refer to these adjustments as the PUCT guaranteed true-up adjustments or true-up mechanism. These adjustments will be made at least annually, and semi-annually if necessary, to ensure the expected recovery of amounts sufficient to timely provide all payments of debt service and other required amounts and charges in connection with the transition bonds. Please read "Entergy Texas' Financing Order-PUCT Guaranteed True-Ups."
• Collection Account-Under the indenture, the trustee will hold a collection account for the transition bonds, divided into various subaccounts. The primary subaccounts for credit enhancement purposes are:

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• the general subaccount-the trustee will deposit into the general subaccount all transition charge collections remitted to it by the servicer;
• the capital subaccount-Entergy Texas will deposit an amount equal to the required capital level into the capital subaccount on the date of issuance of the transition bonds; and
• the excess funds subaccount-any excess amount of collected transition charges and investment earnings not released to us will be held in the excess funds subaccount.

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Each of these subaccounts will be available to make payments on the transition bonds on each payment date.

If, in the future, there should be any retail electric providers in Entergy Texas' service territory and such retail electric providers do not maintain a long-term, unsecured credit rating of "BBB-" and "Baa3" (or the equivalent) from S&P and Moody's, respectively, then they will be required to provide a cash deposit of two months' maximum expected transition charge collections, an affiliate guarantee, surety bond or letter of credit from an entity with such a credit rating providing for payment of such amount of transition charge collections in the event that the retail electric provider defaults in its payment obligations or a combination of any of the foregoing. If a retail electric provider defaults in making a payment of transition charges to the servicer and does not remedy the default within a 10 calendar-day grace period, amounts on deposit or available from other credit support (up to an amount of the lesser of the payment default of the retail electric provider or t he amount of the deposit or other credit support amount) will be used to make payments in respect of transition bonds. Please read "Future Retail Electric Providers-Credit Practices, Policies and Procedures of Retail Electric Providers."

Allocations as Between Transition Bond Issuances

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In the event a customer does not pay in full all amounts owed under any bill including transition charges, Entergy Texas is required to allocate any resulting shortfalls in transition charges ratably based on the amounts of transition charges owing in respect of the bonds, amounts owing to Entergy Gulf States Reconstruction Funding I, LLC, the affiliate of Entergy Texas that issued the prior transition bonds in 2007 and any amounts owing to any other subsequently created special-purpose subsidiaries of Entergy Texas which issue transition bonds in the future pursuant to the Financing Act. Please read "Description of the Transition Bonds-Allocations as Between Transition Bond Issuances" and "The Servicing Agreement-Remittances to Collection Account."

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State Pledge

The State of Texas has pledged in the Financing Act that it will not take or permit any action that would impair the value of the transition property, or, except as permitted in connection with a true-up adjustment authorized by the Financing Act, reduce, alter or impair the transition charges until the principal, interest and premium, and any other charges incurred and contracts to be performed in connection with the transition bonds, have been paid and performed in full. The transition bonds are not a debt or an obligation of the State of Texas, the Texas commission or any other governmental agency or instrumentality and are not a charge on the full faith and credit or the taxing power of the State of Texas or any governmental agency or instrumentality.

Optional Redemption

We will not have the option to redeem or otherwise prepay any transition bonds prior to their scheduled final payment date.

Scheduled Final Payment Dates and Final Maturity Dates

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Failure to pay a scheduled principal payment on any payment date or the entire outstanding amount of the transition bonds of any tranche by the scheduled final payment date will not result in a default with respect to that tranche. The failure to pay the entire outstanding principal balance of the transition bonds of any tranche will result in a default only if such payment has not been made by the final maturity date for the tranche. We will specify the scheduled final payment date and the final maturity date of each tranche of transition bonds in the prospectus supplement.

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Ratings for the Transition Bonds

It will be a condition of issuance for the of transition bonds that the bonds be rated "Aaa" by Moody's, "AAA" by S&P and "AAA" by Fitch, Inc. Please read "Ratings for the Transition Bonds."

Reports to Transition Bondholders

Pursuant to the indenture, the trustee will provide to the holders of record of the transition bonds regular reports prepared by the servicer containing information concerning, among other things, us and the collateral for the transition bonds. Unless and until the transition bonds are issued in definitive certificated form, the reports for such bonds will be provided to The Depository Trust Company. The reports will be available to beneficial owners of the transition bonds upon written request to the trustee or the servicer. These reports will not be examined and reported upon by an independent public accountant. In addition, no independent public accountant will provide an opinion thereon. Please read "Description of the Transition Bonds-Reports to Bondholders."

Servicing Compensation

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We will pay the servicer on each payment date the servicing fee with respect to the transition bonds. As long as Entergy Texas or any affiliated entity acts as servicer, this fee will be $290,000 annually. If a third-party servicer is appointed, the servicing fee will be negotiated by the successor servicer and us; however, the Texas commission must approve the appointment of such third-party servicer, and the annual servicing fee may not exceed 0.60% of the aggregate initial principal amount of all outstanding transition bonds without the approval of the Texas commission and notification in writing to each rating agency of such action and the confirmation by S&P to the servicer, the trustee and us, that such action would not result in the credit ratings on any outstanding transition bonds being reduced or withdrawn. We sometimes refer to this condition as the rating agency condition. In no event will the trustee be liable for any servicing fee in its individual capacity.

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U.S. Federal Income Tax Status

In the opinion of Sidley Austin LLP, counsel to us and to Entergy Texas, for U.S. federal income tax purposes, the transition bonds will constitute indebtedness of Entergy Texas, our sole member. If you purchase a beneficial interest in any transition bond, you agree by your purchase to treat the transition bonds as debt of Entergy Texas, our sole member, for U.S. federal income tax purposes.

ERISA Considerations

Pension plans and other investors subject to ERISA may acquire the transition bonds subject to specified conditions. The acquisition and holding of the transition bonds could be treated as a direct or indirect prohibited transaction under ERISA. Accordingly, by purchasing the transition bonds, each investor purchasing on behalf of a pension plan will be deemed to certify that the purchase and subsequent holding of the transition bonds would be exempt from the prohibited transaction rules of ERISA. Please read "ERISA Considerations."

RISK FACTORS

Please carefully consider all the information we have included or incorporated by reference in this prospectus and the prospectus supplement, including the risks described below and the statements in "Cautionary Statement Regarding Forward-Looking Information," before deciding whether to invest in the transition bonds.

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RISK RELATED TO LIMITED SOURCE OF FUNDS

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You may experience material payment delays or incur a loss on your investment in the transition bonds because the source of funds for payment is limited.

The only source of funds for payment of the transition bonds will be our assets, which consist of:

• the transition property securing the transition bonds, including the right to impose, collect and receive related transition charges;
• the rights under a financing order, including the statutory true-up mechanism;
• the funds on deposit in the accounts held by the trustee; and
• our rights under various contracts we describe in this prospectus.

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The transition bonds are not a charge on the full faith and credit or taxing power of the State of Texas or any governmental agency or instrumentality, nor will the transition bonds be insured or guaranteed by Entergy Texas, including in its capacity as the servicer, or by its parent, Entergy, any of their respective affiliates (other than us), the trustee or any other person or entity. Thus, you must rely for payment of the transition bonds solely upon the Financing Act, state and federal constitutional rights to enforcement of the Financing Act, the irrevocable financing order, collections of the transition charges and funds on deposit in the accounts held by the trustee relating to the transition bonds. Our organizational documents restrict our right to acquire other assets unrelated to the transactions described in this prospectus. Please read "Entergy Texas Restoration Funding, LLC, The Issuing Entity."

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RISKS ASSOCIATED WITH POTENTIAL JUDICIAL, LEGISLATIVE OR REGULATORY ACTIONS

We are not obligated to indemnify you for changes in law.

Neither we nor Entergy Texas will indemnify you for any changes in the law, including any federal preemption or repeal or amendment of the Financing Act, that may affect the value of your transition bonds. Entergy Texas will agree in the sale agreement to institute any action or proceeding as may be reasonably necessary to block or overturn any attempts to cause a repeal, modification or amendment to the Financing Act that would be materially adverse to us, the trustee or transition bondholders. Please read "The Sale Agreement-Covenants of the Seller" and "The Servicing Agreement-Servicing Standards and Covenants." However, we cannot assure you that Entergy Texas would be able to take this action or that any such action would be successful.

Future judicial action could reduce the value of your investment in the transition bonds.

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The transition property is the creation of the Financing Act and the financing order that has been issued by the Texas commission to Entergy Texas. There is uncertainty associated with investing in bonds payable from an asset that depends for its existence on legislation because there is limited judicial or regulatory experience implementing and interpreting the legislation. Because the transition property is a creation of the Financing Act, any judicial determination affecting the validity of or interpreting the Financing Act, the transition property or our ability to make payments on the transition bonds might have an adverse effect on the transition bonds. In June 2001, the Supreme Court of the State of Texas upheld the constitutionality of certain securitization provisions of Subchapter G of Chapter 39 of PURA, which are part of the Financing Act. Notwithstanding that decision, a federal or state court could be asked in the future to determine whether the relevant provisions of the Financing Act are unlawful or invalid. If the Financing Act is invalidated, the financing order might also be invalidated.

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Other states have passed electric utility deregulation laws similar to the Financing Act, and some of these laws have been challenged by judicial actions. To date, none of these challenges has succeeded, but future judicial challenges might be made. An unfavorable decision regarding another state's law would not automatically invalidate the Financing Act or the financing order, but it might provoke a challenge to the Financing Act, establish a legal precedent for a successful challenge to the Financing Act or heighten awareness of the political and other risks of the transition bonds, and in that way may limit the liquidity and value of the transition bonds. Therefore, legal activity in other states may indirectly affect the value of your investment in the transition bonds.

Future state legislative action might attempt to reduce the value of your investment in the transition bonds.

Despite its pledge in the Financing Act not to take or permit certain actions that would impair the value of the transition property or the transition charges, the Texas legislature might attempt to repeal or amend the Financing Act in a manner that limits or alters the transition property so as to reduce its value. For a description of the State's pledge, please read "The Financing Act-Entergy Texas and Other Utilities May Securitize Qualified Costs-State Pledge." It might be possible for the Texas legislature to repeal or amend the Financing Act notwithstanding the State's pledge if the legislature acts in order to serve a significant and legitimate public purpose. Any such action, as well as the costly and time-consuming litigation that likely would ensue, might adversely affect the price and liquidity, the dates of payment of interest and principal and the weighted average lives of the transition bonds. Moreover, the outcome of any litigation cannot be predicted. Accordingly, you might incur a loss on or delay in recovery of your investment in the transition bonds.

If an action of the Texas legislature adversely affecting the transition property or the ability to collect transition charges were considered a "taking" under the United States or Texas Constitutions, the State of Texas might be obligated to pay compensation for the taking. However, even in that event, there is no assurance that any amount provided as compensation would be sufficient for you to recover fully your investment in the transition bonds or to offset interest lost pending such recovery.

Unlike the citizens of California, Massachusetts, Michigan and some other states, the citizens of the State of Texas currently do not have the constitutional right to adopt or revise state laws by initiative or referendum. Thus, absent an amendment of the Texas Constitution, the Financing Act cannot be amended or repealed by direct action of the electorate of the State of Texas or of Entergy Texas' service territory.

The enforcement of any rights against the State of Texas or the Texas commission under the State's pledge may be subject to the exercise of judicial discretion in appropriate cases and to the limitations on legal remedies against state and local governmental entities in Texas. These limitations might include, for example, the necessity to exhaust administrative remedies prior to bringing suit in a court, or limitations on type and locations of courts in which the State of Texas or the Texas commission may be sued.

The Texas commission might attempt to take actions that could reduce the value of your investment in the transition bonds.

The Financing Act provides that a financing order is irrevocable and that the Texas commission may not directly or indirectly, by any subsequent action, rescind or amend a financing order or reduce or impair the transition charges authorized under a financing order, except for the true-up adjustments to the transition charges. However, the Texas commission retains the power to adopt, revise or rescind rules or regulations affecting Entergy Texas. The Texas commission also retains the power to interpret the financing order granted to Entergy Texas, and in that capacity might be called upon to rule on the meanings of provisions of the order that might need further elaboration. Any new or amended regulations or orders from the Texas commission might attempt to affect the ability of the servicer to collect the transition charges in full and on a timely basis, the rating of the related transition bonds or their price and, accordingly, the amortization of su ch transition bonds and their weighted average lives.

The servicer is required to file with the Texas commission, on our behalf, certain adjustments of the transition charges. Please read "Entergy Texas' Financing Order-PUCT Guaranteed True-Ups" and "The Servicing Agreement-The PUCT Guaranteed Transition Charge Adjustment Process." True-up adjustment procedures have been challenged in the past and may be challenged in the future. Challenges to or delays in the true-up process might adversely affect the market perception and valuation of the transition bonds. Also, any litigation might materially delay transition charge collections due to delayed implementation of true-up adjustments and might result in missing payments or payment delays and lengthened weighted average life of the related transition bonds.

SERVICING RISKS

Inaccurate consumption forecasting or unanticipated delinquencies or charge-offs might reduce scheduled payments on the transition bonds.

The transition charges are generally assessed based on forecasted customer usage, which includes both kilowatts demanded and kilowatt-hours of electricity consumed by retail customers. The amount and the rate of transition charge collections will depend in part on actual electricity usage and the amount of collections and write-offs for each customer class. If the servicer inaccurately forecasts electricity consumption or uses inaccurate customer delinquency or charge-off data when setting or adjusting the transition charges, there could be a shortfall or material delay in transition charge collections, which might result in missed or delayed payments of principal and interest and lengthened weighted average life of the transition bonds. Please read "Entergy Texas' Financing Order-PUCT Guaranteed True-Ups" and "The Servicing Agreement-The PUCT Guaranteed Transition Charge Adjustment Process."

Entergy Texas, the servicer, has historically forecasted customer usage based on kilowatt-hours and has historically forecasted peak demand annually on a total company basis. The servicer does not generally forecast demand by customer rate class, although it does so as a servicer for the prior transition bonds. Inaccurate forecasting of electricity consumption by the servicer might result from, among other things, unanticipated weather or economic conditions, resulting in less electricity consumption than forecast; general economic conditions being worse than expected, causing retail electric customers to migrate from Entergy Texas' service territory or reduce their electricity consumption; the occurrence of a natural disaster, such as a hurricane or an act of terrorism or other catastrophic event; unanticipated changes in the market structure of the electric industry; customers consuming less electricity than anticipated because of increased energy prices, unanticipated increases in conservation effort s or unanticipated increases in electric usage efficiency; or customers unexpectedly switching to alternative sources of energy, including self-generation of electric power.

The servicer's use of inaccurate delinquency or charge-off rates might result also from, among other things, unexpected deterioration of the economy or the unanticipated declaration of a moratorium on terminating electric service to customers in the event of extreme weather, either of which would cause greater delinquencies or charge-offs than expected or force Entergy Texas or any retail electric providers to grant additional payment relief to more customers; or the introduction into the Texas service territory of REPs who collect payments arising from the transition charges, but who may fail to remit retail customer charges to the servicer in a timely manner; or the failure of REPs to submit accurate and timely information to the servicer regarding their collections and charge-offs; or any other unanticipated change in law that makes it more difficult for Entergy Texas or retail electric providers, if any, to terminate service to nonpaying customers or that requires Entergy Texas or retail electric prov iders, if any, to apply more lenient credit standards in accepting retail electric customers.

Changes to billing and collection practices may reduce the amount of funds available for payments on the bonds.

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The methodology of determining the amount of the transition charge billed to each consumer is specified in the financing order. Although Entergy Texas may not change this methodology, Entergy Texas, as servicer, may set, and may change, its own billing and collection arrangements with each retail electricity consumer and with each REP, if any. For example, to recover part of an outstanding electricity bill, Entergy Texas may agree to extend a consumer's payment schedule or to write off the remaining portion of the bill. Similarly, the Texas commission may require changes to these practices. Under the methodology specified in the financing order, this might result in an extension of the consumer's payment of transition charges. Thus, any changes in billing and collection practices or regulations might make it more difficult for the servicer to collect the transition charge and might adversely affect the value of the transition bonds and their weighted average lives. The servicing agreement provides, however, that the servicer will not take any action that will adversely impair our interest in the transition property.

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Your investment in the transition bonds depends on Entergy Texas or its successor or assignee, acting as servicer of the transition property.

 Entergy Texas, as servicer, will be responsible for, among other things, calculating, billing and collecting the transition charges from retail electric consumers, or, in the future, any retail electric providers operating in Entergy Texas' service territory, submitting requests to the Texas commission to adjust these charges, monitoring the collateral for the transition bonds and taking certain actions in the event of non-payment by retail electric consumers, or, in the future, by any retail electric providers. The trustee's receipt of collections in respect of transition charges, which will be used to make payments on the transition bonds, will depend in part on the skill and diligence of the servicer in performing these functions. The systems the State of Texas and servicer have in place for transition charge billings and collections might, in particular circumstances, cause the servicer to experience difficulty in performing these functions in a timely and completely accurate manner. If the servicer fails to make collections for any reason, then the servicer's payments to the trustee in respect of the transition charges might be delayed or reduced. In that event, our payments on the related transition bonds might be delayed or reduced.

If we replace Entergy Texas as the servicer, we may experience difficulties finding and using a replacement servicer.

If Entergy Texas ceases to service the transition property, it might be difficult to find a successor servicer. Under the financing order, the appointment of a successor servicer and the annual servicing fee payable to a successor servicer require PUCT approval if it exceeds 0.60% of the aggregate initial principal amount of all outstanding transition bonds. In addition, the servicing fee for any replacement servicer may not exceed 0.60% of the aggregate initial principal amount of all outstanding transition bonds unless the rating agency condition is satisfied. Please read "The Servicing Agreement-Servicing Compensation." Also, any successor servicer might have less experience and ability than Entergy Texas and might experience difficulties in collecting transition charges and determining appropriate adjustments to the transition charges, and billing and/or payment arrangements may change, resulting in delays or disruptions of collections. A successor servicer might charge fees that are substantially higher than the fees paid to Entergy Texas as servicer. In the event of the commencement of a case by or against the servicer under the United States Bankruptcy Code or similar laws, we and the trustee might be prevented from effecting a transfer of servicing due to operation of the Bankruptcy Code. Any of these factors and others might delay the timing of payments and may reduce the value of your investment.

It might be difficult to collect transition charges from retail electric providers.

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If retail competition is ever introduced into Entergy Texas' service territory, then retail electric customers will pay the transition charges not to Entergy Texas, but to retail electric providers who supply them with electric power. The retail electric providers will be responsible for billing retail customers and will be obligated to remit to the servicer payments of the transition charges, less a specified percentage allowance for charge-offs of delinquent customer accounts, within 35 days of billing from the servicer, even if they do not collect the transition charges from retail electric customers. Please read "Future Retail Electric Providers." Because the retail electric providers will bill most retail electric customers for the transition charges, we will have to rely on a relatively small number of entities for the collection of the bulk of the transition charges.

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Failure by the retail electric providers, if any, to remit transition charges to the servicer might cause delays in payments on the transition bonds and adversely affect your investment in the transition bonds. The servicer will not pay any shortfalls resulting from the failure of any retail electric provider to forward transition charge collections.

Adjustments to the transition charges and any credit support provided by a retail electric provider, while available to compensate for a failure by a retail electric provider to pay the transition charges to the servicer, might not be sufficient to protect the value of your investment in the transition bonds. Please read "Entergy Texas' Financing Order-PUCT Guaranteed True-Ups" and "The Servicing Agreement-The PUCT Guaranteed Transition Charge Adjustment Process."

PURA provides for one or more retail electric providers in each area that is open to retail competition to be designated the "provider of last resort" for that area or for specified customer classes. The provider of last resort is required to offer basic electric service to retail customers in its designated area, regardless of the creditworthiness of the customer. The provider of last resort might face greater difficulty in bill collection than other retail electric providers and therefore the servicer may face greater difficulty in collecting transition charges from the provider of last resort.

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Retail electric providers, if retail competition ever commences in Entergy Texas' service territory, may issue a single bill to individual retail customers that includes all charges related to the purchase of electricity, without separately itemizing the transition charge component of the bill. A retail electric provider's use of a consolidated bill might increase the risk that customers who have claims against the retail electric provider will attempt to offset those claims against transition charges or increase the risk that, in the event of a bankruptcy of a retail electric provider, a bankruptcy court would find that the retail electric provider has an interest in the transition property and would make it more difficult to terminate the services of a bankrupt retail electric provider or collect transition charges from its customers.

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Competitive metering services might result in unexpected problems in receiving accurate metering data.

As part of the restructuring of the Texas electric industry, certain metering services can be provided on a competitive basis to commercial and industrial customers, and third parties are permitted to perform metering services and provide metering data to the servicer that the servicer will utilize in calculating and billing transition charges. The Texas commission has adopted a rule under which the Electric Reliability Council of Texas, the entity designated by the Texas commission to administer the competitive retail market in Texas, establishes and periodically revises a list of qualifying competitive meters. The Texas commission's rule also provides for testing of competitive meters, for data management, and for the use of meter data for billing by transmission and distribution utilities.

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As retail competition has not been introduced into Entergy Texas' service territory, competitive metering is not available to commercial and industrial customers in Entergy Texas' service territory. However, it is possible it may be available in the future.

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Since third parties may not have previously performed metering services in Entergy Texas' service territory, there might be unforeseen problems in converting to the third-party's metering system, in taking accurate meter readings and in collecting and processing accurate metering data following the conversion to competitive metering. Inaccurate metering data might lead to inaccuracies in the calculation and imposition of transition charges and might give rise to disputes between the servicer and REPs regarding payments resulting in missing or delayed payments of principal and interest and a lengthened weighted average life of the transition bonds.

Limits on rights to terminate service might make it more difficult to collect the transition charges.

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The financing order expressly provides that we may authorize the servicer to disconnect service for nonpayment of transition charges to the same extent as an electric utility. Moreover, if the servicer is billing customers for transition charges, the servicer may terminate transmission and distribution service to the customer for non-payment of transition charges pursuant to the applicable rules of the Texas commission. Nonetheless, Texas statutory requirements and the rules and regulations of the Texas commission, which may change from time to time, regulate and control the right to disconnect service. For example, Entergy Texas generally may not terminate service to a retail customer on (1) a weekend day or holiday, (2) a day when the previous day's high temperature did not exceed 32 degrees Fahrenheit and the temperature is predicted to remain at or below that level for the next 24 hours or (3) a day for which the National Weather Service issues a heat advisory for any county in Ent ergy Texas' service territory, or when a heat advisory has been issued for either of the two prior calendar days. To the extent these retail electric customers do not pay for their electric service, Entergy Texas will not be able to collect transition charges from these retail electric customers. Although retail electric providers would have to pay the servicer the transition charges on behalf of those customers (subject to any charge-off allowance and annual reconciliation rights), if and when retail competition commences in Entergy Texas' service territory, continuing service to non-paying customers could affect the ability of retail electric providers to make such payment.

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Future adjustments to transition charges by customer class might result in insufficient collections.

The customers who pay transition charges are divided into customer classes. Transition charges will be functionalized and allocated to customers in the same manner as the corresponding facilities and related expenses are functionalized and allocated in the utility's current base rates.

A shortfall in collections of transition charges in one customer class may be corrected by making adjustments to the transition charges payable by that customer class and any other customer class. If certain customers in a class fail to pay transition charges or cease to be customers, the servicer might have to substantially increase the transition charges for the remaining customers in that customer class and for other customer classes. This effect might be more extreme in the case of Entergy Texas' industrial class customers. Other factors, such as economic conditions, could also lead to industrial customers reducing their demand for electricity or to abandon operation of their facilities. The inability to impose and collect transition charges or the failure to collect transition charges from such retail customers could lead to increases in transition charges for other customers. These increases could lead to further unanticipated failures by the remaining customers to pay transition charges, thereby in creasing the risk of a shortfall in funds to pay the transition bonds.

RISKS ASSOCIATED WITH THE UNUSUAL NATURE OF THE TRANSITION PROPERTY

We will not receive transition charges in respect of electric service provided more than 15 years from the date of issuance of the transition bonds.

Entergy Texas will not be entitled to charge transition charges for electricity delivered after the fifteenth anniversary of the issuance of the transition bonds. If transition charges collected for electricity delivered through the fifteenth anniversary of the transition bonds are not sufficient to repay the transition bonds in full, no other funds will be available to pay the unpaid balance due on the transition bonds.

Foreclosure of the trustee's lien on the transition property securing the transition bonds might not be practical, and acceleration of the transition bonds before maturity might have little practical effect.

Under the Financing Act and the indenture, the trustee or the transition bondholders have the right to foreclose or otherwise enforce the lien on the transition property securing the transition bonds. However, in the event of foreclosure, there is likely to be a limited market, if any, for the transition property. Therefore, foreclosure might not be a realistic or practical remedy. Moreover, although principal of the transition bonds will be due and payable upon acceleration of the transition bonds before maturity, transition charges would not likely be accelerated and the nature of our business will result in principal of the transition bonds being paid as funds become available. If there is an acceleration of the transition bonds, all tranches of the transition bonds will be paid pro rata; therefore, some tranches might be paid earlier than expected and some tranches might be paid later than expected.

STORM-RELATED RISKS

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Storm damage to Entergy Texas' service territory could impair payment of the transition bonds.

Entergy Texas' service territory was affected by Hurricane Rita in 2005, and again in 2008 by Hurricanes Ike and Gustav, disrupting Entergy Texas' operations, and depleting its storm reserve leading the Texas legislature to enact the Financing Act. Future storms could have similar or more drastic effects. Transmission and/or distribution facilities could be damaged or destroyed and usage of electricity could be interrupted temporarily, reducing the collections of transition charges. There could be longer-lasting weather-related adverse effects on residential and commercial development and economic activity in Entergy Texas' service territory, which could cause the per-kWh transition charge to be greater than expected. Legislative action adverse to the bondholders might be taken in response, and such legislation, if challenged as violative of the State Pledge, might be defended on the basis of public necessity. Please read "The Financing Act-The Financing Act and other provisions of PURA authorizes utilities to recover hurricane-related costs through the issuance of bonds" and "-Entergy Texas and other utilities may securitize qualified costs-State Pledge" in this prospectus.

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RISKS ASSOCIATED WITH POTENTIAL BANKRUPTCY PROCEEDINGS OF THE SELLER OR THE SERVICER

For a more detailed discussion of the following bankruptcy risks, please read "How a Bankruptcy May Affect Your Investment."

The servicer will commingle the transition charges with other revenues it collects, which might obstruct access to the transition charges in case of the servicer's bankruptcy and reduce the value of your investment in the transition bonds.

The servicer will be required to remit to the trustee on a daily basis (and within two business days of the expected date of receipt) estimated transition charge collections which were billed earlier to the customer, the lag being based on the average number of days bills remain outstanding. The servicer will not segregate the transition charges from the other funds it collects from retail electric customers or retail electric providers, if any, or its general funds. The transition charges will be segregated only when the servicer pays them to the trustee.

Despite this requirement, the servicer might fail to pay the full amount of the transition charges to the trustee or might fail to do so on a timely basis. This failure, whether voluntary or involuntary, might materially reduce the amount of transition charge collections available to make payments on the transition bonds.

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The Financing Act provides that the priority of a lien and security interest perfected in transition property is not impaired by the commingling of the funds arising from transition charges with any other funds. In a bankruptcy of the servicer, however, a bankruptcy court might rule that federal bankruptcy law takes precedence over the Financing Act and might decline to recognize our right to collections of the transition charges that are commingled with other funds of the servicer as of the date of bankruptcy. If so, the collections of the transition charges held by the servicer as of the date of bankruptcy would not be available to pay amounts owing on the transition bonds. In this case, we would have only a general unsecured claim against the servicer for those amounts, which is a creditor's claim against a debtor without a priority for payment and for which the creditor holds no security or collateral. This decision could cause material delays in payments of principal or interest, or losses, on your transition bonds and could materially reduce the value of your investment in the transition bonds, particularly if it occurred in the fifteenth year of the transition bonds after the completion of which no transition charges can be charged.

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The bankruptcy of Entergy Texas or any successor seller might result in losses or delays in payments on the transition bonds.

The Financing Act and the financing order provide that as a matter of Texas state law:

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• the rights and interests of a selling utility under the financing order, including the right to impose, collect and receive transition charges, are contract rights of the seller,
• the seller may make a present transfer of its rights under the financing order, including the right to impose, collect and receive future transition charges that retail customers do not yet owe,
• upon the transfer to us, the rights will become transition property, and transition property constitutes a present property right, even though the imposition and collection of transition charges depend on further acts that have not yet occurred, and
• a transfer of the transition property from the seller or its affiliate, to us, under an agreement that expressly states the transfer is a sale or other absolute transfer, is a true sale of the transition property and not a pledge of the transition property to secure a financing by the seller.

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These provisions are important to maintaining payments on the transition bonds in accordance with their terms during any bankruptcy of Entergy Texas. In addition, the transaction has been structured with the objective of keeping us legally separate from Entergy Texas and its affiliates in the event of a bankruptcy of Entergy Texas or any such affiliates.

A bankruptcy court generally follows state property law on issues such as those addressed by the state law provisions described above. However, a bankruptcy court does not follow state law if it determines that the state law is contrary to a paramount federal bankruptcy policy or interest. If a bankruptcy court in a Entergy Texas bankruptcy refused to enforce one or more of the state property law provisions described above, the effect of this decision on you as a beneficial owner of the transition bonds might be similar to the treatment you would receive in a Entergy Texas bankruptcy if the transition bonds had been issued directly by Entergy Texas. A decision by the bankruptcy court that, despite our separateness from Entergy Texas, our assets and liabilities and those of Entergy Texas should be consolidated would have a similar effect on you as a bondholder.

We have taken steps together with Entergy Texas, as the seller, to reduce the risk that in the event the seller or an affiliate of the seller were to become the debtor in a bankruptcy case, a court would order that our assets and liabilities be substantively consolidated with those of Entergy Texas or an affiliate. Nonetheless, these steps might not be completely effective, and thus if Entergy Texas or an affiliate of the seller were to become a debtor in a bankruptcy case, a court might order that our assets and liabilities be consolidated with those of Entergy Texas or an affiliate of the seller. This might cause material delays in payment of, or losses on, your transition bonds and might materially reduce the value of your investment in the transition bonds. For example:

• without permission from the bankruptcy court, the trustee might be prevented from taking actions against Entergy Texas or recovering or using funds on your behalf or replacing Entergy Texas as the servicer,
• the bankruptcy court might order the trustee to exchange the transition property for other property, of lower value,
• tax or other government liens on Entergy Texas' property might have priority over the trustee's lien and might be paid from collected transition charges before payments on the transition bonds,
• the trustee's lien might not be properly perfected in the collected transition property collections prior to or as of the date of Entergy Texas' bankruptcy, with the result that the transition bonds would represent only general unsecured claims against Entergy Texas,
• the bankruptcy court might rule that neither our property interest nor the trustee's lien extends to transition charges in respect of electricity consumed after the commencement of Entergy Texas' bankruptcy case, with the result that the transition bonds would represent only general unsecured claims against Entergy Texas,
• we and Entergy Texas might be relieved of any obligation to make any payments on the transition bonds during the pendency of the bankruptcy case and might be relieved of any obligation to pay interest accruing after the commencement of the bankruptcy case,
• Entergy Texas might be able to alter the terms of the transition bonds as part of its plan of reorganization,
• the bankruptcy court might rule that the transition charges should be used to pay, or that we should be charged for, a portion of the cost of providing electric service, or
• the bankruptcy court might rule that the remedy provisions of the sale agreement are unenforceable, leaving us with an unsecured claim for actual damages against Entergy Texas that may be difficult to prove or, if proven, to collect in full.

Furthermore, if Entergy Texas enters bankruptcy proceedings, it might be permitted to stop acting as servicer and it may be difficult to find a third party to act as servicer. The failure of the servicer to perform its duties or the inability to find a successor servicer might cause payment delays or losses on your investment in the transition bonds. Also, the mere fact of a servicer or seller bankruptcy proceeding might have an adverse effect on the resale market for the transition bonds and on the value of the transition bonds.

The sale of the transition property might be construed as a financing and not a sale in a case of Entergy Texas' bankruptcy which might delay or limit payments on the transition bonds.

The Financing Act provides that the characterization of a transfer of transition property as a sale or other absolute transfer will not be affected or impaired by treatment of the transfer as a financing for federal or state tax purposes or financial reporting purposes. We and Entergy Texas will treat the transaction as a sale under applicable law, although for financial reporting and state income and franchise tax purposes the transaction is intended to be treated as a financing. In the event of a bankruptcy of Entergy Texas, a party in interest in the bankruptcy might assert that the sale of the transition property to us was a financing transaction and not a "sale or other absolute transfer" and that the treatment of the transaction for financial reporting and tax purposes as a financing and not a sale lends weight to that position. If a court were to characterize the transaction as a financing, we expect that we would, on behalf of ourselves and the trustee, be treated as a secured credit or of Entergy Texas in the bankruptcy proceedings, although a court might determine that we only have an unsecured claim against Entergy Texas. Even if we had a security interest in the transition property, we would not likely have access to the related transition charge collections during the bankruptcy and would be subject to the risks of a secured creditor in a bankruptcy case, including the possible bankruptcy risks described in the immediately preceding risk factor. As a result, repayment of the transition bonds might be significantly delayed and a plan of reorganization in the bankruptcy might permanently modify the amount and timing of payments to us of the transition charge collections and therefore the amount and timing of funds available to us to pay transition bondholders.

If the servicer enters bankruptcy proceedings, the collections of the transition charges held by the servicer as of the date of bankruptcy might constitute preferences, which means these funds might be unavailable to pay amounts owing on the transition bonds.

In the event of a bankruptcy of the servicer, a party in interest might take the position that the remittance of funds prior to bankruptcy of the servicer, pursuant to the servicing agreement or an intercreditor agreement, constitutes a preference under bankruptcy law if the remittance of those funds was deemed to be paid on account of a preexisting debt. If a court were to hold that the remittance of funds constitutes a preference, any such remittance within 90 days of the filing of the bankruptcy petition could be avoidable, and the funds could be required to be returned to the bankruptcy estate of the servicer. To the extent that transition charges have been commingled with the general funds of the servicer, the risk that a court would hold that a remittance of funds was a preference would increase. Also, we or the servicer may be considered an "insider" with any retail electric provider that is affiliated with us or the servicer. If the servicer or we are considered to be an "i nsider" of the retail electric provider, any such remittance made within one year of the filing of the bankruptcy petition could be avoidable as well if the court were to hold that such remittance constitutes a preference. In either case, we or the trustee would merely be an unsecured creditor of the servicer. If any funds were required to be returned to the bankruptcy estate of the servicer, we would expect that the amount of any future transition charges would be increased through the true-up mechanism to recover such amount.

Claims against Entergy Texas or any successor seller might be limited in the event of a bankruptcy of the seller.

If the seller were to become a debtor in a bankruptcy case, claims, including indemnity claims, by us against the seller under the sale agreement and the other documents executed in connection with the sale agreement could be unsecured claims and would be disposed of in the bankruptcy case. In addition, the bankruptcy court might estimate any contingent claims that we have against the seller and, if it determines that the contingency giving rise to these claims is unlikely to occur, estimate the claims at a lower amount. A party in interest in the bankruptcy of the seller might challenge the enforceability of the indemnity provisions in the sale agreement. If a court were to hold that the indemnity provisions were unenforceable, we would be left with a claim for actual damages against the seller based on breach of contract principles, which would be subject to estimation and/or calculation by the court. We cannot give any assurance as to the result if any of the above-described actions or claims were made. Furthermore, we cannot give any assurance as to what percentage of their claims, if any, unsecured creditors would receive in any bankruptcy proceeding involving the seller.

The bankruptcy of Entergy Texas or any successor seller might limit the remedies available to the trustee.

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Upon an event of default of the transition bonds under the indenture, the Financing Act permits the trustee to enforce the security interest in the transition property in accordance with the terms of the indenture. In this capacity, the trustee is permitted to request the Texas commission or a Travis County, Texas district court to order the sequestration and payment to the bondholders of all revenues arising with respect to the transition property. There can be no assurance, however, that the Texas commission or the Travis County, Texas district court would issue this order after a Entergy Texas bankruptcy in light of the automatic stay provisions of Section 362 of the United States Bankruptcy Code. In that event, the trustee would be required to seek an order from the bankruptcy court lifting the automatic stay to permit this action by the Texas court, and an order requiring an accounting and segregation of the revenues arising from the transition property. There can be no assur ance that a court would grant either order. Any failure to grant such order could result in the losses or material delays in payment on your transition bonds and could materially reduce the value of your investment.

RISKS ASSOCIATED WITH POTENTIAL BANKRUPTCY PROCEEDINGS OF FUTURE RETAIL ELECTRIC PROVIDERS IF RETAIL COMPETITION IS INTRODUCED

As described under "The Texas Electricity Market Restructuring Plan - - Entergy Texas' Service Territory Could Experience Deregulation in the Future", if the provisions of PURA remain unchanged and Entergy Texas remains a member of Southeastern Electric Reliability Council or SERC, it is possible, but not likely, that there will be any competing retail electric providers within the term that the transition bonds are outstanding. Nonetheless, it is possible that retail competition may be introduced into Entergy Texas' service territory. If retail competition is introduced into Entergy Texas' service territory, REPs, and not Entergy Texas, will collect the transition charges from customers. In such event, the following risks may arise. Please read "Future Retail Electric Providers."

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If retail competition is introduced into Entergy Texas' service territory, retail electric providers will collect the transition charges and may commingle such charges with other revenues they collect. This may cause losses on or reduce the value of your investment in the transition bonds in the event a retail electric provider enters bankruptcy proceedings.

If retail competition is introduced into Entergy Texas' service territory, REPs, and not Entergy Texas, will collect the transition charges from customers. A retail electric provider is not required under Texas commission rules to segregate from its general funds the transition charges it collects, but is required to remit to the servicer amounts billed to it for transition charges, less an amount relating to expected customer charge-offs, within 35 days of the billing by the servicer. A retail electric provider nevertheless might fail to remit the full amount of the transition charges owed to the servicer or might fail to do so on a timely basis. This failure, whether voluntary or involuntary, might materially reduce the amount of transition charge collections available on the next payment date to make timely payments on the transition bonds.

The Financing Act provides that the priority of a perfected lien on transition property will not be impaired by the commingling of these funds with other funds. In a bankruptcy of a retail electric provider, however, a bankruptcy court might rule that federal bankruptcy law takes precedence over the Financing Act and does not recognize our right to receive the collected transition charges that are commingled with other funds of a retail electric provider as of the date of bankruptcy. If so, the collections of the transition charges held by a retail electric provider as of the date of bankruptcy would not be available to pay amounts owing on the transition bonds. In this case, we would have only a general unsecured claim against the retail electric provider for those amounts. This decision might cause material delays in payments of principal or interest or losses on your transition bonds and could materially reduce the value of your investment in the transition bonds, particularly if it occurred in the fif teenth year of the transition bonds after the completion of which no transition charges can be charged. Please read "How a Bankruptcy May Affect Your Investment."

If a retail electric provider enters bankruptcy proceedings, any cash deposit of the retail electric provider held by the trustee might not be available to cover amounts owed by the retail electric provider.

If a retail electric provider does not have the credit rating required by the financing order, it may nevertheless qualify to act as a retail electric provider if, among other alternatives, it provides a cash deposit equal to two months' maximum expected transition charge collections. Those cash deposits will be held by the trustee for the benefit of the bondholders. If the retail electric provider becomes bankrupt, the trustee would be stayed from applying that cash deposit to cover amounts owed by the retail electric provider absent relief from the court, and the trustee might be required to return that cash deposit to the retail electric provider's bankruptcy estate if the bankruptcy court determines there is no valid right of set-off or recoupment. In that case, the issuing entity might only have an unsecured claim for any amounts owed by the retail electric provider in the retail electric provider's bankruptcy proceedings.

If a retail electric provider enters bankruptcy proceedings, transition charge payments made by that retail electric provider to the servicer might constitute preferences, and the servicer may be required to return such funds to the bankruptcy estate of the retail electric provider.

In the event of a bankruptcy of a retail electric provider, a party in interest might take the position that the remittance of funds by the retail electric provider to the servicer, pursuant to the financing order, prior to bankruptcy constitutes a preference under bankruptcy law if the remittance of those funds was deemed to be paid on account of a preexisting debt. If a court were to hold that the remittance of funds constitutes preferences, any remittance of such funds made within 90 days of the filing of the bankruptcy petition might be avoidable, and the funds might be required to be returned to the bankruptcy estate of the retail electric provider by us or the servicer. To the extent that transition charges have been commingled with the general funds of the retail electric provider, the risk that a court would hold that a remittance of funds was a preference would increase. Also, we or the servicer might be considered an "insider" with any retail electric provider that is affiliat ed with us or the servicer. If the servicer or we are considered to be an "insider" of the retail electric provider, any such remittance made within one year of the filing of the bankruptcy petition could be avoidable as well if the court were to hold that such remittance constitutes a preference. In either case, we or the servicer would merely be an unsecured creditor of the retail electric provider. If any funds were required to be returned to the bankruptcy estate of the retail electric provider, we would expect that the amount of any future transition charges would be increased through the true-up mechanism to recover the amount returned.

Furthermore, the mere fact of a retail electric provider bankruptcy proceeding could have an adverse effect on the resale market for the transition bonds and on the value of the transition bonds. Please read "How a Bankruptcy May Affect Your Investment."

OTHER RISKS ASSOCIATED WITH AN INVESTMENT IN THE TRANSITION BONDS

Entergy Texas' indemnification obligations under the sale and servicing agreements are limited and might not be sufficient to protect your investment in the transition bonds.

Entergy Texas is obligated under the sale agreement to indemnify us and the trustee, for itself and on behalf of the transition bondholders, only in specified circumstances and will not be obligated to repurchase any transition property in the event of a breach of any of its representations, warranties or covenants regarding the transition property. Similarly, Entergy Texas is obligated under the servicing agreement to indemnify us, the trustee, for itself and on behalf of the transition bondholders, and the Texas commission only in specified circumstances. Please read "The Sale Agreement" and "The Servicing Agreement."

Neither the trustee nor the transition bondholders will have the right to accelerate payments on the transition bonds as a result of a breach under the sale agreement or servicing agreement, absent an event of default under the indenture as described in "Description of the Transition Bonds-Events of Default; Rights Upon Event of Default." Furthermore, Entergy Texas might not have sufficient funds available to satisfy its indemnification obligations under these agreements, and the amount of any indemnification paid by Entergy Texas might not be sufficient for you to recover all of your investment in the transition bonds. In addition, if Entergy Texas becomes obligated to indemnify transition bondholders, the ratings on the transition bonds will likely be downgraded as a result of the circumstances causing the breach and the fact that transition bondholders will be unsecured creditors of Entergy Texas with respect to any of these indemnification amounts.

Entergy Texas may cause the issuance of additional transition bonds through another affiliated entity.

Entergy Texas, one of the entities that emerged from the reorganization of Entergy Gulf States, Inc. pursuant to a jurisdictional split plan, has in the past and may in the future sell transition property to one or more entities other than us in connection with the issuance of a new issuance of transition bonds, in any such case without your prior review or approval. Any new issuance may include terms and provisions that would be unique to that particular issue. We may not issue additional transition bonds. Entergy Texas will likely serve as servicer for any new issuance.

Entergy Texas may not sell transition property to other entities issuing transition bonds if the issuance would result in the credit ratings on any outstanding series of transition bonds being reduced or withdrawn. In the event a customer does not pay in full all amounts owed under any bill including transition charges, Entergy Texas, as servicer, is required to allocate any resulting shortfalls in transition charges ratably based on the amounts of transition charges owing in respect of the bonds, amounts owing to us, amounts owing to Entergy Gulf States Reconstruction Funding I, LLC with respect to the prior transition bonds, and any amounts owing to any subsequently created affiliate of Entergy Texas which issues transition bonds. However, we cannot assure you that a new issuance would not cause reductions or delays in payments on your transition bonds.

Entergy Texas' ratings might affect the market value of the transition bonds.

A downgrading of the credit ratings on the debt of Entergy Texas might have an adverse effect on the market value of your transition bonds.

Technological change might make alternative energy sources more attractive in the future.

Technological developments might result in the introduction of economically attractive alternatives to purchasing electricity through Entergy Texas' distribution facilities for increasing numbers of retail customers. Manufacturers of self-generation facilities may develop smaller-scale, more fuel-efficient generating units that can be cost-effective options for a greater number of retail customers. Under the financing order, electric customers within Entergy Texas' service territory whose load is served by a new on-site power generation facility with a rated capacity of 10 MW or less are not required to pay transition charges except to the extent Entergy Texas' distribution lines are used to provide such energy. Technological developments might allow greater numbers of retail customers to avoid transition charges under such provisions, which may reduce the total number of retail customers from which transition charges will be collected.

The absence of a secondary market for the transition bonds might limit your ability to resell your transition bonds.

The underwriters for the transition bonds might assist in resales of the transition bonds, but they are not required to do so. A secondary market for the transition bonds might not develop. If a secondary market does develop, it might not continue or it might not be sufficiently liquid to allow you to resell any of your transition bonds. Please read "Plan of Distribution."

You might receive principal payments for your transition bonds later than you expect.

The amount and the rate of collection of the transition charges for the transition bonds, together with the transition charge adjustments, will generally determine whether there is a delay in the scheduled repayments of transition bond principal. If the servicer collects the transition charges at a slower rate than expected from any retail electric provider, it might have to request adjustments of the transition charges. If those adjustments are not timely and accurate, you might experience a delay in payments of principal and interest and a decrease in the value of your investment in the transition bonds.

THE FINANCING ACT

The Financing Act and other provisions of PURA authorize utilities to recover hurricane-related costs through the issuance of bonds.

In September 2005, Texas was struck by Hurricane Rita, which caused widespread damage to infrastructure and power outages throughout Entergy Texas' service territory. In response to the damage to utility infrastructure, the Texas legislature passed HB 163, codified as Sections 39.458-463 of Chapter 39 of PURA, authorizing the Texas commission to issue financing orders allowing for the securitization of hurricane reconstruction costs. Pursuant to a financing order issued by the Texas commission on April 2, 2007 (as corrected on April 23, 2007), Entergy Gulf States, Inc., or EGSI, sold transition property to an affiliate, Entergy Gulf States Reconstruction Funding I, LLC. The affiliate, on June 29, 2007, issued $329,500,000 Senior Secured Transition Bonds, Series A. We refer to these bonds as the prior transition bonds. The proceeds of the prior transition bonds were paid to EGSI to retire debt and equity attributable to hurricane costs. Following the is suance of the prior transition bonds, EGSI was reorganized pursuant to a jurisdictional separation plan into two vertically integrated utility companies, Entergy Gulf States Louisiana, L.L.C. operating as a public utility in Louisiana, and Entergy Texas operating as a public utility in Texas. Entergy Texas succeeded EGSI in the role of sponsor, seller and servicer for the prior transition bonds. Neither the transition charges which are authorized to be collected to repay the prior transition bonds, nor any other security held for the benefit of such bonds constitute security for the bonds offered by this prospectus.

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In September 2008, Hurricane Ike caused catastrophic damage to Entergy Texas' service territory. Earlier in the month the service territory of several Texas utilities had been affected by Hurricane Gustav. Hurricane Ike resulted in widespread power outages, significant damage to distribution, transmission, and generation infrastructure, and the loss of sales during the power outages. In response to the damage caused by these storms, the Texas legislature passed SB 769, adding Subchapter I of Chapter 36 of PURA (codified as Sections 36.401-406 of PURA). Under Section 36.403, the procedures and standards of SB 769, as well as the provisions of Subchapter G of Chapter 39 of PURA, govern the application for, and the Texas commission's issuance of, a financing order allowing for the securitization of system restoration costs. Subchapter I of Chapter 36 and Subchapter G of Chapter 39 of PURA are collectively referred to as the Financing Act.

The Financing Act authorizes certain electric utilities in Texas, including Entergy Texas, to finance the recovery of certain costs incurred as a result of any tropical storm or hurricane, ice or snow storm, flood or other weather-related event or natural disaster that occurred on 2008 or thereafter, which are referred to under the Financing Act and in this prospectus as system restoration costs, as well as the costs expensed or charged to the storm reserve and the costs of issuing, supporting, and servicing transition bonds, through the issuance of transition bonds. A Texas utility must apply to the Texas commission for a financing order under the Financing Act to authorize the issuance of transition bonds. Entergy Texas applied for a financing order under the Financing Act, which was issued by the Texas commission on September 11, 2009.

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Entergy Texas and other utilities may securitize qualified costs

We May Issue Transition Bonds to Recover Entergy Texas' System Restoration Costs.

The Financing Act authorizes the Texas commission to issue financing orders approving the issuance of transition bonds in series to recover certain qualified costs of an electric utility, including system restoration costs and the cost of carrying system restoration costs. A utility, its successors or a third-party assignee of a utility may issue transition bonds. The Financing Act requires the proceeds of the transition bonds to be used only for the purpose of reducing the amount of recoverable system restoration costs, as determined by the Texas commission, through the refinancing or retirement of utility debt or equity and the payment of up-front qualified costs. The transition bonds are secured by and payable from transition property, which includes the right to impose, collect and receive transition charges. Transition bonds may have a maximum maturity of 15 years. Under the Financing Act, system restoration costs are to be functionalized and allocated to customers in the same manner as the cor responding facilities and related expenses are functionalized and allocated in a utility's current base rates. Transition charges can be imposed only when and to the extent that transition bonds are issued.

The Financing Act contains a number of provisions designed to facilitate the securitization of qualified costs.

Creation of Transition Property.

Under the Financing Act, transition property is created when the rights and interests of an electric utility or successor under a financing order, including the right to impose, collect and receive transition charges authorized in the financing order, are first transferred to an assignee, such as us, or pledged in connection with the issuance of transition bonds.

A Financing Order is Irrevocable.

A financing order, once effective, together with the transition charges authorized in the financing order, is irrevocable and not subject to reduction, impairment, or adjustment by the Texas commission, except for adjustments pursuant to the Financing Act in order to correct overcollections or undercollections and to provide that sufficient funds are available to provide on a timely basis for payments of debt service and other required amounts in connection with the transition bonds. Although a financing order is irrevocable, the Financing Act allows for applicants to apply for one or more new financing orders to provide for retiring and refunding transition bonds if such retirement or refunding would result in lower transition charges.

State Pledge.

Under the Financing Act, the State of Texas has pledged, for the benefit and protection of transition bondholders and Entergy Texas, that it will not take or permit any action that would impair the value of the transition property, or, except for adjustments discussed in "Entergy Texas' Financing Order-PUCT Guaranteed True-ups" and "The Servicing Agreement-The PUCT Guaranteed Transition Charge Adjustment Process," reduce, alter, or impair the transition charges to be imposed, collected and remitted to transition bondholders until the principal, interest and premium, if any, and any other charges incurred and contracts to be performed in connection with the related transition bonds have been paid and performed in full. Please read "Risk Factors-Risks Associated with Potential Judicial, Legislative or Regulatory Actions."

Constitutional Matters.

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To date, no federal or Texas cases addressing the repeal or amendment of securitization provisions analogous to those contained in the Financing Act have been decided. There have been cases in which federal courts have applied the Contract Clause of the United States Constitution and Texas courts have applied the Contract Clause of the Texas Constitution to strike down legislation regarding similar matters, such as legislation reducing or eliminating taxes, public charges or other sources of revenues servicing other types of bonds issued by public instrumentalities or private issuers, or otherwise substantially impairing or eliminating the security for bonds or other indebtedness. Based upon this case law, Sidley Austin LLP expects to deliver an opinion, prior to the closing of an offering of the transition bonds described in a prospectus supplement accompanying this prospectus, to the effect that the language of the State Pledge constitutes a contractual relationship with the bondholder and theref ore the transition bondholders (or the trustee acting on their behalf) could, absent a demonstration that such action was necessary to serve a significant and legitimate public purpose, challenge successfully the constitutionality under the United States Constitution of any act by the State of Texas (including the Texas commission) of a legislative character to repeal or amend the Financing Act, or to take or refuse to take any action required under its pledge described above if the repeal or amendment or the action or inaction would limit, alter, impair or reduce the value of the transition property or the transition charges so as to substantially impair (x) the terms of the indenture or the transition bonds or (y) the rights and remedies of the transition bondholders (or the trustee acting on their behalf) prior to the time that the transition bonds are fully paid and discharged. Based upon this case law, Clark, Thomas & Winters, a Professional Corporation expects to deliver an opinion, prior to the closing of an offering of the transition bonds described in a prospectus supplement accompanying this prospectus, to the effect that the pledge described above provides a basis upon which the bondholders (or the trustee acting on their behalf) could challenge successfully in the Texas state courts under the Contract Clause of the Texas Constitution the constitutionality of any action by the State of Texas (including the Texas commission) of a legislative character, that repeals the State Pledge or limits, alters, impairs or reduces the value of the transition property so as to cause a substantial impairment under the Contract Clause of the Texas Constitution of (i) the terms of the indenture or the transition bonds or (ii) the rights and remedies of the bondholders (or the trustee acting on their behalf) prior to the time the transition bonds are fully paid and discharged. It may be possible for the Texas legislature to repeal or amend the Financing Act or for the Texas commission to amend or revoke the financing order notwithstanding the State Pledge, if the legislature or the Texas commission acts in order to serve a significant and legitimate public purpose, such as protecting the public health and safety or responding to a national or regional catastrophe affecting Entergy Texas' service territory, or if the legislature otherwise acts in the valid exercise of the state's police power.

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In addition, any action of the Texas legislature adversely affecting the transition property or the ability to collect transition charges may be considered a "taking" under the United States or Texas Constitutions. Each of Sidley Austin LLP and Clark, Thomas & Winters, a Professional Corporation has advised us that they are not aware of any federal or Texas court cases, respectively, addressing the applicability of the Takings Clause of the United States or Texas Constitution in a situation analogous to that which would be involved in an amendment or repeal of the Financing Act. It is possible that a court would decline even to apply a Takings Clause analysis to a claim based on an amendment or repeal of the Financing Act, since, for example, a court might determine that a Contract Clause analysis rather than a Takings Clause analysis should be applied. Assuming a Takings Clause analysis were applied under the United States Constitution, Sidley Austin LLP expects to render an opinion, prior to the closing of an offering of the transition bonds described in a prospectus supplement accompanying this prospectus, to the effect that under existing case law, the State of Texas would be required under the United States Constitution to pay just compensation to the bondholders if the State were to repeal or amend the Financing Act, or if the Texas commission were to amend or revoke the financing order or take any other action in contravention of the State Pledge, in either case which (i) permanently appropriates the related transition property or denies all economically productive use of the related transition property; or (ii) destroys the related transition property, other than in response to emergency conditions; or (iii) substantially reduces, alters or impairs the value of the related transition property, if the law unduly interferes with the bondholders' reasonable expectations arising from their investments in the transition bonds. In determining what is an undue interference, a court would consider the nature of the governmental action and weigh the public purpose served thereby against the degree to which it interferes with the legitimate property interests and distinct investment-backed expectations of the bondholders. Assuming a Takings Clause analysis were applied under the Texas Constitution, Clark, Thomas & Winters, a Professional Corporation expects to render an opinion, prior to the closing of an offering of the transition bonds described in a prospectus supplement accompanying this prospectus, to the effect that under existing case law, a Texas state court would find a compensable taking under the Takings Clause of the Texas Constitution if (a) it concludes that the related transition property is property of a type protected by the Takings Clause of the Texas Constitution and (b) the State of Texas (including the Texas commission) takes action that, without paying just compensation to the bondholders, (i) permanently appropriates t he transition property or denies all economically productive use of the transition property; or (ii) destroys the transition property, other than in response to emergency conditions; or (iii) substantially reduces, alters or impairs the value of the transition property, if the action unduly interferes with the bondholders' reasonable investment-backed expectations. In examining whether action of the Texas legislature amounts to a regulatory taking, both federal and state courts will consider the character of the governmental action and whether such action substantially advances the State's legitimate governmental interests, the economic impact of the governmental action on the bondholders, and the extent to which the governmental action interferes with distinct investment-backed expectations. There is no assurance, however, that, even if a court were to award just compensation, it would be sufficient for you to recover fully your investment in the transition bonds.

In connection with the foregoing, each of Sidley Austin LLP and Clark, Thomas & Winters, a Professional Corporation has advised us that issues relating to the Contract and Takings Clauses of the United States and Texas Constitutions are essentially decided on a case-by-case basis and that the courts' determinations, in most cases, appear to be strongly influenced by the facts and circumstances of the particular case, and both firms have further advised us that there are no reported controlling judicial precedents that are directly on point. The opinions described above will be subject to the qualifications included in them. The degree of impairment necessary to meet the standards for relief under a Takings Clause analysis or Contract Clause analysis could be substantially in excess of what a transition bondholder would consider material.

We and Entergy Texas will file a copy of each of the Sidley Austin LLP and Clark, Thomas & Winters, a Professional Corporation opinions as exhibits to an amendment to the registration statement of which this prospectus is a part, or to one of our periodic filings with the SEC.

For a discussion of risks associated with potential judicial, legislation or regulatory actions, please read "Risk Factors-Risks Associated with Potential Judicial, Legislative or Regulatory Actions."

The Texas Commission May Adjust Transition Charges.

The Financing Act requires the Texas commission to provide in all financing orders a mechanism requiring that transition charges be adjusted at least annually. The purposes of these adjustments are:

• to correct any overcollections or undercollections during the preceding 12 months, and
• to provide for the expected recovery of amounts sufficient to timely provide all payments of debt service and other required amounts and charges in connection with the transition bonds.

Transition Charges Are Nonbypassable.

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The Financing Act provides that the transition charges are nonbypassable subject to the terms of the financing order. "Nonbypassable" means that a utility collects these charges from all existing retail customers of a utility and all future retail customers located within the utility's certificated service area as it existed on September 11, 2009. The financing order allows retail customers with on-site power generation facilities with rated capacities of 10 MW or less to avoid paying system restoration costs with respect to energy generated at such facilities except to the extent Entergy Texas' distribution lines are used to provide such energy. Subject to a materiality threshold, customers who build on-site power generation facilities which exceed 10 MW and become operational in the future cannot avoid payment of transition charges even if the self-generated energy is not transmitted using Entergy Texas' distribution or transmission lines.

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The Financing Act Protects the Bondholders' Lien on Transition Property.

The Financing Act provides that a valid and enforceable lien and security interest in transition property may be created only by a financing order and the execution and delivery of a security agreement in connection with the issuance of the transition bonds. The security interest automatically attaches from the time value is received by the issuer of the transition bonds and, on perfection through filing of a notice with the Secretary of State of Texas, such security interest will be a continuously perfected lien and security interest in the transition property.

Upon perfection, the statutorily created lien attaches both to transition property and to all proceeds of transition property, whether the related transition charges have accrued or not, and shall have priority in the order of filing and take precedence over any subsequent judicial or other lien creditor. The Financing Act provides that the transfer of an interest in transition property will be perfected against all third parties, including subsequent judicial or other lien creditors, when:

• the financing order becomes effective,
• transfer documents have been delivered to the assignee, and
• a notice of the transfer has been filed with the Secretary of State of Texas.

If the notice of the transfer is filed within 10 days after the delivery of transfer documentation, perfection is retroactive to the date value was received. Otherwise, the transfer is perfected against third parties as of the date the notice is filed. The Financing Act provides that priority of security interests in transition property will not be impaired by:

• commingling of funds arising from transition charges with other funds, or
• modifications to the financing order resulting from any true-up adjustment.

Please read "Risk Factors-Risks Associated with the Unusual Nature of the Transition Property."

The Financing Act Characterizes the Transfer of Transition Property as a True Sale.

The Financing Act provides that an electric utility's or an assignee's transfer of transition property is a "true sale" under Texas law and is not a secured transaction and that legal and equitable title passes to the transferee, if the agreement governing that transfer expressly states that the transfer is a sale or other absolute transfer. Please read "The Sale Agreement" and "Risk Factors-The Risks Associated With Potential Bankruptcy Proceedings of the Seller or the Servicer."

The Financing Act Provides a Tax Exemption.

The Financing Act provides that "transactions involving the transfer and ownership of transition property and the receipt of transition charges are exempt from state and local income, sales, franchise, gross receipts and other taxes or similar charges."

ENTERGY TEXAS' FINANCING ORDER

Entergy Texas' Securitization Proceeding and Financing Order

We and Entergy Texas have filed the financing order with the SEC as an exhibit to the registration statement of which this prospectus forms a part. The following summary does not purport to be complete and is subject to and qualified by reference to the provisions of the financing order.

On April 21, 2009, Entergy Texas filed an application to determine the system restoration costs which it was entitled to recover under the Financing Act. On July 16, 2009, Entergy Texas filed an application with the Texas commission seeking authority to securitize and cause the issuance of transition bonds in the amount of approximately $628 million of system restoration costs, plus costs of issuing the transition bonds.

On August 18, 2009, the Texas commission issued a cost recovery order determining that Entergy Texas was entitled to recover $566,356,566  of system restoration costs, plus carrying costs on the system restoration costs through the issuance date of the transition bonds, minus a $70 million credit for projected insurance proceeds, plus all other qualified costs, to be determined by the Texas commission in the securitization proceeding.

On August 21, 2009, Entergy Texas filed a unanimous settlement agreement resolving all issues relating to the securitization proceeding.

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On September 11, 2009, the Texas commission issued its financing order which authorized Entergy Texas to securitize and cause to be issued transition bonds, with the aggregate principal consisting of: (i) $539,881,826 in system restoration costs (including carrying costs through October 26, 2009, which was the expected issuance date of the transition bonds used in the financing order), plus (ii) up-front qualified costs. The financing order became final and non-appealable on September 28, 2009. To the extent the transition bonds are issued on a date other than October 26, 2009, the financing order requires Entergy Texas to adjust the carrying costs for the difference in the number of days either greater than or less than assumed in the calculation based on the projected issuance date of October 26, 2009. The financing order requires Entergy Texas to update the up-front qualified costs in the issuance advice letter to reflect the actual issuance date and other more current information. The fi nancing order authorizes Entergy Texas to cause transition bonds to be issued to securitize the updated aggregate principal amount reflected in the issuance advice letter in accordance with the terms of the financing order.

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We are responsible to the State of Texas and the Texas commission. Specifically, pursuant to the financing order of the Texas commission relating to the transition bonds:

• our organizational documents and transaction documents prohibit us from engaging in any activities other than acquiring transition property, issuing transition bonds, and performing other activities as specifically authorized by such financing order;
• the Texas commission or its designated representative has a decision-making role co-equal with Entergy Texas with respect to the structuring and pricing of the transition bonds and all matters related to the structuring and pricing of the transition bonds will be determined through a joint decision of Entergy Texas and the Texas commission or its designated representative;
• Entergy Texas is directed to take all necessary steps to ensure that the Texas commission or its designated representative is provided sufficient and timely information to allow the Texas commission or its designated representative to fully participate in, and exercise its decision making power over, the proposed securitization, and
• the servicer must file on our behalf all true-up adjustments required under the order.

In addition, the indenture governing the transition bonds will require the servicer on our behalf to submit certain reports to the Texas commission.

We have also agreed that certain reports concerning transition charge collections will be provided to the Texas commission.

In the financing order, the Texas commission guarantees that it will take specific actions pursuant to the irrevocable financing order as expressly authorized by the Financing Act to ensure that expected transition charge revenues are sufficient to pay on a timely basis scheduled principal and interest on the transition bonds and other costs, including fees and expenses, in connection with the transition bonds. Such financing order, pursuant to the provisions of the Financing Act, is irrevocable and is not subject to reduction, impairment or adjustment by further action of the Texas commission, except as contemplated by the periodic true-up adjustments. The financing order also provides that the true-up mechanism and all other obligations of the State of Texas and the Texas commission set forth in the irrevocable financing order are direct, explicit, irrevocable and unconditional upon issuance of the transition bonds, and are legally enforceable against the State of Texas and the Texas commission. Plea se read "Risks Associated With Potential Judicial, Legislative or Regulatory Actions."

Collection of Transition Charges

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The financing order authorizes Entergy Texas to collect transition charges from retail electric consumers or, in the future if retail competition is ever introduced into Entergy Texas' service territory, any retail electric providers serving retail electric customers, in Entergy Texas' service territory in an amount sufficient to provide for timely recovery of Entergy Texas' aggregate qualified costs which include principal and interest and certain ongoing fees and expenses associated with the transition bonds. There is no "cap" on the level of transition charges that may be imposed on consumers of electricity to pay on a timely basis scheduled principal and interest on the transition bonds. However, we may not charge transition charges for the transition bonds for electricity delivered after the fifteenth anniversary of the date of issuance of the transition bonds.

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Issuance Advice Letter

Within twenty-four hours following the determination of the final terms of the transition bonds and prior to their issuance, Entergy Texas is required to file with the Texas commission an issuance advice letter, which will:

• demonstrate compliance with the requirements of the financing order,
• evidence the actual terms on which the transition bonds will be issued,
• show the actual dollar amount of the initial transition charges relating to the transition bonds,
• identify the transition property relating to the transition bonds we will purchase,
• identify us, and
• certify that, based on information reasonably available, the structuring and pricing of the transition bonds will result in the lowest transition bond charges consistent with market conditions and the terms of the financing order.

The issuance advice letter becomes effective on the date of issuance of the transition bonds unless the Texas commission issues an order, prior to noon on the fourth business day after the determination of the final terms of the transition bonds that the proposed issuance does not comply with the requirements of the Financing Act or the financing order. The Texas commission's review of the issuance advice letter will be limited to confirming the arithmetic accuracy of the calculations and to compliance with the specific requirements contained in the issuance advice letter.

Tariff

We are required, prior to the issuance of any transition bonds, to complete and file a tariff in the form attached to the financing order. The tariff establishes the initial transition charges. It also implements the minimum requirements for any future retail electric providers which collect transition charges, the procedures for periodic adjustments to the transition charges, the procedures for any future retail electric providers to remit transition charge payments and the annual procedures allowing retail electric providers to reconcile remittances with actual charge-offs. Please read "Description of the Transition Property-Tariff; Transition Charges."

PUCT Guaranteed True-Ups

The Financing Act mandates and the financing order guarantees that transition charges be adjusted at least annually to correct any overcollections or undercollections in the preceding 12 months. The financing order also requires the servicer to make mandatory interim true-up adjustments semi-annually (or quarterly during the period between the expected final maturity and the legal final maturity of the last bond tranche or class) if the servicer forecasts that transition charge collections will be insufficient to make all scheduled payments of principal, interest and other amounts in respect of the transition bonds during the current or next succeeding semi-annual or quarterly period (as applicable) and to replenish any draws upon the capital subaccount. These adjustments are intended to ensure the expected recovery of amounts sufficient to timely provide all payments of debt service and other required amounts and charges in connection with the transition bonds. The Financing Act does not cap the leve l of transition charges that may be imposed on retail electric customers as a result of the true-up process.

The Texas commission must be given at least 15 days' notice prior to making either the annual true-up adjustment or an interim true-up adjustment. In the event any correction to a true-up adjustment due to mathematical errors in the calculation of the adjustment or otherwise is necessary, it will be made in a future true-up adjustment.

The financing order also provides for a non-standard true-up procedure if the forecasted billing units for one or more of the customer classes for an upcoming period decrease by more than 10% compared to the threshold billing units for such class set forth in the financing order. The purpose of the non-standard true-up is to reallocate the transition charges among the customer classes in order to avoid overburdening the remaining members of a customer class the size of which has decreased significantly. Please read "The Servicing Agreement-The PUCT Guaranteed Transition Charge Adjustment Process." For the non-standard true-up, the servicer will make a filing with the Texas commission at least 90 days before the date that the transition charges to be imposed in connection with such non-standard true-up are to go into effect. The servicer will issue appropriate notice of the filing and the Texas commission will conduct a contested case proceeding on the proposed non- standard true-up. The scope of the proceeding will be limited to determining whether the proposed adjustment complies with the financing order. The Texas commission will issue a final order by the proposed true-up adjustment date specified by the servicer in the non-standard true-up filing. If the Texas commission cannot issue an order by that date, the servicer may implement the proposed adjustments and any modifications subsequently ordered by the Texas commission will be made by the servicer in the next true-up filing.

PUCT Guaranteed True-Ups-Credit Risk

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The State of Texas has pledged in the Financing Act that it will not take or permit any action that would impair the value of the transition property, or, except as permitted in connection with a true-up adjustment authorized by the Financing Act, reduce, alter or impair the transition charges until the principal, interest and premium, and any other charges incurred and contracts to be performed in connection with the transition bonds, have been paid and performed in full.

The broad-based true-up mechanism and the State pledge described above, along with our bankruptcy remoteness from Entergy Texas and the collection account, will serve to minimize if not effectively eliminate, for all practical purposes and circumstances, any credit risk to the payment of the transition bonds (i.e., that sufficient transition charges will be assessed and collected to discharge all principal and interest obligations when due). The Texas commission has made a finding to such effect in the financing order. See "The Financing Act - - Entergy Texas and other utilities may securitize qualified costs", "Risk Factors", including among others, "Risk Factors - - Risks Associated with Potential Judicial, Legislative or Regulatory Actions", "-Servicing Risks", and "-Risks Associated with Potential Bankruptcy Proceedings of the Seller and the Servicer" and please also read "Cautionary Statement Regarding Forward-Looking Information" for further information. With respect to the foregoing, interest is due on each payment date and principal is due upon the final maturity date for each tranche.

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Allocation

Under the terms of the Financing Act and the financing order, Entergy Texas will functionalize and allocate system restoration costs to customers in the same manner as the corresponding facilities and related expenses are functionalized and allocated in a utility's current base rates. The percentages described below under "Description of the Transition Property-Tariff; Transition Charges" show the resulting allocation of cost responsibility based upon Entergy Texas' current base rate case.

Adjustments to Allocation of Transition Charges

In the financing order, the Texas commission requires Entergy Texas and any successor servicer under certain circumstances to request adjustments to the allocation of the transition charges among various classes of customers as described under "Description of the Transition Property-Tariff; Transition Charges."

Servicing Agreement

In the financing order, the Texas commission authorized Entergy Texas, as the servicer, to enter into the servicing agreement described under "The Servicing Agreement" in this prospectus.

Binding on Successors

The financing order, along with the transition charges authorized in the financing order, is binding on:

• Entergy Texas
• any successor to Entergy Texas that provides transmission and distribution service directly to retail customers in Entergy Texas' service territory,
• any other entity that provides transmission or distribution service to retail customers within Entergy Texas' service territory, and any successor to such other entity,
• each retail electric provider that sells electric energy to retail customers located within Entergy Texas' service territory, or any such retail electric provider's successor,
• any other entity responsible for billing and collecting transition charges on our behalf, and
• any successor to the Texas commission.

DESCRIPTION OF THE TRANSITION PROPERTY

Creation of Transition Property; Financing Order

The Financing Act defines transition property as the rights and interests of an electric utility or successor under a financing order, including the right to impose, collect and receive transition charges, which charges include amounts to be charged to recover system restoration costs, established in the financing order. Transition property becomes property at the time that it is first transferred to an assignee or pledged in connection with the issuance of transition bonds, such as the transition bonds. The transition bonds will be secured by transition property, as well as the other collateral described under "Security for the Transition Bonds."

In addition to the right to impose, collect and receive transition charges, the financing order:

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• authorizes the transfer of transition property to us and the issuance of transition bonds;
• establishes procedures for periodic true-up adjustments to transition charges in the event of overcollection or undercollection;
• implements guidelines for REPs who collect transition charges; and
• provides that the financing order is irrevocable and not subject to reduction, impairment, or adjustment by further act of the Texas commission (except for the periodic adjustments to the transition charges).

A form of issuance advice letter and a form of tariff is attached to the financing order. We will complete and file both documents with the Texas commission immediately after the pricing of the transition bonds. The Texas commission's review of the issuance advice letter and the tariff will be limited to confirming the arithmetic accuracy of the calculations and to compliance with the specific requirements contained in the issuance advice letter.

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The issuance advice letter confirms to the Texas commission the interest rate and expected sinking fund schedule for the transition bonds and sets forth the actual dollar amount of the initial transition charges as described above under "Entergy Texas' Financing Order-Issuance Advice Letter." The dollar amount of the initial transition charges, along with any other terms of the issuance advice letter and tariff affecting the terms of the transition bonds, will be more fully described in the prospectus supplement.

The tariff establishes the initial transition charges. The financing order and the tariff also implement the minimum requirements for future REPs that may collect transition charges, the procedures for periodic adjustments to the transition charges, the procedures for REPs to remit transition charge payments and the annual procedures allowing REPs to reconcile remittances with actual charge-offs.

Tariff; Transition Charges

The following is a description of the initial tariff to be filed by Entergy Texas with the Texas commission pursuant to the financing order creating transition property. We expect that future tariffs will have substantially similar terms. We will describe any material differences between the initial tariff and future tariffs in the prospectus supplement relating to the tranches of transition bonds subject to such tariffs.

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The initial tariff applies to energy consumption and demand of retail customers taking electric transmission and distribution service from Entergy Texas and its successors and assigns including, in the event that retail competition is ever introduced into Entergy Texas' service territory, to energy consumption supplied by REPs. In no event will transition charges provided for in the tariff be assessed for services provided after 15 years from the issuance of the transition bonds.

The transition charges will be payable by all existing and future retail customers located within Entergy Texas' service territory who consume electricity that is delivered through the distribution system or who produce energy from certain new on-site generation. Please read "The Financing Act-Entergy Texas and other utilities may securitize qualified costs - -Transition Charges Are Nonbypassable." The defined classes of transition charge retail customers are:

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• Residential - This service is applicable for all domestic purposes in single family residences or individual apartments.
• Small General Service - This service is applicable to non-residential customers using 20 kW or less of demand. The Small General Service class also includes Municipal Traffic Signal Service and Unmetered Services.
• General Service - This service is applicable to non-residential customers who contract for not less than 5 kW but not more than 2,500 kW of electric service.
• Large General Service - This service is applicable to non-residential customers who contract for not less than 300 kW but not more than 2,500 kW of electric service. The Large General Service class also includes customers taking service under the Experimental Rider for Water Heating Service.
• Large Industrial Power Service - This service is applicable to non-residential customers who contract for not less than 2,500 kW of electric service. The Large Industrial Power Service class also includes customers taking service under Pipeline Pumping Service and Interruptible Service.
• Standby and Maintenance Service - This service is applicable to non-residential customers who have their own generation equipment and who contract for Standby and Maintenance Service from Entergy Texas.
• Experimental Economic As-Available Power Service ("EAPS") - This service is applicable to all retail customers having self-generation capability greater than 5,000 kW which was both permanently existing on site and in operating condition as of March 8, 1993. The power taken under Schedule EAPS can only be used for the displacement, in total or in part of the customer's self-generating capability. A customer may not contract for Schedule EAPS power in excess of the design capacity of the customer's power production facilities and shall not displace load historically served by Entergy Texas.
• Street and Outdoor Lighting - This class includes Area Lighting Service which provides security or flood lighting services provided on end-use customers' premises and Street and Highway Lighting Service.

Because of differences in the tariff rate for each class of retail customers and the provisions of the Financing Act, the transition charges payable by each class of retail customers will differ. The Financing Act requires that transition charges be functionalized and allocated to Entergy Texas' customers in the same manner as the corresponding facilities and related expenses are functionalized and allowed in the utility's current base rates.

Set forth below are the initial allocation percentages for the eight transition charge retail customer classes, each of which was adopted in the financing order issued by the Texas commission.

Transition Charge Retail Customer Class Allocation Percentages

Transition Charge Retail Customer Class	Allocation Percentage
Residential	56.0416%
Small General Service	3.8977%
General Service	24.0633%
Large General Service	6.0038%
Large Industrial Power Service	5.9070%
Standby and Maintenance Service	0.4668%
Experimental Economic As-Available Power Service	0.3097%
Street and Outdoor Lighting	3.3101%

In the case of the Large Industrial Power Service and Standby and Maintenance Service rate classes, customers will be billed on a demand (kW) basis. All other retail electric customers will be billed on a kilowatt-hour, non-demand metered basis. Each new retail electric customer will be assigned to the appropriate customer class.

The initial transition charges that will be assessed to customers comprising each of the above transition charge retail customer classes, as of the issuance date for the transition bonds, will be set forth in the related prospectus supplement.

Billing and Collection Terms and Conditions

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Transition charges will be assessed by the servicer, for our benefit as owner of the transition property, based on a retail customer's actual consumption of electricity or electric demand from time to time. Transition charges will be collected by the servicer directly from retail customers as part of its normal collection activities. If and when retail competition is introduced into Entergy Texas' service territory, system restoration costs will be collected by the servicer from any REP that collects transition charges. Please read "Future Retail Electric Providers." Transition charges will be deposited by the servicer into the collection account under the terms of the indenture and the servicing agreement. The servicer will deposit in the collection account estimated payments of transition charges on each business day.

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The obligation to pay transition charges is not subject to any right of set-off in connection with the bankruptcy of the seller or any other entity. Transition charges are "nonbypassable" in accordance with the provisions set forth in the Financing Act and the financing order. If a retail customer pays only a portion of its bill, such partial payments will be first applied to any amounts due with respect to customer deposits. Next, the servicer will allocate the partial payment to all electric service charges of the servicer and transition charges pro rata based on the total amount billed, with amounts owed for transition charges allocated before amounts owed for late charges. Finally, any remaining moneys will be allocated to taxes and charges billed to customers. The portion owed in respect of transition charges may be further allocated as between different issuances of transition bonds, including amounts owed to other special-purpose subsidiaries of Entergy Texas who have issued or may in t he future issue transition bonds under the Financing Act or Subchapter G of Chapter 39 of PURA. Such allocations shall be pro rata based upon the amount billed with respect to each such issuance. If a retail customer fails to pay all or any portion of the transition charges, the servicer or any future REP who is billing such customer may transfer billing and collection rights to the designated provider of last resort or POLR, if any, for such customer. The POLR may direct Entergy Texas or its successor transmission and distribution utility to terminate service to such non-paying customer in accordance with the financing order and Texas commission guidelines.

THE SELLER, INITIAL SERVICER AND SPONSOR

General

Entergy Texas will be the seller and initial servicer of the transition property securing the transition bonds, and will be the sponsor of the securitization in which the transition bonds covered by this prospectus are issued.

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Entergy Texas was formed as of December 31, 2007, upon the completion by Entergy Gulf States, Inc. of a jurisdictional separation into two vertically integrated utility companies, one operating under the sole retail jurisdiction of the PUCT, Entergy Texas, and the other operating under the sole jurisdiction of the Louisiana Public Service Commission, Entergy Gulf States Louisiana, LLC. As a result of such separation, Entergy Texas owns all of Entergy Gulf States, Inc.'s distribution and transmission assets located in Texas, together with certain generation assets. As described above in this prospectus under "The Financing Act - - The Financing Act and other provisions of PURA authorize utilities to recover hurricane-related costs through the issuance of bonds," Entergy Texas is also the successor sponsor, servicer and administrator for the prior transition bonds.

Entergy Texas is a public utility company engaged in the generation, transmission, distribution and sale of electric energy in the State of Texas. Entergy Texas as of December 31, 2008 and as of June 30, 2009, respectively, provided electric service to approximately 395,000 and 402,000 retail customers in its service territory. (We refer to this service territory as Entergy Texas' service territory.) The retail customer base includes a mix of residential, commercial and diversified industrial retail customers. During the twelve months ended December 31, 2008, Entergy Texas delivered approximately 15,534 billion kilowatt hours of electricity resulting in billed electric revenue of $1,503 million. During the six months ended June 30, 2009, Entergy Texas delivered approximately 7,094 billion kilowatt hours of electricity resulting in billed electric revenue of $630 million.

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Entergy Texas is a wholly-owned subsidiary of Entergy Corporation, a Delaware corporation ("Entergy"). In addition to Entergy Texas, the principal operating utility subsidiaries of Entergy are Entergy Arkansas, Inc., Entergy Gulf States Louisiana, L.L.C., Entergy Louisiana, LLC, Entergy Mississippi, Inc., and Entergy New Orleans, Inc. Entergy also owns, among other things, all of the common stock of System Energy Resources, Inc., a generating company that owns the Grand Gulf Electric Generating Station, and Entergy Operations, Inc., a nuclear management services company.

Entergy Texas is subject to the jurisdiction of the municipal authorities of incorporated cities in Texas as to retail rates and services that it provides within their boundaries, with appellate jurisdiction over such matters residing in the PUCT. Entergy Texas is also subject to regulation by the PUCT as to retail rates and services that it provides in rural areas, certification of new generating plants and extensions of service into new areas in Texas. Entergy Texas is also subject to the jurisdiction of the Federal Energy Regulatory Commission or FERC under the Federal Power Act with respect to the sale of electricity for resale, transmission of electricity in interstate commerce, the issuance of securities, acquisitions and divestitures of utility assets, certain affiliate transactions and other matters.

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As described below under "The Texas Electricity Market Restructuring Plan - Entergy Texas' Service Territory Could Experience Deregulation in the Future," the electric industry in Texas is undergoing fundamental restructuring. Although retail competition and the unbundling of services have not been introduced into Entergy Texas' service territory, it is possible that it may occur during the term of the transition bonds.

Where to Find Information About Entergy Texas. Entergy Texas files periodic reports with the SEC as required by the Exchange Act. Reports filed with the SEC are available for inspection without charge at the public reference room maintained by the SEC at 100 F Street, N.E., Washington, DC 20549. Copies of periodic reports and exhibits thereto may be obtained at the above location at prescribed rates. Information as to the operation of the public reference facilities is available by calling the SEC at 1-800-SEC-0330. Information filed with the SEC can also be inspected at the SEC site on the World Wide Web at http://www.sec.gov. You may access a copy of Entergy Texas' filings at http://www.entergy.com. Except as provided in any related prospectus supplement, no information contained on that website constitutes part of this prospectus or any prospectus supplement related to the transition bonds.

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Municipalization

Texas law may authorize certain local municipalities to seek to acquire portions of Entergy Texas' electric distribution facilities through the power of eminent domain for use as part of municipally-owned utility systems. Although the power of eminent domain has not been used by municipalities in Texas in recent times to acquire electric distribution systems, there can be no assurance that one or more municipalities will not seek to acquire some or all of Entergy Texas' electric distribution facilities while transition bonds remain outstanding. The Financing Act specifies that transition charges approved by a Texas commission order shall be collected by an electric utility as well as its "successors." In the servicing agreement, Entergy Texas will covenant to assert in an appropriate forum that any municipality that acquires any portion of Entergy Texas' electric distribution facilities must be treated as a successor to Entergy Texas under the Financing Act and the financing order and that r etail customers in such municipalities remain responsible for payment of transition charges. However, the involved municipality might assert that it should not be treated as a successor to Entergy Texas for these purposes and that its distribution customers are not responsible for payment of transition charges. In any such cases, there can be no assurance that the transition charges will be collected from customers of municipally-owned utilities who were formerly customers of Entergy Texas.

Entergy Texas Customer Base and Electric Energy Consumption

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The following tables show the electricity billed to retail customers, electric billed revenues and number of retail customers for each of Entergy Texas' revenue-reporting customer classes for the five preceding years and the six months ended June 30, 2009 within the service territory. There can be no assurances that the retail electricity sales, retail electric revenues and number of retail customers or the composition of any of the foregoing will remain at or near the levels reflected in the following tables.

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	Electricity Billed to Retail Customers (As Measured by GWh Sales) by Customer Class and Percentage Composition*
Customer Class	2004		2005		2006		2007		2008		June 30, 2009
Residential	5,126	31.98%	5,207	34.76%	5,211	33.88%	5,280	34.02%	5,245	33.77%	2,341	33.00%
Commercial	3,816	23.81%	3,878	25.89%	4,002	26.01%	4,085	26.32%	4,092	26.34%	1,922	27.10%
Industrial	6,839	42.68%	5,650	37.72%	5,915	38.45%	5,911	38.08%	5,949	38.29%	2,710	38.20%
Government & Municipal	245	1.53%	244	1.63%	255	1.66%	246	1.58%	248	1.60%	121	1.70%
Total Retail	16,026	100.00%	14,979	100.00%	15,383	100.00%	15,522	100.00%	15,534	100.00%	7,094	100.00%

	Electric Billed Revenues by Customer Class and Percentage Composition (Dollars in thousands)*
Customer Class	2004		2005		2006		2007		2008		June 30, 2009
Residential	$468,704	39.14%	$502,135	40.51%	$599,494	40.08%	$532,617	40.17%	$585,470	38.96%	$249,474	39.62%
Commercial	$302,699	25.28%	$327,286	26.41%	$406,198	27.15%	$358,009	27.00%	$405,611	26.99%	$178,547	28.36%
Industrial	$405,650	33.87%	$388,285	31.33%	$463,640	30.99%	$412,279	31.09%	$485,802	32.33%	$189,769	30.14%
Government & Municipal	$20,535	1.71%	$21,693	1.75%	$26,609	1.78%	$23,028	1.74%	$25,789	1.72%	$11,886	1.89%
Total Retail	$1,197,588	100.00%	$1,239,399	100.00%	$1,495,941	100.00%	$1,325,933	100.00%	$1,502,672	100.00%	$629,676	100.00%

	Texas Service Territory Average Number of Retail Electric Customers and Percentage Composition*
Customer Class	2004		2005		2006		2007		2008		June 30 , 2009
Residential	325,186	87.64%	330,278	87.57%	334,758	87.59%	341,132	87.56%	347,776	87.62%	349,529	87.65%
Commercial	39,170	10.56%	40,129	10.64%	40,457	10.64%	41,375	10.62%	42,224	10.64%	42,469	10.65%
Industrial	4,743	1.28%	4,769	1.26%	4,958	1.30%	5,045	1.29%	4,793	1.21%	4,653	1.17%
Government & Municipal	1,955	0.53%	1,968	0.52%	2,029	0.53%	2,062	0.53%	2,092	0.53%	2,135	0.54%
Total Retail	371,054	100.00%	377,144	100.00%	382,202	100.00%	389,614	100.00%	396,885	100.00%	398,785	100.00%

* Columns may not add due to rounding.

Percentage Concentration Within Entergy Texas' Large Commercial Customers

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For the year ended December 31, 2008 and for the six months ended June 30, 2009, respectively, the ten largest electric customers in Entergy Texas' service territory represented approximately 20% and 18% of Entergy Texas' retail gigawatt-hour sales. All ten customers are industrial class accounts. There are no material concentrations in the residential and commercial classes.

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Forecasting Electricity Consumption

Entergy uses econometric models for forecasting residential, commercial, small industrial and governmental sales for all of its regulated electric utilities, including Entergy Texas. The models use ten years of monthly historical sales data when possible, although several models use only 5-8 years because of reliability issues with older data. Entergy's largest 150 industrial customers (the "Top 150") are forecasted and tracked individually through account managers. Of the Top 150 accounts, 33 are located in Entergy Texas' service territory.

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Economic driver data used in the econometric models, both historical and forecasted, are obtained from Moody's Economy.com. The data includes both customized data for Entergy Texas' service territory, as well as national drivers for a wide variety of economic variables. Temperature data is obtained from the national weather service and converted to cooling and heating degree days for use in all the models except for those instances (such as for all the industrial class models) where no dependence of sales to weather could be established. Actual data is used for the historical time periods and normal (defined as 15-year average) cooling and heating days are used for the forecasted time periods.

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Econometric sales forecasts for Entergy Texas's residential class are derived from separate usage per customer ("UPC") and customer count models, the outputs of which are multiplied together on a monthly basis to produce estimated total sales volumes. For the other classes, total usage is directly calculated by the models. The key drivers for the UPC models are generally gross area economic output (similar to national gross domestic product) or real income, while customer count models are typically based on drivers such as population or households. The residential UPC and commercial usage models additionally incorporate end use variables such as appliance efficiencies and home size to account for the impact of changing end use characteristics through time. These models are generically known as Statistically Adjusted End Use (SAE) models.

Once per year (typically in June), Entergy completes a comprehensive five-year sales forecast where the econometric models are completely re-estimated and where each Top 150 account forecast is produced. The output of this exercise is the sales forecast that underlies Entergy's annual five-year business plan. This forecast is typically completed during June as the first step in a multi-stage planning process that determines the hourly demand (gigawatt), generation mix and fuel cost assumptions in the business plan. In the past, the final sales forecast, although largely based on the econometric model outputs, has been revised by qualitative judgments from management. Starting in the 2007 to 2011 business plan, however, the sales forecast for Entergy Texas' service territory in the five-year business plan is based solely on the econometric modeling and large industrial forecasting processes.

Annual Forecast Variance For Ultimate Electric Delivery (GWh)*

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	2004	2005	2006	2007	2008	2009**
Residential
Forecast 9; 9; 9; 9;	5,314	5,309	5,478	5,335	5,462	2,406
Actual 9; 9; 9; 9;	5,126	5,207	5,211	5,280	5,245	2,341
Variance (%) 9; 9; 9; 9;	-3.5%	-1.9%	-4.9%	-1.0%	-4.0%	-2.7%
Commercial
Forecast 9; 9; 9; 9;	3,804	3,945	4,126	4,099	4,209	1,904
Actual 9; 9; 9; 9;	3,816	3,878	4,002	4,085	4,092	1,922
Variance (%) 9; 9; 9; 9;	0.3%	-1.7%	-3.0%	-0.3%	-2.8%	1.0%
Industrial
Forecast 9; 9; 9; 9;	6,444	6,306	5,837	6,217	6,083	2,996
Actual 9; 9; 9; 9;	6,839	5,650	5,915	5,911	5,949	2,710
Variance (%) 9; 9; 9; 9;	6.1%	-10.4%	1.3%	-4.9%	-2.2%	-9.5%
Government
Forecast 9; 9; 9; 9;	277	257	255	257	266	123
Actual 9; 9; 9; 9;	245	244	255	246	248	121
Variance (%) 9; 9; 9; 9;	-11.6%	-5.1%	0.0%	-4.3%	-6.8%	-2.0%
Total
Forecast 9; 9; 9; 9;	15,839	15,817	15,696	15,908	16,020	7,429
Actual 9; 9; 9; 9;	16,026	14,979	15,383	15,522	15,534	7,094
Variance (%) 9; 9; 9; 9;	1.2%	-5.3%	-2.0%	-2.4%	-3.0%	-4.5%

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* Percentages may not calculate due to rounding.

** Actual result through June 30, 2009.

Credit Policy; Billing Process; Collections Process; Termination of Service

Entergy Texas bills its retail customers in its service territory directly, and its current credit policies, billing process, and termination of service policies are described below. All information below pertains only to Entergy Texas' service territory. In the future, retail competition may be introduced into Entergy Texas' service territory, and retail electric providers, not Entergy Texas, will bill retail customers directly and thus collect the transition charges. Please read "Future Retail Electric Providers."

Credit Policy

Entergy Texas is required to provide electric utility service to applicants within its designated service territory once outstanding debts are cleared and any deposit requirements are met. Using information provided by the Customer Information System (CIS, Entergy's legacy customer accounting system), Entergy Texas determines whether Entergy Texas has previously provided service to an applicant. Certain accounts are secured with deposits or guarantees as a precautionary measure. The amount of the deposit for residential customers is based upon the previous history of usage at the location and can be up to one-sixth (1/6) of the total estimated annual bill. The annual bill is based on the most recent 12 months with a default value of $150 where there is insufficient history.

Entergy Texas uses specific criteria for establishing credit. Entergy Texas uses a positive identification and consumer credit scoring service from a third-party provider (currently Experian) to determine creditworthiness of its new residential applicants. If a deposit is required to establish credit, residential applicants are billed a deposit equal to one-sixth (1/6) of the total estimated annual bill. As noted above, the annual bill amount is equivalent to the most recent 12 months with a default value of $150 where there is an insufficient history. PUCT rules require deposits to be returned when the customer has paid bills for service for 12 consecutive residential billings or for 24 consecutive non-residential billings without having service disconnected for nonpayment of a bill and without having more than two occasions in which a bill was delinquent, and when the customer is not delinquent in the payment of the current bills. PUCT rules require Entergy Texas to pay simple interest at a rate determ ined annually, and, as of January 1, 2009, at a rate of 2.09%, for any cash deposits held by Entergy Texas on a customer's account. PUCT rules do not require interest to be refunded annually unless requested by the customer. A residential applicant may also have their deposit requirement satisfied by an existing residential customer in good standing acting as guarantor for the deposit or portion of deposit. Entergy Texas does not accept third party guarantors for commercial accounts.

Entergy Texas' current business practices require industrial and commercial customers to provide deposits equal to two times the average monthly bill based on the location history.

Cash deposits are accounted for as an obligation, but are not required to be escrowed, and are available in working capital.

Billing Process

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Entergy Texas bills its customers on average every 30 days. For the year ended December 31, 2008, Entergy Texas in its service territory mailed out an average of 16,644 bills on each business day to its customers. For the six-months ended June 30, 2009, Entergy Texas in its service territory mailed out an average of 16,585 bills on each business day to its customers. For accounts with potential billing error exceptions, reports are generated for manual review. This review examines accounts that have abnormally high or low bills, potential meter-reading errors, possible meter malfunctions and/or unbilled accounts. The PUCT requires that the bill provided to customers shall include a payment due date that shall not be less than 16 days after issuance.

Collection, Termination of Service and Write-Off Policy.

In 2008, Entergy Texas received approximately 48% of payments by mail, 19% were walk-in payments, and 33% were electronic payments, either bank draft or electronic funds transfer. For the six-months ended June 30, 2009, Entergy Texas received approximately 45% of payments by mail, 17% were walk-in payments, and 38% were electronic payments, either bank draft or electronic funds transfer.

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Walk-in payments are handled by a third party and payment centers are located in each town in Entergy Texas' service territory.

Customers are sent a bill which is due and payable upon receipt and is considered past due if not paid within 16 calendar days from the mail date. If the bill is not paid on the last day to pay indicated on the statement, and the customer's payment history makes the past due amount eligible for collection activity, a disconnect notice is mailed on the 4^th business day after the past due date to ensure that consideration is given to any payment that may be en route by mail on the last day to pay. The disconnect notice gives the customer an additional 10 calendar days to pay the bill. On the last day to pay indicated on the disconnect notice, a courtesy call is attempted with a predictive dialer. If the bill is not paid or if the customer has not called for extended payment arrangements, a disconnect order will be generated on the next business day. Once the disconnect order has been generated, payment in full is required to stop the termination. If the customer is disconnected, payment in full i s required. In addition, the customer may be subject to an additional deposit and/or a collection or reconnection fee. For non-residential customers, additional deposits are billed per PUCT rule based on usage at location and the full amount of twice the average bill is due prior to the reconnection.

Termination of service is subject to PUCT rules that forbid termination during certain weather conditions, such as freezing temperatures or "heat advisory" conditions. In addition, the PUCT has adopted rules forbidding termination of service to critical care, elderly customers and elderly, low-income customers.

Entergy Texas provides several payment options to help consumers manage their electric usage and payments. Entergy Texas customer service representatives as well as an automated Voice Response Unit (VRU) are available 24 hours a day, 365 days a year to assist customers with payment arrangements. Most customers can receive an extension on their scheduled disconnect date through the VRU or by talking with a customer service representative. Extensions are denied in some cases based on the payment history of the account. Programs such as Pick-A-Date, which allows the customer to choose a preferred due date and Levelized Billing Programs, which allow customers to pay an average bill each month while spreading the difference over the remaining months, are available to most residential customers. Automated draw draft and internet billing and payments are also available.

Unpaid final bills are written off after 120 days. Entergy Texas does mail a final bill to all customers. If not paid in 45 days, an in-house collection letter is mailed. A second letter is mailed approximately 15 days later. If not paid, a third letter is mailed by a third-party collector approximately 75 days from the time that the final bill is mailed. Once the account is written off, it is turned over to a third-party collection agency on a contingency basis.

Write-off and Delinquency Experience

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The following table shows gross write-offs for electricity and gross write-offs as a percentage of total electric billed revenue for the past five years and for the six-months ended June 30, 2009 for Entergy Texas' service territory.

Gross Write-Offs as a Percentage of Revenues*

	As of December 31,					As of June 30,
	2004	2005	2006	2007	2008	2009
Billed Electric Revenues ($000)	$1,197,588	$1,239,399	$1,495,941	$1,325,933	$1,502,672	$629,676
Gross Write-Offs ($000)	$ 3,883	$ 4,689	$ 7,147	$ 5,909	$ 4,673	$ 3,853
Percentage of Billed Revenue	0.32%	0.38%	0.48%	0.45%	0.31%	0.61%

*Numbers not exact due to rounding.

The following table shows, for its service territory, total Entergy Texas net write-offs for electricity and total net write-offs as a percentage of total electric billed revenue for the past five years and for the six-months ended June 30, 2009. Net write-offs include amounts recovered by Entergy Texas from deposits, bankruptcy proceedings and payments received after an account has been either written-off by Entergy Texas or transferred to one of its external collection agencies.

Net Write-Offs as a Percentage of Revenues*

	As of December 31,					As of June 30,
	2004	2009	2006	2007	2008	2009
Billed Electric Revenues ($000)	$1,197,588	$1,239,399	$1,495,941	$1,325,933	$1,502,672	$629,676
Net Write-Offs ($000)	$ 1,774	$ 3,173	$ 5,178	$ 3,632	$ 2,859	$ 2,591
Percentage of Billed Revenue	0.15%	0.26%	0.35%	0.27%	0.19%	0.41%

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*Numbers not exact due to rounding.

Delinquencies

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The following table sets forth information relating to the delinquency experience of Entergy Texas for residential, commercial, industrial and governmental customers on December 31 of each of the five preceding years and on June 30, 2009 for the preceding six months:

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Customer Delinquency Data*

	Dec. 2004	Dec. 2005	Dec. 2006	Dec. 2007	Dec. 2008	June 2009
Residential
Percent of Billed Revenue Collected Within:
31-60 days	20.03%	19.55%	18.97%	19.12%	18.55%	15.39%
61-90 days	4.27	5.11	3.83	3.99	4.15	2.62
91 days or more	0.04	0.24	0.04	0.00	0.19	0.03
Commercial, Industrial, Governmental & Residential
Percent of Billed Revenue Collected Within:
31-60 days	9.73%	12.37%	9.65%	9.60%	10.13%	9.12%
61-90 days	1.22	2.39	1.86	2.47	2.20	1.30
91 days or more	0.26	0.13	0.03	0.13	0.24	0.22

* Data shows statistics for combined gas and electric revenues for open accounts for each year and is calculated based upon amounts collected as a percentage of the year's billed revenue.

Entergy Texas does not believe that the delinquency experience with respect to transition charge collections will differ substantially from the approximate rates indicated above.

Average Days Sales Outstanding

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The following table sets forth information relating to Entergy Texas' average days sales outstanding for all electric consumers in its service territory for the past five years and for the six months ended June 30, 2009. Average days sales outstanding is a measure of the average number of days that Entergy Texas takes to collect its revenue.

Average Days Sales Outstanding ("DSO")
2004 Through 2009**

Year	DSO*
2004	18.02
2005	23.78
2006	21.51
2007	19.46
2008	21.89
2009	20.30

*Numbers not exact due to rounding.
** For the six months ended June 30, 2009.

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ENTERGY TEXAS RESTORATION FUNDING, LLC, THE ISSUING ENTITY

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We are a special purpose limited liability company formed under the Delaware Limited Liability Company Act pursuant to a limited liability company agreement executed by our sole member or owner, Entergy Texas, and the filing of a certificate of formation with the Secretary of State of the State of Delaware. Our limited liability company agreement restricts us from engaging in activities other than those described in this section. We do not have any employees, but we will pay our member for administrative services in accordance with our limited liability company agreement. We have summarized selected provisions of our limited liability company agreement below, a copy of which has been filed as an exhibit to the registration statement of which this prospectus is a part. On the date of issuance of the transition bonds, our capital will be equal to 0.5% of the principal amount of the transition bonds issued or such other amount as may allow us to achieve the desired security rating and treat the transition b onds as debt under applicable IRS regulations. Our capitalization after giving effect to the issuance of the transition bonds will be set forth in the prospectus supplement.

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As of the date of this prospectus, we have not carried on any business activities and have no operating history. We are not an agency or instrumentality of the State of Texas but are responsible to the State of Texas and the Texas commission as described below under the caption "-Our Relationship with the State of Texas and the Texas Commission."

Our assets will consist of:

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• the transition property,
• our rights under the sale agreement (and under any bills of sale delivered thereunder), the servicing agreement, the administration agreement, and the other basic documents,
• collections of transition charges that are allocated to us and the trust accounts (other than the REP deposit accounts) held by the trustee, and
• any money distributed to us by the trustee from the collection account in accordance with the indenture.

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Restricted Purpose

We have been created for the sole purpose of:

• purchasing and owning the transition property and the other collateral;
• registering and issuing from time to time transition bonds, which may be comprised of one or more tranches;
• making payment on the transition bonds;
• distributing amounts released to us;
• pledging our interest in the transition property and other collateral to the trustee under the indenture in order to secure the repayment of transition bonds and certain qualified expenses; and
• performing other activities that are necessary, suitable or convenient to accomplish these purposes.

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Our limited liability company agreement does not permit us to engage in any activities not directly related to these purposes, including issuing securities (other than the transition bonds), borrowing money or making loans to other persons. We may not issue any other transition bonds other than the transition bonds offered by this prospectus. The list of permitted activities set forth in our limited liability company agreement may not be altered, amended or repealed without the affirmative vote of a majority of our managers, which vote must include the affirmative vote of all of our independent manager(s).

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Our Relationship with Entergy Texas

On the issue date of the transition bonds, Entergy Texas will sell the transition property to us pursuant to the sale agreement between us and Entergy Texas. Entergy Texas will service the transition property pursuant to the servicing agreement between us and Entergy Texas. Please read "The Sale Agreement" and "The Servicing Agreement."

Our Relationship with the State of Texas and the Texas Commission

We are responsible to the State of Texas and the Texas commission. Specifically, pursuant to a financing order,

• our organizational documents and transaction documents prohibit us from engaging in any activities other than acquiring transition property, issuing transition bonds and performing other activities as specifically authorized by that financing order,
• the Texas commission or its designated representative has a decision-making role co-equal with Entergy Texas with respect to the structuring and pricing of the transition bonds and all matters related to the structuring and pricing of the transition bonds will be determined through a joint decision of Entergy Texas and the Texas commission or its designated representative,
• Entergy Texas is directed to take all necessary steps to ensure that the Texas commission or its designated representative is provided sufficient and timely information to allow the Texas commission or its designated representative to fully participate in, and exercise its decision making power over, the proposed securitization, and
•  the servicer will file periodic adjustments to transition charges with the Texas commission on our behalf.

We have also agreed that certain reports concerning transition charge collections will be provided to the Texas commission.

Our Management

Pursuant to our limited liability company agreement, our business will be managed by five managers appointed from time to time by Entergy Texas. We refer to Entergy Texas or any successor as our owner or owners. Following the initial issuance of transition bonds, we will have at least one independent manager who, among other things, is not and has not been for at least five years from the date of their appointment:

• a direct or indirect legal or beneficial owner of us, our owner, any of our respective affiliates or any of our owner's affiliates,
• a relative, supplier, employee, officer, director, manager, contractor or material creditor of us, our owner or any of our affiliates or any of our owner's affiliates, or
• a person who controls (whether directly, indirectly or otherwise) our owner or its affiliates or any creditor, employee, officer, director, manager or material supplier or contractor of our owner or its affiliates; provided, that the indirect or beneficial ownership of stock of our owner or its affiliates through a mutual fund or similar diversified investment vehicle with respect to which the owner does not have discretion or control over the investments held by such diversified investment vehicle shall not preclude such owner from being an independent manager.

The remaining managers will be employees or officers of Entergy Texas, its affiliates or any new owner. The managers will devote the time necessary to conduct our affairs.

Entergy Texas, as our sole member, will appoint the independent manager(s) prior to the issuance of the transition bonds. None of our managers or officers has been involved in any legal proceedings which are specified in Item 401(f) of the SEC's Regulation S-K.

Manager Fees and Limitation on Liabilities

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We have not paid any compensation to any manager since we were formed. We will not compensate our managers, other than the independent manager(s), for their services on our behalf. We will pay the independent manager(s) annual fees from our revenues and will reimburse them for their reasonable expenses. These expenses include the reasonable compensation, expenses and disbursements of the agents, representatives, experts and counsel that the independent manager(s) may employ in connection with the exercise and performance of their rights and duties under our limited liability company agreement, the indenture, the sale agreement and the servicing agreement. Our limited liability company agreement provides that to the extent permitted by law, the managers will not be personally liable for any of our debts, obligations or liabilities. Our limited liability company agreement further provides that, except as described below, to the fullest extent permitted by law, we will indemnify the managers against any liab ility incurred in connection with their services as managers for us if they acted in good faith and in a manner which they reasonably believed to be in or not opposed to our best interests. With respect to a criminal action, the managers will be indemnified unless they had reasonable cause to believe their conduct was unlawful. We will not indemnify the manager for any judgment, penalty, fine or other expense directly caused by their fraud, gross negligence or willful misconduct. In addition, unless ordered by a court, we will not indemnify the managers if a final adjudication establishes that their acts or omissions involved intentional misconduct, fraud or a knowing violation of the law and were material to the cause of action. We will pay any indemnification amounts owed to the managers out of funds in the collection account, subject to the priority of payments described in "Security for the Transition Bonds-How Funds in the Collection Account Will Be Allocated."

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We Are a Separate and Distinct Legal Entity from Entergy Texas

Under our limited liability company agreement, we may not file a voluntary petition for relief under the Bankruptcy Code, without the affirmative vote of our member and the affirmative vote of all of our managers, including each independent manager(s). Our limited liability company agreement requires us, except for financial reporting purposes and for U.S. federal income tax purposes, and, to the extent consistent with applicable state law, state income and franchise tax purposes, to maintain our existence separate from Entergy Texas including:

• taking all reasonable steps to continue our identity as a separate legal entity;
• making it apparent to third persons that we are an entity with assets and liabilities distinct from those of Entergy Texas, other affiliates of Entergy Texas, including Entergy Gulf States Reconstruction Funding I, LLC, the managers or any other person; and
• making it apparent to third persons that, except for federal and certain other tax purposes, we are not a division of Entergy Texas or any of its affiliated entities or any other person.

Administration Agreement

Entergy Texas will, pursuant to an administration agreement between Entergy Texas and us, provide administrative services to us, including services relating to the preparation of financial statements, required filings with the SEC, any tax returns we might be required to file under applicable law, qualifications to do business, and minutes of our managers' meetings. We will pay Entergy Texas a fixed fee of $100,000 per annum, payable in installments of $50,000 on each payment date for performing these services, plus we will reimburse Entergy Texas for all costs and expenses for services performed by unaffiliated third parties and actually incurred by Entergy Texas in performing such services described above.

THE TEXAS ELECTRICITY MARKET RESTRUCTURING PLAN

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Entergy Texas' Service Territory Could Experience Deregulation in the Future

In June 1999, the Texas Legislature enacted Chapter 39 of PURA. Chapter 39 substantially modified the Texas regulatory structure governing public utilities in order to transition to a competitive retail electric market. Pursuant to its authority under Section 39.103 of Chapter 39, the PUCT delayed the introduction of retail competition in Entergy Texas' service territory.

However, in 2005, Entergy Texas was required by the legislature to file a transition to competition plan with the PUCT by January 1, 2007. As required by the legislation, Entergy Texas filed its proposed transition to competition plan in December 2006. In May 2009, additional legislation was passed by the Texas Legislature (Senate Bill 1492) that suspended all activities toward the transition of Entergy Texas to competition. Among other things, the bill includes a provision prohibiting the PUCT from approving a transition plan until at least four years from the date the PUCT certifies the power region in which Entergy Texas operates as a qualifying power region. In order to certify a power region as a qualifying power region, the PUCT must find that: (1) a sufficient number of interconnected utilities in the power region fall under the operational control of an independent organization as defined by Texas law, (2) the power region has a generally applicable tariff that guarantees open and nondiscrimin atory access for all users to transmission and distribution facilities in the power region, and (3) no person owns and controls more than 20 percent of the installed generation capacity located in or capable of delivering electricity to the power region.

Key aspects of PURA are outlined below. Please also read "Future Retail Electric Providers" below and "Risks Associated with Potential Bankruptcy Proceedings of Future Retail Electric Providers if and when Retail Competition is Introduced" above.

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General Structure of Utility Deregulation in Texas

An Overview of PURA.

PURA, among other things:

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• authorized competition in the retail electric market and the electricity generation market for electricity beginning in January 2002, and in some instances sooner,
• required a rate freeze for all retail customers until January 2002, and required certain rate reductions for residential and small commercial retail customers through the so-called "price to beat" period for up to five years thereafter,
• permitted electric utilities to recover certain stranded investments and regulatory assets through the issuance of transition bonds pursuant to and supported by an irrevocable financing order issued by the Texas commission,
• permitted the Texas commission to impose an irrevocable nonbypassable transition charge on all retail electric customers within a utility's certificated service area for payment of transition bonds, and
• permitted the PUCT to delay retail competition in a service area if the PUCT determined that such area was unable to offer fair competition and reliable service to all retail customer classes on January 1, 2002 and as stated, the PUCT delayed retail competition in Entergy Texas' service territory.

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Unbundling.

Many electric utilities were required to separate their customer-related energy services business activities that were otherwise already widely available in the competitive market from their regulated activities prior to September 1, 2000. PURA required most electric utilities to separate their business into the following units by January 1, 2002:

• a power generation company, which generates electricity that is intended to be sold at wholesale, and which may not, in general, own a transmission or distribution facility and may not have a certificated service area,
• a retail electric provider, or REP, which sells electric energy to retail customers and which may not own or operate generation assets, and
• a transmission and distribution utility or separate transmission and distribution utilities, which own or operate facilities to transmit or distribute electricity.

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Entergy Texas has not unbundled its services as just described, but it is possible that it may need to do so at some point during the term of the transition bonds.

Retail Competition.

Since January 1, 2002, many retail customers in the Texas service territories of other Texas utilities have been able to choose their own REP, which may be a REP affiliated with their existing utility. As noted above, retail competition has not been introduced in Entergy Texas' service territory, and thus there are no REPs operating in Entergy Texas' service territory. However, it is possible that they may be approved to do so in the future.

In the event REPs are in the future authorized to operate in Entergy Texas' service territory, the Texas commission will designate Voluntary REPs, or VREPs, and Large Service Providers, or LSPs, to serve as POLR for customers who request such service and for customers whose chosen REP goes out of business or loses its certification to provide electric service in Texas (i.e., a "mass transition"). VREPs are REPs that have volunteered to provide POLR service pursuant to the Texas commission rule. LSPs are eligible REPs that have the greatest market share based upon retail sales in megawatt-hours, by customer class and POLR area. Any Entergy Texas-affiliated REP will likely qualify as an LSP eligible to be designated as a POLR in Entergy Texas' service territory.

POLR providers serve two-year terms and must offer a basic, standard retail service package to customers they are designated to serve. VREPs may serve customers on a market-based month-to-month rate. LSPs must provide electric service to customers based on a rate prescribed by Texas commission rule or may, at their discretion, serve customers pursuant to a market-based month-to-month product. During a mass transition, ERCOT will first transfer customers to designated VREPs, up to the numbers of ESI IDs that each VREP offered to serve for each customer class in the POLR area. After that, ERCOT will assign remaining customers to LSPs in a non-discriminatory fashion, in accordance with their percentage of market share.

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Recovery of Stranded Costs and Regulatory Assets for Texas Utilities Subject to PURA

PURA allows utilities an opportunity to recover their stranded costs incurred in purchasing power and providing electric generation service. Stranded costs means the amount by which the net book value of generation-related assets exceeds the market value of the assets.

PURA provides that recovery of retail stranded costs by an electric utility shall be through collection of competition transition charges imposed on all existing or future retail customers. PURA permits utilities to recover, or securitize, their transition costs through the issuance of transition bonds issued under PURA. The Financing Act incorporates by reference the substantive provisions of PURA.

FUTURE RETAIL ELECTRIC PROVIDERS

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As part of the restructuring of the Texas electric industry, some retail customers began purchasing electricity and related services from REPs. There are no REPs currently operating in Entergy Texas' service territory. Moreover, as described above under "The Texas Electricity Market Restructuring Plan - - Entergy Texas' Service Territory Could Experience Deregulation in the Future," if the provisions of PURA remain unchanged and Entergy Texas remains a member of SERC, it is possible, but not likely, that there will be any competing retail electric provider within the term that the transition bonds are outstanding. However, if any transition to competition plan is approved by the PUCT, REPs may in the future begin to operate in Entergy Texas' service territory during the term in which the transition bonds are outstanding. In such event, the REP will bill and collect the transition charges under the conditions described below.

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Neither Entergy Texas nor any successor servicer will pay any shortfalls resulting from the failure of any future REP to remit payments arising from the transition charges to the servicer. The annual true-up and interim true-up adjustment mechanisms for the transition charges, as well as the amounts deposited in the capital subaccount, are intended to mitigate the risk of shortfalls. Any shortfalls that occur may delay the distribution of interest on and principal of the transition bonds.

Credit Practices, Policies and Procedures of Retail Electric Providers

Pursuant to the financing order and the tariff, in the event REPs are in the future authorized to operate in Entergy Texas' service territory, billing and collection standards will be imposed on any REPs operating in the service territory with respect to transition charges. The standards relate only to the billing and collection of transition charges authorized under the financing order, and do not apply to collection of any other nonbypassable charges or other charges. The standards apply to all REPs that bill and collect transition charges from retail electric customers. REPs may contract with other parties to bill and collect transition charges from retail customers, but such REPs will remain subject to the applicable billing and collection standards. If the Texas commission later determines that different standards are to be applied to REPs in particular areas (e.g., payment terms), then those new standards, with appropriate modifications to related provisions, may replace those specific items. Up on adoption of any rule addressing any of these billing and collection standards, the Texas commission's Advising and Docket Management Division will open a proceeding to investigate the need to modify the standards to conform to that rule, with the understanding that such modifications may not be implemented absent prior written confirmation from each of the rating agencies that have rated the transition bonds that such modifications will not cause a suspension, withdrawal, or downgrade of the ratings on the transition bonds.

The following subsections summarize the REP standards required under the financing order and tariff. These standards are the most stringent that the servicer can impose on REPs under the financing order. In the future, the Texas commission may determine that different standards should be applied to REPs in particular areas, such as payment terms. Any such standards may replace specific standards described above. The financing order provides, however, that any modifications to the foregoing standards may not be implemented absent satisfaction of the rating agency condition.

Rating, Deposit and Related Requirements.

Each REP must (1) have a long-term, unsecured credit rating of not less than "BBB-" and "Baa3" (or the equivalent) from S&P and Moody's, respectively, or (2) provide (A) a deposit of two months' maximum expected transition charge collections in the form of cash, (B) an affiliate guarantee, surety bond, or letter of credit providing for payment of such amount of transition collections in the event that the REP defaults in its payment obligations, or (C) a combination of any of the foregoing. A REP that does not have or maintain the requisite long-term, unsecured credit rating may select which alternate form of deposit, credit support, or combination thereof it will utilize, in its sole discretion. The trustee will be the beneficiary of any affiliate guarantee or surety bond or letter of credit. The provider of any affiliate guarantee, surety bond, or letter of credit must have and maintain long-term, unsecured credit ratings of not less than "BBB-& quot; and "Baa3" (or the equivalent) from S&P and Moody's, respectively.

Loss of Rating.

If the long-term, unsecured credit rating from either S&P or Moody's of a REP that did not previously provide the alternate form of deposit, credit support, or combination thereof or of any provider of an affiliate guarantee, surety bond, or letter of credit is suspended, withdrawn, or downgraded below "BBB-" or "Baa3" (or the equivalent), the REP must provide the alternate form of deposit, credit support, or combination thereof, or new forms thereof, in each case from providers with the requisite ratings, within 10 business days following such suspension, withdrawal, or downgrade. A REP failing to make such provision is required to comply with the provisions set forth in the section below labeled "-Remedies Upon Default."

Computation of Deposit, etc.

The computation of the size of a required deposit will be agreed upon by the servicer and the REP, and reviewed no more frequently than quarterly to ensure that the deposit accurately reflects two months' maximum expected transition charge collections. Within 10 business days following such review (1) the REP will remit to the trustee the amount of any shortfall in such required deposit or (2) the servicer will instruct the trustee to remit to the REP any amount in excess of such required deposit. A REP failing to so remit any such shortfall is required to comply with the provisions set forth below under "-Remedies Upon Default." REP cash deposits will be held by the trustee in a REP deposit account and invested in eligible investments. Investment earnings on REP cash deposits will be considered part of such cash deposits so long as they remain on deposit with the trustee. At the instruction of the servicer, cash deposits will be remitted with investment earnings to the REP once a ll transition bonds have been retired unless otherwise utilized for the payment of the REP's obligations for transition charges. If at any time the deposit is no longer required, the servicer will promptly (but not later than 30 calendar days) instruct the trustee in writing to remit the applicable amounts in the REP deposit account to the REP.

Payment of Transition Charges.

Payments of transition charges will be due 35 calendar days following each billing by the servicer to the REP, without regard to whether or when the REP receives payment from its retail electric customers. The servicer will accept payment by electronic funds transfer, wire transfer, and/or check and payment will be considered received by the servicer on the date the electronic funds transfer or wire transfer is received by the servicer, or the date the check clears. A 5% penalty will be charged on amounts received after 35 calendar days; however, a 10 calendar-day grace period will be allowed before the REP is considered to be in default. A REP in default will be required to comply with the provisions set forth below under "-Remedies Upon Default." The 5% penalty will be a one-time assessment measured against the current amount overdue from the REP to the servicer. The "current amount" consists of the total unpaid transition charges existing on the 36th calendar day after the billi ng by the servicer. Any and all such penalty payments will be made to the trustee to be applied against transition charge obligations. A REP will not be obligated to pay the overdue transition charges of another REP. If a REP agrees to assume the responsibility for the payment of overdue transition charges as a condition of receiving the customers of another REP that has decided to terminate service to those customers for any reason, the new REP will not be assessed the 5% penalty upon such transition charges; however, the prior REP will not be relieved of the previously-assessed penalties.

Remedies Upon Default.

After the 10 calendar-day grace period (the 45th calendar day after the billing date) referred to above under the heading "-Payment of Transition Charges," the servicer will have the option to seek recourse against any cash deposit, affiliate guarantee, surety bond, letter of credit, or combination thereof provided by the REP, and avail itself of such legal remedies as may be appropriate to collect any remaining unpaid transition charges and associated penalties due the servicer after the application of the REP's deposit or alternate form of credit support. In addition, a REP that is in default with respect to the requirements set forth under "-Loss of Rating," "-Computation of Deposit, etc." or "-Payment of Transition Charges" will be required to select and implement one of the following options:

• transfer the billing and collection responsibility for all charges to the POLR or a qualified REP of the customer's choosing;
• immediately implement other mutually suitable and agreeable arrangements with the servicer. It is expressly understood that the servicer's ability to agree to any other arrangements will be limited by the terms of the servicing agreement and requirements of the rating agencies necessary to satisfy the rating agency condition; or
• arrange that all amounts owed by retail electric customers for services rendered be timely billed and immediately paid directly into a lock-box controlled by the servicer with such amounts to be applied first to pay transition charges before the remaining amounts are released to the REP. All costs associated with this mechanism will be borne solely by the REP.

If a REP that is in default fails to immediately select and implement one of the foregoing options or, after so selecting one of the foregoing options, fails to adequately meet its responsibilities thereunder, then the servicer will, subject to limitations that may be imposed by applicable bankruptcy laws if the REP is a debtor in bankruptcy, immediately implement the first option listed above. Upon re-establishment of compliance with the requirements set forth in "-Loss of Rating," "-Computation of Deposit, etc." and "-Payment of Transition Charges" and the payment of all past-due amounts and associated penalties, the REP will no longer be considered in default and will not be required to comply with this paragraph. Any agreement entered into between the servicer and a defaulting REP pursuant to the second bullet point above will be limited to the terms of the servicing agreement and must satisfy the rating agency condition.

Billing by Providers of Last Resort.

The provider of last resort appointed by the Texas commission must meet the minimum credit rating and/or deposit/credit support requirements applicable to other REPs in addition to any other standards that may be adopted by the Texas commission. If the provider of last resort defaults or is not eligible to provide such services, responsibility for billing and collection of transition charges will immediately be transferred to and assumed by the servicer until a new provider of last resort can be named by the Texas commission or the customer requests the services of another qualified REP. Retail electric customers cannot be re-billed by a successor REP, a POLR or the servicer for any amount of transition charges they have paid their REP (although future transition charges will be adjusted to reflect REP and other system-wide charge-offs). Additionally, if the amount of the penalty detailed in "-Payment of Transition Charges" is the sole remaining past-due amount after the 45th calendar day, t he REP will not be required to comply with the provisions set forth under "-Remedies Upon Default" unless the penalty is not paid within an additional 30 calendar days.

Disputes.

In the event that a REP disputes any amount of billed transition charges, the REP will pay the disputed amount under protest according to the timelines detailed in "-Payment of Transition Charges." In the event of a dispute, the REP and the servicer will first attempt to informally resolve the dispute, but if they fail to do so within 30 calendar days, either party may file a complaint with the Texas commission. If the REP is successful in the dispute process (informal or formal), the REP will be entitled to interest on the disputed amount paid to the servicer at the Texas commission-approved interest rate. Disputes about the date of receipt of transition charge payments (and penalties arising thereof) will be handled in a like manner. Interest paid by the servicer on disputed amounts may not be recovered through transition charges if it is determined that the servicer's claim to the funds is clearly unfounded. No interest will be paid by the servicer if it is determined that the servicer ha s received inaccurate metering data from another entity providing competitive metering services.

Metering Data.

If the servicer is providing metering service to the retail electric customer, metering data will be provided to the REP at the same time as the REP is billed. If the servicer is not providing metering service to the retail electric customer, the entity providing metering service will be responsible for complying with Texas commission rules and ensuring that the servicer and the REP receive timely and accurate metering data in order for the servicer to meet its obligations under the servicing agreement and the financing order with respect to billing and true-up adjustments.

Charge-Off Allowance.

The REP will be allowed to hold back an allowance for charge-offs in its payments to the servicer. Such charge-off rate will be recalculated each year in connection with the annual true-up procedure. On an annual basis in connection with the true-up process, the REP and the servicer will be responsible for reconciling the amounts held back with amounts actually written off as uncollectible in accordance with the terms agreed to by the REP and the servicer, provided that:

• The REP's right to reconciliation for write-offs will be limited to customers whose service has been permanently terminated and whose entire accounts (i.e., all amounts due the REP for its own account as well as the portion representing transition charges) have been written off;
• The REP's recourse will be limited to a credit against future transition charge payments unless the REP and the servicer agree to alternative arrangements, but in no event will the REP have recourse to the trustee, us or our funds for such payments; and
• The REP is required to provide information on a timely basis to the servicer so that the servicer can include the REP's default experience and any subsequent credits into its calculation of the adjusted transition charge rates for the next transition charge billing period and the REP's rights to credits will not take effect until after such adjusted transition charge rates have been implemented.

Service Termination.

In the event that the servicer is billing customers for transition charges, the servicer will have the right to terminate transmission and distribution service to the end-use customer for non-payment by the customer pursuant to applicable Texas commission rules. In the event that a REP (including any POLR) is billing customers for transition charges, that REP will have the right to transfer the customer to the POLR (or to another certified REP) or to direct the servicer to terminate transmission and distribution service to the end-use customer for non-payment by the customer pursuant to applicable Texas commission rules.

Codification of REP Standards.

The Texas commission codified the standards for REPs regarding the billing and collection of transition charges in July 2000 as Substantive Rule 25.108. This Rule provides that:

• if a REP's actual charge-offs are greater than the allowance for charge-offs, the REP may collect the difference, with interest, in 12 equal monthly installments;
• the REP will be responsible for providing the servicer accurate metering data (including metering identification information) for REP customers whose meters are not read by the servicer; and
• if a POLR or qualified REP assumes responsibility for billing and collecting transition charges, the POLR, replacement REP or servicer will bill all transition charges which have not been billed as of the date it assumes such responsibility.

USE OF PROCEEDS

We will use the proceeds of the issuance of the transition bonds to pay the expenses of the issuance and sale of the transition bonds and to purchase transition property from Entergy Texas. In accordance with the financing order, Entergy Texas will use the proceeds it receives from the sale of the transition property for the purpose of reducing the amount of recoverable system restoration costs, as determined by the Texas commission, through the refinancing or retirement of utility debt.

RELATIONSHIP TO THE PRIOR TRANSITION BONDS

Pursuant to a financing order issued by the Texas commission in April 2007, Entergy Gulf States, Inc., or EGSI, sold transition property to an affiliate, Entergy Gulf States Reconstruction Funding I, LLC. The affiliate, on June 29, 2007, issued $329,500,000 Senior Secured Transition Bonds, Series A, or the prior transition bonds. Following the issuance of the prior transition bonds, EGSI was reorganized pursuant to a jurisdictional separation plan into two vertically integrated utility companies, Entergy Gulf States Louisiana, L.L.C. operating as a public utility in Louisiana, and Entergy Texas operating as a public utility in Texas. Entergy Texas succeeded EGSI in the role of servicer for the prior transition bonds.

Although Entergy Texas is the servicer with respect to the prior transition bonds, we are a separate legal entity from Entergy Gulf States Reconstruction Funding I, LLC, and the bonds described herein will be payable from collateral that is separate from that securing the prior transition bonds. Entergy Gulf States Reconstruction Funding I, LLC will have no obligations under our bonds, and we will have no obligations under the prior transition bonds.

DESCRIPTION OF THE TRANSITION BONDS

General

We will issue the transition bonds pursuant to the terms of an indenture between us and the trustee specified in the prospectus supplement. The particular terms of the transition bonds will be established in a supplement to the indenture referred to herein as a series supplement and the material terms will be described in the prospectus supplement. Although we have summarized below selected provisions of the indenture and the transition bonds, this summary does not purport to be complete and is subject to the terms and provisions of the indenture and related supplements, forms of which are filed as exhibits to the registration statement of which this prospectus forms a part. Please read "Where You Can Find More Information."

We may issue the transition bonds in the future in one or more tranches. Tranches of transition bonds may differ as to the interest rate, maturity and the timing, sequential order and amount of payments of principal or interest, or both.

The prospectus supplement will describe the specific terms of the transition bonds (and the tranches (if any)). All transition bonds will be identical in all respects except for the denominations, unless there is more than one tranche, in which case all transition bonds of the same tranche will be identical in all respects except for the denominations.

All transition bonds that we issue under the indenture will be payable solely from, and secured solely by, a pledge of and lien on the transition property and the other collateral as provided in the indenture. Please read "Security for the Transition Bonds-Pledge of Collateral."

The prospectus supplement will describe the following terms of the transition bonds and, if applicable, the tranches of the transition bonds:

• the number of tranches, if any,
• the principal amount of the bonds and, if applicable, the tranches,
• the transition charges,
• the annual rate at which interest accrues or the method or methods of determining such annual rate and, if applicable, the tranches,
• the payment dates,
• the collateral,
• the scheduled final payment date and the final maturity date of the transition bonds and, if applicable, the tranches,
• the issuance date,
• the authorized denominations,
• the expected sinking fund schedule for principal and, if applicable, the tranches,
• any other material terms of the tranches that are not inconsistent with the provisions of the indenture and that will not result in any rating agency reducing or withdrawing its rating of any outstanding tranche of transition bonds, and
• the identity of the trustee.

The transition bonds are not a debt, liability or other obligation of the State of Texas, the Texas commission or of any political subdivision, governmental agency, authority or instrumentality of the State or Texas and do not represent an interest in or legal obligation of Entergy Texas, Entergy or any of their affiliates, other than us. Neither Entergy Texas, Entergy nor any of their affiliates will guarantee or insure the transition bonds. Financing orders authorizing the issuance of the transition bonds do not constitute a pledge of the full faith and credit of the State of Texas or of any of its political subdivisions. The issuance of the transition bonds under the Financing Act will not directly, indirectly or contingently obligate the State of Texas or any of its political subdivisions to levy or to pledge any form of taxation for the transition bonds or, except in their capacity as retail electric customers, to make any appropriation for their payment.

Interest and Principal on the Transition Bonds

Interest will accrue on the principal balance of a tranche of transition bonds at the interest rate specified in or determined in the manner specified in the related prospectus supplement. Interest will be payable on each payment date, commencing on the date specified in the related prospectus supplement. Interest payments will be made from collections of transition charges, including amounts available in the excess funds subaccount and, if necessary, the amounts available in the capital subaccount. If, in the future, transition charges are collected by a REP, then, in the event of default by a REP, the amounts in the REP deposit account or available from other credit support (up to an amount of the lesser of the payment defaults of a REP or that REP's deposit or other credit support amount) will be used to make interest payments to the bondholders on each payment date for the transition bonds. Please read "Security for the Transition Bonds-How Funds in the Collection Account Will Be Allocated.& quot;

Principal of the transition bonds of each tranche will be payable in the amounts and on the payment dates specified in the related prospectus supplement, but only to the extent that amounts in the applicable collection account are available, and subject to the other limitations described below, under "Security for the Transition Bonds-How Funds in the Collection Account Will Be Allocated." Accordingly, principal of the transition bonds may be paid later, but generally not sooner, than reflected in the expected sinking fund schedule, except in the case of an acceleration. The prospectus supplement will set forth the expected sinking fund schedule and expected amortization schedule for the transition bonds and, if applicable, the tranches. The expected sinking fund schedule will be established in a manner required by the financing order. If principal of any tranche is not paid in full on the final maturity date for such tranche, an event or default will occur. On any payment date, unless an even t of default has occurred and is continuing and the transition bonds have been declared due and payable, the trustee will make principal payments on the transition bonds only until the outstanding principal balances of those transition bonds have been reduced to the principal balances specified in the applicable expected amortization schedule for that payment date. The trustee will retain in the excess funds subaccount for payment on later payment dates any collections of transition charges in excess of amounts payable as:

• fees and expenses of the servicer, the independent manager(s) and the trustee (including the indemnity amounts and the servicing fee),
• payments of interest on and principal of the transition bonds,
• investment earnings on amounts in the capital subaccount released to us, and
• allocations to the capital subaccount (all as described under "Security for the Transition Bonds-How Funds in the Collection Account Will Be Allocated").

If the trustee receives insufficient collections of transition charges for any payment date, and amounts in the collection account (and the applicable subaccounts of the collection account) are not sufficient to make up the shortfall, principal of any tranche of transition bonds may be payable later than expected, as described in this prospectus. Please read "Risk Factors-Other Risks Associated with an Investment in the Transition Bonds." The failure to make a scheduled payment of principal on the transition bonds because there are not sufficient funds in the collection account does not constitute a default or an event of default under the indenture, except for the failure to pay in full the unpaid balance of any tranche upon the final maturity date for such tranche. If an event of default (other than a breach by the State of Texas of its pledge) has occurred and is continuing, then the trustee or the holders of not less than a majority in principal amount of the transition bonds then outstan ding may declare the transition bonds to be immediately due and payable, in which event the entire unpaid principal amount of the transition bonds will become due and payable. Please read "-Events of Default; Rights Upon Event of Default."

Unless the context requires otherwise, all references in this prospectus to principal of the transition bonds include any premium that might be payable if transition bonds are redeemed, as described in the related prospectus supplement.

Payments on the Transition Bonds

The trustee will pay on each payment date to the holders of each tranche of transition bonds, to the extent of available funds in the applicable collection account, all payments of principal and interest then due. The trustee will make each payment other than the final payment with respect to any transition bonds to the holders of record of the transition bonds of the applicable tranche on the record date for that payment date. The trustee will make the final payment for each tranche of transition bonds, however, only upon presentation and surrender of the transition bonds of that tranche at the office or agency of the trustee specified in the notice given by the trustee of the final payment. The trustee will mail notice of the final payment to the related bondholders no later than five days prior to the final payment date, specifying the date set for the final payment and the amount of the payment.

The failure to pay accrued interest on any payment date (even if the failure is caused by a shortfall in transition charges received) will result in an event of default for the transition bonds unless such failure is cured within five business days. Please read "-Events of Default; Rights Upon Event of Default." Any interest not paid within such five business day period (plus interest on the defaulted interest at the applicable interest rate to the extent lawful) will be payable to the bondholders on a special record date. The special record date will be at least fifteen business days prior to the date on which the trustee is to make a special payment (a special payment date). We will fix any special record date and special payment date. At least 10 days before any special record date, the trustee will mail to each affected bondholder a notice that states the special record date, the special payment date and the amount of defaulted interest (plus interest on the defaulted interest) to be paid.

At the time, if any, we issue the transition bonds in the form of definitive bonds and not to DTC or its nominee, the trustee will make payments with respect to that tranche on a payment date or a special payment date by check mailed to each holder of a definitive bond of the tranche of record on the applicable record date at its address appearing on the register maintained with respect to the transition bonds. Upon application by a holder of any tranche of transition bonds in the principal amount of $10,000,000 or more to the trustee not later than the applicable record date, the trustee will make payments by wire transfer to an account maintained by the payee in New York, New York.

If any special payment date or other date specified for any payments to bondholders is not a business day, the trustee will make payments scheduled to be made on that special payment date or other date on the next succeeding business day and no interest will accrue upon the payment during the intervening period.

Registration and Transfer of the Transition Bonds

If specified in the related prospectus supplement, we may issue one or more tranches of transition bonds in definitive form, which will be transferable and exchangeable at the office of the registrar identified in the related prospectus supplement. Generally, there will be no service charge for any registration or transfer of the transition bonds, but the trustee may require the owner to pay a sum sufficient to cover any tax or other governmental charge.

We will issue each tranche of transition bonds in the minimum initial denominations set forth in the related prospectus supplement.

The trustee will make payments of interest and principal on each payment date to the bondholders in whose names the transition bonds were registered on the record date.

Transition Bonds Will Be Issued in Book-Entry Form

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Unless we specify otherwise in the related prospectus supplement, the transition bonds will be available to investors only in the form of book-entry transition bonds. You may hold your bonds through DTC in the United States or through Clearstream Banking, société anonyme, referred to herein as Clearstream, or Euroclear Bank S.A./N.V., referred to herein as Euroclear, in Europe, or in any other manner we describe in the related prospectus supplement. You may hold your bonds directly with one of these systems if you are a participant in the system or indirectly through organizations that are participants.

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The Role of DTC, Clearstream and Euroclear

Cede & Co., as nominee for DTC, will hold the global bond or bonds representing the transition bonds. Clearstream and Euroclear will hold omnibus positions on behalf of the Clearstream customers and Euroclear participants, respectively, through customers' securities accounts in Clearstream's and Euroclear's names on the books of their respective depositaries. These depositaries will, in turn, hold these positions in customers' securities accounts in the depositaries' names on the books of DTC.

The Function of DTC

DTC, the world's largest securities depository, is a limited-purpose trust company organized under the New York Banking Law, a "banking organization" within the meaning of the New York Banking Law, a member of the Federal Reserve System, a "clearing corporation" within the meaning of the New York Uniform Commercial Code, and a "clearing agency" registered pursuant to the provisions of Section 17A of the Securities Exchange Act of 1934. DTC holds and provides asset servicing for over 3.5 million issues of U.S. and non-U.S. equity issues, corporate and municipal debt issues, and money market instruments (from over 100 countries) that DTC's participants ("Direct Participants") deposit with DTC. DTC also facilitates the post-trade settlement among Direct Participants of sales and other securities transactions in deposited securities, through electronic computerized book-entry transfers and pledges between Direct Participants' accounts. This eliminates the need for p hysical movement of securities certificates. Direct Participants include both U.S. and non-U.S. securities brokers and dealers, banks, trust companies, clearing corporations, and certain other organizations. DTC is a wholly-owned subsidiary of The Depository Trust & Clearing Corporation ("DTCC"). DTCC is the holding company for DTC, National Securities Clearing Corporation and Fixed Income Clearing Corporation, all of which are registered clearing agencies. DTCC is owned by the users of its regulated subsidiaries. Access to the DTC system is also available to others such as both U.S. and non-U.S. securities brokers and dealers, banks, trust companies, and clearing corporations that clear through or maintain a custodial relationship with a Direct Participant, either directly or indirectly ("Indirect Participants"). DTC has Standard & Poor's highest rating: AAA. The DTC Rules applicable to its Participants are on file with the Securities and Exchange Commission. More information abo ut DTC can be found at www.dtcc.com and www.dtc.org.

The Function of Clearstream

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Clearstream holds securities for its customers and facilitates the clearance and settlement of securities transactions between Clearstream customers through electronic book-entry changes in accounts of Clearstream customers, thereby eliminating the need for physical movement of securities. Transactions may be settled by Clearstream in any of various currencies, including United States dollars. Clearstream provides to its customers, among other things, services for safekeeping, administration, clearance and settlement of internationally traded securities and securities lending and borrowing. Clearstream also deals with domestic securities markets in various countries through established depositary and custodial relationships. Clearstream is registered as a bank in Luxembourg and therefore is subject to regulation by the Luxembourg Commission de Surveillance du Secteur Financier, which supervises Luxembourg banks. Clearstream's customers are world-wide financial institutions including underwriter s, securities brokers and dealers, banks, trust companies and clearing corporations, among others, and may include the underwriters of the transition bonds. Clearstream's United States customers are limited to securities brokers and dealers and banks. Clearstream has customers located in various countries. Indirect access to Clearstream is also available to other institutions that clear through or maintain a custodial relationship with an account holder of Clearstream. Clearstream has established an electronic bridge with Euroclear to facilitate settlement of trades between Clearstream and Euroclear.

The Function of Euroclear

The Euroclear System was created in 1968 in Brussels. Euroclear holds securities and book-entry interests in securities for Euroclear participants and facilitates the clearance and settlement of securities transactions between Euroclear participants, and between Euroclear participants and participants of certain other securities intermediaries through simultaneous electronic book-entry delivery against payment, thereby eliminating the need for physical movement of securities and any risk from lack of simultaneous transfers of securities and cash. Such transactions may be settled in any of various currencies, including United States dollars. The Euroclear System includes various other services, including, among other things, safekeeping, administration, clearance and settlement, securities lending and borrowing and interfaces with domestic markets in several countries generally similar to the arrangements for cross-market transfers with DTC described below. The Euroclear System is operated by Euroclear Bank SA/NV. Euroclear participants include central banks and other banks, securities brokers and dealers and other professional financial intermediaries and may include the underwriters of the transition bonds. Indirect access to the Euroclear System is also available to other firms that clear through or maintain a custodial relationship with a Euroclear participant, either directly or indirectly.

Terms and Conditions of Euroclear

Securities clearance accounts and cash accounts with Euroclear are governed by the Terms and Conditions Governing Use of Euroclear and the related Operating Procedures of the Euroclear System, and applicable Belgian law (collectively, the "Terms and Conditions"). These Terms and Conditions govern transfers of securities and cash within the Euroclear System, withdrawals of securities and cash from the Euroclear System and receipts of payments with respect to securities in the Euroclear System. All securities in Euroclear are held on a fungible basis without attribution of specific securities to specific securities clearance accounts. Euroclear acts under the Terms and Conditions only on behalf of Euroclear participants and has no record of or relationship with persons holding through Euroclear participants.

The Rules for Transfers Among DTC, Clearstream or Euroclear Participants

Transfers between DTC participants will occur in accordance with DTC rules. Transfers between Clearstream customers or Euroclear participants will occur in the ordinary way in accordance with their applicable rules and operating procedures and will be settled using procedures applicable to conventional securities held in registered form.

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Cross-market transfers between persons holding directly or indirectly through DTC, on the one hand, and directly or indirectly through Clearstream customers or Euroclear participants, on the other, will be effected through DTC in accordance with DTC rules on behalf of the relevant European international clearing system by its depositary; however, those cross-market transactions will require delivery of instructions to the relevant European international clearing system by the counterparty in that system in accordance with its rules and procedures and within its established deadlines, which will be based on European time. The relevant European international clearing system will, if the transaction meets its settlement requirements, deliver instructions to its depositary to take action to effect final settlement on its behalf by delivering or receiving transition bonds in DTC and making or receiving payment in accordance with normal procedures for same-day funds settlement applicable to DTC. Clearstream cus tomers and Euroclear participants may not deliver instructions directly to Clearstream's and Euroclear's depositaries.

Because of time-zone differences, credits of securities in Clearstream or Euroclear as a result of a transaction with a participant will be made during the subsequent securities settlement processing, dated the business day following the DTC settlement date, and those credits or any transactions in those securities settled during that processing will be reported to the relevant Clearstream customer or Euroclear participant on that business day. Cash received in Clearstream or Euroclear as a result of sales of securities by or through a Clearstream customer or a Euroclear participant to a DTC participant will be received with value on the DTC settlement date but will be available in the relevant Clearstream or Euroclear cash account only as of the business day following settlement in DTC.

DTC Will Be the Holder of the Transition Bonds

Transition bondholders that are not participants or indirect participants but desire to purchase, sell or otherwise transfer ownership of, or other interest in, transition bonds may do so only through participants and indirect participants. In addition, transition bondholders will receive all distributions of principal of and interest on the transition bonds from the trustee through the participants, who in turn will receive them from DTC. Under a book-entry format, transition bondholders may experience some delay in their receipt of payments because payments will be forwarded by the trustee to Cede & Co., as nominee for DTC. DTC will forward those payments to its participants, who thereafter will forward them to indirect participants or transition bondholders. It is anticipated that the only "bondholder" will be Cede & Co., as nominee of DTC. The trustee will not recognize transition bondholders as bondholders, as that term is used in the indenture, and transition bondhold ers will be permitted to exercise the rights of bondholders only indirectly through the participants, who in turn will exercise the rights of transition bondholders through DTC.

Under the rules, regulations and procedures creating and affecting DTC and its operations, DTC is required to make book-entry transfers among participants on whose behalf it acts with respect to the transition bonds and is required to receive and transmit distributions of principal and interest on the transition bonds. Participants and indirect participants with whom transition bondholders have accounts with respect to the transition bonds similarly are required to make book-entry transfers and receive and transmit those payments on behalf of their respective transition bondholders. Accordingly, although transition bondholders will not possess transition bonds, transition bondholders will receive payments and will be able to transfer their interests.

Because DTC can act only on behalf of participants, who in turn act on behalf of indirect participants and certain banks, the ability of a transition bondholder to pledge transition bonds to persons or entities that do not participate in the DTC system, or otherwise take actions in respect of those bonds, may be limited due to the lack of a physical certificate for those transition bonds.

DTC has advised us that it will take any action permitted to be taken by a transition bondholder under the indenture only at the direction of one or more participants to whose account with DTC the transition bonds are credited. Additionally, DTC has advised us that it will take those actions with respect to specified percentages of the collateral amount only at the direction of and on behalf of participants whose holdings include interests that satisfy those specified percentages. DTC may take conflicting actions with respect to other interests to the extent that those actions are taken on behalf of participants whose holdings include those interests.

How Transition Bond Payments Will Be Credited by Clearstream and Euroclear

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Distributions with respect to transition bonds held through Clearstream or Euroclear will be credited to the cash accounts of Clearstream customers or Euroclear participants in accordance with the applicable system's rules and operating procedures, to the extent received by its depositary. Those distributions will be subject to tax reporting in accordance with relevant United States tax laws and regulations. Please read "Material U.S. Federal Income Tax Consequences" in this prospectus. Clearstream or the Euroclear operator, as the case may be, will take any other action permitted to be taken by a transition bondholder under the indenture on behalf of a Clearstream customer or Euroclear participant only in accordance with its applicable rules and operating procedures and subject to its depositary's ability to effect those actions on its behalf through DTC.

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Although DTC, Clearstream and Euroclear have agreed to the foregoing procedures in order to facilitate transfers of the transition bonds among participants of DTC, Clearstream and Euroclear, they are under no obligation to perform or continue to perform those procedures, and those procedures may be discontinued at any time.

Definitive Transition Bonds

We will issue transition bonds in registered, certificated form to bondholders, or their nominees, rather than to DTC, only under the circumstances provided in the indenture, which will include: (1) DTC or us advising the trustee in writing that DTC is no longer willing or able to properly discharge its responsibilities as nominee and depositary with respect to the book-entry bonds and that we are unable to locate a qualified successor, (2) our electing to terminate the book-entry system through DTC, with written notice to the trustee, or (3) after the occurrence of an event of default under the indenture, holders of transition bonds representing not less than a majority of the aggregate outstanding principal amount of the transition bonds maintained as book-entry bonds advising us, the trustee, and DTC in writing that the continuation of a book-entry system through DTC (or a successor) is no longer in the best interests of those bondholders. Upon issuance of definitive bonds, the trans ition bonds evidenced by such definitive bonds will be transferable directly (and not exclusively on a book-entry basis) and registered holders will deal directly with the trustee with respect to transfers, notices and payments.

Upon surrender by DTC of the definitive securities representing the transition bonds and instructions for registration, the trustee will issue the transition bonds in the form of definitive bonds, and thereafter the trustee will recognize the registered holders of the definitive bonds as bondholders under the indenture.

The trustee will make payment of principal of and interest on the transition bonds directly to bondholders in accordance with the procedures set forth herein and in the indenture and the related prospectus supplement. The trustee will make interest payments and principal payments to bondholders in whose names the definitive bonds were registered at the close of business on the related record date. The trustee will make payments by check mailed to the address of the bondholder as it appears on the register maintained by the trustee or in such other manner as may be provided in the related series supplement, except that certain payments will be made by wire transfer as described in the indenture. The trustee will make the final payment on any transition bond (whether definitive bonds or notes registered in the name of Cede & Co.), however, only upon presentation and surrender of the bond on the final payment date at the office or agency that is specified in the notice of final payment to bondholder s. The trustee will provide the notice to registered bondholders not later than the fifth day prior to the final payment date.

Definitive bonds will be transferable and exchangeable at the offices of the transfer agent and registrar, which initially will be the trustee. There will be no service charge for any registration of transfer or exchange, but the transfer agent and registrar may require payment of a sum sufficient to cover any tax or other governmental charge imposed in connection therewith.

Optional Redemption

The indenture does not permit an optional redemption of transition bonds under any circumstances.

Allocations as Between Transition Bond Issuances

Although each issuance of transition bonds under the Financing Act will have its own transition property, transition charges relating to each issuance will be collected through single bills to individual retail customers and, when and if retail competition commences in Entergy Texas' service territory, through any associated retail electric providers that include all charges related to the purchase of electricity, without separately itemizing the transition charge component of the bill or the transition charge components applicable to separate issuances. In the event a customer does not pay in full all amounts owed under any bill including transition charges, Entergy Texas is required to allocate any resulting shortfalls in transition charges ratably based on the amounts of transition charges owing in respect of the bonds, amounts owing to us and amounts owing to any other previously created or subsequently created affiliate of Entergy Texas which has issued or may issue transition bonds. Please rea d "The Servicing Agreement-Remittances to Collection Account."

Access of Bondholders

Upon written request of any bondholder or group of bondholders of all outstanding transition bonds evidencing not less than 10 percent of the aggregate outstanding principal amount of the transition bonds, the trustee will afford the bondholder or bondholders making such request a copy of a current list of bondholders, for purposes of communicating with other bondholders with respect to their rights under the indenture.

The indenture does not provide for any annual or other meetings of bondholders.

Reports to Bondholders

On or prior to each payment date, special payment date or any other date specified in the indenture for payments with respect to the transition bonds, the trustee will deliver, to the Texas commission and bondholders, a statement prepared by the servicer with respect to the payment to be made on the payment date, special payment date or other date, as the case may be, setting forth the following information:

• the amount of the payment to bondholders allocable to principal and interest,
• the aggregate outstanding principal balance of the transition bonds, before and after giving effect to payments allocated to principal reported immediately above,
• the difference, if any, between the amount specified immediately above and the principal amount scheduled to be outstanding on that date according to the related expected amortization schedule,
• any other transfers and payments to be made on such payment date, including amounts paid to the trustee and the servicer, and
• the amounts on deposit in the capital subaccount and the excess funds subaccount, after giving effect to the foregoing payments.

Unless and until transition bonds are no longer issued in book-entry form, the reports will be provided to the depository for the transition bonds, or its nominee, as sole beneficial owner of the transition bonds. The reports will be available to bondholders upon request to the trustee or the servicer. Such reports will not constitute financial statements prepared in accordance with generally accepted accounting principles. The financial information provided to bondholders will not be examined and reported upon by an independent public accountant. In addition, an independent public accountant will not provide an opinion on the financial information.

Within the prescribed period of time for tax reporting purposes after the end of each calendar year during the term of the transition bonds, the trustee, so long as it is acting as paying agent and transfer agent and registrar for the transition bonds, will, upon written request by us or any transition bondholder, mail to persons who at any time during the calendar year were bondholders and received any payment on the transition bonds, a statement containing certain information for the purposes of the bondholder's preparation of U.S. federal and state income tax returns.

Enhanced Continuing Disclosure

Neither we nor the sponsor will voluntarily suspend or terminate our filing obligations with the SEC. To the extent permitted by and consistent with our legal obligations, we will post on our website (or that of Entergy Texas or an affiliate) or furnish or file in the periodic reports and other reports to be filed with the SEC pursuant to the Securities Exchange Act of 1934, as amended, as described below, the following information with respect to the outstanding transition bonds to the extent such information is reasonably available to us:

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• statements of transition charge remittances made to the trustee (to be included in a Form 10-D),
• a statement reporting the balances in the collection account and in each subaccount of the collection account as of the end of each quarter or the most recent date available (to be included in a Form 10-D or Form 10-K),
• a statement showing the balance of outstanding transition bonds that reflects the actual periodic payments made on the transition bonds versus the expected periodic payments (to be included in the next Form 10-D or Form 10-K filed),
• the semi-annual servicer's certificates, (which will include the preceding monthly servicer certificates) which are required to be submitted pursuant to the servicing agreement (to be filed with a Form 10-D, Form 10-K or Form 8-K),
• the text (or a link to the website where a reader can find the text) of each true-up filing and the results of each true-up filing following the issuance of the transition bonds,
• any change in the long-term or short-term credit ratings of the servicer assigned by the rating agencies (to be filed or furnished in a Form 8-K),
• material legislative or regulatory developments directly relevant to the outstanding transition bonds (to be filed or furnished in a Form 8-K), and
• a quarterly statement either affirming that, to our knowledge, in all material respects, for each materially significant retail electric provider (to be included in each Form 10-D and each Form 10-K): (a) each such retail electric provider has been billed in compliance with the requirements outlined in the financing order, (b) each such retail electric provider has made payments in compliance with the requirements outlined in the financing order, and (c) each such retail electric provider satisfies the creditworthiness requirements of the financing order or describing the servicer's actions if (a), (b) or (c) has not occurred.

Internet-Based Information

In addition, we will, to the extent permitted by and consistent with legal obligations, cause to be posted on the website associated with Entergy Texas, currently located at www.entergy.com:

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• the final prospectus for the outstanding transition bonds,
• the semi-annual servicer's certificate (which will include the preceding monthly servicer certificates) delivered for the transition bonds pursuant to the servicing agreement,
• the periodic reports described above, and
• a current organization chart for the issuing entity and servicer (unless the servicer is not related to us in which case the servicer will post two separate organization charts), in each case disclosing the parent company and material subsidiaries of the servicer and us.

We and the Trustee May Modify the Indenture

Modifications of the Indenture that do not Require Consent of Transition Bondholders

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From time to time, and without the consent of the bondholders (but with prior notice to the rating agencies and with the consent or deemed consent of the Texas commission if such supplemental indenture will increase ongoing qualified costs), we may enter into one or more agreements supplemental to the indenture for various purposes described in the indenture, including:

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• to correct or amplify the description of any property including, without limitation, the collateral subject to the indenture, or to better convey, assure and confirm to the trustee the property subject to the indenture, or to add additional property,
• to add to the covenants for the benefit of the bondholders and the trustee, or surrender any right or power conferred to us with the indenture,
• to convey, transfer, assign, mortgage or pledge any property to or with the trustee,
• to cure any ambiguity or correct or supplement any provision in the indenture or in any supplemental indenture which may be inconsistent with any other provision in the indenture or in any supplemental indenture or to make any other provisions with respect to matters or questions arising under the indenture or in any supplemental indenture, provided however, that (i) such action will not, as evidenced by an opinion of counsel, adversely affect in any material respect the interests of the bondholders and (ii) the rating agency condition shall have been satisfied with respect thereto,
• to evidence the succession of another person to us or to the trustee in accordance with the terms of the indenture,
• to effect qualification under the Trust Indenture Act,
• to qualify the transition bonds for registration with a clearing agency, or
• to satisfy any rating agency requirements.

We may also, without the consent of the bondholders, enter into one or more other agreements supplemental to the indenture so long as (i) the supplemental agreement does not, as evidenced by an opinion of counsel, adversely affect the interests of any holders of transition bonds then outstanding in any material respect, (ii) the rating agency condition shall have been satisfied with respect thereto, and (iii) with respect to any amendment that would increase qualifying costs, we have obtained the consent or deemed consent of the Texas commission.

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Modifications of the Indenture that Require the Consent of Transition Bondholders.

We may, with the consent of bondholders holding not less than a majority of the aggregate outstanding principal amount of the transition bonds or tranches (and with prior notice to the rating agencies and with the consent or deemed consent of the Texas commission), enter into one or more indentures supplemental to the indenture for the purpose of, among other things, adding any provisions to or changing in any manner or eliminating any of the provisions of the indenture. No supplement, however, may, without the consent of each bondholder of each tranche affected thereby, take certain actions enumerated in the indenture, including:

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• change the date of payment of any installment of principal of or premium, if any, or interest on any transition bond of such tranche, or reduce in any manner the principal amount thereof, the interest rate thereon or the premium, if any, with respect thereto,
• change the provisions of the indenture and any applicable supplemental indenture relating to the application of collections on, or the proceeds of the sale of, the collateral to payment of principal of or premium, if any, or interest on the transition bonds of such tranche, or change the coin or currency in which any transition bond or any interest thereon is payable,
• impair the right to institute suit for the enforcement of those provisions of the indenture specified therein regarding payment,
• reduce the percentage of the aggregate amount of the outstanding transition bonds, or of a tranche thereof, the consent of the transition bondholders of which is required for any supplemental indenture, or the consent of the transition bondholders of which is required for any waiver of compliance with those provisions of the indenture specified therein or of defaults specified therein and their consequences provided for in the indenture,
• reduce the percentage of the outstanding amount of the transition bonds of such tranche the holders of which are required to consent to direct the trustee to sell or liquidate the collateral,
• modify any of the provisions of the indenture in a manner so as to affect the amount of any payment of interest, principal or premium, if any, payable on any transition bond of such tranche on any payment date or change the expected sinking fund schedules or final maturity dates of any transition bonds of such tranche,
• decrease the required capital amount,
• permit the creation of any lien ranking prior to or on a parity with the lien of the indenture with respect to any of the collateral for the transition bonds of such tranche or, except as otherwise permitted or contemplated in the indenture, terminate the lien of the indenture on any property at any time subject thereto or deprive the holder of any transition bond of the security provided by the lien of the indenture, or

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• cause any material adverse U.S. federal income tax consequences to us, our managers, the seller, the trustee or the then existing bondholders.

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Promptly following the execution of any supplement to the indenture, the trustee will furnish written notice of the substance of the supplement to each bondholder.

Notification of the Rating Agencies, the Texas Commission, the Trustee and the Transition Bondholders of Any Modification

If we, Entergy Texas or the servicer or any other party to the applicable agreement:

• proposes to amend, modify, waive, supplement, terminate or surrender, or agree to any other amendment, modification, waiver, supplement, termination or surrender of, the terms of the sale agreement or the servicing agreement, or
• waives timely performance or observance by Entergy Texas or the servicer under the sale agreement or a servicing agreement,

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in each case in a way which would materially and adversely affect the interests of the related transition bondholders, we must first notify the rating agencies of the proposed amendment, modification, supplement, waiver or other action. Upon receiving notification regarding satisfaction of the rating agency condition, we must thereafter notify the related trustee and the Texas commission in writing and the trustee shall notify the transition bondholders of the proposed amendment, modification, supplement, waiver or other action and whether the rating agency condition has been satisfied with respect thereto. The trustee will consent to this proposed amendment, modification, supplement, waiver or other action only with the written consent of the holders of a majority of the outstanding principal amount of the transition bonds of the tranches materially and adversely affected thereby. In determining whether a majority of holders have consented, transition bonds owned by us, Entergy Texas or any affiliate of us to Entergy Texas shall be disregarded, except that, in determining whether the trustee shall be protected in relying upon any such consent, the trustee shall only be required to disregard any transition bonds it actually knows to be so owned.

Modifications to the Sale Agreement, the Administration Agreement and the Servicing Agreement

With the prior written consent of the trustee, the sale agreement, the administration agreement and the servicing agreement, may be amended, so long as the rating agency condition is satisfied in connection therewith, at any time and from time to time, without the consent of the transition bondholders but, with respect to amendments that would increase ongoing qualified costs as defined in the financing order, with the consent or deemed consent of the Texas commission. However, any such amendment may not adversely affect the interest of any transition bondholder in any material respect without the consent of the holders of a majority of the outstanding principal amount of the transition bonds The parties to the servicing agreement will acknowledge that the financing order provides that the Texas commission, acting through its authorized legal representative and for the benefit of Texas ratepayers, may enforce the servicer's obligations imposed under the servicing agreement pursuant to the financing order to the extent permitted by law.

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Enforcement of the Sale Agreement, the Administration Agreement and the Servicing Agreement

The indenture provides that we will take all lawful actions to enforce our rights under the sale agreement, the administration agreement, and the servicing agreement. The indenture also provides that we will take all lawful actions to compel or secure the performance and observance by Entergy Texas, the administrator and the servicer of their respective obligations to us under or in connection with the sale agreement, the administration agreement, and the servicing agreement. So long as no event of default occurs and is continuing, we may exercise any and all rights, remedies, powers and privileges lawfully available to us under or in connection with the sale agreement, the administration agreement, and the servicing agreement. However, if we or the servicer propose to amend, modify, waive, supplement, terminate or surrender in any material respect, or agree to any material amendment, modification, supplement, termination, waiver or surrender of, the process for adjusting the transition charges, we mu st notify the trustee and the Texas commission in writing and the trustee must notify the transition bondholders of this proposal. In addition, the trustee may consent to this proposal only with the written consent of the holders of a majority of the principal amount of the outstanding transition bonds of the tranches materially and adversely affected thereby and only if the rating agency condition is satisfied. In addition, any proposed amendment of the indenture, the sale agreement or the servicing agreement that would increase ongoing qualified costs as defined in the applicable financing order requires the prior written consent or deemed consent of the Texas commission.

If an event of default occurs and is continuing, the trustee may, and, at the written direction of the holders of a majority of the outstanding amount of the transition bonds shall, exercise all of our rights, remedies, powers, privileges and claims against Entergy Texas, the administrator and servicer, under or in connection with the sale agreement, administration agreements and servicing agreement, and any right of ours to take this action shall be suspended.

Procedure for obtaining consent or deemed consent of the Texas commission

To the extent the consent of the Texas commission is required to effect any amendment, modification or supplemental indenture of the indenture or any other of the basic documents, the indenture sets forth procedures whereby we may request such consent and the Texas commission shall, within 30 days of receiving such a request, either (i) provide notice of its consent or lack of consent, or (ii) be conclusively deemed to have consented to the proposed amendment, modification or supplemental indenture, unless, within such 30 day period, the Texas commission delivers to us a written statement requesting an additional amount of time, not to exceed 30 days, in which to consider whether to consent to the proposed amendment, modification or supplemental indenture. If the Texas commission requests an extension of time as described above, the Texas commission shall either (i) provide notice of its consent or lack of consent no later than the last day of such extended period of time or (ii)  ;be conclusively deemed to have consented to the proposed amendment, modification or supplemental indenture on the last day of such extended period of time.

Our Covenants

We may not consolidate with or merge into any other entity, unless:

• the entity formed by or surviving the consolidation or merger is organized under the laws of the United States or any State;
• the entity expressly assumes, by a supplemental indenture, the performance or observance of all of our agreements and covenants under the indenture and any series supplement;
• the entity expressly assumes all of our obligations and succeeds to all of our rights under the sale agreement, servicing agreement and any other basic document to which we are a party;
• no default, event of default or servicer default under the indenture has occurred and is continuing immediately after the merger or consolidation;
• the rating agency condition will have been satisfied with respect to the merger or consolidation;
• we have delivered to Entergy Texas, the trustee and the rating agencies a no material adverse tax change opinion of independent tax counsel (as selected by us, in form and substance reasonably satisfactory to Entergy Texas and the trustee) regarding such consolidation or merger;

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• any action necessary to maintain the lien and the first priority perfected security interest in the collateral created by the indenture and the series supplement has been taken, as evidenced by an opinion of independent counsel; and
• we have delivered to the trustee an officer's certificate and an opinion of independent counsel, each stating that all conditions precedent in the indenture provided for relating to the transaction have been complied with.

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We may not sell, convey, exchange, transfer or otherwise dispose of any of our properties or assets included in the collateral to any person or entity, unless:

• the person or entity acquiring the properties and assets:

• is a U.S. citizen or an entity organized under the laws of the United States or any State,
• expressly assumes, by a supplemental indenture, the performance or observance of all of our agreements and covenants under the indenture and each series supplement,
• expressly agrees by a supplemental indenture that all right, title and interest so conveyed or transferred will be subject and subordinate to the rights of bondholders,
• unless otherwise specified in the supplemental indenture, expressly agrees to indemnify, defend and hold us and the trustee harmless against and from any loss, liability or expense arising under or related to the indenture, each related series supplement and the outstanding transition bonds,
• expressly agrees by means of the supplemental indenture that the person (or if a group of persons, then one specified person) will make all filings with the SEC (and any other appropriate person) required by the Securities Exchange Act of 1934 in connection with the transition bonds; and
• if such sale, conveyance, exchange, transfer or disposal relates to our rights and obligations under the sale agreement or the servicing agreement, such person or entity assumes all obligations and succeeds to all of our rights under the sale agreement and the servicing agreement, as applicable;

• no default, event of default or servicer default under the indenture has occurred and is continuing immediately after the transactions;
• the rating agency condition has been satisfied with respect to such transaction;
• we have delivered to Entergy Texas, the trustee and the rating agencies a no material adverse tax change opinion of independent tax counsel (as selected by us, in form and substance reasonably satisfactory to Entergy Texas and the trustee) regarding such disposition;
• any action necessary to maintain the lien and the first priority perfected security interest in the collateral created by the indenture and each series supplement has been taken as evidenced by an opinion of counsel of independent counsel; and
• we have delivered to the trustee an officer's certificate and an opinion of independent counsel, each stating that the conveyance or transfer complies with the indenture and the related series supplement and all conditions precedent therein provided for relating to the transaction have been complied with.

We will not, among other things, for so long as any transition bonds are outstanding:

• except as expressly permitted by the indenture, sell, transfer, exchange or otherwise dispose of any of our assets unless directed to do so by the trustee;
• claim any credit on, or make any deduction from the principal or premium, if any, or interest payable in respect of, the transition bonds (other than amounts properly withheld from such payments under the Internal Revenue Code or other tax laws) or assert any claim against any present or former bondholder by reason of the payment of the taxes levied or assessed upon any part of the collateral;
• terminate our existence, or dissolve or liquidate in whole or in part;
• permit the validity or effectiveness of the indenture or any series supplement to be impaired;
• permit the lien of the indenture and any series supplement to be amended, hypothecated, subordinated, terminated or discharged or permit any person to be released from any covenants or obligations with respect to the transition bonds except as may be expressly permitted by the indenture;
• permit any lien, charge, excise, claim, security interest, mortgage or other encumbrance, other than the lien and security interest granted under the indenture and the related series supplement, to be created on or extend to or otherwise arise upon or burden the collateral or any part thereof or any interest therein or the proceeds thereof (other than tax liens arising by operation of law with respect to amounts not yet due);
• permit the lien granted under the indenture and each series supplement not to constitute a valid first priority perfected security interest in the related collateral;
• enter into any swap, hedge or similar financial arrangement;
• elect to be classified as an association taxable as a corporation for U.S. federal income tax purposes or otherwise take any action, file any tax return, or make any election inconsistent with our treatment, for U.S. federal income tax purposes and, to the extent consistent with applicable state tax law, state income and franchise tax purposes, as a disregarded entity that is not separate from our sole member;
• change our name, identity or structure or the location of our chief executive office, unless at least ten (10) days prior to the effective date of any such change, we deliver to the trustee such documents, instruments or agreements, executed by us, as are necessary to reflect such change and to continue the perfection of the security interest of the indenture and each series supplement;
• take any action which is subject to the rating agency condition if such action would result in a downgrade;
• voluntarily suspend or terminate our filing obligations with the SEC; or

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• issue any transition bonds under the Financing Act or any similar legislation (other than the transition bonds offered by this prospectus).

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We may not engage in any business other than financing, purchasing, owning and managing the transition property and the other collateral and the issuance of the transition bonds in the manner contemplated by the financing order and the basic documents, or certain related activities incidental thereto.

We will not issue, incur, assume, guarantee or otherwise become liable for any indebtedness except for the transition bonds. Also, we will not, except as contemplated by the transition bonds and the basic documents, make any loan or advance or credit to, or guarantee, endorse or otherwise become contingently liable in connection with the obligations, stocks or dividends of, or own, purchase, repurchase or acquire (or agree contingently to do so) any stock, obligations, assets or securities of, or any other interest in, or make any capital contribution to, any other person. We will not, except as contemplated by the transition bonds and the basic documents, make any expenditure (by long-term or operating lease or otherwise) for capital assets (either real or personal).

We will not make any payments, distributions, dividends or redemptions to any holder of our equity interests in respect of that interest except in accordance with the indenture.

We will cause the servicer to deliver to the trustee the annual accountant's certificates, compliance certificates, reports regarding distributions and statements to bondholders required by the servicing agreement.

Events of Default; Rights Upon Event of Default

An "event of default" with respect to the transition bonds will be defined in the indenture as any one of the following events:

• a default for five business days in the payment of any interest on any transition bond (whether such failure to pay interest is caused by a shortfall in transition charges received or otherwise),
• a default in the payment of the then unpaid principal of the transition bonds on the final maturity date for that tranche,
• a default in the observance or performance of any of our covenants or agreements made in the indenture (other than defaults described above) and the continuation of any default for a period of 30 days after the earlier of (i) the date that written notice of the default is given to us by the trustee or to us and the trustee by the holders of at least 25% in principal amount of the transition bonds then outstanding or (ii) the date that we had actual knowledge of the default,
• any representation or warranty made by us in the indenture or in any certificate delivered pursuant to the indenture or in connection with the indenture having been incorrect in any material respect as of the time made, and such breach not having been cured within 30 days after the earlier of (i) the date that notice of the breach is given to us by the trustee or to us and the trustee by the holders of at least 25% in principal amount of the transition bonds then outstanding or (ii) the date that we had actual knowledge of the default,
• certain events of bankruptcy, insolvency, receivership or liquidation,

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• a breach by the State of Texas or any of its agencies (including the Texas commission), officers or employees that violates or is not in accordance with the State's pledge, or

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• any other event designated as such in the related series supplement and described in the related prospectus supplement.

If an event of default (other than as specified in the sixth bullet point above) should occur and be continuing with respect to the transition bonds, the trustee or holders of not less than a majority in principal amount of the transition bonds then outstanding may declare the unpaid principal of the transition bonds and all accrued and unpaid interest thereon to be immediately due and payable. However, the nature of our business will result in payment of principal upon an acceleration of the transition bonds being made as funds become available. Please read "Risk Factors-Risks Associated with the Unusual Nature of the Transition Property-Foreclosure of the trustee's lien on the transition property securing the transition bonds might not be practical, and acceleration of the transition bonds before maturity might have little practical effect" and "Risk Factors-You may experience material payment delays or incur a loss on your investment in the transition bonds because the source of funds f or payment is limited." The holders of a majority in principal amount of the transition bonds may rescind that declaration under certain circumstances set forth in the indenture. Additionally, the trustee may exercise all of our rights, remedies, powers, privileges and claims against the seller or the servicer under or in connection with the related sale agreement, the servicing agreement and the administration agreement. If an event of default as specified in the sixth bullet above has occurred, the servicer will be obligated to institute (and the trustee, for the benefit of the bondholders, will be entitled and empowered to institute) any suits, actions or proceedings at law, in equity or otherwise, to enforce the State's pledge and to collect any monetary damages as a result of a breach thereof, and each of the servicer and the trustee may prosecute any suit, action or proceeding to final judgment or decree. The servicer would be required to advance its own funds in order to bring any suits, actions or proceedings and, for so long as the legal actions were pending, the servicer would, unless otherwise prohibited by applicable law or court or regulatory order in effect at that time, be required to bill and collect the transition charges, perform adjustments and discharge its obligations under the servicing agreement. The costs of any such action would be payable by the seller pursuant to the sale agreement.

If the transition bonds have been declared to be due and payable following an event of default, the trustee may, at the written direction of the holders of a majority in principal amount of the transition bonds, either sell the transition property or elect to have us maintain possession of the transition property and continue to apply transition charge collections as if there had been no declaration of acceleration. There is likely to be a limited market, if any, for the transition property following a foreclosure, in light of the event of default, the unique nature of the transition property as an asset and other factors discussed in this prospectus. In addition, the trustee is prohibited from selling the transition property following an event of default, other than a default in the payment of any principal at final maturity or a default for five business days or more in the payment of any interest on any transition bond, unless:

• the holders of all the outstanding transition bonds consent to the sale,
• the proceeds of the sale are sufficient to pay in full the principal of and the accrued interest on the outstanding transition bonds, or
• the trustee determines that the proceeds of the collateral would not be sufficient on an ongoing basis to make all payments on the transition bonds as those payments would have become due if the transition bonds had not been declared due and payable, and the trustee obtains the consent of the holders of 66 2/3% of the aggregate outstanding amount of the transition bonds.

Subject to the provisions of the indenture relating to the duties of the trustee, if an event of default occurs and is continuing, the trustee will be under no obligation to exercise any of the rights or powers under the related transition bonds at the request or direction of any of the holders of transition bonds if the trustee reasonably believes it will not be adequately indemnified against the costs, expenses and liabilities which might be incurred by it in complying with the request. Subject to the provisions for indemnification and certain limitations contained in the indenture:

• the holders of not less than a majority in principal amount of the outstanding transition bonds will have the right to direct the time, method and place of conducting any proceeding for any remedy available to the trustee and
• the holders of not less than a majority in principal amount of the transition bonds may, in certain cases, waive any default with respect thereto, except a default in the payment of principal or interest or a default in respect of a covenant or provision of the indenture that cannot be modified without the consent of all of the holders of the outstanding transition bonds of all tranches affected thereby.

With respect to the transition bonds, no holder of any such transition bond will have the right to institute any proceeding, to avail itself of any remedies provided in the Financing Act or of the right to foreclose on the collateral, or otherwise to enforce the lien and security interest on the collateral or to seek the appointment of a receiver or trustee, or for any other remedy under the indenture, unless:

• the holder previously has given to the trustee written notice of a continuing event of default,
• the holders of not less than a majority in principal amount of the outstanding transition bonds have made written request of the trustee to institute the proceeding in its own name as trustee,
• the holder or holders have offered the trustee satisfactory indemnity,
• the trustee has for 60 days failed to institute the proceeding, and
• no direction inconsistent with the written request has been given to the trustee during the 60-day period by the holders of a majority in principal amount of the outstanding transition bonds.

In addition, each of the trustee, the bondholders and the servicer will covenant that it will not, prior to the date which is one year and one day after the termination of the indenture, institute against us or against our managers or our member or members any bankruptcy, reorganization or other proceeding under any federal or state bankruptcy or similar law, subject to the right of a Travis County, Texas district court to order sequestration and payment of revenues arising with respect to the transition property.

Neither any manager nor the trustee in its individual capacity, nor any holder of any ownership interest in us, nor any of their respective owners, beneficiaries, agents, officers, directors, employees, successors or assigns will, in the absence of an express agreement to the contrary, be personally liable for the payment of the principal of or interest on the transition bonds or for our agreements contained in the indenture.

Actions by Bondholders

Subject to certain exceptions, the holders of not less than a majority of the aggregate outstanding amount of the transition bonds will have the right to direct the time, method and place of conducting any proceeding for any remedy available to the trustee, or exercising any trust or power conferred on the trustee under the indenture; provided that:

• the direction is not in conflict with any rule of law or with the indenture and would not involve the trustee in personal liability or expense;
• subject to any other conditions specified in the indenture, the consent of 100% of the bondholders is required to direct the trustee to sell the collateral; and
• the trustee may take any other action deemed proper by the trustee which is not inconsistent with the direction.

In circumstances under which the trustee is required to seek instructions from the holders of the transition bonds of any tranche with respect to any action or vote, the trustee will take the action or vote for or against any proposal in proportion to the principal amount of the corresponding tranche, as applicable, of transition bonds taking the corresponding position. Notwithstanding the foregoing, the indenture allows each bondholder to institute suit for the nonpayment of (1) the interest, if any, on its transition bonds which remains unpaid as of the applicable due date and (2) the unpaid principal, if any, of any tranche of its transition bonds on the final maturity date therefor.

Annual Report of Trustee

If required by the Trust Indenture Act of 1939, the trustee will be required to mail each year to all bondholders a brief report. The report must state, among other things:

• the trustee's eligibility and qualification to continue as the trustee under the indenture,
• any amounts advanced by it under the indenture,
• the amount, interest rate and maturity date of specific indebtedness owing by us to the trustee in the trustee's individual capacity,
• the property and funds physically held by the trustee, and
• any action taken by it that materially affects the transition bonds and that has not been previously reported.

Annual Compliance Statement

We will file annually with the trustee, the rating agencies and the Texas commission, a written statement as to whether we have fulfilled our obligations under the indenture.

Satisfaction and Discharge of Indenture

The indenture will cease to be of further effect with respect to the transition bonds and the trustee, on our written demand and at our expense, will execute instruments acknowledging satisfaction and discharge of the indenture, when:

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• either all transition bonds which have already been authenticated or delivered, with certain exceptions set forth in the indenture, have been delivered to the trustee for cancellation or either (1) the final scheduled payment date has occurred with respect to all transition bonds not delivered to the trustee for cancellation or (2) such transition bonds will be due and payable on their respective final scheduled payment date within one year, and in any such case of clause (1) or (2), we have irrevocably deposited in trust with the trustee cash and/or U.S. government obligations in an aggregate amount sufficient to pay principal, interest and premium, if any, on the transition bonds and all other sums payable by us with respect to such transition bonds when scheduled to be paid and to discharge the entire indebtedness on the transition bonds when due,
• we have paid all other sums payable by us under the indenture with respect to the transition bonds, and
• we have delivered to the trustee an officer's certificate, an opinion of independent counsel and if required, by the Trust Indenture Act or the trustee, a certificate from a firm of independent registered public accountants, each stating that there has been compliance with the conditions precedent in the indenture relating to the satisfaction and discharge of the indenture with respect to the transition bonds.

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Our Legal and Covenant Defeasance Options

We may, at any time, terminate all of our obligations under the indenture with respect to the transition bonds, referred to herein as the legal defeasance option, or terminate our obligations to comply with some of the covenants in the indenture, including some of the covenants described under "-Our Covenants," referred to herein as our covenant defeasance option.

We may exercise the legal defeasance option notwithstanding our prior exercise of the covenant defeasance option. If we exercise the legal defeasance option, the transition bonds will be entitled to payment only from the funds or other obligations set aside under the indenture for payment thereof on the scheduled final payment date or redemption date therefor as described below. The transition bonds will not be subject to payment through redemption or acceleration prior to the scheduled final payment date or redemption date, as applicable. If we exercise the covenant defeasance option, the final payment of the transition bonds may not be accelerated because of an event of default relating to a default in the observance or performance of any of our covenants or agreements made in the indenture.

The indenture provides that we may exercise our legal defeasance option or our covenant defeasance option only if:

• we irrevocably deposit or cause to be deposited in trust with the trustee cash and/or U.S. government obligations in an aggregate amount sufficient to pay principal, interest and premium, if any, on the transition bonds and other sums payable by us under the indenture with respect to the transition bonds when scheduled to be paid and to discharge the entire indebtedness on the transition bonds when due,
• we deliver to the trustee a certificate from a nationally recognized firm of independent registered public accountants expressing its opinion that the payments of principal and interest on the U.S. government obligations when due and without reinvestment plus any deposited cash will provide cash at times and in sufficient amounts to pay in respect of the transition bonds:

• principal in accordance with the expected sinking fund schedule,
• interest when due, and
• all other sums payable by us under the indenture with respect to the transition bonds,

• in the case of the legal defeasance option, 95 days pass after the deposit is made and during the 95-day period no default relating to events of our bankruptcy, insolvency, receivership or liquidation occurs and is continuing at the end of the period,
• no default has occurred and is continuing on the day of this deposit and after giving effect thereto,
• in the case of the legal defeasance option, we deliver to the trustee an opinion of independent tax counsel stating that: we have received from, or there has been published by, the IRS a ruling, or since the date of execution of the indenture, there has been a change in the applicable U.S. federal income tax law, and in either case confirming that the holders of the transition bonds will not recognize income, gain or loss for U.S. federal income tax purposes as a result of the exercise of the legal defeasance option and will be subject to U.S. federal income tax on the same amounts, in the same manner and at the same times as would have been the case if the legal defeasance had not occurred,
• in the case of the covenant defeasance option, we deliver to the trustee an opinion of independent tax counsel to the effect that the holders of the transition bonds will not recognize income, gain or loss for U.S. federal income tax purposes as a result of the exercise of the covenant defeasance option and will be subject to U.S. federal income tax on the same amounts, in the same manner and at the same times as would have been the case if the covenant defeasance had not occurred,
• we deliver to the trustee a certificate of one of our officers and an opinion of counsel, each stating that all conditions precedent to the legal defeasance option or the covenant defeasance option, as applicable, have been complied with as required by the indenture,

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• we deliver to the trustee an opinion of independent counsel to the effect that (a) in a case under the Bankruptcy Code in which Entergy Texas (or any of its affiliates, other than us) is the debtor, the court would hold that the deposited cash or U.S. government obligations would not be in the bankruptcy estate of Entergy Texas (or any of its affiliates, other than us, that deposited the cash or U.S. government obligations); and (b) in the event Entergy Texas (or any of its affiliates, other than us, that deposited the cash or U.S. government obligations), were to be a debtor in a case under the Bankruptcy Code, the court would not disregard the separate legal existence of Entergy Texas (or any of its affiliates, other than us, that deposited the cash or U.S. government obligations) and us so as to order substantive consolidation under the Bankruptcy Code of our assets and liabilities with the assets and liabilities of Entergy Texas or such other affiliate, and

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• the rating agency condition will be satisfied with respect to the exercise of any legal defeasance option or covenant defeasance option.

THE TRUSTEE

The trustee for the transition bonds will be identified in the prospectus supplement. You will find the address of the principal office of the trustee, as well as a description of its experience as a trustee, in the prospectus supplement. The trustee may resign at any time by so notifying us. The holders of a majority in principal amount of the transition bonds then outstanding may remove the trustee by so notifying the trustee and may appoint a successor trustee. We will remove the trustee if the trustee ceases to be eligible to continue in this capacity under the indenture, the trustee becomes a debtor in a bankruptcy proceeding or is adjudicated insolvent, a receiver, other public officer takes charge of the trustee or its property, the trustee becomes incapable of acting or the trustee fails to provide to us certain information we reasonably request which is necessary for us to satisfy our reporting obligations under the securities laws. If the trustee resig ns or is removed or a vacancy exists in the office of trustee for any reason, we will be obligated promptly to appoint a successor trustee eligible under the indenture. No resignation or removal of the trustee will become effective until acceptance of the appointment by a successor trustee. We are responsible for payment of the expenses associated with any such removal or resignation.

The trustee will at all times satisfy the requirements of the Trust Indenture Act and Rule 3a-7 under the Investment Company Act of 1940 and have a combined capital and surplus of at least $50 million and a long term debt rating of "BBB" (or the equivalent thereof) or better by all of the rating agencies from which a rating is available. If the trustee consolidates with, merges or converts into, or transfers all or substantially all of its corporate trust business or assets to, another entity, the resulting, surviving or transferee entity will without any further action be the successor trustee.

The trustee shall not be liable for any action it takes or omits to take in good faith which it believes to be authorized or within its rights or powers; provided that its conduct does not constitute willful misconduct, negligence or bad faith. We have agreed to indemnify the trustee and its officers, directors, employees and agents against any and all loss, liability or expense (including reasonable attorney's fees and expenses) incurred by it in connection with the administration of the trust and the performance of its duties under the indenture, provided that we are not required to pay any expense or indemnify against any loss, liability or expense incurred by the trustee through the trustee's own willful misconduct, negligence or bad faith.

SECURITY FOR THE TRANSITION BONDS

General

The transition bonds issued will be payable solely from and secured solely by a pledge of and lien on the transition property and the other collateral as provided in the indenture. As noted under "Description of the Transition Bonds," we will issue the transition bonds pursuant to the terms of the indenture. We will establish the particular terms of the transition bonds in a series supplement. We will describe the material terms of the transition bonds in the prospectus supplement.

Pledge of Collateral

To secure the payment of principal of and interest on the transition bonds and certain other qualified costs, we will grant to the trustee a security interest in all of our right, title and interest (whether now owned or hereafter acquired or arising) in and to the following property:

• the transition property and all related transition charges,
• our rights under the PUCT guaranteed true-up mechanism,
• our rights under the sale agreement pursuant to which we will acquire the transition property, and under all bills of sale delivered by Entergy Texas pursuant to the sale agreement,
• our rights under the servicing agreement and any subservicing, agency, or collection agreements executed in connection with the servicing agreement,
• our rights under the administration agreement,
• the collection account and all subaccounts of the collection account, and all amounts of cash instruments, investment property or other assets on deposit therein or credited thereto from time to time and all financial assets and securities entitlements carried therein or credited thereto,
• our rights in all deposits, guarantees, surety bonds, letters of credit and other forms of credit support provided by or on behalf of retail electric providers pursuant to any financing order or tariff,
• all of our other property related to the transition bonds, other than any cash released to us by the trustee on any payment date from earnings on the capital subaccount,
• all present and future claims, demands, causes and choses in action in respect of any or all of the foregoing, and
• all proceeds in respect of any or all of the foregoing.

The security interest does not extend to:

• amounts representing investment earnings on the capital subaccount or any other subaccount that has been released to us,
• amounts deposited in the capital subaccount or any other subaccount that have been released to us or as we direct following retirement of all transition bonds, and
• amounts deposited with us on any issuance date for payment of costs of issuance with respect to the transition bonds (together with any interest earnings thereon).

We refer to the foregoing assets in which we, as assignee of the seller, will grant the trustee a security interest as the collateral.

Security Interest in the Collateral

Section 39.309 of the Financing Act provides that transition property does not constitute property in which a security interest may be created under the Texas Business & Commerce Code. Rather, Section 39.309(b) of the Financing Act provides that a valid and enforceable security interest in transition property will attach and be perfected only by a financing order and the execution and delivery of a security agreement in connection with issuance of financing instruments such as the transition bonds. The lien and security interest attach automatically at the time when value is received for the instruments. Upon perfection by filing notice with the Texas Secretary of State under Section 39.309(d) of the Financing Act, the lien and security interest will be a continuously perfected lien and security interest in the transition property and all proceeds of the property, whether accrued or not, and will have priority in the order of filing and take precedence over any subsequent judic ial or other lien creditor. If notice is filed within 10 days after value is received for the transition bonds, the security interest will be perfected retroactively to the date that value was received. Otherwise, the security interest will be perfected as of the date of filing.

The financing order creates a valid and enforceable lien and security interest in the transition property and the indenture states that it constitutes a security agreement within the meaning of the Financing Act. The servicer pledges in the servicing agreement to file with the Texas Secretary of State on or before the date of issuance of the transition bonds the filing required by Section 39.309 of the Financing Act to perfect the lien of the trustee in the transition property. The seller will represent, at the time of issuance of the transition bonds, that no prior filing has been made under the terms of Section 39.309 of the Financing Act with respect to the transition property securing the transition bonds to be issued other than a filing which provides the trustee with a first priority perfected security interest in the transition property.

Certain items of the collateral may not constitute transition property, and the perfection of the trustee's security interest in those items of collateral would therefore be subject to the Uniform Commercial Code or common law and not Section 39.309 of the Financing Act. These items consist of our rights in:

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• the sale agreement, the servicing agreement, the administration agreement and any other basic documents,
• the capital subaccount or any other funds on deposit in the collection account which do not constitute transition charge collections, together with all instruments, investment property or other assets on deposit therein or credited thereto and all financial assets and securities entitlements carried therein or credited thereto which do not constitute transition charge collections,
• all accounts, chattel paper, deposit accounts, documents, general intangibles, goods, instruments, investment property, letters-of-credit, letter-of-credit rights, money, commercial tort claims and supporting obligations and all of our other property to the extent not transition property, and
• proceeds of the foregoing items.

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Additionally, any contractual rights we have against retail customers (other than the right to impose transition charges and rights otherwise included in the definition of transition property) would be collateral to which the UCC applies.

As a condition to the issuance of the transition bonds, we will have made all filings and taken any other action required by the UCC or common law to perfect the lien of the trustee in all the items included in collateral which do not constitute transition property. We will also covenant to take all actions necessary to maintain or preserve the lien and security interest on a first priority basis. We will represent, along with the seller, at the time of issuance of the transition bonds, that no prior filing has been made with respect to the party under the terms of the UCC, other than a filing which provides the trustee with a first priority perfected security interest in the collateral.

Right of Foreclosure

Section 39.309(f) of the Financing Act provides that if an event of default occurs with respect to the transition bonds, the holders of the transition bonds or their representatives, as secured parties, may foreclose or otherwise enforce the lien in the transition property as if they were secured parties under Article 9 of the UCC. The Texas commission may order that amounts arising from transition charges be transferred to a separate account for the holders' benefit, to which their lien and security interest will apply.

Description of Indenture Accounts

Collection Account.

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Pursuant to the indenture, we will establish a segregated trust account in the name of the trustee with an eligible institution, for the transition bonds called the collection account. The collection account will be under the sole dominion and exclusive control of the trustee. The trustee will hold the collection account for our benefit as well as for the benefit of the bondholders. The collection account for the transition bonds will consist of three subaccounts: a general subaccount, an excess funds subaccount, and a capital subaccount, which need not be separate bank accounts. For administrative purposes, the subaccounts may, but need not, be established by the trustee as separate accounts which will be recognized individually as subaccounts and collectively as the collection account. All amounts in the collection account not allocated to any other subaccount will be allocated to the general subaccount. We may establish additional subaccounts to provide credit enhance ment for the transition bonds as provided in the series supplement. Unless the context indicates otherwise, references in this prospectus to the collection account include each of the subaccounts contained therein.

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Permitted Investments for Funds in the Collection Account.

Funds in the collection account, and any REP deposit accounts, which may be established in the future in the event a REP collects the transition charges, may be invested only in such investments as meet the criteria described below and which mature on or before the business day preceding the next payment date:

• direct obligations of, or obligations fully and unconditionally guaranteed as to timely payment by, the United States of America,
• time deposits and certificates of deposit of depository institutions meeting the requirements of the definition of "eligible institution" in the Glossary,
• commercial paper (other than commercial paper issued by Entergy Texas or any of its affiliates) having, at the time of investment or contractual commitment to invest, a rating in the highest rating category from each rating agency from which a rating is available,
• money market funds which have the highest rating from Moody's, S&P and Fitch, if rated by Fitch, or
• any other investment permitted by each rating agency.

The trustee will have access to the collection account for the purpose of making deposits in and withdrawals from the collection account in accordance with the indenture. The servicer will select the eligible investments in which funds will be invested, unless otherwise directed by us.

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The servicer will remit transition charge payments to the collection account in the manner described under "The Servicing Agreement-Remittances to Collection Account."

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General Subaccount

The general subaccount will hold all funds held in the collection account that are not held in the other two subaccounts. The servicer will remit all transition charge payments to the general subaccount. On each payment date, the trustee will draw on amounts in the general subaccount to pay our expenses and to pay interest and make scheduled payments on the transition bonds, and to make other payments and transfers in accordance with the terms of the indenture. Funds in the general subaccount will be invested in the eligible investments described above.

Excess Funds Subaccount

The servicer will allocate to the excess funds subaccount transition charge collections available with respect to any payment date in excess of amounts necessary to make the payments specified on such payment date. The excess funds subaccount will also hold all investment earnings on the collection account (other than investment earnings on the capital subaccount) in excess of such amounts.

Capital Subaccount

In connection with the issuance of the transition bonds, the seller, in its capacity as our sole owner, will contribute capital to us in an amount equal to the required capital level, which will equal 0.50% of the principal amount of the transition bonds issued. This amount will be funded by the seller and not from the proceeds of the sale of the transition bonds, and will be deposited into the capital subaccount at the time of issuance. In the event that amounts on deposit in the general subaccount and the excess funds subaccount are insufficient to make scheduled payments of principal and interest on the transition bonds and payments of fees and expenses contemplated by the first six bullets under "-How Funds in the Collection Account Will Be Allocated," the trustee will draw on amounts in the capital subaccount to make such payments up to the lesser of the amount of such insufficiency and the amounts on deposit in the capital subaccount. In the event of any such withdrawal, colle cted transition charges available on any subsequent payment date that are not necessary to pay scheduled payments of principal and interest on the transition bonds and payments of fees and expenses will be used to replenish any amounts drawn from the capital subaccount. If the transition bonds have been retired as of any payment date, the amounts on deposit in the capital subaccount will be released to us, free of the lien of the indenture.

REP Deposit Accounts

In the future, REPs may be permitted to collect the transition charges and remit them to the servicer. In such event, deposits received from REPs as described under "Future Retail Electric Providers" will be held in the REP deposit accounts. Amounts in the REP deposit accounts and other forms of credit support provided by REPs will not be our property. Rather, amounts in the REP deposit accounts and other forms of credit support will only be available to make payments on the transition bonds in the event that a REP defaults in payment, in which case the servicer may direct the trustee to withdraw the amount of the payment default from the applicable REP deposit account or, if less, the amount of that REP's security deposit or seek recourse against any other credit support for such amount. Amounts in the REP deposit accounts will be invested in the eligible investments described above.

How Funds in the Collection Account Will Be Allocated

On each payment date, the trustee will pay or allocate, at the direction of the servicer, all amounts on deposit in the collection account (including investment earnings thereon) which have accumulated from the first billing date of the month in which the prior payment date occurred until the final billing date of the month immediately preceding the month of the relevant payment date, to pay the following amounts in the following priority:

• amounts owed by us to the trustee, and the total amount of which may be paid in any 12-month period may be capped, as set forth in the prospectus supplement;
• a servicing fee, which will be a fixed amount specified in the servicing agreement, and any unpaid servicing fees from prior payment dates as described under "The Servicing Agreement-Servicing Compensation," to the servicer;
• an administration fee, which will be a fixed amount specified in the administration agreement between us and Entergy Texas and the fees owed to our independent manager(s), which will be a fixed amount specified in an agreement between us and our independent manager(s);
• all of our other ordinary periodic operating expenses, such as accounting and audit fees, rating agency fees, legal fees and certain reimbursable costs of the servicer under the servicing agreement, and the total amount of which may be paid in any 12-month period may be capped, as set forth in the prospectus supplement;
• interest then due on the transition bonds, including any past-due interest;
• principal then due and payable on the transition bonds as a result of an event of default or on the final maturity date;
• scheduled principal payments of the transition bonds according to the expected sinking fund schedule, together with any overdue scheduled principal payments;
• any remaining unpaid operating expenses and any remaining amounts owed pursuant to the basic documents, including indemnity amounts owed to the trustee;
• replenishment of any shortfalls in the applicable capital subaccount;
• if there is a positive balance after making the foregoing allocations, so long as no event of default has occurred and is continuing, release to us of an amount not to exceed the lesser of such balance and the investment earnings on amounts in the applicable capital subaccount;
• the trustee will pay the remainder, if any, to the applicable excess funds subaccount for distribution on subsequent payment dates; and
• after principal of and premium, if any, and interest on all transition bonds and all of the other foregoing amounts have been paid in full, the balance (including all amounts then held in the applicable capital subaccount and the applicable excess funds subaccount), if any, shall be paid to us free and clear from the lien of the indenture and the related series supplement.

If on any payment date funds on deposit in the general subaccount are insufficient to make the payments contemplated by the first eight bullet points above, the trustee will first, draw from amounts on deposit in the applicable excess funds subaccount, and second, draw from amounts on deposit in the applicable capital subaccount, up to the amount of the shortfall, in order to make those payments in full. If the trustee uses amounts on deposit in the applicable capital subaccount to pay those amounts or make those transfers, as the case may be, subsequent adjustments to the transition charges will take into account, among other things, the need to replenish those amounts. In addition, if on any payment date funds on deposit in the applicable general subaccount are insufficient to make the transfers described in the ninth bullet point above, the trustee will draw from amounts on deposit in the applicable excess funds subaccount to make the transfers notwithstanding the fact that, on that payment date, the o bligation to pay unpaid operating expenses to the persons entitled thereto may not have been fully satisfied.

The trustee will make payments to the bondholders on the payment date as specified in the related prospectus supplement.

State Pledge

Section 39.310 of the Financing Act provides: "Transition bonds are not a debt or obligation of the state and are not a charge on its full faith and credit or taxing power. The state pledges, however, for the benefit and protection of financing parties and the electric utility, that it will not take or permit any action that would impair the value of the transition property, or, except as permitted by Section 39.307 (relating to true-up adjustments), reduce, alter or impair the transition charges to be imposed, collected and remitted to financing parties, until the principal, interest and premium, and any other charges incurred and contracts to be performed in connection with the related transition bonds have been paid and performed in full. Any party issuing transition bonds is authorized to include this pledge in any documentation relating to those bonds."

The bondholders and the trustee, for the benefit of the bondholders and the trustee, will be entitled to the benefit of the pledges and agreements of the State of Texas set forth in Section 39.310 of the Financing Act, and we are authorized to include these pledges and agreements in any contract with the bondholders, the trustee or with any assignees pursuant to the Financing Act. We have included these pledges and agreements in the indenture and the transition bonds for the benefit of the trustee and the bondholders, and acknowledge that any purchase by a bondholder of a transition bond is made in reliance on these agreements and pledges of the State of Texas.

WEIGHTED AVERAGE LIFE AND YIELD CONSIDERATIONS
FOR THE TRANSITION BONDS

The rate of principal payments, the amount of each interest payment and the actual final payment date of each tranche of the transition bonds and the weighted average life thereof will depend primarily on the timing of receipt of transition charges by the trustee and the PUCT guaranteed true-up mechanism. The aggregate amount of collected transition charges and the rate of principal amortization on the transition bonds will depend, in part, on actual energy usage and energy demands, and the rate of delinquencies and write-offs. The transition charges are required to be adjusted from time to time based in part on the actual rate of collected transition charges. However, we can give no assurance that the servicer will be able to forecast accurately actual electricity usage and the rate of delinquencies and write-offs or implement adjustments to the transition charges that will cause collected transition charges to be received at any particular rate. Please read &quo t;Risk Factors-Servicing Risks," "-Inaccurate consumption forecasting or unanticipated delinquencies or charge-offs might reduce scheduled payments on the transition bonds" and "Entergy Texas' Financing Order-PUCT Guaranteed True-Ups."

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If the servicer receives transition charges at a slower rate than expected, the transition bonds may be retired later than expected. Except in the event of an acceleration of the transition bonds after an event of default, however, the transition bonds will not be paid at a rate faster than that contemplated in the expected sinking fund schedule for the transition bonds even if the receipt of collected transition charges is accelerated. Instead, receipts in excess of the amounts necessary to amortize the transition bonds in accordance with the applicable expected sinking fund schedules, to pay interest and related fees and expenses and to fund subaccounts of the collection account will be allocated to the excess funds subaccount. Acceleration of the final maturity date after an event of default may result in payment of principal earlier than the related scheduled final payment dates. A payment on a date that is earlier than forecast might result in a shorter weighted average life, and a payment on a dat e that is later than forecast might result in a longer weighted average life. In addition, if a larger portion of the delayed payments on the transition bonds is received in later years, the transition bonds may have a longer weighted average life.

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THE SALE AGREEMENT

The following summary describes particular material terms and provisions of the sale agreement pursuant to which we will purchase transition property from the seller. We and Entergy Texas have filed the form of the sale agreement as an exhibit to the registration statement of which this prospectus forms a part. This summary does not purport to be complete and is subject and qualified by reference to the provisions of the sale agreement.

Sale and Assignment of the Transition Property

The seller will offer and sell transition property to us, subject to the satisfaction of the conditions specified in the sale agreement and the indenture. We will finance the purchase of transition property through the issuance of transition bonds. On the date of issuance of transition bonds, the seller will sell to us, without recourse, its entire right, title and interest in and to the transition property to be transferred to us on that transfer date. The transition property will include all of the seller's rights under the financing order related to such transition property to impose, collect and receive transition charges in an amount sufficient to recover the qualified costs approved in that financing order.

Under the Financing Act, each such sale of transition property will constitute a true sale under state law whether or not:

• we have any recourse against Entergy Texas,
• Entergy Texas retains any equity interest in the transition property under state law,
• Entergy Texas acts as a collector of transition charges relating to the transition property, or
• Entergy Texas treats the transfer as a financing for tax, financial reporting or other purposes.

In accordance with the Financing Act, a valid and enforceable lien and security interest in the transition property will be created upon the issuance of the financing order and the execution and delivery of the sale agreement in connection with the issuance of the transition bonds. The lien and security interest attaches automatically from the time that value is received for the transition bonds and, on perfection through the timely filing of a notice with the Secretary of State of the State of Texas, in accordance with the rules prescribed under the Financing Act, will be a continuously perfected lien and security interest in the transition property and all proceeds of the transition property. Upon the issuance of the financing order, the execution and delivery of the sale agreement and the related bill of sale and the filing of a notice with the Texas Secretary of State in accordance with the rules prescribed under the Financing Act, the transfer of the transition property will be perfected as against a ll third persons, including subsequent judicial or other lien creditors.

Conditions to the Sale of Transition Property

Our obligation to purchase and the seller's obligation to sell transition property on any transfer date is subject to the satisfaction or waiver of each of the following conditions:

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• on or prior to the transfer date, the seller must deliver to us a duly executed bill of sale identifying transition property to be conveyed on that date;
• on or prior to the transfer date, the seller must have received a financing order from the Texas commission creating the transition property;
• as of the transfer date, the seller may not be insolvent and may not be made insolvent by the sale of transition property to us, and the seller may not be aware of any pending insolvency with respect to itself;
• as of the transfer date, the representations and warranties of the seller in the sale agreement must be true and correct (except to the extent they relate to an earlier date), the seller may not have breached any of its covenants in the sale agreement, and the servicer may not be in default under the servicing agreement;
• as of the transfer date, we must have sufficient funds available to pay the purchase price for transition property to be conveyed and all conditions to the issuance of transition bonds intended to provide the funds to purchase that transition property must have been satisfied or waived;
• on or prior to the transfer date, the seller must have taken all action required to transfer ownership of transition property to be conveyed to us on the transfer date, free and clear of all liens other than liens created by us pursuant to the basic documents and to perfect such transfer including, without limitation, filing any statements or filings under the Financing Act or the Uniform Commercial Code; and we or the servicer, on our behalf, must have taken any action required for us to grant the trustee a first priority perfected security interest in the collateral and maintain that security interest as of the transfer date;
• the seller must deliver appropriate opinions of counsel to us and to the rating agencies;
• the seller must receive and deliver to us and the trustee a no material adverse tax change opinion of independent tax counsel (as selected by the seller, and in form and substance reasonably satisfactory to us and the trustee) regarding such sale;
• on and as of the transfer date, our limited liability company agreement, the servicing agreement, the administration agreement, the sale agreement, the indenture, the Financing Act, any issued financing order and any tariff authorizing the collection of transition charges must be in full force and effect;
• the transition bonds shall have received a rating of AAA, or its equivalent, from each rating agency; and
• the seller must deliver to us and to the trustee an officer's certificate confirming the satisfaction of each of these conditions.

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Seller Representations and Warranties

In the sale agreement, the seller will represent and warrant to us, as of each transfer date, to the effect, among other things, that:

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• no portion of the transition property has been sold, transferred, assigned or pledged or otherwise conveyed by the seller to any person other than us and immediately prior to the sale of the transition property, the seller owns the transition property free and clear of all liens and rights of any other person, and no offsets, defenses or counterclaims exist or have been asserted with respect to the transition property;
• on the transfer date, immediately upon the sale under the sale agreement, the transition property transferred on the transfer date will be validly transferred and sold to us, we will own the transition property free and clear of all liens (except for liens created in favor of you and the trustee by the Financing Act and the basic documents) and all filings and actions to be made or taken by the seller (including filings with the Secretary of State of Texas under the Financing Act) necessary in any jurisdiction to give us a perfected ownership interest (subject to any lien created by us in your favor under the basic documents or the Financing Act) in the transition property will have been made or taken;
• subject to the clause below regarding assumptions used in calculating the transition charges as of the transfer date, all written information, as amended or supplemented from time to time, provided by the seller to us with respect to the transition property (including the expected sinking fund schedule, the financing order and the issuance advice letter relating to the transition property) is true and correct in all material respects;
• under the laws of the State of Texas (including the Financing Act) and the United States in effect on the transfer date:

• the financing order pursuant to which the rights and interests of the seller have been created, including the right to impose, collect and receive the transition charges and the interest in and to the transition property, has become final and non-appealable and is in full force and effect;
• as of the issuance of the transition bonds, those transition bonds are entitled to the protection provided in the Financing Act and, accordingly, the related financing order, transition charges and issuance advice letter are not revocable by the Texas commission;
• as of the issuance of the related transition bonds, the related tariff is in full force and effect and is not subject to modification by the Texas commission except for true-up adjustments made in accordance with the Financing Act;
• the process by which the financing order was approved and the financing order, issuance advice letter and tariff comply with all applicable laws and regulations;
• the issuance advice letter and the tariff have been filed in accordance with the financing order and an officer of the seller has provided the certification to the Texas commission required by the issuance advice letter; and
• no other approval, authorization, consent, order or other action of, or filing with any governmental authority is required in connection with the creation of the transition property transferred on the transfer date, except those that have been obtained or made;

• under the Financing Act, the State of Texas has pledged that it will not take or permit any action that would impair the value of the transition property, or, except for true-up adjustments made in accordance with the Financing Act, reduce, alter, or impair the transition charges relating to such transition property until the principal, interest and premium, and any other charges incurred and contracts to be performed in connection with the related transition bonds have been paid and performed in full, and consequently the State of Texas could not constitutionally take any action of a legislative character, including the repeal or amendment of the Financing Act, which would substantially limit, alter or impair the transition property or other rights vested in the bondholders pursuant to the financing order, or substantially limit, alter, impair or reduce the value or amount of the transition property, unless that action is a reasonable exercise of the State of Texas's sovereign powers and of a character reasonable and appropriate to further a legitimate public purpose, and, under the takings clauses of the Texas and United States Constitutions, the State of Texas could not repeal or amend the Financing Act or take any other action in contravention of its pledge and agreement quoted above without paying just compensation to the bondholders, as determined by a court of competent jurisdiction, if doing so would constitute a permanent appropriation of a substantial property interest of the bondholders in the transition property and deprive the bondholders of their reasonable expectations arising from their investments in the transition bonds; however, there is no assurance that, even if a court were to award just compensation, it would be sufficient to pay the full amount of principal and interest on the transition bonds;
• based on information available to the seller on the transfer date, the assumptions used in calculating the transition charges as of the transfer date are reasonable and are made in good faith; however, notwithstanding the foregoing, Entergy Texas makes no representation or warranty, express or implied, that amounts actually collected arising from those transition charges will in fact be sufficient to meet the payment obligations on the related transition bonds or that the assumptions used in calculating such transition charges will in fact be realized;
• upon the effectiveness of the financing order, the issuance advice letter and the tariff with respect to the transition property and the transfer of such transition property to us:

• the rights and interests of the seller under the financing order, including the right to impose, collect and receive the transition charges established in the financing order, become transition property;
• the transition property constitutes a present property right vested in us;
• the transition property includes the right, title and interest of the seller in the financing order and the transition charges, the right to impose, collect and obtain periodic adjustments (with respect to adjustments, in the manner and with the effect provided in the servicing agreement) of the transition charges, and the rates and other charges authorized by the financing order and all revenues, claims, payments, money or proceeds of or arising from the transition charges;
• the owner of the transition property is legally entitled to bill transition charges and collect payments in respect of the transition charges in the aggregate sufficient to pay the interest on and principal of the related transition bonds in accordance with the indenture, to pay the fees and expenses of servicing the transition bonds, to replenish the capital subaccount to the required capital level until the transition bonds are paid in full or until the last date permitted for the collection of payments in respect of the transition charges under the financing order, whichever is earlier, and the customer class allocation percentages in the financing order do not prohibit the owner of the transition property from obtaining adjustments and effecting allocations to the transition charges in order to collect payments of such amounts; and
• the transition property is not subject to any lien other than the lien created by the related basic documents;

• the seller is a corporation duly organized and in good standing under the laws of the State of Texas, with corporate power and authority to own its properties and conduct its business as currently owned or conducted;
• the seller has the corporate power and authority to obtain the financing order and to own the rights and interests under the financing order relating to the transition bonds, to sell and assign those rights and interests to us, whereupon (subject to the effectiveness of the related issuance advice letter) such rights and interests will become transition property;
• the seller has the corporate power and authority to execute and deliver the sale agreement and to carry out its terms, and the execution, delivery and performance of the sale agreement have been duly authorized by the seller by all necessary corporate action;
• the sale agreement constitutes a legal, valid and binding obligation of the seller, enforceable against it in accordance with its terms, subject to customary exceptions relating to bankruptcy, creditor's rights and equitable principles;
• the consummation of the transactions contemplated by the sale agreement and the fulfillment of its terms do not (a) conflict with or result in a breach of any of the terms or provisions of or otherwise constitute (with or without notice or lapse of time) a default under the seller's organizational documents or any indenture, or other agreement or instrument to which the seller is a party or by which it or any of its property is bound, (b) result in the creation or imposition of any lien upon the seller's properties pursuant to the terms of any such indenture, agreement or other instrument (other than any liens that may be granted in our favor or any liens created by us pursuant to the Financing Act) or (c) violate any existing law or any existing order, rule or regulation applicable to the seller of any governmental authority having jurisdiction over the seller or its properties;
• no proceeding is pending and, to the seller's knowledge, no proceeding is threatened and no investigation is pending or threatened before any governmental authority:

• asserting the invalidity of the Financing Act, the financing order, the sale agreement, the transition bonds and the basic documents;
• seeking to prevent the issuance of the transition bonds or the consummation of any of the transactions contemplated by the sale agreement or any of the other basic documents;
• seeking a determination that could reasonably be expected to materially and adversely affect the performance by the seller of its obligations under, or the validity or enforceability of, the Financing Act, the financing order, the transition bonds, the sale agreement or the other basic documents; or
• seeking to adversely affect the U.S. federal income tax or state income or franchise tax classification of the transition bonds as debt;

• except for continuation filings under the Uniform Commercial Code and other filings under the Financing Act and the Uniform Commercial Code, no governmental approvals, authorizations, consents, orders or other actions or filings with any governmental authority are required for the seller to execute, deliver and perform its obligations under the sale agreement except those which have previously been obtained or made or are required to be made by the servicer in the future pursuant to the servicing agreement;
• there is no order by any court providing for the revocation, alteration, limitation or other impairment of the Financing Act, the financing order, the issuance advice letter, the transition property or the transition charges or any rights arising under any of them or that seeks to enjoin the performance of any obligations under the financing order; and
• after giving effect to the sale of any transition property under the sale agreement, Entergy Texas:

• is solvent and expects to remain solvent;
• is adequately capitalized to conduct its business and affairs considering its size and the nature of its business and intended purposes;
• is not engaged and does not expect to engage in a business for which its remaining property represents an unreasonably small portion of its capital;
• reasonably believes that it will be able to pay its debts as they become due; and
• is able to pay its debts as they mature and does not intend to incur, or believes that it will not incur, indebtedness that it will not be able to repay at its maturity.

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The seller will not make any representation or warranty, express or implied, that billed transition charges will be actually collected from customers.

Certain of the representations and warranties that the seller will make in the sale agreement involve conclusions of law. The seller will make those representations and warranties in order to reflect the understanding of the basis on which we are issuing the transition bonds and to reflect the agreement that if this understanding proves to be incorrect, the seller will be obligated to indemnify us.

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The representations and warranties made by the seller will survive the execution and delivery of the sale agreement and may not be waived by us or the seller if such waiver would cause the transition bonds not to be rated in one of the four highest categories by each of the applicable rating agencies. The seller will not be in breach of any representation or warranty as a result of any change in law by means of any legislative enactment, constitutional amendment or voter initiative.

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Covenants of the Seller

In the sale agreement, the seller will make the following covenants:

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• Subject to its right to assign its rights and obligations under the sale agreement, and for a successor to assume the seller's rights and obligations under the sale agreement, so long as any of the transition bonds are outstanding, the seller or such successor will (a) keep in full force and effect its existence and remain in good standing under the laws of the jurisdiction of its organization, obtain and preserve its qualifications to do business in those jurisdictions necessary to protect the validity and enforceability of the sale agreement and the other basic documents or to the extent necessary to perform its obligations under the sale agreement and the other basic documents and (b) continue to own and operate its transmission and distribution system (or, if by law, the seller is no longer required to own and/or operate both the transmission and distribution systems, then the seller's distribution system) in order and to the extent required to provide electric service to its customers with in Entergy Texas' service territory. The seller is not prohibited from selling, assigning or otherwise divesting any of its assets provided that if the seller sells, assigns or otherwise divests of all or any portion of its transmission and distribution system required to provide electric service to its customers in its service territory (or, if by law, the seller is no longer required to own and/operate both the transmission and distribution systems, and if the seller then sells, assigns or otherwise divests all or any portion of its distribution system required to provide electric service to its customers in its service territory), then the entity acquiring such distribution (and if owned and/or operated jointly, transmission) facilities is either required by law or agrees by contract to continue operating the facilities to provide electric services to the seller's customers in its service territory, and, in the case of a sale, assignment or divestment of a portion of the distribution (and, if applicable transmission) assets, the rating agency condition is satisfied.
• Except for the conveyances under the sale agreement or any lien under the Financing Act for the benefit of us, the bondholders or the trustee, the seller will not sell, pledge, assign or transfer, or grant, create, incur, assume or suffer to exist any lien on, any of the transition property, or any interest therein, and the seller will defend the right, title and interest of us and of the trustee on behalf of the related bondholders and itself, in, to and under the transition property against all claims of third parties claiming through or under the seller. The seller also will covenant that, in its capacity as seller, it will not at any time assert any lien against, or with respect to, any of the transition property.
• If the seller receives any payments in respect of the transition charges or the proceeds thereof other than in its capacity as the servicer, the seller agrees to pay all those payments to the servicer, on behalf of us, and to hold such amounts in trust for us and the trustee prior to such payment.
• The seller will notify us and the trustee promptly after becoming aware of any lien on any of the transition property, other than the conveyances under the sale agreement, or any lien under the basic documents or under the Financing Act or the UCC for our benefit or for the benefit of the bondholders and the trustee.
• The seller agrees to comply with its organizational or governing documents and all laws, treaties, rules, regulations and determinations of any governmental authority applicable to it, except to the extent that failure to so comply would not materially adversely affect our or the trustee's interests in the transition property or under the basic documents to which the seller is a party or the seller's performance of its obligations under the basic documents to which the seller is a party.
• So long as any of the transition bonds are outstanding, the seller will:

• treat the transition bonds as debt for all purposes and specifically as our debt, other than for financial reporting, state or federal regulatory or tax purposes;
• disclose in its financial statements that we and not the seller are the owner of the transition property and that our assets are not available to pay creditors of the seller or its affiliates (other than us);
• not own or purchase any transition bonds; and
• disclose the effects of all transactions between us and the seller in accordance with generally accepted accounting principles.

• The seller will agree that, upon the sale by the seller of transition property to us pursuant to the sale agreement:

• to the fullest extent permitted by law, including applicable Texas commission regulations and the Financing Act, we will have all of the rights originally held by the seller with respect to the related transition property, including the right (subject to the terms of the servicing agreement) to exercise any and all rights and remedies to collect any amounts payable by any retail customer or REP in respect of the transition property, notwithstanding any objection or direction to the contrary by the seller (and the seller agrees not to make any such objection or to take any such contrary action), and
• any payment by any retail customer or REP to us will discharge that customer's or REP's obligations, if any, in respect of the transition property to the extent of that payment, notwithstanding any objection or direction to the contrary by the seller.

• So long as any of the transition bonds are outstanding:

• in all proceedings relating directly or indirectly to the transition property, the seller will affirmatively certify and confirm that it has sold all of its rights and interests in and to such property (other than for financial reporting or tax purposes), and will not make any statement or reference in respect of the transition property that is inconsistent with our ownership interest (other than for financial accounting, state or federal regulatory, or tax purposes),
• the seller will not take any action in respect of the transition property except solely in its capacity as servicer pursuant to the servicing agreement or as otherwise contemplated by the basic documents,
• the seller will not sell transition property under a separate financing order in connection with the issuance of additional transition bonds unless the rating agency condition has been satisfied, and
• neither the seller nor the issuing entity will take any action, file any tax return, or make any election inconsistent with the treatment of the issuing entity, for U.S. federal income tax purposes and, to the extent consistent with applicable state tax law, state income and franchise tax purposes, as a disregarded entity that is not separate from the seller (or, if relevant, from another sole owner of us, as the issuing entity).

• The seller will execute and file the filings required by law to fully preserve, maintain, protect and perfect our ownership interest in and the trustee's lien on the transition property, including all filings required under the Financing Act and the Uniform Commercial Code relating to the transfer of the ownership of the rights and interests related to the transition bonds under the financing order by the seller to us and the pledge of the transition property to the trustee. The seller will institute any action or proceeding necessary to compel performance by the Texas commission, the State of Texas or any of their respective agents of any of their obligations or duties under the Financing Act, the financing order or any issuance advice letter. The seller also will take those legal or administrative actions, including defending against or instituting and pursuing legal actions and appearing or testifying at hearings or similar proceedings, in each case, as may be reasonably necessary (i) to protect us, the bondholders and the trustee from claims, state actions or other actions or proceedings of third parties which, if successfully pursued, would result in a breach of any representation or warranty of the seller in the sale agreement and (ii) to block or overturn any attempts to cause a repeal of, modification of or supplement to the Financing Act, the financing order, any issuance advice letter or the rights of holders by legislative enactment or constitutional amendment that would be materially adverse to us, the trustee or the bondholder or which would otherwise cause an impairment of our rights or those of the bondholders and the trustee, and the seller will pay the costs of any such actions or proceedings.
• Even if the sale agreement or the indenture is terminated, the seller will not, prior to the date which is one year and one day after the termination of the indenture and payment in full of the transition bonds or any other amounts owed under the indenture, petition or otherwise invoke or cause us to invoke the process of any court or government authority for the purpose of commencing or sustaining a case against us under any federal or state bankruptcy, insolvency or similar law, appointing a receiver, liquidator, assignee, trustee, custodian, sequestrator or other similar official or any substantial part of our property, or ordering the winding up or liquidation of our affairs.
• So long as any of the transition bonds are outstanding, the seller will, and will cause each of its subsidiaries to, pay all material taxes, assessments and governmental charges imposed upon it or any of its properties or assets or with respect to any of its franchises, business, income or property before any penalty accrues if the failure to pay any such taxes, assessments and governmental charges would, after any applicable grace periods, notices or other similar requirements, result in a lien on the transition property; provided that no such tax need be paid if the seller or any of its affiliates is contesting the same in good faith by appropriate proceedings promptly instituted and diligently conducted and if the seller or such affiliate has established appropriate reserves as shall be required in conformity with generally accepted accounting principles.
• The seller will not withdraw the filing of any issuance advice letter with the Texas commission.
• The seller will make all reasonable efforts to keep each tariff in full force and effect at all times.
• Promptly after obtaining knowledge of any breach in any material respect of its representations, warranties or covenants in the sale agreement, the seller will notify us, the trustee, the Texas commission and the rating agencies of the breach.
• The seller will use the proceeds of the sale of the transition property in accordance with the financing order and the Financing Act.
• Upon our request, the seller will execute and deliver such further instruments and do such further acts as may be necessary to carry out more effectively the provisions and purposes of the sale agreement.

Indemnification

The seller will indemnify, defend and hold harmless us, the trustee (for itself and for the benefit of the related bondholders) and any of our and the trustee's respective officers, directors, employees and agents against:

• any and all amounts of principal and interest on the transition bonds not paid when due or when scheduled to be paid,
• any deposits required to be made by or to us under the basic documents or the financing order which are not made when required, and
• any and all other liabilities, obligations, losses, claims, damages, payment, costs or expenses incurred by any of these persons

in each case, as a result of a breach by the seller of any of its representations, warranties and covenants in the sale agreement.

The seller will indemnify us and the trustee (for itself and for the benefit of the bondholders) and each of their respective officers, directors, employees, trustees, managers, and agents for, and defend and hold harmless each such person from and against, any and all taxes (other than taxes imposed on the bondholders as a result of their ownership of a transition bonds) that may at any time be imposed on or asserted against any such person as a result of (i) the sale of the transition property to us, (ii) our ownership and assignment of the transition property, (iii) the issuance and sale by us of the transition bonds or (iv) the other transactions contemplated in the basic documents, including any franchise, sales, gross receipts, general corporation, tangible personal property, privilege or license taxes but excluding, any taxes imposed as a result of a failure of such person to withhold or remit taxes with respect to payments on any transition bonds.

In addition, the seller will indemnify, defend and hold harmless the trustee (for itself), our independent manager(s) and any of the Trustee's or the independent manager's respective affiliates, officers, directors, employees and agents against any and all liabilities, obligations, losses, claims, damages, payments, costs or expenses incurred by any of these parties as a result of the seller's breach of any of its representations and warranties or covenants contained in the sale agreement, except to the extent of such losses either resulting from the willful misconduct, bad faith or gross negligence of such indemnified persons or resulting from a breach of a representation or warranty made by such indemnified persons in the indenture or any related documents that gives rise to the seller's breach.

The seller will indemnify the servicer (if the servicer is not the seller) for the costs of any action instituted by the servicer pursuant to the servicing agreement which are not paid as an operating expense under the indenture.

The indemnification provided for in the sale agreement will survive any repeal of, modification of, or supplement to, or judicial invalidation of, the Financing Act or any financing order and will survive the resignation or removal of the trustee, or the termination of the sale agreement and will rank in priority with other general, unsecured obligations of the seller.

Successors to the Seller

Any entity which becomes the successor by merger, sale, reorganization, transfer, lease, management contract or otherwise to all or substantially all of the electric distribution system business assets of Entergy Texas may assume the rights and obligations of Entergy Texas under the sale agreement. If transmission and distribution are not provided by a single entity after any such transaction, the entity which provides distribution service directly to retail customers taking service at facilities, premises or loads located in Entergy Texas' service territory may assume Entergy Texas' rights and obligations under the sale agreement. So long as the conditions of any such assumption are met, Entergy Texas will automatically be released from its obligations under the sale agreement. The conditions include that:

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• immediately after giving effect to any transaction referred to in this paragraph, no representation, warranty or covenant made in the sale agreement will have been breached, and no servicer default, and no event that, after notice or lapse of time, or both, would become a servicer default will have occurred and be continuing,
• the successor must execute an agreement of assumption to perform all of the obligations of the seller under the sale agreement;
• officers' certificates and opinions of counsel specified in the sale agreement will have been delivered to us, the trustee and the rating agencies, and
• the rating agencies specified in the sale agreement will have received prior written notice of the transaction.

Amendment

The sale agreement may be amended in writing by the seller and us, if notice of the amendment is provided by us to each rating agency and the rating agency condition is satisfied, with the consent of the trustee and, with respect to amendments that would increase ongoing qualified costs as defined in the financing order, the consent or deemed consent of the Texas commission. If any such amendment would adversely affect the interest of any bondholder in any material respect, the consent of the holders of a majority of each affected tranche of transition bonds is also required.

THE SERVICING AGREEMENT

The following summary describes the material terms and provisions of the servicing agreement pursuant to which the servicer is undertaking to service the transition property. We and Entergy Texas have filed the form of the servicing agreement as an exhibit to the registration statement of which this prospectus forms a part. This summary does not purport to be complete and is subject and qualified by reference to the provisions of the servicing agreement.

Servicing Procedures

The servicer, as our agent, will manage, service and administer, and bill and collect payments in respect of the transition property according to the terms of the servicing agreement. The servicer's duties will include: calculating, billing and collecting the transition charges; responding to inquiries of retail customers, REPs (if any), the Texas commission or any other governmental authority regarding the transition property; calculating electricity usage; accounting for collections; furnishing periodic reports and statements to us, the rating agencies and to the trustee; making all filings with the Texas commission and taking all other actions necessary to perfect our ownership interests in and the trustee's lien on the transition property; making all filings and taking such other action as may be necessary to perfect the trustee's lien on and security interest in all collateral that is not transition property; selling, as our agent, as our interests may appear, defaulted or written off accounts; a nd taking all necessary action in connection with true-up adjustments. The servicer is required to notify us, the trustee and the rating agencies in writing of any laws or Texas commission regulations promulgated after the execution of the servicing agreement that have a material adverse effect on the servicer's ability to perform its duties under the servicing agreement. The servicer is also authorized to execute and deliver documents and to make filings and participate in proceedings on our behalf.

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In addition, if we request, the servicer will provide to us public information about the servicer and any material information about the transition property that is reasonably available, as may be reasonably necessary to enable us to monitor the servicer's performance, and, so long as any transition bonds are outstanding, any information necessary to calculate the transition charges applicable to each customer class. The servicer will also prepare any reports to be filed by us with the SEC and will cause to be delivered required opinions of counsel to the effect that all filings with the Texas commission necessary to preserve, protect and perfect the interests of the trustee in the transition property have been made.

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Servicing Standards and Covenants

The servicing agreement will require the servicer, in servicing and administering the transition property, to employ or cause to be employed procedures and exercise or cause to be exercised the same care and diligence it customarily employs and exercises with respect to billing and collection activities it conducts for its own account and, if applicable, for others.

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In the event that REPs are permitted to collect the transition charges, the servicing agreement requires the servicer to implement procedures and policies to ensure that REPs remit the transition charges collected from their retail customers to the servicer on behalf of us and the bondholders. These procedures and policies include creating and maintaining records that would permit prompt transfer of billing responsibilities in the event that a REP defaults. The servicer will also monitor payments from REPs and will take all permitted steps to ensure and collect payment by the REPs. The servicer will impose collection policies on the REPs, as permitted under the financing order and the rules of the Texas commission. Any agreement entered into between the servicer and a defaulted REP must satisfy the rating agency condition.

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The servicing agreement will require the servicer to (i) manage, service, administer and make collections in respect of the transition property with reasonable care and in material compliance with applicable requirements of law, including all applicable regulations of the Texas commission, (ii) follow customary standards, policies and procedures for the industry in Texas in performing its duties, (iii) use all reasonable efforts, consistent with its customary servicing procedures, to enforce, and maintain rights in respect of, the transition property and to bill and collect the transition charges, (iv) comply with all requirements of law including all applicable regulations of the Texas commission applicable to and binding on it relating to the transition property, (v) file all notices with the Texas commission described in the Financing Act and file and maintain the effectiveness of UCC financing statements with respect to the property transferred under the sale agreement, and (v i) take such other action on our behalf to ensure that the lien of the trustee on the collateral remains perfected and of first priority.

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The servicer is responsible for instituting any proceeding to compel performance by the State of Texas or the Texas commission of their respective obligations under the Financing Act, the financing order, the issuance advice letter, any true-up adjustment or any tariff. The servicer is also responsible for instituting any proceeding as may be reasonably necessary to block or overturn any attempts to cause a repeal, modification or judicial invalidation of the Financing Act or the financing order or the rights of holders of transition property by legislative enactment, voter initiative or constitutional amendment that would be materially adverse to holders or which would cause an impairment of the rights of the issuing entity or the holders. In any proceedings related to the exercise of the power of eminent domain by any municipality to acquire a portion of Entergy Texas' electric distribution facilities, the servicer will assert that the court ordering such condemnation must treat such municipality as a s uccessor to Entergy Texas under the Financing Act and the financing order. The servicing agreement also designates the servicer as the custodian of our records and documents. The servicing agreement requires the servicer to indemnify us, our independent manager(s) and the trustee (for itself and for your benefit) for any negligent act or omission relating to the servicer's duties as custodian.

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The PUCT Guaranteed Transition Charge Adjustment Process

Among other things, the servicing agreement requires the servicer to file, and the Financing Act requires the Texas commission to approve, annual true-up adjustments to the rate at which transition charges are billed to customers. For more information on the true-up process, please read "Entergy Texas' Financing Order-PUCT Guaranteed True-Ups." These adjustments are to be based on actual transition charge collections and updated assumptions by the servicer as to projected future billed revenue from which transition charges are allocated, projected electricity usage during the next period, expected delinquencies and write-offs and future payments and expenses relating to the transition property and the transition bonds.

In addition to the annual true-up adjustments, the financing order provides for the servicer to make true-up adjustments more frequently during the term of the transition bonds to correct any undercollection or overcollection, as provided in the financing order, in order to assure timely payment of transition bonds based on rating agency and bondholder considerations. The financing order also requires the servicer to make mandatory interim true-up adjustments semi-annually (or quarterly during the period between the expected final maturity and the legal final maturity of the last bond tranche or class) if the servicer forecasts that transition charge collections will be insufficient to make all scheduled payments of principal, interest and other amounts in respect of the transition bonds during the current or next succeeding semi-annual or quarterly period (as applicable) and to replenish any draws upon the capital subaccount.

The Texas commission must be given at least 15 days' notice prior to making either the annual true-up adjustment or an interim true-up adjustment. In the event any correction to a true-up adjustment due to mathematical errors in the calculation of the adjustment or otherwise is necessary, it will be made in a future true-up adjustment. Interim true-up adjustments may not be made more frequently than every three months if quarterly transition bond payments are required or every six months if semi-annual transition bond payments are required; however, interim adjustments may occur quarterly for any transition bonds remaining outstanding during the fourteenth and fifteenth years after the transition bonds are issued.

In addition to the annual true-up adjustment the servicer may file for a non-standard true-up adjustment if the forecasted billing units for one or more of the retail customer classes for an upcoming period decreases by more than 10% compared to the threshold billing units for such class set forth in the financing order. Non-standard true-up adjustments under the financing order must be filed with the Texas commission ninety (90) days before the date of the proposed adjustment and will be determined by a contested proceeding limited to determining if the non-standard true-up complies with the financing order. If the Texas commission does not issue an order by the proposed adjustment date, the servicer will be allowed to implement its proposed changes and any modifications subsequently ordered by the Texas commission will be made in the next true-up filing. Any such modification could result in delays in payments on the transition bonds.

An interim true-up adjustment will allocate amounts to customer classes in the same manner as amounts were allocated in the most recent annual true-up adjustment or non-standard true-up adjustment, as applicable.

As part of each true-up adjustment, the servicer will calculate the transition charges necessary to result in:

• all accrued and unpaid interest being paid in full,
• the outstanding principal balance of the transition bonds equaling the amount provided in the expected amortization schedule,
• the amount on deposit in the capital subaccount equaling the required capital level, and
• all other fees, expenses and indemnities of the issuing entity (up to the authorized amounts of such payments set forth in the financing order) being paid.

The servicer will file true-up adjustments and, in accordance with the related financing order, the Texas commission has the right to review the adjustments. Under the financing order, the Texas commission has fifteen days to review annual or interim true-up adjustment filings. The Texas commission's rights of review are limited to (i) in the case of an annual or an interim true-up adjustment, arithmetic errors and (ii) in the case of a non-standard true-up adjustment, whether the non-standard true-up complies with the provisions of the financing order. The servicer will implement adjustments to the transition charges annually, unless more frequent adjustments are required as described above.

Remittances to Collection Account

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The servicer will make periodic payments on account of transition charge collections to the trustee for deposit in the collection account. The servicer will remit estimated collection payments on the transition charges to the collection account each business day. For a description of the allocation of the deposits, please read "Security for the Transition Bonds-How Funds in the Collection Account Will Be Allocated." Until transition charge collections are remitted to the collection account, the servicer will not segregate them from its general funds. Please read "Risk Factors-Risks Associated With Potential Bankruptcy Proceedings of the Seller or the Servicer" in this prospectus.

Commencing [22] days after the issuance of the transition bonds, the servicer will remit to the trustee all estimated transition charges collections estimated to be collected on such remittance date, taking into account its estimated gross write-offs by revenue class. Transition charges are estimated to have been collected by the servicer on a date following the billing date which reflects the average number of days customers' bills remain outstanding. No less often than annually, but more often at the discretion of the servicer if it believes such reconciliations are appropriate, the servicer and the trustee will reconcile remittances of estimated payments arising from transition charges with actual transition charge payments received by the servicer to more accurately reflect the amount of billed transition charges that should have been remitted, based on the amounts actually received. To the extent the remittances of billed payments arising from the transition charges exceed the amounts that should have been remitted based on actual system-wide write-offs, the servicer will be entitled to receive a payment from the trustee in an amount equal to the excess remittance, or to withhold the excess amount from any subsequent remittance to the trustee. To the extent the remittances of estimated payments arising from the transition charges are less than the amount that should have been remitted, the servicer will remit the amount of the shortfall to the trustee within two business days. Although the servicer will remit estimated payments arising from the transition charges to the trustee, the servicer is not obligated to make any payments on the transition bonds. In the event that the servicer does not collect in full the amounts owing on bills from customers, such partial payments will be first applied to any amounts due with respect to customer deposits. Next, the servicer will allocate the partial payment to all electric service charges of the servicer and transition charges pro rata based on the total am ount billed, with amounts owed for transition charges allocated before amounts owed for late charges. Finally, any remaining moneys will be allocated to taxes and charges billed to customers. The portion owed in respect of transition charges may be further allocated as between other affiliates of Entergy Texas who have issued or may in the future issue transition bonds under the Financing Act or under Subchapter G of Chapter 39 of PURA.

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In the event that the servicer makes changes to its current computerized customer information system which would allow the servicer to monitor payment and collection activity more efficiently or accurately than is being done today, the servicing agreement will allow the servicer to substitute such remittance procedures for the remittance procedures described above and otherwise modify the remittance procedures described above as may be appropriate in the interests of efficiency, accuracy, cost and/or system capabilities. However, the servicer will not be allowed to make any modification or substitution that will materially adversely affect the bondholders. The servicer must also give notice to the rating agencies of any such computer system changes no later than 60 business days after the date on which all retail customer accounts are billed on the new system.

Servicing Compensation

The servicer will be entitled to receive an annual servicing fee in an amount equal to:

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• $290,000 or
• if Entergy Texas or any of its affiliates is not the servicer, an amount agreed upon by the successor servicer and us; however, the Texas commission must approve the appointment of the successor servicer, and the annual servicing fee may not exceed 0.60% of the aggregate initial principal amount of all outstanding transition bonds without the approval of the Texas commission and the satisfaction of the rating agency condition.

The servicing fee shall be paid semi-annually with half of the servicing fee being paid on each payment date. The servicer will also be entitled to retain any interest earnings on transition charge collections prior to remittance to the collection account. However, if the servicer has failed to remit transition charge collections to the collection account on the same business day that the servicer received such transition charge collections on more than three occasions during the period that the transition bonds are outstanding, then thereafter the servicer will be required to pay to the trustee any interest earnings on related transition charge collections received by the servicer and invested by the servicer during each collection period prior to remittance to the collection account for so long as the related transition bonds remain outstanding. The trustee will pay the servicing fee on each payment date (together with any portion of the servicing fee that remains unpaid from prior payment dates) to the extent of available funds prior to the distribution of any interest on and principal of the transition bonds. So long as Entergy Texas or an affiliate is the servicer, Entergy Texas' servicing compensation will be included as an identified revenue credit and reduce revenue requirements for setting its transmission and distribution rates. The expenses of servicing shall likewise be included as a cost of service in setting such rates.

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Servicer Representations and Warranties; Indemnification

In the servicing agreement, the servicer will represent and warrant to us, as of the date of the issuance of the transition bonds, among other things, that:

• the servicer is duly organized, validly existing and is in good standing under the laws of the state of its organization, with requisite corporate or other power and authority to own its properties, to conduct its business as such properties are currently owned and such business is presently conducted by it, and to service the transition property and hold the records related to the transition property, and to execute, deliver and carry out the terms of the servicing agreement;
• the servicer is duly qualified to do business, is in good standing and has obtained all necessary licenses and approvals in all jurisdictions in which the ownership or lease of property or the conduct of its business (including the servicing of the transition property) requires such qualifications, licenses or approvals (except where a failure to qualify would not be reasonably likely to have a material adverse effect on the servicer's business, operations, assets, revenues or properties or to its servicing of the transition property);
• the execution, delivery and performance of the terms of the servicing agreement have been duly authorized by all necessary action on the part of the servicer under its organizational or governing documents and laws;
• the servicing agreement constitutes a legal, valid and binding obligation of the servicer, enforceable against it in accordance with its terms, subject to applicable insolvency, reorganization, moratorium, fraudulent transfer and other laws relating to or affecting creditors' rights generally from time to time in effect and to general principles of equity, regardless of whether considered in a proceeding in equity or at law;
• the consummation of the transactions contemplated by the servicing agreement does not conflict with, result in any breach of, nor constitute a default under the servicer's organizational documents or any indenture or other agreement or instrument to which the servicer is a party or by which it or any of its property is bound, result in the creation or imposition of any lien upon the servicer's properties pursuant to the terms of any such indenture or agreement or other instrument (other than any lien that may be granted under the basic documents or any lien created pursuant to Section 39.309 of the Financing Act) or violate any existing law or any existing order, rule or regulation applicable to the servicer;
• each report or certificate delivered in connection with an issuance advice letter or delivered in connection with any filing made to the Texas commission by us with respect to the transition charges or true-up adjustments will be true and correct in all material respects, or, if based in part on or containing assumptions, forecasts or other predictions of future events, such assumptions, forecasts or predictions will be reasonably based on historical performance (and facts known to the servicer on the date such report or certificate is delivered);
• no governmental approvals, authorizations, consents, orders or other actions or filings with any governmental authority, are required for the servicer to execute, deliver and perform its obligations under the servicing agreement except those which have previously been obtained or made or are required to be made by the servicer in the future; and
• no proceeding or investigation is pending and, to the servicer's knowledge, no proceeding or investigation is threatened before any governmental authority having jurisdiction over the servicer or its properties, asserting the invalidity of the servicing agreement or the other basic documents, seeking to prevent issuance of transition bonds or the consummation of the transactions contemplated by the servicing agreement or other basic documents, seeking a determination that could reasonably be expected to materially and adversely affect the performance by the servicer of its obligations under or the validity or enforceability of the servicing agreement or the other basic documents or which could reasonably be expected to adversely affect the U.S. federal income tax or state income or franchise tax classification of the transition bonds as debt.

The servicer will not be responsible for any ruling, action or delay of the Texas commission, except those caused by the servicer's failure to file required applications in a timely and correct manner or other breach of its duties under the servicing agreement. The servicer also will not be liable for the calculation of the transition charges and adjustments, including any inaccuracy in the assumptions made in the calculation, so long as the servicer has acted in good faith and has not acted in an imprudent manner.

The Servicer Will Indemnify Us, Other Entities and the Texas Commission in Limited Circumstances

The servicer will indemnify, defend and hold harmless us and the trustee (for itself and for your benefit) and the independent manager(s) and each of their respective officers, directors, employees and agents from any and all liabilities, obligations, losses, damages, payments and claims, and reasonable costs or expenses, arising as a result of:

• the servicer's willful misconduct, bad faith or negligence in the performance of, or reckless disregard of, its duties or observance of its covenants under the servicing agreement,
• the servicer's breach of any of its representations or warranties,
• litigation and related expenses relating to its status and obligations as servicer (other than any proceeding the servicer is required to institute under the servicing agreement), and
• any finding that interest payable to a REP (if any) with respect to disputed funds must be paid by us or from the transition property.

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The servicer will not be liable, however, for any liabilities, obligations, losses, damages, payments or claims, or reasonable costs or expenses, resulting from the willful misconduct, bad faith or gross negligence of the party seeking indemnification.

In addition, the servicer will agree to indemnify the Texas commission (for the benefit of retail electric customers) in connection with any liabilities, obligations, losses, damages, payments and claims, including any increase in servicing fees as described under "-Servicing Compensation," resulting from the servicer's willful misconduct, bad faith or negligence in performance of its duties or observance of its covenants under the servicing agreement. Any such indemnity payments made to the Texas commission for the benefit of the retail electric customers will be remitted to the trustee promptly for deposit in the collection account.

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The servicing agreement will also provide that the servicer will release us and our independent manager(s), the trustee and each of our respective officers, directors and agents from any actions, claims and demands which the servicer, in the capacity of servicer or otherwise, may have against those parties relating to the transition property or the servicer's activities, other than actions, claims and demands arising from the willful misconduct, bad faith or gross negligence of the parties.

Evidence as to Compliance

The servicing agreement will provide that the servicer will furnish annually to us, the trustee and the rating agencies, on or before March 31 of each year, beginning March 31, 2010 or, if earlier, on the date on which the annual report on Form 10-K relating to the bonds is required to be filed, a report on its assessment of compliance with specified servicing criteria as required by Item 1122(a) of Regulation AB, during the preceding 12 months ended December 31(or preceding period since the closing date of the issuance of the transition bonds in the case of the first statement), together with a certificate by an officer of the servicer certifying the statements set forth therein.

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The servicing agreement also provides that a firm of independent public accountants, at the servicer's expense, will furnish annually to us, the trustee and the rating agencies on or before March 31 of each year, beginning March 31, 2010 or, if earlier, on the date on which the annual report on Form 10-K relating to the bonds is required to be filed, an annual accountant's report, which will include an attestation report that attests to and reports on the servicer's assessment report described in the immediately preceding paragraph, to the effect that the accounting firm has performed agreed upon procedures in connection with the servicer's compliance with its obligations under the servicing agreement during the preceding 12 months, identifying the results of the procedures and including any exceptions noted. The report will also indicate that the accounting firm providing the report is independent of the servicer within the meaning of the rules of the Public Company Accounting Oversight Board.< /P>

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Copies of the above reports will be filed with the Texas commission. You may also obtain copies of the above statements and certificates by sending a written request addressed to the trustee.

The servicer will also be required to deliver monthly reports and copies of any filings made with the Texas commission to us and to the trustee and the rating agencies. In addition, the servicer is required to make certain disclosures to its retail customers and REPs (if any), and must provide information about the REPs (if any) as is reasonably requested by the rating agencies.

The servicer will also be required to deliver to us, the trustee and the rating agencies monthly reports setting forth certain information relating to collections of transition charges received during the preceding calendar month and, shortly before each payment date, a report setting forth the amount of principal and interest payable to bondholders on such date, the difference between the principal outstanding on the transition bonds and the amounts specified in the related expected amortization schedule after giving effect to any such payments, and the amounts on deposit in the capital subaccount and excess funds subaccount after giving effect to all transfers and payments to be made on such payment date. The servicer is required to file copies of these reports with the Texas commission.

In addition, the servicer is required to send copies of each filing or notice evidencing a true-up adjustment to us, the trustee and the rating agencies. The servicer is also required to prepare and deliver certain disclosures to its retail customers and to REPs (if any), and to provide to the rating agencies any non-confidential and non-proprietary information about the REPs (if any) as is reasonably requested by the rating agencies.

Matters Regarding the Servicer

The servicing agreement will provide that Entergy Texas may not resign from its obligations and duties as servicer thereunder, except when Entergy Texas delivers to the trustee and the Texas commission an opinion of independent legal counsel to the effect that Entergy Texas' performance of its duties under the servicing agreement is no longer permissible under applicable law. No resignation by Entergy Texas as servicer will become effective until a successor servicer has assumed Entergy Texas' servicing obligations and duties under the servicing agreement.

The servicing agreement will further provide that neither the servicer nor any of its directors, officers, employees, and agents will be liable to us or to the trustee, our managers, you or any other person or entity, except as provided under the servicing agreement, for taking any action or for refraining from taking any action under the servicing agreement or for good faith errors in judgment. However, neither the servicer nor any person or entity will be protected against any liability that would otherwise be imposed by reason of willful misconduct, bad faith or negligence in the performance of its duties. The servicer and any of its directors, officers, employees or agents may rely in good faith on the advice of counsel reasonably acceptable to the trustee or on any document submitted by any person respecting any matters under the servicing agreement. In addition, the servicing agreement will provide that the servicer is under no obligation to appear in, prosecute, or defend any legal action, except a s provided in the servicing agreement at our expense.

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Under the circumstances specified in the servicing agreement, any entity which becomes the successor by merger, sale, transfer, lease, management contract or otherwise to all or substantially all of the servicer's electric transmission and distribution business (or, subject to the satisfaction of the rating agency condition, part of the distribution system business assets) may assume all of the rights and obligations of the servicer under the servicing agreement. If transmission and distribution are not provided by a single entity after any such transaction, the entity which provides distribution service directly to retail customers taking service at facilities, premises located in the servicer's Texas service territory may assume all of the servicer's rights and obligations under the servicing agreement. The following are conditions to the transfer of the duties and obligations to a successor servicer:

• immediately after the transfer, no representation, warranty or covenant made by the servicer in the servicing agreement will have been breached and no servicer default or event which after notice of, lapse of time or both, would become a servicer default, has occurred and is continuing;
• the successor to the servicer must execute an agreement of assumption to perform every obligation of the servicer under the servicing agreement;
• the servicer has delivered to us, the trustee and the rating agencies an officer's certificate and an opinion of counsel stating that the transfer complies with the servicing agreement and all conditions to the transfer under the servicing agreement have been complied with;
• the servicer has delivered to us and to the trustee and the rating agencies an opinion of counsel stating either that all necessary filings, including those with the Texas commission, to preserve, perfect and maintain the priority of our interests in and the trustee's lien on the transition property, have been made or that no filings are required;
• the servicer has given prior written notice to the rating agencies; and
• the servicer has delivered to us, the Texas commission, the trustee and the rating agencies a no material adverse tax change opinion of independent tax counsel regarding such transfer.

So long as the conditions of any such assumptions are met, then the prior servicer will automatically be released from its obligations under the servicing agreement.

The servicing agreement will permit the servicer to appoint any person to perform any or all of its obligations. However, unless the appointed person is an affiliate of Entergy Texas, the servicer must receive notice from the rating agencies that the appointment will not result in a reduction or withdrawal of the then current ratings on any tranche of transition bonds. In the event such notice is not received from the rating agencies, the servicer must remain obligated and liable under the servicing agreement.

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Servicer Defaults

Servicer defaults under the servicing agreement will include, among other things:

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• any failure by the servicer to remit payments arising from the transition charges into the collection account as required under the servicing agreement, which failure continues unremedied for five business days after written notice from us or the trustee is received by the servicer or after discovery of the failure by an officer of the servicer;

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• any failure by the servicer to duly perform its obligations to make transition charge adjustment filings in the time and manner set forth in the servicing agreement, which failure continues unremedied for a period of five days;
• any failure by the servicer or, if the servicer is an affiliate of Entergy Texas, by Entergy Texas to observe or perform in any material respect any covenants or agreements in the servicing agreement or the other basic documents to which it is a party in its capacity as servicer, which failure materially and adversely affects the rights of related bondholders and which continues unremedied for 60 days after written notice of this failure has been given to the servicer or, if the servicer is an affiliate of Entergy Texas, by Entergy Texas by us or by the trustee or after such failure is discovered by an officer of the servicer;
• any representation or warranty made by the servicer in the servicing agreement or any basic document will prove to have been incorrect in a material respect when made, which has a material adverse effect on us or the bondholders and which material adverse effect continues unremedied for a period of 60 days after the giving of written notice to the servicer by us or the trustee after such failure is discovered by an officer of the servicer; and
• certain events of bankruptcy, insolvency, receivership or liquidation of the servicer.

Rights Upon a Servicer Default

In the event of a servicer default that remains unremedied, the trustee will upon the instruction of the Texas commission or the holders of transition bonds evidencing not less than a majority in principal amount of then outstanding transition bonds, terminate all the rights and obligations of the servicer under the servicing agreement, other than the servicer's indemnity obligation and obligation to continue performing its functions as servicer until a successor servicer is appointed. After the termination, the trustee will appoint a successor servicer who will succeed to all the responsibilities, duties and liabilities of the servicer under the servicing agreement and will be entitled to similar compensation arrangements.

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In addition, when a servicer defaults through failure to remit storm recovery charges as described in the first bullet above under "Servicer Defaults," the bondholders (subject to the provisions of the indenture) and the trustee as beneficiary of any statutory lien permitted by the Financing Act will be entitled to (i) apply to a Travis County, Texas district court for sequestration and payment of revenues arising from the transition property, (ii) foreclose on or otherwise enforce the lien and security interests in the transition property and (iii) apply to the Texas commission for an order that amounts arising from the transition charges be transferred to a separate account for the benefit of the bondholders. If, however, a bankruptcy trustee or similar official has been appointed for the servicer, and no servicer default other than an appointment of a bankruptcy trustee or similar official has occurred, that trustee or official may have the power to prevent the trustee or the b ondholders from effecting a transfer of servicing. Please read "Risk Factors-Risks Associated With Potential Bankruptcy Proceedings of the Seller or the Servicer" and "How a Bankruptcy May Affect Your Investment" in this prospectus.

Under certain circumstances, the trustee may petition the Texas commission or a court of competent jurisdiction for the appointment of a successor servicer which, among other conditions, satisfies the rating agency condition. In no event will the trustee be liable for its appointment of a successor servicer. If Entergy Texas or any of its affiliates is not the servicer, the servicing fee will be negotiated by the successor servicer and us; however, the Texas commission must approve the appointment of, and any annual servicing fee in excess of 0.60% of the aggregate initial principal amount of all outstanding transition bonds for, any successor servicer. In addition, the servicing fee for any replacement servicer may not exceed 0.60% of the aggregate initial principal amount of all outstanding transition bonds unless the rating agency condition is satisfied.

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Waiver of Past Defaults

Holders of transition bonds evidencing not less than a majority in principal amount of the then outstanding transition bonds, on behalf of all bondholders, together with the Texas commission, may waive any default by the servicer in the performance of its obligations under the servicing agreement and its consequences, except a default in making any required remittances to the collection account under the servicing agreement. The servicing agreement will provide that no waiver will impair the bondholders' rights relating to subsequent defaults.

Successor Servicer

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If for any reason a third-party assumes the role of the servicer under the servicing agreement, the servicing agreement will require the servicer to cooperate with us and with the trustee and the successor servicer in terminating the servicer's rights and responsibilities under the servicing agreement, including the transfer to the successor servicer of all cash amounts then held by the servicer for remittance or subsequently acquired. The Texas commission must approve the appointment of any successor servicer and the annual servicing fee for the successor servicer may not exceed 0.60% of the aggregate initial principal amount of all outstanding transition bonds without approval of the Texas commission and satisfaction of the rating agency condition. The servicing agreement will provide that the servicer will be liable for the reasonable costs and expenses incurred in transferring the transition property records to the successor servicer and amending the servicing agreement to reflect such succession if such transfer is the result of a servicer default. In all other cases such costs and expenses will be paid by the party incurring them.

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Amendment

The servicing agreement may be amended in writing by the servicer and us, if the rating agency condition has been satisfied, with the prior written consent of the trustee and, with respect to amendments that would increase ongoing qualified costs as defined in the applicable financing order, the consent or deemed consent of the Texas commission. If the Texas commission adopts rules or regulations the effect of which is to modify or supplement any provision of the servicing agreement related to the credit and deposit requirements for retail electric providers and which the rating agencies have confirmed will not result in a suspension, withdrawal or downgrade of the ratings of the transition bonds, the servicing agreement will be so modified or supplemented on the effective date of such rule or regulation without the necessity of any further action by any party to the servicing agreement.

HOW A BANKRUPTCY MAY AFFECT YOUR INVESTMENT

Challenge to True Sale Treatment

Entergy Texas will represent and warrant that the transfer of the transition property in accordance with the sale agreement constitutes a true and valid sale and assignment of that transition property by Entergy Texas to us. It will be a condition of closing for the sale of transition property pursuant to the sale agreement that Entergy Texas will take the appropriate actions under the Financing Act, including filing a notice of transfer of an interest in the transition property, to perfect this sale. The Financing Act provides that a transfer of transition property by an electric utility to an assignee which the parties have in the governing documentation expressly stated to be a sale or other absolute transfer, in a transaction approved in a financing order, shall be treated as an absolute transfer of all the transferor's right, title and interest, as in a "true sale" under applicable creditors' rights principles, and not as a pledge or other financing, of the relevant transition property. We and Entergy Texas will treat such a transaction as a sale under applicable law. However, we expect that transition bonds will be reflected as debt on Entergy Texas' consolidated financial statements. In addition, we anticipate that the transition bonds will be treated as debt of Entergy Texas for U.S. federal income tax purposes. Please read "Material U.S. Federal Income Tax Consequences." In the event of a bankruptcy of a party to the sale agreement, if a party in interest in the bankruptcy were to take the position that the transfer of the transition property to us pursuant to the sale agreement was a financing transaction and not a true sale under applicable creditors' rights principles, there can be no assurance that a court would not adopt this position. Even if a court did not ultimately recharacterize the transaction as a financing transaction, the mere commencement of a bankruptcy of Entergy Texas and the attendant possible uncertainty surrounding the trea tment of the transaction could result in delays in payments on the transition bonds.

In that regard, we note that the bankruptcy court in In re: LTV Steel Company, Inc., et al., 274 B.R. 278 (Bankr. N. D. Oh. 2001) issued an interim order that observed that a debtor, LTV Steel Company, which had previously entered into securitization arrangements with respect both to its inventory and its accounts receivable may have "at least some equitable interest in the inventory and receivables, and that this interest is property of the Debtor's estate.... sufficient to support the entry of" an interim order permitting the debtor to use proceeds of the property sold in the securitization. 274 B.R. at 285. The court based its decision in large part on its view of the equities of the case.

LTV and the securitization investors subsequently settled their dispute over the terms of the interim order and the bankruptcy court entered a final order in which the parties admitted and the court found that the pre-petition transactions constituted "true sales." The court did not otherwise overrule its earlier ruling. The LTV memorandum opinion serves as an example of the pervasive equity powers of bankruptcy courts and the importance that such courts may ascribe to the goal of reorganization, particularly where the assets sold are integral to the ongoing operation of the debtor's business.

We and Entergy Texas have attempted to mitigate the impact of a possible recharacterization of a sale of transition property as a financing transaction under applicable creditors' rights principles. The sale agreement will provide that if the transfer of the applicable transition property is thereafter recharacterized by a court as a financing transaction and not a true sale, the transfer by Entergy Texas will be deemed to have granted to us on behalf of ourselves and the trustee a first priority security interest in all Entergy Texas' right, title and interest in and to the transition property and all proceeds thereof. In addition, the sale agreement will require the filing of a notice of security interest in the related transition property and the proceeds thereof in accordance with the Financing Act. As a result of this filing, we would be a secured creditor of Entergy Texas and entitled to recover against the collateral or its value. This does not, however, eliminate the risk of payment delays or red uctions and other adverse effects caused by a bankruptcy of Entergy Texas. Further, if, for any reason, a transition property notice is not filed under the Financing Act or we fail to otherwise perfect our interest in the transition property, and the transfer is thereafter deemed not to constitute a true sale, we would be an unsecured creditor of Entergy Texas.

The Financing Act provides that the creation, granting, perfection and enforcement of liens and security interests in transition property are governed by the Financing Act and not by the Texas Business & Commerce Code. Under the Financing Act, a valid and enforceable lien and security interest in transition property may be created only by a financing order issued under the Financing Act and the execution and delivery of a security agreement with a holder of transition bonds or a trustee or agent for the holder. The lien and security interest attaches automatically from the time value is received for the transition bonds. Upon perfection through the filing of notice with the Secretary of State of Texas pursuant to rules established by the Secretary of State of Texas, the security interest shall be a continuously perfected lien and security interest in the transition property, with priority in the order of filing and shall take precedence over any subsequent judicial or other lien creditor. If this notice is filed within ten days after value is received for the transition bonds, the security interest will be perfected retroactive to the date value was received, otherwise, the security interest will be perfected as of the date of filing. None of this, however, mitigates the risk of payment delays and other adverse effects caused by a bankruptcy of Entergy Texas. Further, if, for any reason, a transition property notice is not filed under the Financing Act or we fail to otherwise perfect our interest in the transition property sold pursuant to the sale agreement, and the transfer is thereafter deemed not to constitute a true sale, we would be an unsecured creditor of Entergy Texas.

Consolidation of the Issuing Entity and Entergy Texas

If Entergy Texas were to become a debtor in a bankruptcy case, a party in interest might attempt to substantively consolidate the assets and liabilities of Entergy Texas and us. We and Entergy Texas have taken steps to attempt to minimize this risk. Please read "Entergy Texas Restoration Funding, LLC, The Issuing Entity" in this prospectus. However, no assurance can be given that if Entergy Texas were to become a debtor in a bankruptcy case, a court would not order that our assets and liabilities be substantively consolidated with those of Entergy Texas. Substantive consolidation would result in payment of the claims of the beneficial owners of the transition bonds to be subject to substantial delay and to adjustment in timing and amount under a plan of reorganization in the bankruptcy case.

Status of Transition Property as Current Property

Entergy Texas will represent in the sale agreement, and the Financing Act provides, that the transition property sold pursuant to the sale agreement constitutes a current property right on the date that it is first transferred or pledged in connection with the issuance of the transition bonds. Nevertheless, no assurance can be given that, in the event of a bankruptcy of Entergy Texas, a court would not rule that the applicable transition property comes into existence only as retail electric customers use electricity.

If a court were to accept the argument that the applicable transition property comes into existence only as retail electric customers use electricity, no assurance can be given that a security interest in favor of the bondholders of the transition bonds would attach to the related transition charges in respect of electricity consumed after the commencement of the bankruptcy case or that the transition property has been sold to us. If it were determined that the transition property had not been sold to us, and the security interest in favor of the transition bondholders did not attach to the transition charges in respect of electricity consumed after the commencement of the bankruptcy case, then we would have an unsecured claim against Entergy Texas. If so, there would be delays and/or reductions in payments on the transition bonds. Whether or not a court determined that transition property had been sold to us pursuant to the sale agreement, no assurances can be given that a court would not rule that any t ransition charges relating to electricity consumed after the commencement of the bankruptcy could not be transferred to us or the trustee.

In addition, in the event of a bankruptcy of Entergy Texas, a party in interest in the bankruptcy could assert that we should pay, or that we should be charged for, a portion of Entergy Texas' costs associated with the transmission or distribution of the electricity, consumption of which gave rise to the transition charge receipts used to make payments on the transition bonds.

Regardless of whether Entergy Texas is the debtor in a bankruptcy case, if a court were to accept the argument that transition property sold pursuant to the sale agreement comes into existence only as customers use electricity, a tax or government lien or other nonconsensual lien on property of Entergy Texas arising before that transition property came into existence could have priority over our interest in that transition property. Adjustments to the transition charges may be available to mitigate this exposure, although there may be delays in implementing these adjustments.

Estimation of Claims; Challenges to Indemnity Claims

If Entergy Texas were to become a debtor in a bankruptcy case, claims, including indemnity claims, by us or the trustee against Entergy Texas as seller under the sale agreement and the other documents executed in connection therewith would be unsecured claims and would be subject to being discharged in the bankruptcy case. In addition, a party in interest in the bankruptcy may request that the bankruptcy court estimate any contingent claims that we or the trustee have against Entergy Texas. That party may then take the position that these claims should be estimated at zero or at a low amount because the contingency giving rise to these claims is unlikely to occur. If a court were to hold that the indemnity provisions were unenforceable, we would be left with a claim for actual damages against Entergy Texas based on breach of contract principles. The actual amount of these damages would be subject to estimation and/or calculation by the court.

No assurances can be given as to the result of any of the above-described actions or claims. Furthermore, no assurance can be given as to what percentage of their claims, if any, unsecured creditors would receive in any bankruptcy proceeding involving Entergy Texas.

Enforcement of Rights by the Trustee

Upon an event of default under the indenture, the Financing Act permits the trustee to enforce the security interest in the transition property sold pursuant to the sale agreement in accordance with the terms of the indenture. In this capacity, the trustee is permitted to request the Texas commission or a Travis County, Texas district court to order the sequestration and payment to holders of transition bonds of all revenues arising from the applicable transition charges. There can be no assurance, however, that the Texas commission or a district court judge would issue this order after a seller bankruptcy in light of the automatic stay provisions of Section 362 of the United States Bankruptcy Code. In that event, the trustee may under the indenture seek an order from the bankruptcy court lifting the automatic stay with respect to this action by the Texas commission or a district court judge and an order requiring an accounting and segregation of the revenues arising from the transition property sold pursuant to the sale agreement. There can be no assurance that a court would grant either order.

Bankruptcy of the Servicer

The servicer is entitled to commingle the transition charges that it receives with its own funds until each date on which the servicer is required to remit funds to the trustee as specified in the servicing agreement. The Financing Act provides that the relative priority of a lien created under the Financing Act is not defeated or adversely affected by the commingling of transition charges arising with respect to the related transition property with funds of the electric utility. In the event of a bankruptcy of the servicer, a party in interest in the bankruptcy might assert, and a court might rule, that the transition charges commingled by the servicer with its own funds and held by the servicer, prior to and as of the date of bankruptcy were property of the servicer as of that date, and are therefore property of the servicer's bankruptcy estate, rather than our property. If the court so rules, then the court would likely rule that the trustee has only a general unsecured claim against the servicer f or the amount of commingled transition charges held as of that date and could not recover the commingled transition charges held as of the date of the bankruptcy.

However, if the court were to rule on the ownership of the commingled transition charges, the automatic stay arising upon the bankruptcy of the servicer could delay the trustee from receiving the commingled transition charges held by the servicer as of the date of the bankruptcy until the court grants relief from the stay. A court ruling on any request for relief from the stay could be delayed pending the court's resolution of whether the commingled transition charges are our property or are property of the servicer, including resolution of any tracing of proceeds issues.

The servicing agreement will provide that the trustee, as our assignee, together with the other persons specified therein, may vote to appoint a successor servicer that satisfies the rating agency condition. The servicing agreement will also provide that the trustee, together with the other persons specified therein, may petition the Texas commission or a court of competent jurisdiction to appoint a successor servicer that meets this criterion. However, the automatic stay in effect during a servicer bankruptcy might delay or prevent a successor servicer's replacement of the servicer. Even if a successor servicer may be appointed and may replace the servicer, a successor may be difficult to obtain and may not be capable of performing all of the duties that Entergy Texas as servicer was capable of performing. Furthermore, should the servicer enter into bankruptcy, it may be permitted to stop acting as servicer.

Bankruptcy of a Retail Electric Provider

A retail electric provider is not required to segregate the transition charges it collects from its general funds. The Financing Act provides that our rights to transition property are not affected by the commingling of these funds with other funds. In a bankruptcy of a retail electric provider, however, a bankruptcy court might rule that federal bankruptcy law takes precedence over the Financing Act and does not recognize our right to receive the collected transition charges that are commingled with other funds of a retail electric provider prior to or as of the date of bankruptcy, including transition charges associated with other issuances of transition bonds. If so, the collected transition charges held by a retail electric provider as of the date of bankruptcy would not be available to us to pay amounts owing on the transition bonds. In this case, we would have only a general unsecured claim against that retail electric provider for those amounts.

In addition, the bankruptcy of a retail electric provider may cause a delay in or prohibition of enforcement of various rights against the retail electric provider, including rights to require payments by the retail electric provider, rights to retain preferential payments made by the retail electric provider prior to bankruptcy, rights to require the retail electric provider to comply with financial provisions of the Financing Act or other state laws, rights to terminate contracts with the retail electric provider and rights that are conditioned on the bankruptcy, insolvency or financial condition of the retail electric provider.

Affiliated Retail Electric Providers

If, in the future, retail electric providers are permitted to collect the transition charges, then retail electric providers will be required to remit to the servicer a fixed portion of billed transition charges except for a reasonable allowance for expected losses. As incentive collection agent compensation, a retail electric provider may retain collections from end-use customers in excess of the specified percentage remitted but is not reimbursed for collections below the specified percentage. The specified percentage will be adjusted on an annual basis to take into account the collection experience of the previous year, as demonstrated by audited reports from all retail electric providers.

In the event of a bankruptcy of Entergy Texas, a party in interest in bankruptcy could attempt to take the position that an affiliated retail electric provider had taken all or some of the risk of transition charge collections. If a court were to adopt this position, there would be an increased possibility that the court would recharacterize the transaction as a financing transaction and not a "true sale" or substantively consolidate the assets and liabilities of Entergy Texas and us.

Other risks relating to bankruptcy may be found in "Risk Factors-Risks Associated With Potential Bankruptcy Proceedings of Future Retail Electric Providers if and when Retail Competition is Introduced."

MATERIAL U.S. FEDERAL INCOME TAX CONSEQUENCES

General

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The following is a general discussion of the anticipated material U.S. federal income tax consequences of the purchase, ownership and disposition of the transition bonds. Except as specifically provided below with respect to Non-U.S. Holders (as defined below), this discussion does not address the tax consequences to persons other than initial purchasers who are U.S. Holders (as defined below) that acquire their transition bonds at the initial offering price and hold their transition bonds as capital assets within the meaning of Section 1221 of the Internal Revenue Code and it does not address all of the tax consequences relevant to investors that are subject to special treatment under the U.S. federal income tax laws (such as life insurance companies, retirement plans, regulated investment companies, persons who hold transition bonds as part of a "straddle," a "hedge" or a "conversion transaction," U.S. persons that have a "functional curre ncy" other than the U.S. dollar, investors in pass-through entities and tax-exempt organizations). This summary also does not address the consequences to holders of the transition bonds under state, local or foreign tax laws.

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This summary is based on current provisions of the Internal Revenue Code, the Treasury Regulations promulgated and proposed thereunder, judicial decisions and published administrative rulings and pronouncements of the IRS and interpretations thereof. All of these authorities and interpretations are subject to change, and any change may apply retroactively and affect the accuracy of the opinions, statements and conclusions set forth in this discussion.

U.S. Holder and Non-U.S. Holder Defined

A "U.S. Holder" means a beneficial owner of a transition bond that, for U.S. federal income tax purposes, is (i) a citizen or individual resident of the United States, (ii) a corporation (including an entity treated as a corporation for U.S. federal income tax purposes) created or organized in or under the laws of the United States, any state thereof or the District of Columbia, (iii) an estate the income of which is includible in gross income for U.S. federal income tax purposes regardless of its source, or (iv) a trust if (A) a court in the United States is able to exercise primary supervision over the administration of the trust and one or more U.S. persons have the authority to control all substantial decisions of the trust, or (B) it has a valid election in place to be treated as a U.S. person under applicable Treasury Regulations. A "Non-U.S. Holder" means a beneficial owner of a transition bond that is not a U.S. Holder but does not include (i) an entity or arrangement treated as a partnership for U.S. federal income tax purposes, (ii) a former citizen of the United States or (iii) a former resident of the United States.

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If an entity or arrangement treated as a partnership for U.S. federal income tax purposes is a holder of a transition bond, the U.S. federal income tax treatment of a partner will generally depend on the status of the partner and the activities of the partnership. Partnerships holding transition bonds (and partners in such partnerships) are encouraged to consult their tax advisors about the particular U.S. federal income tax consequences applicable to them. Similarly, former citizens and former residents of the United States are encouraged to consult their tax advisors about the particular U.S. federal income tax consequences that may be applicable to them.

ALL PROSPECTIVE INVESTORS ARE ENCOURAGED TO CONSULT THEIR TAX ADVISORS REGARDING THE U.S. FEDERAL INCOME TAX CONSEQUENCES OF THE PURCHASE, OWNERSHIP AND DISPOSITION OF TRANSITION BONDS IN LIGHT OF THEIR PARTICULAR CIRCUMSTANCES, AS WELL AS THE EFFECT OF ANY FOREIGN, STATE, LOCAL OR OTHER TAX LAWS.

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Taxation of the Issuing Entity and Characterization of the Transition Bonds

Based on Revenue Procedure 2005-62, 2005-2 CB 507, it is the opinion of Sidley Austin LLP, as tax counsel, that for U.S. federal income tax purposes, (1) we will not be treated as a taxable entity separate and apart from Entergy Texas and (2) the transition bonds will be treated as debt of Entergy Texas. By acquiring a transition bond, a transition bondholder agrees to treat the transition bond as debt of Entergy Texas, our sole member, for U.S. federal income tax purposes. This opinion is based on certain representations made by us and Entergy Texas, on the application of current law to the facts as established by the indenture and other relevant documents and assumes compliance with the indenture and such other documents as in effect on the date of issuance of the transition bonds.

Tax Consequences To U.S. Holders

Interest

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Interest income on the transition bonds, payable at a fixed rate, will be includible in income by a U.S. Holder when it is received, in the case of a U.S. Holder using the cash receipts and disbursements method of tax accounting, or as it accrues, in the case of a U.S. Holder using the accrual method of tax accounting. We expect that the transition bonds will not be issued with original issue discount. If the transition bonds are issued with original issue discount, the prospectus supplement for those transition bonds will address the tax consequences of the purchase, ownership and disposition transition bonds with original issue discount.

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Sale or Retirement of Transition Bonds

On a sale, exchange or retirement of a transition bond, a U.S. Holder will have taxable gain or loss equal to the difference between the amount received by the U.S. Holder and the U.S. Holder's tax basis in the transition bond. A U.S. Holder's tax basis in its transition bonds is the U.S. Holder's cost, subject to adjustments. Gain or loss will generally be capital gain or loss, and will be long-term capital gain or loss if the transition bond was held for more than one year at the time of disposition. If a U.S. Holder sells the transition bond between interest payment dates, a portion of the amount received will reflect interest that has accrued on the transition bond but that has not yet been paid by the sale date. To the extent that amount has not already been included in the U.S. Holder's income, it will be treated as ordinary interest income and not as capital gain.

Tax Consequences to Non-U.S. Holders

Withholding Taxation on Interest

Payments of interest income on the transition bonds received by a Non-U.S. Holder that does not hold its transition bonds in connection with the conduct of a trade or business in the United States, will generally not be subject to U.S. federal withholding tax, provided that the Non-U.S. Holder does not actually or constructively own 10% or more of the total combined voting power of all classes of stock of Entergy entitled to vote, is not a controlled foreign corporation that is related to Entergy through stock ownership, is not a bank receiving interest described in Section 881(c)(3)(A) of the Internal Revenue Code, is not an individual who ceased being a U.S. citizen or long-term resident for tax avoidance purposes, and Entergy or its paying agent receives:

• from a Non-U.S. Holder appropriate documentation to treat the payment as made to a foreign beneficial owner under Treasury Regulations issued under Section 1441 of the Internal Revenue Code;
• a withholding certificate from a person claiming to be a foreign partnership and the foreign partnership has received appropriate documentation to treat the payment as made to a foreign beneficial owner in accordance with these Treasury Regulations;
• a withholding certificate from a person representing to be a "qualified intermediary" that has assumed primary withholding responsibility under these Treasury Regulations and the qualified intermediary has received appropriate documentation from a foreign beneficial owner in accordance with its agreement with the IRS; or
• a statement, under penalties of perjury from an authorized representative of a financial institution, stating that the financial institution has received from the beneficial owner a withholding certificate described in these Treasury Regulations or that it has received a similar statement from another financial institution acting on behalf of the foreign beneficial owner.

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In general, it will not be necessary for a Non-U.S. Holder to obtain or furnish a United States taxpayer identification number to Entergy Texas or its paying agent in order to claim any of the foregoing exemptions from U.S. federal withholding tax on payments of interest. Interest paid to a Non-U.S. Holder will be subject to a U.S. federal withholding tax of 30% upon the actual payment of interest income, except as described above and except where an applicable income tax treaty provides for the reduction or elimination of the U.S. federal withholding tax or except where the interest is effectively connected with a U.S. trade or business as described in the next sentence. A Non-U.S. Holder generally will be taxable in the same manner as a U.S. person with respect to interest income if the income is effectively connected with the Non-U.S. Holder's conduct of a trade or business in the United States (and, if an income tax treaty applies, is attributable to a permanent establishment maintained by the Non-U.S. Holder within the United States). Effectively connected income received by a Non-U.S. Holder that is a corporation may in some circumstances be subject to an additional "branch profits tax" at a 30% rate, or if applicable, a lower rate provided by an income tax treaty. In order to claim that interest income is effectively connected with the conduct of a U.S. trade or business, a Non-U.S. Holder must timely provide the appropriate IRS form, generally, IRS Form W-8ECI, to the withholding agent. Any IRS forms that a Non-U.S. Holder provides to a withholding agent may be required to be periodically updated.

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Capital Gains Tax Issues

A Non-U.S. Holder generally will not be subject to U.S. federal income or withholding tax on gain realized on the sale or exchange of transition bonds, unless:

• the Non-U.S. Holder is an individual who is present in the United States for 183 days or more during the taxable year and this gain is from United States sources; or
• the gain is effectively connected with the conduct by the Non-U.S. Holder of a trade or business in the United States and other requirements are satisfied.

Backup Withholding

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Backup withholding of U.S. federal income tax may apply to payments made in respect of the transition bonds to registered owners who are not "exempt recipients" and who fail to provide certain identifying information (such as the registered owner's taxpayer identification number) in the required manner. Generally, individuals are not exempt recipients, whereas corporations and certain other entities generally are exempt recipients. Payments made in respect of the transition bonds to a U.S. Holder must be reported to the IRS, unless the U.S. Holder is an exempt recipient or establishes an exemption. A U.S. Holder can obtain a complete exemption from backup withholding by filing IRS Form W-9 (Payer's Request for Taxpayer Identification Number and Certification). Compliance with the identification procedures described above under "-Withholding Taxation on Interest" would establish an exemption from backup withholding for those Non-U.S. Holders who are not exempt recipients.

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In addition, backup withholding of U.S. federal income tax may apply upon the sale of a transition bond to (or through) a broker, unless either (1) the broker determines that the seller is a corporation or other exempt recipient or (2) the seller provides, in the required manner, certain identifying information and, in the case of a Non-U.S. Holder, certifies that the seller is a Non-U.S. Holder (and certain other conditions are met). The sale must also be reported by the broker to the IRS, unless either (a) the broker determines that the seller is an exempt recipient or (b) the seller certifies its non-U.S. status (and certain other conditions are met). Certification of the registered owner's non-U.S. status would be made normally on an IRS Form W-8BEN under penalty of perjury, although in certain cases it may be possible to submit other documentary evidence.

Any amounts withheld under the backup withholding rules from a payment to a beneficial owner would be allowed as a refund or a credit against such beneficial owner's U.S. federal income tax provided the required information is furnished to the IRS in a timely manner.

ERISA CONSIDERATIONS

General

The Employee Retirement Income Security Act of 1974, known as ERISA, and Section 4975 of the Internal Revenue Code impose certain requirements on plans subject to ERISA or Section 4975 of the Internal Revenue Code. ERISA and the Internal Revenue Code also impose certain requirements on fiduciaries of a plan in connection with the investment of the assets of the plan. For purposes of this discussion, "plans" include employee benefit plans and other plans and arrangements that provide retirement income, including individual retirement accounts and annuities and Keogh plans, as well as some collective investment funds and insurance company general or separate accounts in which the assets of those plans, accounts or arrangements are invested. A fiduciary of an investing plan is any person who in connection with the assets of the plan:

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• exercises discretionary authority or control over the management of the plan,
• exercises authority or control over the disposition of the assets of the plan, or
• provides investment advice for a fee.

Some plans, such as governmental plans, and certain church plans, plans maintained outside the United States primarily for the benefit of persons substantially all of whom are non resident aliens, and the fiduciaries of those plans, are not subject to ERISA requirements. Accordingly, assets of these plans may be invested in the transition bonds without regard to the ERISA considerations described below, subject to the provisions of other applicable federal and state law. Any such plan which is qualified and exempt from taxation under Sections 401(a) and 501(a) of the Internal Revenue Code, however, is subject to the prohibited transaction rules in Section 503 of the Internal Revenue Code.

ERISA imposes certain general fiduciary requirements on fiduciaries, including:

• investment prudence and diversification, and
• the investment of the assets of the plan in accordance with the documents lawfully governing the plan.

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Section 406 of ERISA and Section 4975 of the Internal Revenue Code also prohibit a broad range of transactions involving the assets of a plan and persons who have certain specified relationships to the plan, referred to as "parties in interest," unless a statutory or administrative exemption is available. Parties in interest include parties in interest under ERISA and disqualified persons under the Internal Revenue Code. The types of transactions that are prohibited include:

• sales, exchanges or leases of property;
• loans or other extensions of credit; and
• the furnishing of goods or services.

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Certain persons that participate in a prohibited transaction may be subject to an excise tax under Section 4975 of the Internal Revenue Code or a penalty imposed under Section 502(i) of ERISA, unless a statutory or administrative exemption is available. In addition, the persons involved in the prohibited transaction may have to cancel the transaction and pay an amount to the plan for any losses realized by the plan or profits realized by these persons. In addition, individual retirement accounts involved in the prohibited transaction may be disqualified which would result in adverse tax consequences to the owner of the account.

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Regulation of Assets Included in a Plan

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A fiduciary's investment of the assets of a plan in the transition bonds may cause our assets to be deemed assets of the plan. Section 2510.3-101 of the regulations of the U.S. Department of Labor, as modified by Section 3(42) of ERISA, provides that the assets of an entity will be deemed to be assets of a plan that purchases an interest in the entity only if the interest that is purchased by the plan is an equity interest, equity participation by benefit plan investors is significant and none of the exceptions contained in Section 2510.3-101 of the regulations applies. An equity interest is defined in Section 2510.3-101 of the regulations as an interest in an entity other than an instrument which is treated as indebtedness under applicable local law and which has no substantial equity features. Although there is no authority directly on point, it is anticipated that the transition bonds will be treated as indebtedness under local law without any substantial equity features.

If the transition bonds were deemed to be equity interests in us, equity participation by benefit plan investors were deemed to be significant, and none of the exceptions contained in Section 2510.3-101 of the regulations were applicable, then our assets would be considered to be assets of any plans that purchase the transition bonds. The extent to which the transition bonds are owned by benefit plan investors will not be monitored. If our assets were deemed to constitute "plan assets" pursuant to Section 2510.3-101 of the regulations, as modified by Section 3(42) of ERISA, transactions we might enter into, or may have entered into in the ordinary course of business, might constitute non-exempt prohibited transactions under ERISA and/or Section 4975 of the Internal Revenue Code.

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In addition, the acquisition or holding of the transition bonds by or on behalf of a plan could give rise to a prohibited transaction if we or the trustee, Entergy Texas, any other servicer, Entergy, any underwriter or certain of their affiliates has, or acquires, a relationship to an investing plan. Each purchaser of the transition bonds will be deemed to have represented and warranted that its purchase and holding of the transition bonds will not result in a prohibited transaction.

Before purchasing any transition bonds by or on behalf of a plan, you should consider whether the purchase and holding of transition bonds might result in a prohibited transaction under ERISA or Section 4975 of the Internal Revenue Code and, if so, whether any prohibited transaction exemption might apply to the purchase and holding of the transition bonds.

Prohibited Transaction Exemptions

If you are a fiduciary of a plan, before purchasing any transition bonds, you should consider the availability of one of the Department of Labor's prohibited transaction class exemptions, referred to as PTCEs, or one of the statutory exemptions provided by ERISA or Section 4975 of the Internal Revenue Code, which include:

• PTCE 75-1, which exempts certain transactions between a plan and certain broker-dealers, reporting dealers and banks;
• PTCE 84-14, which exempts certain transactions effected on behalf of a plan by a "qualified professional asset manager";
• PTCE 90-1, which exempts certain transactions between insurance company separate accounts and parties in interest;
• PTCE 91-38, which exempts certain transactions between bank collective investment funds and parties in interest;
• PTCE 95-60, which exempts certain transactions between insurance company general accounts and parties in interest;
• PTCE 96-23, which exempts certain transactions effected on behalf of a plan by an "in-house asset manager"; and
• the statutory service provider exemption provided by Section 408(b)(17) of ERISA and Section 4975(d)(20) of the Internal Revenue Code, which exempts certain transactions between plans and parties in interest that are not fiduciaries with respect to the transaction.

We cannot provide any assurance that any of these class exemptions or statutory exemptions will apply with respect to any particular investment in the transition bonds by, or on behalf of, a plan or, even if it were deemed to apply, that any exemption would apply to all transactions that may occur in connection with the investment. Even if one of these class exemptions or statutory exemptions were deemed to apply, transition bonds may not be purchased with assets of any plan if we or the trustee, Entergy Texas, any other servicer, Entergy, any underwriter or any of their affiliates:

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• has authority or control over the investment of the assets of the plan used to purchase the transition bonds; or
• has authority or responsibility to give, or regularly gives, investment advice regarding the assets of the plan used to purchase the transition bonds, for a fee and under an agreement or understanding that the advice will serve as a primary basis for investment decisions for the assets of the plan, and will be based on the particular investment needs of the plan.

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Consultation with Counsel

If you are a fiduciary which proposes to purchase the transition bonds on behalf of or with assets of a plan, you should consider your general fiduciary obligations under ERISA and you should consult with your legal counsel as to the potential applicability of ERISA and the Internal Revenue Code to any investment and the availability of any prohibited transaction exemption in connection with any investment.

PLAN OF DISTRIBUTION

We may sell the transition bonds to or through the underwriters named in the prospectus supplement by a negotiated firm commitment underwriting and public reoffering by the underwriters or another underwriting arrangement that may be specified in the prospectus supplement. We may also offer or place the transition bonds either directly or through agents. We intend that transition bonds will be offered through these various methods from time to time and that offerings may be made concurrently through more than one of these methods or that an offering of the transition bonds may be made through a combination of these methods.

The distribution of transition bonds may be effected in one or more transactions at a fixed price or prices, which may be changed, or at market prices prevailing at the time of sale, at prices related to prevailing market prices or in negotiated transactions or otherwise at varying prices to be determined at the time of sale.

In connection with the sale of the transition bonds, underwriters or agents may receive compensation in the form of discounts, concessions or commissions. Underwriters may sell transition bonds to dealers at prices less a concession. Underwriters may allow, and the dealers may reallow, a concession to other dealers. Underwriters, dealers and agents that participate in the distribution of the transition bonds may be deemed to be underwriters and any discounts or commissions received by them from the issuing entity and any profit on the resale of the transition bonds by them may be deemed to be underwriting discounts and commissions under the Securities Act of 1933. We will identify any of these underwriters or agents, and describe any compensation we give them, in the prospectus supplement.

RATINGS FOR THE TRANSITION BONDS

It is a condition to issuance of the transition bonds that each tranche be rated "Aaa" by Moody's, "AAA" by S&P, and "AAA" by Fitch Ratings. A security rating is not a recommendation to buy, sell or hold securities and may be subject to revision or withdrawal at any time by the assigning rating agency. Each rating should be evaluated independently of any other rating. No person is obligated to maintain the rating on any transition bonds and, accordingly, we can give no assurance that the ratings assigned to any tranche of the transition bonds upon initial issuance will not be lowered or withdrawn by a rating agency at any time thereafter. If a rating of any tranche of transition bonds is revised or withdrawn, the liquidity of this tranche of the transition bonds may be adversely affected. In general, ratings address credit risk and do not represent any assessment of any particular rate of principal payments on the transition bonds other than the payment in full of each tranche of the transition bonds by the tranche final maturity date, as well as the timely payment of interest.

WHERE YOU CAN FIND MORE INFORMATION

This prospectus is part of a registration statement we and Entergy Texas have filed with the SEC relating to the transition bonds. This prospectus and the prospectus supplement describe the material terms of some of the documents we have filed as exhibits to the registration statement. However, this prospectus and the prospectus supplement do not contain all of the information contained in the registration statement and the exhibits. Any statements contained in this prospectus or any prospectus supplement concerning the provisions of any document filed as an exhibit to the registration statement or otherwise filed with the SEC are not necessarily complete. Each statement concerning those provisions is qualified in its entirety by reference to the respective exhibit. Information filed with the SEC can be inspected at the SEC's Internet site located at http://www.sec.gov. You may also read and copy the registration statement, the exhibits and any other documents we f ile with the SEC at the SEC's Public Reference Room located at 100 F Street, N.E., Washington, D.C. 20549. You may obtain further information regarding the operation of the SEC's Public Reference Room by calling the SEC at 1-800-SEC-0330. You may also obtain a copy of our filings with the SEC at no cost, by writing to or telephoning us at the following address:

Entergy Texas Restoration Funding, LLC
Capital Center
919 Congress Avenue, Suite 840-C
Austin, Texas 78701
Telephone No. (512) 487-3982

We or Entergy Texas as sponsor will also file with the SEC all of the periodic reports we or the sponsor are required to file under the Securities Exchange Act of 1934 and the rules, regulations or orders of the SEC thereunder.

The SEC allows us to "incorporate by reference" into this prospectus information we or the sponsor file with the SEC. This means we can disclose important information to you by referring you to the documents containing the information. The information we incorporate by reference is considered to be part of this prospectus, unless we update or supersede that information by the information contained in a prospectus supplement or information that we or the sponsor file subsequently that is incorporated by reference into this prospectus. We are incorporating into this prospectus any future filing, which we or Entergy Texas, but solely in its capacity as our sponsor, make with the SEC under Sections 13(a), 13(c), 14 or 15(d) of the Exchange Act (excluding any annual reports on Form 10-K). These reports will be filed under our own name as issuing entity. Any statement contained in this prospectus, in any prospectus supplement or in a document incorporated or deemed to be incorporated by referenc e in this prospectus or any prospectus supplement will be deemed to be modified or superseded for purposes of this prospectus and any prospectus supplement to the extent that a statement contained in this prospectus, any prospectus supplement or in any separately filed document which also is or is deemed to be incorporated by reference herein modifies or supersedes that statement. Any statement so modified or superseded will not be deemed, except as so modified or superseded, to constitute part of this prospectus or the prospectus supplement.

LEGAL MATTERS

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Certain legal matters relating to the transition bonds, including certain U.S. federal income tax matters, will be passed on by Sidley Austin LLP, counsel to Entergy Texas and the issuing entity. Certain other legal matters relating to the transition bonds will be passed on by Richards, Layton & Finger, P.A., special Delaware counsel to the issuing entity, by Clark, Thomas & Winters, a Professional Corporation, Austin, Texas, Texas regulatory counsel to Entergy Texas and the issuing entity, and by Pillsbury Winthrop Shaw Pittman LLP, counsel to the underwriters. Pillsbury Winthrop Shaw Pittman LLP regularly represents affiliates of Entergy Texas in connection with various legal matters not relating to the offering of transition bonds covered by this prospectus.

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GLOSSARY OF DEFINED TERMS

Set forth below is a list of some of the defined terms used in this prospectus which, except as otherwise noted in a prospectus supplement, are also used in the prospectus supplement:

Basic documents means, with respect to the transition bonds, the administration agreement, sale agreement, servicing agreement, indenture and any supplements thereto or bills of sale given by the seller and the notes evidencing the transition bonds.

Bankruptcy Code means Title 11 of the United States Code, as amended.

Business day means any day other than a Saturday, a Sunday or a day on which banking institutions in Dallas, Texas or New York, New York are, or DTC is, authorized or obligated by law, regulation or executive order to remain closed.

Capital subaccount means that subaccount of the collection account into which the seller will contribute capital in an amount equal to the required capital level.

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Clearstream means Clearstream Banking, société anonyme.

Customer means retail customer or retail electric customer.

Collateral means all of the assets of the issuing entity pledged to the trustee for the benefit of the holders of the transition bonds, which includes the transition property, all rights of the issuing entity under the sale agreement, the servicing agreement and the other documents entered into in connection with the transition bonds, all rights to the collection account and the subaccounts of the collection account (other than cash released to us from earnings on amounts in the capital account), and all other property of the issuing entity relating to the transition bonds, including all proceeds in respect of the foregoing.

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Collection account means the segregated trust account designated the collection account and held by the trustee under the indenture.

DTC means The Depository Trust Company, New York, New York, and its nominee holder, Cede & Co.

Eligible institution means (1) the corporate trust department of the trustee or a subsidiary thereof so long as any of the securities of the trustee or a subsidiary thereof have a credit rating from each rating agency in one of its generic rating categories which signifies investment grade or (2) a depository institution organized under the laws of the United States of America or any State (or any domestic branch of a foreign bank) (A) which has either (i) a long-term unsecured debt rating of "AAA" by S&P and "A2" by Moody's and if rated by Fitch, Inc., "AAA" by Fitch, Inc. or (ii) a certificate of deposit rating of "A-1 +" by S&P and "P-1" by Moody's, or any other long-term, short-term or certificate of deposit rating acceptable to the rating agencies and (B) whose deposits are insured by the Federal Deposit Insurance Corporation.

Entergy Texas means Entergy Texas, Inc.

Entergy Texas Funding means Entergy Texas Restoration Funding, LLC.

Entergy means Entergy Corporation.

ERISA means the Employee Retirement Income Security Act of 1974, as amended.

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Euroclear means Euroclear Bank SA/NV.

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Excess funds subaccount means that subaccount of the collection account into which funds collected by the servicer in excess of amounts necessary to make the payments specified on a given payment date.

Exchange Act means the Securities Exchange Act of 1934, as amended.

FERC means the Federal Energy Regulatory Commission.

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Financing Act means Subchapter I of Chapter 36 of PURA, adopted and effective in April 2009, which enacted Subchapter I of Chapter 36, that allows for the securitization of system restoration costs, together with Subchapter G of Chapter 39 of PURA.

Financing order, as used in this prospectus, means an irrevocable order issued by the Texas commission to Entergy Texas which, among other things, governs the amount of transition bonds that may be issued and terms for collections of related transition charges. As used in a prospectus supplement, the term may be used to refer to a financing order relating to specific transition bonds, including the order issued on September 11, 2009.

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Fitch means Fitch, Inc.

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General subaccount means that subaccount of the collection account that will hold funds held in the collection account that are not held in the other subaccounts of the collection account.

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Indenture means the indenture to be entered into between the issuing entity and the trustee, providing for the issuance of transition bonds, as the same may be amended and supplemented from time to time.

Internal Revenue Code means the Internal Revenue Code of 1986, as amended.

IRS means the Internal Revenue Service of the United States.

Issuing Entity means Entergy Texas Restoration Funding, LLC.

kWh means kilowatt-hour.

Moody's means Moody's Investors Service, Inc.

MWh means megawatt-hour.

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No material adverse tax change opinion means, with respect to any action, an opinion of independent tax counsel that, as a result of such action (i) we will not be subject to United States federal income tax as an entity separate from our sole owner and that the transition bonds will be treated as debt of our sole owner for United States federal tax purposes and (ii) for United States federal income tax purposes, the issuance of the transition bonds will not result in gross income to the seller.

Nonbypassable refers to the right of the servicer to collect the transition charges from all existing and future retail customers located within Entergy Texas' service territory, even if those customers elect to purchase electricity from another supplier or if the utility goes out of business and its service territory is acquired by another utility or is municipalized or, with certain exceptions, if the customer chooses to operate new on-site generation. The financing order allows retail customers with on-site power generation facilities with rated capacities of 10 megawatts or less to avoid paying system restoration costs except to the extent Entergy Texas' distribution lines are used to provide such energy.

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Non-U.S. Holder means a beneficial owner of a transition bond that is not a U.S. Holder but does not include (i) an entity or arrangement treated as a partnership for U.S. federal income tax purposes, (ii) a former citizen of the United States or (iii) a former resident of the United States.

NRC means the Nuclear Regulatory Commission.

Payment date means the date or dates on which interest and principal are to be payable on the transition bonds.

POLR means a provider of last resort, which is a retail electric provider required to offer a standard retail services package for each class of retail customers it serves at a fixed rate agreed to by the Texas commission.

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Prior transition bonds means the $329,500,000 Senior Secured Transition Bonds, Series A, issued by Entergy Gulf States Reconstruction Funding I, LLC, on June 29, 2007.

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PTCE means a prohibited transaction class exemption of the United States Department of Labor.

Qualified costs means the costs of an electric utility recoverable through the issuance of transition bonds, including 100% of its system restoration costs, the costs of issuing, supporting, and servicing the transition bonds, any costs of retiring and refunding the electric utility's existing debt and equity securities in connection with the issuance of the transition bonds, and the costs of the Texas commission of acquiring professional services for the purpose of evaluating the financing order and related matters in connection with the issuance of transition bonds.

Rating agencies means Moody's, S&P and Fitch.

Rating agency condition means, with respect to any action, the notification in writing to each rating agency of such action and the confirmation by S&P to the servicer, the trustee and the issuing entity that such action will not result in a reduction or withdrawal of the then rating by such rating agency of any outstanding tranche of transition bonds.

Record date means the date or dates with respect to each payment date on which it is determined the person in whose name each transition bond is registered will be paid on the respective payment date.

Required capital level means the amount required to be funded in the capital subaccount for the transition bonds, which will equal 0.50% of the principal amount of transition bonds issued by us.

Restructuring Act means the Texas legislation adopted in June 1999 that substantially amended the regulatory scheme governing electric utilities in order to allow for retail competition in some areas beginning on January 1, 2002.

<R>

Retail customer or retail electric customer means a retail customer within Entergy Texas' service territory. If retail competition is ever introduced into Entergy Texas' service territory, such terms mean a retail end user of electricity and related services provided by a retail electric provider via the transmission and distribution system of a utility such as Entergy Texas within Entergy Texas' service territory.

</R>

Retail electric providers or REPs means any entities certified under state law that provide electricity and related services to retail electric customers within areas of Texas subject to retail competition.

S&P means Standard and Poor's Ratings Services, a Division of The McGraw-Hill Companies.

<R>

Sale agreement means the sale agreement to be entered into between the issuing entity and Entergy Texas, pursuant to which Entergy Texas sells and the issuing entity buys transition property.

</R>

SEC means the U.S. Securities and Exchange Commission.

<R>

Series supplement means a supplement to the indenture which establishes the terms of the transition bonds.

Service territory means, with regard to Entergy Texas, the certificated service area of Entergy Texas as it existed on September 11, 2009, within which Entergy Texas may recover qualified costs through nonbypassable transition charges assessed on retail electric customers within that area.

Servicer means Entergy Texas, acting as the servicer, and any successor or assignee servicer, which will service the transition property under the servicing agreement with the issuing entity.

Servicing agreement means the servicing agreement to be entered into between the issuing entity and the servicer, as the same may be amended and supplemented from time to time, pursuant to which the servicer undertakes to service transition property.

SERC means the Southeastern Electric Reliability Council.

</R>

Texas commission means the Public Utility Commission of Texas.

Transition charges means statutorily-created, nonbypassable, consumption-based per kilowatt hour, per kilowatt or per kilovolt-Amperes charges. Transition charges are irrevocable and payable, through Entergy Texas or retail electric providers, by retail electric customers who consume electricity that is delivered through the distribution system or produced in certain new on-site generation. There is no "cap" on the level of transition charges that may be imposed on future retail electric customers as a result of the true-up mechanism. Through the true-up mechanism, all retail electric customers cross share in the liabilities of all other retail electric customers for the payment of transition charges.

<R>

Transition property means, with regard to Entergy Texas or the issuing entity, all of Entergy Texas' right, title, and interest in and to certain property established pursuant to a financing order which is then transferred to the issuing entity, including the irrevocable right to impose, collect and receive transition charges payable by existing and future retail customers in Entergy Texas' certificated service area as it existed on September 11, 2009 in an amount sufficient to recover the qualified costs established in the related financing order.

</R>

Treasury Regulations means proposed or issued regulations promulgated from time to time under the Internal Revenue Code.

<R>

True-up means the PUCT guaranteed mechanism required by the financing order whereby the servicer will apply to the Texas commission for annual and interim adjustments to the applicable transition charges based on actual collected transition charges and updated assumptions by the servicer as to future collections of transition charges. The Texas commission will approve properly filed adjustments. Adjustments will immediately be reflected in the customers' next billing cycle. Any corrections for mathematical errors will be reflected in the next true-up.

</R>

Trust Indenture Act means the Trust Indenture Act of 1939, as amended.

UCC means, unless the context otherwise requires, the Uniform Commercial Code, as in effect in the relevant jurisdiction, as amended from time to time.

U.S. Holder means a beneficial owner of a transition bond that, for U.S. federal income tax purposes, is (i) a citizen or individual resident of the United States, (ii) a corporation (including any entity treated as a corporation for U.S. federal income tax purposes) created or organized in or under the laws of the United States, any state thereof or the District of Columbia, (iii) an estate the income of which is includible in gross income for U.S. federal income tax purposes regardless of its source, or (iv) a trust if (A) a court in the United States is able to exercise primary supervision over administration and one or more U.S. persons have the authority to control all substantial decisions of the trust or (B) the trust has a valid election in place to be treated as a U.S. person under applicable Treasury Regulations.

PART II

INFORMATION NOT REQUIRED IN PROSPECTUS

ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION*

The following is an itemized list of the estimated expenses to be incurred in connection with the offering of the securities being offered hereunder other than underwriting discounts and commissions.

Registration Fee	$ 30,690.00
Printing Expenses	15,000.00
Trustee Fees and Expenses	35,000.00
Legal Fees and Expenses	1,025,000.00
Accountants' Fees and Expenses	200,000.00
Rating Agencies' Fees	715,000.00
Miscellaneous	621,000.00
Total 9;	$2,641,690.00

* All amounts, other than the Registration Fee, are estimates of expenses to be incurred in connection with the issuance and distribution of a series of securities in an aggregate principal amount assumed for these purposes to be equal to $550,000,000 of securities registered by this Registration Statement.

ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS

Entergy Texas, Inc. ("ETI") has insurance covering expenditures that might arise in connection with lawful indemnification of its directors and officers for certain of their liabilities and expenses. ETI's directors and officers also have insurance that insures them against certain other liabilities and expenses. The corporation laws of Texas permit indemnification of directors and officers in a variety of circumstances, which may include liabilities under the Securities Act of 1933, and, under ETI's Certificate of Formation and By-Laws, its officers and directors may generally be indemnified to the full extent of such laws.

Article X of the limited liability company agreement pursuant to which Entergy Texas Restoration Funding, LLC (the "Issuing Entity," and together with ETI, the "Registrants") is formed provides that to the fullest extent permitted by law, the Issuing Entity shall indemnify any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative, except an action by or in the right of the Issuing Entity, by reason of the fact that such person is or was a manager, member, officer, controlling person, employee, legal representative or agent of the Issuing Entity, or is or was serving at the request of the Issuing Entity as a member, manager, director, officer, partner, shareholder, controlling person, employee, legal representative or agent of another limited liability company, partnership, corporation, joint venture, trust or other enterprise, against expenses, includi ng attorneys' fees, judgments, fines and amounts paid in settlement actually and reasonably incurred by such person in connection with the action, suit or proceeding if such person acted in good faith and in a manner which such person reasonably believed to be in or not opposed to the best interests of the Issuing Entity, and, with respect to a criminal action or proceeding, had no reasonable cause to believe such person's conduct was unlawful; provided that such person shall not be entitled to indemnification if such judgment, penalty, fine or other expense was directly caused by such person's fraud, gross negligence or willful misconduct.

Further, the expenses of each person who is or was a manager, member, officer, controlling person, employee, legal representative or agent, or is or was serving at the request of the Issuing Entity as a member, manager, director, officer, partner, shareholder, controlling person, employee, legal representative or agent of another limited liability company, corporation, partnership, joint venture, trust or other enterprise, incurred in defending a civil or criminal action, suit or proceeding may be paid by the Issuing Entity as they are incurred and in advance of the final disposition of the action, suit or proceeding, upon receipt of an undertaking by or on behalf of such person to repay the amount if it is ultimately determined by a court of competent jurisdiction that such person is not entitled to be indemnified by the Issuing Entity.

ITEM 16. EXHIBITS

1.1	Form of Underwriting Agreement for the Senior Secured Transition Bonds.
3.1	Certificate of Formation of Entergy Texas, Inc. effective December 31, 2007 (filed as Exhibit (3)(i) to the Registration Statement on Form 10 of Entergy Texas, Inc. in 000-53134).*
3.2	By-Laws of Entergy Texas, Inc. effective December 31, 2007, and as presently in effect (filed as Exhibit (3)(ii) to the Registration Statement on Form 10 of Entergy Texas, Inc. in 000-53134).*
3.3	Certificate of Formation of Entergy Texas Restoration Funding, LLC.
3.4	Amended and Restated Limited Liability Company Agreement of Entergy Texas Restoration Funding, LLC.
4.1	Form of Indenture between the Issuing Entity and the Indenture Trustee (including form of the Senior Secured Transition Bonds).
5.1	Opinion of Sidley Austin LLP with respect to legality.
8.1	Opinion of Sidley Austin LLP with respect to federal tax matters.
23.1	Consent of Sidley Austin LLP (included in its opinions filed as Exhibits 5.1, 8.1 and 99.5).
23.2	Consent of Clark, Thomas & Winters, a Professional Corporation (included in its opinion filed as Exhibit 99.6).
24.1	Power of Attorney (Entergy Texas, Inc.).**
24.2	Power of Attorney (Entergy Texas Restoration Funding, LLC).**
25.1	Form T-1 Statement of Eligibility under the Trust Indenture Act of 1939 of The Bank of New York Mellon.
99.1	Form of Transition Property Servicing Agreement between the Issuing Entity and the Servicer.
99.2	Form of Transition Property Purchase and Sale Agreement between Entergy Texas, Inc. and the Issuing Entity.
99.3	Form of Administration Agreement between Entergy Texas, Inc. and the Issuing Entity.
99.4	Financing Order.
99.5	Opinion of Sidley Austin LLP with respect to federal constitutional matters.
99.6	Opinion of Clark, Thomas & Winters, a Professional Corporation, with respect to Texas constitutional matters.

* Incorporated by reference herein as indicated.
** Previously filed with the Registration Statement filed on September 15, 2009.

ITEM 17. UNDERTAKINGS

1. As to Rule 415:

   Each undersigned Registrant hereby undertakes:

   1. To file, during any period in which offers or sales are being made of the securities registered hereby, a post-effective amendment to this Registration Statement:
      1. to include any prospectus required by Section 10(a)(3) of the Securities Act of 1933, as amended (the "Securities Act");
      2. to reflect in the prospectus any facts or events arising after the effective date of this Registration Statement (or the most recent post-effective amendment hereof) which, individually or in the aggregate, represent a fundamental change in the information set forth in this Registration Statement. Notwithstanding the foregoing, any increase or decrease in volume of securities offered (if the total dollar value of securities offered would not exceed that which was registered) and any deviation from the low or high end of the estimated maximum offering range may be reflected in the form of prospectus filed with the Securities and Exchange Commission (the "Commission") pursuant to Rule 424(b), if, in the aggregate, the changes in volume and price represent no more than 20 percent change in the maximum aggregate offering price set forth in the "Calculation of Registration Fee" table in the effective Registration Statement; and
      3. to include any material information with respect to the plan of distribution not previously disclosed in this Registration Statement or any material change to such information in this Registration Statement;

      provided, however, that the undertakings set forth in clauses (i), (ii) and (iii) above do not apply if the information required to be included in a post-effective amendment by those clauses is contained in reports filed by the Registrant pursuant to Section 13 or Section 15(d) of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), that are incorporated by reference in this Registration Statement, or is contained in a form of prospectus filed pursuant to Rule 424(b) of the Securities Act that is part of this Registration Statement; and provided further, however, that the undertakings set forth in clauses (i) and (ii) above do not apply if the information required to be included in a post-effective amendment by those clauses is provided pursuant to Item 1100(c) of Regulation AB.

   2. That, for the purpose of determining any liability under the Securities Act each such post-effective amendment shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof.
   3. To remove from registration by means of a post-effective amendment any of the securities being registered which remain unsold at the termination of the offering.
   4. That, for the purpose of determining liability under the Securities Act to any purchaser, if the Registrants are relying on Rule 430B:
      1. each prospectus filed by the Registrants pursuant to Rule 424(b)(3), shall be deemed to be part of this Registration Statement as of the date the filed prospectus was deemed part of and included in this Registration Statement; and
      2. each prospectus required to be filed pursuant to Rule 424(b)(2), (b)(5) or (b)(7) as part of a registration statement in reliance on Rule 430B relating to an offering made pursuant to Rule 415(a)(1)(i), (vii) or (x) for the purpose of providing the information required by Section 10(a) of the Securities Act shall be deemed to be part of and included in this Registration Statement as of the earlier of the date such form of prospectus is first used after effectiveness or the date of the first contract of sale of securities in the offering described in the prospectus. As provided in Rule 430B, for liability purposes of the issuer and any person that is at that date an underwriter, such date shall be deemed to be a new effective date of the registration statement relating to the securities in the registration statement to which that prospectus relates, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof; provided, however, that no statement made in a registration statement or prospectus that is part of the registration statement or made in a document incorporated or deemed incorporated by reference into the registration statement or prospectus that is part of the registration statement will, as to a purchaser with a time of contract of sale prior to such effective date, supersede or modify any statement that was made in the registration statement or prospectus that was part of the registration statement or made in any such document immediately prior to such effective date.
   5. That for purposes of determining liability of the Registrants under the Securities Act to any purchaser in the initial distribution of the securities, each Registrant undertakes that in a primary offering of securities of such Registrant pursuant to this Registration Statement, regardless of the underwriting method used to sell the securities to the purchaser, if the securities are offered or sold to such purchaser by means of any of the following communications, the Registrants will be sellers to the purchaser and will be considered to offer or sell such securities to such purchaser:
      1. any preliminary prospectus or prospectus of the undersigned Registrants relating to the offering required to be filed pursuant to Rule 424;
      2. any free writing prospectus relating to the offering prepared by or on behalf of the Registrants or used or referred to by the Registrants;
      3. the portion of any other free writing prospectus relating to the offering containing material information about the Registrants or the securities provided by or on behalf of the Registrants; and
      4. any other communication that is an offer in the offering made by the Registrants to the purchaser.
2. As to documents subsequently filed that are incorporated by reference:

   The Registrants hereby undertake that, for purposes of determining any liability under the Securities Act each filing of the Registrants' annual report pursuant to Section 13(a) or Section 15(d) of the Exchange Act that is incorporated by reference in this Registration Statement shall be deemed to be a new registration statement relating to the securities offered herein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof.

3. As to indemnification:

   Insofar as indemnification for liabilities arising under the Securities Act may be permitted to directors, officers and controlling persons of each Registrant pursuant to the provisions described under Item 15 above, or otherwise, each Registrant has been advised that in the opinion of the Commission such indemnification is against public policy as expressed in the Securities Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by a Registrant of expenses incurred or paid by a director, officer or controlling person of such Registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, each Registrant will, unless in the opinion of its respective counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such ind emnification by it is against public policy as expressed in such Securities Act and will be governed by the final adjudication of such issue.

4. As to incorporating by reference subsequent Exchange Act documents by third parties:

The Registrants hereby undertake that, for purposes of determining any liability under the Securities Act each filing of an annual report pursuant to Section 13(a) or Section 15(d) of the Exchange Act of a third party that is incorporated by reference in this Registration Statement in accordance with Item 1100(c)(1) of Regulation AB shall be deemed to be a new registration statement relating to the securities offered herein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof.

SIGNATURES

Pursuant to the requirements of the Securities Act of 1933, the Registrant certifies that it has reasonable grounds to believe that it meets all of the requirements for filing on Form S-3 and has duly caused this Amendment No. 1 to the Registration Statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of New Orleans and State of Louisiana, on the 20th day of October, 2009.

ENTERGY TEXAS, INC.

By /s/ Theodore H. Bunting, Jr.
Name: Theodore H. Bunting, Jr.
Title: Senior Vice President and
Chief Accounting Officer

Pursuant to the requirements of the Securities Act of 1933, this Registration Statement has been signed below by the following persons in the capacities and on the dates indicated.

Signature	Title	Date
*                                               Joseph F. Domino	Chairman of the Board, Director, and President and Chief Executive Officer (Principal Executive Officer)	October 20, 2009
*                                              Gary J. Taylor	Director, Group President and Chief Utility Operating Officer	October 20,2009
/s/ Theodore H. Bunting, Jr. Theodore H. Bunting, Jr.	Senior Vice President and Chief Accounting Officer (Principal Accounting Officer)	October 20, 2009
*                                              Steven C. McNeal	Vice President and Treasurer (Principal Financial Officer)	October 20, 2009
*                                              Leo P. Denault	Director	October 20, 2009
*                                              Mark T. Savoff	Director	October 20, 2009
* By: Theodore H. Bunting, Jr. By: /s/ Theodore H. Bunting, Jr. Theodore H. Bunting, Jr. Attorney-in-Fact

SIGNATURES

Pursuant to the requirements of the Securities Act of 1933, the Registrant certifies that it has reasonable grounds to believe that it meets all of the requirements for filing on Form S-3 and has duly caused this Amendment No. 1 to the Registration Statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of New Orleans and State of Louisiana, on the 20^th day of October, 2009.

ENTERGY TEXAS RESTORATION FUNDING, LLC

By /s/ Theodore H. Bunting, Jr.
Name: Theodore H. Bunting, Jr.
Title: Chief Accounting Officer

Pursuant to the requirements of the Securities Act of 1933, this Registration Statement has been signed below by the following persons in the capacities and on the dates indicated.

Signature	Title	Date
*                                              Eddie Peebles	Manager and President (Principal Executive Officer)	October 20, 2009
/s/ Theodore H. Bunting, Jr. Theodore H. Bunting, Jr.	Chief Accounting Officer (Principal Accounting Officer)	October 20, 2009
*                                              Tom Wagner	Manager and Secretary	October 20, 2009
*                                              Steven C. McNeal	Vice President and Treasurer (Principal Financial Officer)	October 20, 2009
*                                              Paul Scheurich	Manager	October 20, 2009
By: /s/ Theodore H. Bunting, Jr. Theodore H. Bunting, Jr. Attorney-in-Fact

EXHIBIT INDEX

EXHIBIT NO.	DESCRIPTION OF EXHIBIT
1.1	Form of Underwriting Agreement for the Senior Secured Transition Bonds.
3.1	Certificate of Formation of Entergy Texas, Inc. effective December 31, 2007 (filed as Exhibit (3)(i) to the Registration Statement on Form 10 of Entergy Texas, Inc. in 000-53134).*
3.2	By-Laws of Entergy Texas, Inc. effective December 31, 2007, and as presently in effect (filed as Exhibit (3)(ii) to the Registration Statement on Form 10 of Entergy Texas, Inc. in 000-53134).*
3.3	Certificate of Formation of Entergy Texas Restoration Funding, LLC.
3.4	Amended and Restated Limited Liability Company Agreement of Entergy Texas Restoration Funding, LLC.
4.1	Form of Indenture between the Issuing Entity and the Indenture Trustee (including form of the Senior Secured Transition Bonds).
5.1	Opinion of Sidley Austin llp with respect to legality.
8.1	Opinion of Sidley Austin llp with respect to federal tax matters.
23.1	Consent of Sidley Austin llp (included in its opinions filed as Exhibits 5.1, 8.1 and 99.5).
23.2	Consent of Clark, Thomas & Winters, a Professional Corporation (included in its opinion filed as Exhibit 99.6).
24.1	Power of Attorney (Entergy Texas, Inc.).**
24.2	Power of Attorney (Entergy Texas Restoration Funding, LLC).**
25.1	Form T-1 Statement of Eligibility under the Trust Indenture Act of 1939 of The Bank of New York Mellon.
99.1	Form of Transition Property Servicing Agreement between the Issuing Entity and the Servicer.
99.2	Form of Transition Property Purchase and Sale Agreement between Entergy Texas, Inc. and the Issuing Entity.
99.3	Form of Administration Agreement between Entergy Texas, Inc. and the Issuing Entity.
99.4	Financing Order.
99.5	Opinion of Sidley Austin llp with respect to federal constitutional matters.
99.6	Opinion of Clark, Thomas & Winters, a Professional Corporation, with respect to Texas constitutional matters.

* Incorporated by reference herein as indicated.
** Previously filed with the Registration Statement filed on September 15, 2009.

EX-1

Exhibit 1.1

Entergy Texas Restoration Funding, LLC

Entergy Texas, Inc.

$[ ]

Senior Secured Transition Bonds

UNDERWRITING AGREEMENT

October [ ], 2009

To the Representatives named in Schedule I hereto
of the Underwriters named in Schedule II hereto

Ladies and Gentlemen:

1. Introduction.

   Entergy Texas Restoration Funding, LLC, a Delaware limited liability company (the "Issuer"), proposes, subject to the terms and conditions stated herein, to issue and sell $[ ] aggregate principal amount of its Senior Secured Transition Bonds (the "Bonds"), identified in Schedule I hereto, to the Underwriters named in Schedule II hereto. The Issuer and Entergy Texas, Inc., a Texas corporation and the Issuer's direct parent ("ETI"), hereby confirm their agreement with the several Underwriters (as defined below) as set forth herein.

   The term "Underwriters" as used herein shall be deemed to mean the entity or several entities named in Schedule II hereto and any underwriter substituted as provided in Section 7 hereof, and the term "Underwriter" shall be deemed to mean any one of such Underwriters. If the entity or entities listed in Schedule I hereto (the "Representatives") are the same as the entity or entities listed in Schedule II hereto, then the terms "Underwriters" and "Representatives", as used herein, shall each be deemed to refer to such entity or entities. All obligations of the Underwriters hereunder are several and not joint. If more than one entity is named in Schedule I hereto as a Representative, any action under or in respect of this underwriting agreement (this "Underwriting Agreement") may be taken by such entities jointly as the Representatives or by one of the entities acting on behalf of the Representatives and such action will be binding upon all the Underwriters.

   Capitalized terms used and not otherwise defined in this Underwriting Agreement shall have the meanings given to them in the Indenture (as defined below).

2. Description of the Bonds.

   The issuance of the Bonds is authorized by the Financing Order, Docket No. 37247 (the "Financing Order"), issued by the Public Utility Commission of Texas (the "PUCT") on September 11, 2009 in accordance with Sections 36.401-36.406 of Subchapter I of Chapter 36 of the Texas Utilities Code (together with Sections 39.301-39.313 of Subchapter G of Chapter 39 of the Texas Utilities Code, the "Financing Act"). The Bonds will be issued pursuant to an indenture to be dated as of [ ], 2009, as supplemented by a series supplement thereto relating to the Bonds (as so supplemented, the "Indenture"), between the Issuer and The Bank of New York Mellon, as indenture trustee (the "Indenture Trustee"). The Bonds will be senior secured obligations of the Issuer and will be secured by transition property (as more fully described in the Financing Order, the "Transition Property") to be sold to the Issuer by ETI pursuant to the Transition Property Purchase and Sale Agreement, to be dated on or about November [ ], 2009, between ETI and the Issuer (the "Sale Agreement"). The Transition Property securing the Bonds will be serviced pursuant to the Transition Property Servicing Agreement, to be dated on or about November [ ], 2009, between ETI, as servicer, and the Issuer, as owner of the Transition Property sold to it pursuant to the Sale Agreement (the "Servicing Agreement").

3. Representations and Warranties of the Issuer.

The Issuer represents and warrants to the several Underwriters that:

1. The Issuer and the Bonds meet the requirements for the use of Form S-3 under the Securities Act of 1933, as amended (the "Securities Act"), and each of the Issuer and ETI, in its capacity as sponsor for the Issuer, has filed with the Securities and Exchange Commission (the "Commission") a registration statement on such form on September 15, 2009 (Registration Nos. 333-161911 and 333-161911-01), as amended by Amendment No. 1 thereto filed on October [ ], 2009, including a prospectus and a form of prospectus supplement, for the registration under the Securities Act of up to $550,000,000 aggregate principal amount of the Bonds. Such registration statement, as amended ("Registration Statement No. 333-161911"), has been declared effective by the Commission and no stop order suspending such effectiveness has been issued under the Securities Act and no proceedings for that purpose have been instituted or are pending or, to the knowledge of the Issuer, thr eatened by the Commission. No transition bonds registered with the Commission under the Securities Act pursuant to Registration Statement No. 333-161911 have been previously issued. References herein to the term "Registration Statement" shall be deemed to refer to Registration Statement No. 333-161911, including any amendment thereto, all documents incorporated by reference therein pursuant to Item 12 of Form S-3 ("Incorporated Documents"), if any, and any information in a prospectus or a prospectus supplement deemed or retroactively deemed to be a part thereof pursuant to Rule 430B ("Rule 430B") or 430C ("Rule 430C") under the Securities Act that has not been superseded or modified. "Registration Statement" without reference to a time means the Registration Statement as of the Applicable Time (as defined below), which the parties agree is the time of the first Contract of Sale (as used in Rule 159 under the Sec urities Act) for the Bonds, and shall be considered the "Effective Date" of the Registration Statement relating to the Bonds. For purposes of this definition, information contained in a form of prospectus or prospectus supplement that is deemed retroactively to be a part of the Registration Statement pursuant to Rule 430B or Rule 430C shall be considered to be included in the Registration Statement as of the time specified in Rule 430B or Rule 430C as appropriate. The final prospectus and the final prospectus supplement relating to the Bonds, as filed with the Commission pursuant to Rule 424(b) under the Securities Act, are referred to herein as the "Final Prospectus," and the most recent preliminary prospectus and prospectus supplement that omitted information to be included upon pricing in a form of prospectus filed with the Commission pursuant to Rule 424(b) under the Securities Act and that was used after the initial effectiveness of the Registration Statement and prio r to the Applicable Time (as defined below) is referred to herein as the "Pricing Prospectus."
2. (i) At the earliest time after the filing of the Registration Statement that the Issuer or another offering participant made a bona fide offer (within the meaning of Rule 164(h)(2) under the Securities Act) of the Bonds and (ii) at the date hereof, the Issuer was not and is not an "ineligible issuer," as defined in Rule 405 under the Securities Act.
3. At the time the Registration Statement initially became effective, at the time of each amendment thereto for the purposes of complying with Section 10(a)(3) of the Securities Act (whether by post-effective amendment, incorporated report or form of prospectus) and on the Effective Date, the Registration Statement, and the Indenture, at the Closing Date (as defined below), fully complied and will fully comply in all material respects with the applicable requirements of the Securities Act, the Trust Indenture Act of 1939 (the "Trust Indenture Act") and, in each case, the applicable instructions, rules and regulations of the Commission thereunder; the Registration Statement, at each of the aforementioned dates, did not and will not include any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary to make the statements therein not misleading. As of the Applicable Time and as of the Closing Date (as defined below), the Registra tion Statement and the Final Prospectus fully complied and will fully comply in all material respects with the applicable requirements of the Securities Act, the Trust Indenture Act and the applicable instructions, rules and regulations of the Commission thereunder, and none of such documents include any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading; and on said dates the Incorporated Documents, taken together as a whole, fully complied or will fully comply in all material respects with the applicable provisions of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), and the applicable instructions, rules and regulations of the Commission thereunder; provided that the foregoing representations and warranties in this paragraph (c) shall not apply to statements or omissions made in relia nce upon information furnished in writing to the Issuer or ETI by, or on behalf of, any Underwriter through the Representatives specifically for use in the Registration Statement or the Final Prospectus, it being understood and agreed that the only such information furnished by any Underwriter consists of the information set forth in Schedule IV hereto, or to any statements in or omissions from any Statements of Eligibility on Form T-1 (or amendments thereto) of the Indenture Trustee under the Indenture filed as exhibits to the Registration Statement or Incorporated Documents or to any statements or omissions made in the Registration Statement or the Final Prospectus relating to The Depository Trust Company ("DTC") Book-Entry System that are based solely on information contained in published reports of DTC.
4. As of its date, at the Applicable Time, on the date of its filing, if applicable, and on the Closing Date, the Pricing Prospectus and each Issuer Free Writing Prospectus (as defined below) (other than the Pricing Term Sheet, as defined in Section 5(b) below), considered together, did not include any untrue statement of a material fact or omit to state any material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading (except that the principal amount of the Bonds, the tranches, the initial principal balances, the scheduled final payment dates, the final maturity dates, the expected average lives, the Expected Amortization Schedule, the Expected Sinking Fund Schedule, the interest rate, price to the public and underwriting discounts and commissions for each tranche was not included in the Pricing Prospectus). The Pricing Term Sheet, as of its issue date and at all subsequent times through the completion of the public offer and sale of the Bonds, considered together with the Pricing Prospectus and each other Issuer Free Writing Prospectus, did not include any untrue statement of a material fact or omit to state any material fact necessary in order to make the statements therein, in the light of the circumstance under which they were made, not misleading. The two preceding sentences do not apply to statements in or omissions from the Pricing Prospectus, the Pricing Term Sheet or any other Issuer Free Writing Prospectus in reliance upon and in conformity with written information furnished to the Issuer or ETI by any Underwriter through the Representatives specifically for use therein, it being understood and agreed that the only such information furnished by any Underwriter consists of the information set forth in Schedule IV hereto. "Issuer Free Writing Prospectus" means any "issuer free writing prospectus," as defined in Rule 433(h) under the Securities Act, relating to the Bonds, in the form filed or required to be filed with the Commission or, if not required to be filed, in the form retained in the Issuer's records pursuant to Rule 433(g) under the Securities Act. References to the term "Free Writing Prospectus" shall mean a free writing prospectus, as defined in Rule 405 under the Securities Act. References to the term "Applicable Time" mean [__:__] [_]M, New York City time, on the date hereof, except that if, subsequent to such Applicable Time, the Issuer, ETI and the Underwriters have determined that the information contained in the Pricing Prospectus or any Issuer Free Writing Prospectus issued prior to such Applicable Time included an untrue statement of a material fact or omitted to state a material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading and have terminated their old purchase contracts and entered into new purchase contracts with purchasers of the Bonds, then "App licable Time" will refer to the first of such times when such new purchase contracts are entered into. The Issuer represents, warrants and agrees that it has treated and agrees that it will treat each Free Writing Prospectus listed on Schedule III hereto as an Issuer Free Writing Prospectus, and that each such Free Writing Prospectus has fully complied and will fully comply with the applicable requirements of Rules 164 and 433 under the Securities Act, including timely Commission filing where required, legending and record keeping.
5. Each Issuer Free Writing Prospectus, as of its issue date and at all subsequent times through the Closing Date or until any earlier date that the Issuer notified or notifies the Representatives as described in the next sentence, did not, does not and will not include any information that conflicted, conflicts or will conflict with the information then contained in the Registration Statement. If at any time following issuance of an Issuer Free Writing Prospectus there occurred or occurs an event or development as a result of which such Issuer Free Writing Prospectus conflicted or would conflict with the information then contained in the Registration Statement or included or would include an untrue statement of a material fact or omitted or would omit to state a material fact necessary in order to make the statements therein, in the light of the circumstances prevailing at that subsequent time, not misleading, (i) ETI or the Issuer has promptly notified or will promptly notify the Representatives and (ii) ETI or the Issuer has promptly amended or will promptly amend or supplement such Issuer Free Writing Prospectus to eliminate or correct such conflict, untrue statement or omission. The foregoing two sentences do not apply to statements in or omissions from any Issuer Free Writing Prospectus in reliance upon and in conformity with written information furnished to the Issuer or ETI by any Underwriter through the Representatives specifically for use therein, it being understood and agreed that the only such information furnished by any Underwriter consists of the information set forth in Schedule IV hereto.
6. The Issuer has been duly formed and is validly existing as a limited liability company in good standing under the Limited Liability Company Act of the State of Delaware, as amended, with full limited liability company power and authority to execute, deliver and perform its obligations under this Underwriting Agreement, the Bonds, the Sale Agreement, the Servicing Agreement, the Indenture, the LLC Agreement, the Administration Agreement and the other agreements and instruments contemplated by the Pricing Prospectus (collectively, the "Basic Documents") and to own its properties and conduct its business as described in the Pricing Prospectus; the Issuer has been duly qualified as a foreign limited liability company for the transaction of business and is in good standing under the laws of each other jurisdiction in which it owns or leases properties or conducts any business so as to require such qualification, except where failure to so qualify or to be in good standing would not have a mat erial adverse effect on the business, properties or financial condition of the Issuer; the Issuer has conducted and will conduct no business in the future that would be inconsistent with the description of the Issuer's business set forth in the Pricing Prospectus; the Issuer is not a party to or bound by any agreement or instrument other than the Basic Documents and other agreements or instruments incidental to its formation; the Issuer has no material liabilities or obligations other than those arising out of the transactions contemplated by the Basic Documents and as described in the Pricing Prospectus; ETI is the beneficial owner of all of the limited liability company interests of the Issuer; and based on current law, the Issuer is not classified as an association taxable as a corporation for United States federal income tax purposes.
7. The issuance and sale of the Bonds by the Issuer, the purchase of the Transition Property by the Issuer from ETI, the execution, delivery and compliance by the Issuer with all of the provisions of the Basic Documents to which the Issuer is a party, and the consummation of the transactions herein and therein contemplated will not conflict with or result in a breach or violation of any of the terms or provisions of, or constitute a default under any trust agreement, indenture, mortgage, deed of trust, loan agreement or other agreement or instrument to which the Issuer is a party or by which the Issuer is bound or to which any of the property or assets of the Issuer is subject, which conflict, breach, violation or default would be material to the issue and sale of the Bonds or would have a material adverse effect on the general affairs, management, prospects, financial position or results of operations of the Issuer (an "Issuer Material Adverse Effect"), nor will such action result in any v iolation of the Issuer's certificate of formation or the LLC Agreement (collectively, the "Issuer Charter Documents") or any statute, order, rule or regulation of any court or governmental agency or body having jurisdiction over the Issuer or any of its properties.
8. This Underwriting Agreement has been duly authorized, executed and delivered by the Issuer, which has the necessary limited liability company power and authority to execute, deliver and perform its obligations under this Underwriting Agreement, and constitutes a valid and binding obligation of the Issuer, enforceable against the Issuer in accordance with its terms, except as the enforceability thereof may be limited by bankruptcy, insolvency, reorganization, receivership, moratorium or other similar laws relating to or affecting creditors' or secured parties' rights generally and by general principles of equity (including concepts of materiality, reasonableness, good faith and fair dealing), regardless of whether considered in a proceeding in equity or at law; and possible limitations on enforceability of rights to indemnification or contribution by federal or state securities laws or regulations or by public policy.
9. The Issuer (i) is not in violation of the Issuer Charter Documents, (ii) is not in default and no event has occurred which, with notice or lapse of time or both, would constitute such a default, in the due performance or observance of any term, covenant or condition contained in any indenture, mortgage, deed of trust or other agreement or instrument to which it is a party or by which it is bound or to which any of its properties is subject, except for any such defaults that would not, individually or in the aggregate, have an Issuer Material Adverse Effect, and (iii) is not in violation of any law, ordinance, governmental rule, regulation or court decree to which it or its property may be subject, except for any such violations that would not, individually or in the aggregate, have an Issuer Material Adverse Effect.
10. The Indenture has been duly authorized by the Issuer, and, on the Closing Date, will have been duly executed and delivered by the Issuer and will be a valid and binding instrument, enforceable against the Issuer in accordance with its terms, except as the enforceability thereof may be limited by bankruptcy, insolvency, reorganization, receivership, moratorium or other similar laws relating to or affecting creditors' or secured parties' rights generally and by general principles of equity (including concepts of materiality, reasonableness, good faith and fair dealing), regardless of whether considered in a proceeding in equity or at law. On the Closing Date, the Indenture will (i) comply as to form with the requirements of the Trust Indenture Act and (ii) conform to the description thereof in the Pricing Prospectus and the Final Prospectus.
11. The Bonds have been duly authorized by the Issuer for issuance and sale to the Underwriters pursuant to this Underwriting Agreement and, when executed by the Issuer and authenticated by the Indenture Trustee in accordance with the Indenture and delivered to the Underwriters against payment therefor in accordance with the terms of this Underwriting Agreement, will constitute valid and binding obligations of the Issuer entitled to the benefits of the Indenture and enforceable against the Issuer in accordance with their terms, except as the enforceability thereof may be limited by bankruptcy, insolvency, reorganization, receivership, moratorium or other similar laws relating to or affecting creditors' or secured parties' rights generally and by general principles of equity (including concepts of materiality, reasonableness, good faith and fair dealing), regardless of whether considered in a proceeding in equity or at law, and possible limitations on enforceability of rights to indemnification or contributio n by public policy; and the Bonds conform in all material respects to the description thereof in the Pricing Prospectus and the Final Prospectus. The Issuer has all requisite limited liability company power and authority to issue, sell and deliver the Bonds in accordance with and upon the terms and conditions set forth in this Underwriting Agreement and in the Pricing Prospectus and the Final Prospectus.
12. There is no pending or threatened suit or proceeding before any court or governmental agency, authority or body or any arbitration involving the Issuer, the Transition Property or the Bonds required to be disclosed in the Pricing Prospectus which is not adequately disclosed in the Pricing Prospectus.
13. Other than any necessary action of the PUCT, any filings required under the Financing Act or the Financing Order or as otherwise set forth or contemplated in the Pricing Prospectus, no approval, authorization, consent or order of any public board or body (except such as have been already obtained and other than in connection or in compliance with the provisions of applicable blue-sky laws or securities laws of any state, as to which the Issuer makes no representations or warranties) is legally required for the issuance and sale by the Issuer of the Bonds.
14. Neither the Issuer nor ETI is, and, after giving effect to the sale and issuance of the Bonds, will not be, an "investment company" within the meaning of the Investment Company Act of 1940, as amended (the "1940 Act").
15. Deloitte & Touche LLP, who have performed certain agreed upon procedures with respect to certain statistical and structural information contained in the Pricing Prospectus and the Final Prospectus, are independent public accountants as required by the Securities Act and the rules and regulations of the Commission thereunder.
16. Each of the Sale Agreement, the Servicing Agreement, the Administration Agreement and the LLC Agreement has been duly and validly authorized by the Issuer, and when executed and delivered by the Issuer and the other parties thereto, will constitute a valid and legally binding obligation of the Issuer, enforceable against the Issuer in accordance with its terms, except as the enforceability thereof may be limited by bankruptcy, insolvency, reorganization, receivership, moratorium or other similar laws relating to or affecting creditors' or secured parties' rights generally and by general principles of equity (including concepts of materiality, reasonableness, good faith and fair dealing), regardless of whether considered in a proceeding in equity or at law, and possible limitations on enforceability of rights to indemnification or contribution by public policy.

4. Representations and Warranties of ETI.

ETI represents and warrants to the several Underwriters that:

1. ETI, in its capacity as sponsor with respect to the Bonds, and jointly with the Issuer, has filed with the Commission Registration Statement No. 333-161911 for the registration under the Securities Act of up to $550,000,000 aggregate principal amount of the Issuer's transition bonds. Registration Statement No. 333-161911 has been declared effective by the Commission and no stop order suspending such effectiveness has been issued under the Securities Act and no proceedings for that purpose have been instituted or are pending or, to the knowledge of ETI, threatened by the Commission.
2. (i) At the earliest time after the filing of the Registration Statement that the Issuer or another offering participant made a bona fide offer (within the meaning of Rule 164(h)(2) under the Securities Act) of the Bonds and (ii) at the date hereof, ETI was not and is not an "ineligible issuer," as defined in Rule 405 under the Securities Act.
3. At the time the Registration Statement initially became effective, at the time of each amendment thereto for the purposes of complying with Section 10(a)(3) of the Securities Act (whether by post-effective amendment, incorporated report or form of prospectus) and on the Effective Date, the Registration Statement, and the Indenture, on the Closing Date, fully complied and will fully comply in all material respects with the applicable requirements of the Securities Act, the Trust Indenture Act and the applicable rules and regulations of the Commission thereunder; the Registration Statement, at each of the aforementioned dates, did not and will not include any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary to make the statements therein not misleading. As of the Applicable Time and as of the Closing Date, the Registration Statement and the Final Prospectus fully complied and will fully comply in all material respects to the requirement s of the Securities Act, the Trust Indenture Act and the applicable instructions, rules and regulations of the Commission thereunder, and none of such documents include any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading; and on said dates the Incorporated Documents, taken together as a whole, fully complied or will fully comply in all material respects with the applicable provisions of the Exchange Act, and the applicable instructions, rules and regulations of the Commission thereunder; provided, that the foregoing representations and warranties in this paragraph (c) shall not apply to statements or omissions made in reliance upon and in conformity with information furnished in writing to the Issuer or ETI by, or on behalf of, any Underwriter through the Representatives specifically for use in the Registration Statement or the Final Prospectus, it being understood and agreed that the only such information furnished by any Underwriter consists of the information set forth in Schedule IV hereto, or to any statements in or omissions from any Statement of Eligibility on Form T-1, or amendments thereto, of the Indenture Trustee under the Indenture filed as exhibits to the Registration Statement or Incorporated Documents or to any statements or omissions made in the Registration Statement or Final Prospectus relating to the DTC Book-Entry-Only System that are based solely on information contained in published reports of DTC.
4. As of its date, at the Applicable Time, on the date of its filing, if applicable, and on the Closing Date, the Pricing Prospectus and each Issuer Free Writing Prospectus (other than the Pricing Term Sheet), considered together, did not include any untrue statement of a material fact or omit to state any material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading (except that (i) the principal amount of the Bonds, the tranches, the initial principal balances, the scheduled final payment dates, the final maturity dates, the expected average lives, the Expected Amortization Schedule and the Expected Sinking Fund Schedule described in the Pricing Prospectus supersede any previously issued descriptions of such information and (ii) the interest rate, price to the public and underwriting discounts and commissions for each tranche was not included in the Pricing Prospectus). The Pricing Term Sheet, as of its issue date and at all subsequent times through the completion of the public offer and sale of the Bonds, considered together with the Pricing Prospectus and each other Issuer Free Writing Prospectus, did not include any untrue statement of a material fact or omit to state any material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading. The two preceding sentences do not apply to statements in or omissions from the Pricing Prospectus, the Pricing Term Sheet or any Issuer Free Writing Prospectus in reliance upon and in conformity with written information furnished to the Issuer or ETI by any Underwriter through the Representatives specifically for use therein, it being understood and agreed that the only such information furnished by any Underwriter consists of the information set forth in Schedule IV hereto. ETI represents, warrants and agrees that it has treated and agrees that it will treat each Free Writing Prospectus listed on Schedule III here to as an Issuer Free Writing Prospectus, and that each such Issuer Free Writing Prospectus has fully complied and will fully comply with the applicable requirements of Rules 164 and 433 under the Securities Act, including timely Commission filing where required, legending and record keeping
5. Each Issuer Free Writing Prospectus, as of its issue date and at all subsequent times through the completion of the public offer and sale of the Bonds or until any earlier date that the Issuer or ETI notified or notifies the Representatives as described in the next sentence, did not, does not and will not include any information that conflicted, conflicts or will conflict with the information then contained in the Registration Statement. If at any time following issuance of an Issuer Free Writing Prospectus there occurred or occurs an event or development as a result of which such Issuer Free Writing Prospectus conflicted or would conflict with the information then contained in the Registration Statement or included or would include an untrue statement of a material fact or omitted or would omit to state a material fact necessary in order to make the statements therein, in the light of the circumstances prevailing at that subsequent time, not misleading, (i) ETI or the Issuer has promptly notified or wi ll promptly notify the Representatives and (ii) ETI or the Issuer has promptly amended or will promptly amend or supplement such Issuer Free Writing Prospectus to eliminate or correct such conflict, untrue statement or omission. The foregoing two sentences do not apply to statements in or omissions from any Issuer Free Writing Prospectus in reliance upon and in conformity with written information furnished to the Issuer or ETI by any Underwriter through the Representatives specifically for use therein, it being understood and agreed that the only such information furnished by any Underwriter consists of the information set forth in Schedule IV hereto.
6. ETI has been duly formed and is validly existing as a corporation in good standing under the laws of the jurisdiction of its incorporation, has the corporate power and authority to own, lease and operate its properties and to conduct its business as presently conducted and as set forth in or contemplated by the Pricing Prospectus, is qualified as a foreign corporation to transact business and is in good standing in each jurisdiction in which such qualification is required, whether by reason of the ownership or leasing of property or the conduct of business, except where the failure to so qualify or be in good standing would not have a material adverse effect on the business, property or financial condition of ETI and its subsidiaries considered as a whole (an "ETI Material Adverse Effect"), and has all requisite power and authority to sell the Transition Property as described in the Pricing Prospectus and to otherwise perform its obligations under any Basic Document to which it is a part y. ETI is the beneficial owner of all of the limited liability company interests of the Issuer.
7. ETI has no significant subsidiaries within the meaning of Rule 1-02(w) of Regulation S-X.
8. The transfer by ETI of all of its rights and interests under the Financing Order relating to the Bonds to the Issuer, the execution, delivery and compliance by ETI with all of the provisions of the Basic Documents to which ETI is a party, and the consummation by the Issuer and ETI of the transactions herein and therein contemplated will not conflict with or result in a breach or violation of any of the terms or provisions of, or constitute a default under, any trust agreement, indenture, mortgage, deed of trust, loan agreement or other agreement or instrument to which ETI is a party or by which ETI is bound or to which any of the property or assets of ETI is subject, which conflict, breach, violation or default would be material to the issue and sale of the Bonds.
9. This Underwriting Agreement has been duly authorized, executed and delivered by ETI, which has the necessary corporate power and authority to execute, deliver and perform its obligations under this Underwriting Agreement, and constitutes a valid and binding obligation of ETI, enforceable against ETI in accordance with its terms, except as the enforceability thereof may be limited by bankruptcy, insolvency, reorganization, receivership, moratorium or other similar laws relating to or affecting creditors' or secured parties' rights generally and by general principles of equity (including concepts of materiality, reasonableness, good faith and fair dealing), regardless of whether considered in a proceeding in equity or at law, and possible limitations on enforceability of rights to indemnification or contribution by federal or state securities laws or regulations or by public policy.
10. ETI (i) is not in violation of its certificate of formation or bylaws, (ii) is not in default and no event has occurred which, with notice or lapse of time or both, would constitute such a default, in the due performance or observance of any term, covenant or condition contained in any indenture, mortgage, deed of trust or other agreement or instrument to which it is a party or by which it is bound or to which any of its properties is subject which would be material to the issue and sale of the Bonds, or (iii) is not in violation of any law, ordinance, governmental rule, regulation or court decree to which it or its property may be subject which would be material to the issue and sale of the Bonds.
11. There is no pending or threatened suit or proceeding before any court or governmental agency, authority or body or any arbitration involving ETI, the Transition Property or the Bonds required to be disclosed in the Pricing Prospectus which is not adequately disclosed in the Pricing Prospectus.
12. Other than any necessary action of the PUCT, any filings required under the Financing Act or the Financing Order or as otherwise set forth or contemplated in the Pricing Prospectus, no approval, authorization, consent or order of any public board or body (except such as have been already obtained and other than in connection or in compliance with the provisions of applicable blue-sky laws or securities laws of any state, as to which ETI makes no representations or warranties) is legally required for the issuance and sale by the Issuer of the Bonds.
13. Neither ETI nor the Issuer is, and after giving effect to the sale and issuance of the Bonds, neither ETI or the Issuer will be, an "investment company" within the meaning of the 1940 Act.
14. Each of the Sale Agreement, the Servicing Agreement and the Administration Agreement has been duly and validly authorized by ETI, and when executed and delivered by ETI and the other parties thereto will constitute a valid and legally binding obligation of ETI, enforceable against ETI in accordance with its terms, except as the enforceability thereof may be limited by bankruptcy, insolvency, reorganization, receivership, moratorium or other similar laws relating to or affecting creditors' or secured parties' rights generally and by general principles of equity (including concepts of materiality, reasonableness, good faith and fair dealing), regardless of whether considered in a proceeding in equity or at law, and possible limitations on enforceability of rights to indemnification or contribution by public policy.
15. There are no Texas transfer taxes related to the transfer of the Transition Property or the issuance and sale of the Bonds to the Underwriters pursuant to this Underwriting Agreement required to be paid at or prior to the Closing Date by ETI or the Issuer.
16. Deloitte & Touche LLP are independent public accountants with respect to ETI as required by the Securities Act and the rules and regulations of the Commission thereunder.

5. Investor Communications.

1. The Issuer and ETI represent and agree that, unless they obtain the prior consent of the Representatives, and each Underwriter represents and agrees that, unless it obtains the prior consent of the Issuer and ETI and the Representatives, it has not made and will not make any offer relating to the Bonds that would constitute an Issuer Free Writing Prospectus, or that would otherwise constitute a Free Writing Prospectus, required to be filed by the Issuer or ETI, as applicable, with the Commission or retained by the Issuer or ETI, as applicable, under Rule 433 under the Securities Act; provided that the prior consent of the parties hereto shall be deemed to have been given in respect of the term sheets and each other Free Writing Prospectus identified in Schedule III hereto.
2. ETI and the Issuer (or the Representatives at the direction of the Issuer) will prepare a final pricing term sheet relating to the Bonds (the "Pricing Term Sheet"), containing only information that describes the final pricing terms of the Bonds and otherwise in a form consented to by the Representatives, and will file such final pricing term sheet within the period required by Rule 433(d)(5)(ii) under the Securities Act following the date such final terms have been established for all tranches of the offering of the Bonds. The Pricing Term Sheet is an Issuer Free Writing Prospectus for purposes of this Underwriting Agreement.
3. Each Underwriter may provide to investors one or more of the Free Writing Prospectuses, including the Term Sheets, subject to the following conditions:

1. Unless preceded or accompanied by a prospectus satisfying the requirements of Section 10(a) of the Securities Act, an Underwriter shall not convey or deliver any Written Communication (as defined below) to any person in connection with the initial offering of the Bonds, unless such Written Communication (A) is made in reliance on Rule 134 under the Securities Act, (B) constitutes a prospectus satisfying the requirements of Rule 430B, (C) constitutes "ABS informational and computational information" as defined in Item 1101 of Regulation AB, (D) is an Issuer Free Writing Prospectus listed on Schedule III hereto or (E) is an Underwriter Free Writing Prospectus (as defined below). "Written Communication" has the same meaning as that term is defined in Rule 405 under the Securities Act.

   An "Underwriter Free Writing Prospectus" means any free writing prospectus that contains only preliminary or final terms of the Transition Bonds and is not required to be filed by ETI or the Issuer pursuant to Rule 433 under the Securities Act and that contains information substantially the same as the information contained in the Pricing Prospectus or the Pricing Term Sheet (including, without limitation, (1) the class, size, rating, price, CUSIPs, coupon, yield, spread, benchmark, status and/or legal maturity date of the Bonds, the weighted average life, expected first and final payment dates, trade date, settlement date, transaction parties, credit enhancement, logistical details related to the location and timing of and access to the roadshow, ERISA eligibility, legal investment status and payment window of one or more classes of Bonds and (2) a column or other entry showing the status of the subscriptions for the Bonds, both for the Bonds as a whole and for each Underwriter's retention, and/or expected pricing parameters of the Bonds).

2. Each Underwriter shall comply with all applicable laws and regulations in connection with the use of Free Writing Prospectuses and term sheets, including but not limited to Rules 164 and 433 under the Securities Act.
3. All Free Writing Prospectuses provided to investors, whether or not filed with the Commission, shall bear a legend including substantially the following statement:

   Issuer has filed a registration statement (including a prospectus) with the SEC for the offering to which this communication relates. Before you invest, you should read the prospectus in that registration statement and other documents Issuer has filed with the SEC for more complete information about Issuer and the offering. You may get these documents for free by visiting EDGAR on the SEC web site at www.sec.gov. Alternatively, Issuer, any underwriter or any dealer participating in the offering will arrange to send you the base prospectus if you request it by calling Morgan Stanley & Co. Incorporated toll-free at 1-866-718-1649 or Citigroup Global Markets Inc. toll-free at 1-877-858-5407.

   The Issuer and the Representatives shall have the right to require additional specific legends or notations to appear on any Free Writing Prospectus, the right to require changes regarding the use of terminology and the right to determine the types of information appearing therein with the approval of, in the case of the Issuer, the Representatives and, in the case of the Representatives, the Issuer (which in either case shall not be unreasonably withheld).

4. Each Underwriter covenants with the Issuer and ETI that after the Final Prospectus is available such Underwriter shall not distribute any written information concerning the Bonds to an investor unless such information is preceded or accompanied by the Final Prospectus or by notice to the investor that the Final Prospectus is available for free by visiting EDGAR on the Commission's website at www.sec.gov.
5. Each Underwriter agrees and covenants that if an Underwriter shall use an Underwriter Free Writing Prospectus, the liability arising from its use shall be the sole responsibility of the Underwriter using such Underwriter Free Writing Prospectus unless such Underwriter Free Writing Prospectus was consented to in advance by ETI; provided, however, that, for the avoidance of doubt, (A) this clause (v) shall not be interpreted as tantamount to the indemnification obligations contained in Section 11(b) hereof and (B) no Underwriter shall be responsible for any errors or omissions in an Underwriter Free Writing Prospectus to the extent that such error or omission related to or was derived from any information provided by the Issuer or ETI.

6. Purchase and Sale.

   On the basis of the representations and warranties herein contained, and subject to the terms and conditions herein set forth, the Issuer shall sell to each of the Underwriters, and each Underwriter shall purchase from the Issuer, at the time and place herein specified, severally and not jointly, at the purchase price set forth in Schedule I hereto, the principal amount of the Bonds set forth opposite such Underwriter's name in Schedule II hereto. The Underwriters agree to make a public offering of the Bonds. The Issuer shall pay (in the form of a discount to the principal amount of the offered Bonds) to the Underwriters a commission equal to $[ ].

7. Time and Place of Closing.

Delivery of the Bonds against payment of the aggregate purchase price therefor by wire transfer in federal funds shall be made at the place, on the date and at the time specified in Schedule I hereto, or at such other place, time and date as shall be agreed upon in writing by the Issuer and the Representatives. The hour and date of such delivery and payment are herein called the "Closing Date". The Bonds shall be delivered to DTC or to the Indenture Trustee, as custodian for DTC, in fully registered global form registered in the name of Cede & Co., for the respective accounts specified by the Representatives not later than the close of business on the business day preceding the Closing Date or such other time as may be agreed upon by the Representatives. The Issuer agrees to make the Bonds available to the Representatives for checking purposes not later than 1:00 P.M. New York Time on the last business day preceding the Closing Date at the place specified for delivery of the Bonds in Schedule I hereto, or at such other place as the Issuer may specify.

If any Underwriter shall fail or refuse to purchase and pay for the aggregate principal amount of Bonds that such Underwriter has agreed to purchase and pay for hereunder, the Issuer shall immediately give notice to the other Underwriters of the default of such Underwriter, and the other Underwriters shall have the right within 24 hours after the receipt of such notice to determine to purchase, or to procure one or more others, who are members of the Financial Industry Regulatory Authority ("FINRA") (or, if not members of FINRA, who are not eligible for membership in FINRA and who agree (i) to make no sales within the United States, its territories or its possessions or to persons who are citizens thereof or residents therein and (ii) in making sales to comply with FINRA's Conduct Rules) and satisfactory to the Issuer, to purchase, upon the terms herein set forth, the aggregate principal amount of Bonds that the defaulting Underwriter had agreed to purchase. If any non-defaulti ng Underwriter or Underwriters shall determine to exercise such right, such Underwriter or Underwriters shall give written notice to the Issuer of the determination in that regard within 24 hours after receipt of notice of any such default, and thereupon the Closing Date shall be postponed for such period, not exceeding three business days, as the Issuer shall determine. If in the event of such a default no non-defaulting Underwriter shall give such notice, then this Underwriting Agreement may be terminated by the Issuer, upon like notice given to the non-defaulting Underwriters, within a further period of 24 hours. If in such case the Issuer shall not elect to terminate this Underwriting Agreement it shall have the right, irrespective of such default:

1. to require each non-defaulting Underwriter to purchase and pay for the respective aggregate principal amount of Bonds that it had agreed to purchase hereunder as hereinabove provided and, in addition, the aggregate principal amount of Bonds that the defaulting Underwriter shall have so failed to purchase up to an aggregate principal amount of Bonds equal to one-tenth (1/10) of the aggregate principal amount of Bonds that such non-defaulting Underwriter has otherwise agreed to purchase hereunder, and/or
2. to procure one or more persons, reasonably acceptable to the Representatives, who are members of FINRA (or, if not members of FINRA, who are not eligible for membership in FINRA and who agree (i) to make no sales within the United States, its territories or its possessions or to persons who are citizens thereof or residents therein and (ii) in making sales to comply with FINRA's Conduct Rules), to purchase, upon the terms herein set forth, either all or a part of the aggregate principal amount of Bonds that such defaulting Underwriter had agreed to purchase or that portion thereof that the remaining Underwriters shall not be obligated to purchase pursuant to the foregoing clause (a).

In the event the Issuer shall exercise its rights under (a) and/or (b) above, the Issuer shall give written notice thereof to the non-defaulting Underwriters within such further period of 24 hours, and thereupon the Closing Date shall be postponed for such period, not exceeding three business days, as the Issuer shall determine.

In the computation of any period of 24 hours referred to in this Section 7, there shall be excluded a period of 24 hours in respect of each Saturday, Sunday or legal holiday that would otherwise be included in such period of time.

Any action taken by the Issuer or ETI under this Section 7 shall not relieve any defaulting Underwriter from liability in respect of any default of such Underwriter under this Underwriting Agreement. Termination by the Issuer under this Section 7 shall be without any liability on the part of the Issuer, ETI or any non-defaulting Underwriter, except as otherwise provided in Sections 8(a)(ii) and 11 hereof.

8. Covenants.

1. Covenants of the Issuer. The Issuer covenants and agrees with the several Underwriters that:

1. If, during such period of time (not exceeding nine months) after the Final Prospectus has been filed with the Commission pursuant to Rule 424 under the Securities Act ("Rule 424") as in the opinion of Counsel for the Underwriters (as defined below) a prospectus covering the Bonds is required by law to be delivered in connection with sales by an Underwriter or dealer (including in circumstances where such requirement may be satisfied pursuant to Rule 172 under the Securities Act), any event relating to or affecting the Issuer, the Bonds or the Transition Property or of which the Issuer shall be advised in writing by the Representatives shall occur that in the Issuer's reasonable judgment after consultation with Counsel for the Underwriters should be set forth in a supplement to, or an amendment of, the Final Prospectus in order to make the Final Prospectus not misleading in the light of the circumstances when it is delivered to a purchaser (including in circumstances where such requiremen t may be satisfied pursuant to Rule 172 under the Securities Act), the Issuer will promptly notify the Representatives of such event and, at its expense, amend or supplement the Final Prospectus by either (A) preparing and furnishing to the Underwriters at the Issuer's expense a reasonable number of copies of a supplement or supplements or an amendment or amendments to the Final Prospectus or (B) making an appropriate filing pursuant to Section 13 or Section 15 of the Exchange Act, which will supplement or amend the Final Prospectus so that, as supplemented or amended, it will not contain any untrue statement of a material fact or omit to state any material fact necessary in order to make the statements therein, in the light of the circumstances when the Final Prospectus is delivered to a purchaser (including in circumstances where such requirement may be satisfied pursuant to Rule 172 under the Securities Act), not misleading; provided that should such event relate solely to the activities of any of the Underwriters, then such Underwriters shall assume the expense of preparing and furnishing any such amendment or supplement.
2. The Issuer or ETI will, except as herein provided, pay or cause to be paid, all reasonable costs and expenses of the Issuer, the Indenture Trustee and the Underwriters incident to the performance of the obligations hereunder, including, without limiting the generality of the foregoing, (A) all costs, taxes and expenses incident to the issue and delivery of the Bonds to the Underwriters; (B) all costs and expenses incident to the preparation, printing, reproduction and distribution of the Registration Statement as originally filed with the Commission and each amendment or supplement thereto, the Pricing Prospectus (including any amendments and supplements thereto), the Final Prospectus (including any amendments and supplements thereto), and any Issuer Free Writing Prospectuses; (C) all reasonable fees, disbursements and expenses of (1) the Issuer's counsel, (2) ETI's counsel, (3) the Indenture Trustee's counsel, (4) Counsel for the Underwriters, (5) the Issuer's accountants and (6) ETI's account ants; (D) all fees charged by the Rating Agencies in connection with the rating of the Bonds; (E) all fees of DTC in connection with the book-entry registration of the Bonds; (F) all costs and expenses incurred in connection with the qualification of the Bonds for sale under the laws of such jurisdictions in the United States as the Representatives may designate, together with costs and expenses in connection with any filing with FINRA with respect to the transactions contemplated hereby (including counsel fees not to exceed $10,000); and (G) and all costs and expenses of printing and distributing all of the documents in connection the Bonds.
3. The Issuer will cause the Pricing Prospectus and the Final Prospectus to be filed with the Commission pursuant to Rule 424 as soon as practicable and advise the Underwriters of any stop order suspending the effectiveness of the Registration Statement or the institution of any proceeding therefor of which Issuer shall have received notice. The Issuer has complied and will comply with Rule 433 under the Securities Act in connection with the offering of the Bonds.
4. If the sale of the Bonds provided for herein is not consummated because any condition set forth in Section 9 hereof is not satisfied, because of any termination pursuant to Section 12 hereof or because of any refusal, inability or failure on the part of ETI or the Issuer to perform any agreement herein or comply with any provision hereof other than by reason of a default (including under Section 7) by any of the Underwriters, ETI or the Issuer will reimburse the Underwriters upon demand for the reasonable fees and disbursements of Counsel for the Underwriters, and will reimburse the Underwriters for their reasonable out-of-pocket expenses, in an aggregate amount not exceeding $200,000, incurred by them in connection with the proposed purchase and sale of the Bonds. The Issuer shall not in any event be liable to any of the several Underwriters for damages on account of loss of anticipated profits.
5. During the period from the date of this Underwriting Agreement to the date that is five days after the Closing Date, the Issuer will not, without the prior written consent of the Representatives, offer, sell or contract to sell, or otherwise dispose of, directly or indirectly, or announce the offering of, any asset-backed securities (other than the Bonds).
6. To the extent, if any, that any rating necessary to satisfy the condition set forth in Section 9(dd) of this Underwriting Agreement is conditioned upon the furnishing of documents or the taking of other actions by the Issuer on or after the Closing Date, the Issuer shall furnish such documents and take such other actions.
7. For a period from the date of this Underwriting Agreement until the retirement of the Bonds or until such time as the Underwriters shall cease to maintain a secondary market in the Bonds, whichever occurs first, the Issuer shall file with the Commission, and to the extent permitted by and consistent with the Issuer's obligations under applicable law, make available on the website associated with the Issuer's parent or affiliate, such periodic reports, if any, as are required (without regard to the number of holders of Bonds to the extent permitted by and consistent with the Issuer's obligations under applicable law) from time to time under Section 13 or Section 15(d) of the Exchange Act, and the Issuer shall not voluntarily suspend or terminate its filing obligations with the Commission. The Issuer shall also, to the extent permitted by and consistent with the Issuer's obligations under applicable law, include in the periodic and other reports to be filed with the Commission as provided above, such information as required by Section 3.07(g) of the Indenture with respect to the Bonds. To the extent that the Issuer's obligations are terminated or limited by an amendment to Section 3.07(g) of the Indenture, or otherwise, such obligations shall be correspondingly terminated or limited hereunder.
8. The Issuer will furnish to the Representatives and Counsel for the Underwriters, without charge, copies of the Registration Statement (including exhibits thereto), and as many copies of the Pricing Prospectus and the Final Prospectus and any amendment or supplement thereto as the Representatives may reasonably request.
9. So long as any of the Bonds are outstanding, the Issuer will furnish to the Representatives, if and to the extent not posted on the Issuer or its affiliate's website, (A) as soon as available, a copy of each report of the Issuer filed with the Commission under the Exchange Act or mailed to Bondholders (to the extent such reports are not publicly available on the Commission's website), (B) a copy of any filings with the PUCT pursuant to the Financing Act and the Financing Order including, but not limited to, any Issuance Advice Letter or any annual or more frequent True-Up Advice Letters, and (C) from time to time, any information concerning the Issuer as the Representatives may reasonably request.

2. Covenants of ETI. ETI covenants and agrees with the several Underwriters that, to the extent that the Issuer has not already performed such act pursuant to Section 8(a):

1. The Issuer will furnish to the Representatives and Counsel for the Underwriters, without charge, copies of the Registration Statement (including exhibits thereto), and as many copies of the Pricing Prospectus and the Final Prospectus and any amendment or supplement thereto as the Representatives may reasonably request.
2. ETI, in its capacity as sponsor with respect to the Bonds, will cause the Pricing Prospectus and the Final Prospectus to be filed with the Commission pursuant to Rule 424 as soon as practicable and advise the Underwriters of any stop order suspending the effectiveness of the Registration Statement or the institution of any proceeding therefor of which Issuer shall have received notice.
3. As soon as practicable, but not later than 16 months after the date hereof, ETI, in its capacity as sponsor with respect to the Bonds, will make generally available to its security holders, an earnings statement (which need not be audited) that will satisfy the provisions of Section 11(a) of the Securities Act with respect to the Bonds.
4. ETI, in its capacity as sponsor with respect to the Bonds, will furnish such proper information as may be lawfully required and otherwise cooperate in qualifying the Bonds for offer and sale under the blue-sky laws of such jurisdictions as the Representatives may designate and will maintain such qualifications in effect so long as required for the distribution of the Bonds; provided that neither the Issuer nor ETI shall be required to qualify as a foreign limited liability company or foreign corporation or dealer in securities, file any consents to service of process under the laws of any jurisdiction, or meet any other requirements deemed by the Issuer or ETI, as applicable, to be unduly burdensome.
5. ETI, in its capacity as sponsor with respect to the Bonds, will not file any amendment to the Registration Statement or amendment or supplement to the Final Prospectus during the period when a prospectus relating to the Bonds is required to be delivered under the Securities Act, without prior notice to the Underwriters, or to which Pillsbury Winthrop Shaw Pittman LLP, who are acting as counsel for the Underwriters ("Counsel for the Underwriters"), shall reasonably object by written notice to ETI and the Issuer.
6. To the extent permitted by applicable law and the agreements and instruments that bind ETI, ETI will use its reasonable best efforts to cause the Issuer to comply with the covenants set forth in Section 8(a) hereof.
7. ETI will use its reasonable best efforts to prevent the issuance by the Commission of any stop order suspending the effectiveness of the Registration Statement and, if issued, to obtain as soon as possible the withdrawal thereof.
8. If, during such period of time (not exceeding nine months) after the Final Prospectus has been filed with the Commission pursuant to Rule 424 as in the opinion of Counsel for the Underwriters a prospectus covering the Bonds is required by law to be delivered in connection with sales by an Underwriter or dealer, any event relating to or affecting ETI, the Bonds or the Transition Property or of which ETI shall be advised in writing by the Representatives shall occur that in ETI's reasonable judgment after consultation with Counsel for the Underwriters should be set forth in a supplement to, or an amendment of, the Final Prospectus in order to make the Final Prospectus not misleading in the light of the circumstances when it is delivered to a purchaser, ETI will cause the Issuer to promptly notify the Representatives of such event and, at ETI's or the Issuer's expense, to amend or supplement the Final Prospectus by either (A) preparing and furnishing to the Underwriters at ETI's or the Issuer's expense a reasonable number of copies of a supplement or supplements or an amendment or amendments to the Final Prospectus or (B) causing the Issuer to make an appropriate filing pursuant to Section 13 or Section 15 of the Exchange Act, which will supplement or amend the Final Prospectus so that, as supplemented or amended, it will not contain any untrue statement of a material fact or omit to state any material fact necessary in order to make the statements therein, in the light of the circumstances when the Final Prospectus is delivered to a purchaser, not misleading; provided that should such event relate solely to the activities of any of the Underwriters, then such Underwriters shall assume the expense of preparing and furnishing any such amendment or supplement.
9. During the period from the date of this Underwriting Agreement to the date that is five days after the Closing Date, ETI will not, without the prior written consent of the Representatives, offer, sell or contract to sell, or otherwise dispose of, directly or indirectly, or announce the offering of, any asset-backed securities (other than the Bonds).
10. ETI will cause the proceeds for the issuance and sale of the Bonds to be applied for the purposes described in the Pricing Prospectus.
11. To the extent, if any, that any rating necessary to satisfy the condition set forth in Section 9(dd) of this Underwriting Agreement is conditioned upon the furnishing of documents or the taking of other actions by ETI on or after the Closing Date, ETI shall furnish such documents and take such other actions.
12. The initial Transition Charge will be calculated in accordance with the Financing Order.

9. Conditions to the Obligations of the Underwriters.

The obligations of the Underwriters to purchase the Bonds shall be subject to the accuracy of the representations and warranties on the part of the Issuer and ETI contained in this Underwriting Agreement, on the part of ETI contained in Article III of the Sale Agreement, and on the part of ETI contained in Section 6.01 of the Servicing Agreement as of the Closing Date, to the accuracy of the statements of the Issuer and ETI made in any certificates pursuant to the provisions hereof, to the performance by the Issuer and ETI of their obligations hereunder, and to the following additional conditions:

1. The Final Prospectus shall have been filed with the Commission pursuant to Rule 424 prior to 5:30 P.M., New York time, on the second business day after the date of this Underwriting Agreement. In addition, all material required to be filed by the Issuer or ETI pursuant to Rule 433(d) under the Securities Act that was prepared by either of them or that was prepared by any Underwriter with the Issuer's consent and timely provided to the Issuer or ETI shall have been filed with the Commission within the applicable time period prescribed for such filing by such Rule 433(d).
2. No stop order suspending the effectiveness of the Registration Statement shall be in effect, and no proceedings for that purpose shall be pending before, or threatened by, the Commission on the Closing Date; and the Underwriters shall have received one or more certificates, dated the Closing Date and signed by an officer of ETI and the Issuer, as appropriate, to the effect that no such stop order is in effect and that no proceedings for such purpose are pending before, or to the knowledge of ETI or the Issuer, as the case may be, threatened by, the Commission.
3. Pillsbury Winthrop Shaw Pittman LLP, as Counsel for the Underwriters, shall have furnished to the Representatives their written opinion (substantially in the form attached as Annex I (c) hereto), dated the Closing Date, with respect to the issuance and sale of the Bonds, the Indenture, the other Basic Documents, the Registration Statement and other related matters; and such counsel shall have received such papers and information as they may reasonably request to enable them to pass upon such matters.
4. Richards, Layton & Finger, P.A., special Delaware counsel for ETI and the Issuer, shall have furnished to the Representatives their written opinion (substantially in the form attached as Annex I (d) hereto), dated the Closing Date, regarding the filing of a voluntary bankruptcy petition.
5. Richards, Layton & Finger, P.A., special Delaware counsel to ETI and the Issuer, shall have furnished to the Representatives their written opinion (substantially in the form attached as Annex I (e) hereto), dated the Closing Date, regarding certain Delaware security interest matters.
6. Sidley Austin LLP, counsel for the Issuer and ETI, shall have furnished to the Representatives their written opinion (substantially in the form attached as Annex I (f) hereto), dated the Closing Date, regarding certain aspects of the transactions contemplated by the Basic Documents, including the Indenture and the Trustee's security interest under the Uniform Commercial Code.
7. Sidley Austin LLP, counsel for the Issuer and ETI, shall have furnished to the Representatives their written opinion (substantially in the form attached as Annex I (g) hereto), dated the Closing Date, regarding various issues requested by the Representative, including negative assurances and other corporate matters.
8. Sidley Austin LLP, counsel for the Issuer and ETI, shall have furnished to the Representatives their written opinion (substantially in the form attached as Annex I (h) hereto), dated the Closing Date, regarding bankruptcy issues.
9. Clark Thomas Winters, a Professional Corporation, Texas counsel for the Issuer and ETI, shall have furnished to the Representatives their written opinion (substantially in the form attached as Annex I (i) hereto), dated the Closing Date, regarding certain Texas constitutional matters relating to the Transition Property.
10. Sidley Austin LLP, counsel for the Issuer and ETI, shall have furnished to the Representatives their written opinion (substantially in the form attached as Annex I (j) hereto), dated the Closing Date, regarding certain federal tax matters.
11. Clark Thomas & Winters, a Professional Corporation, Texas counsel for the Issuer and ETI, and Sidley Austin LLP, counsel for the Issuer and ETI, each shall have furnished to the Representatives their respective written opinions (substantially in the forms attached as Annex I (k)(1) and Annex I (k)(2) hereto, respectively) to the effect that, with respect to the opinion of Clark Thomas & Winters, a Professional Corporation, the Transition Property is not subject to the lien of ETI's Mortgage, Deed of Trust and Security Agreement, dated as of December 31, 2007, as amended by the First Amendment to Mortgage, Deed of Trust and Security Agreement, dated effective as of March 20, 2008, as such amended Mortgage, Deed of Trust and Security Agreement was supplemented and modified, and with respect to the opinion of Sidley Austin LLP, the Transition Property is not subject to the lien of ETI's Indenture, Deed of Trust and Security Agreement, dated as of October 1, 2008, as supplemented and modified.< /LI>
12. Clark Thomas & Winters, a Professional Corporation, Texas counsel for the Issuer and ETI, shall have furnished to the Representatives their written opinion (substantially in the form attached as Annex I (l) hereto), dated the Closing Date, with respect to the characterization of the transfer of the Transition Property by ETI to the Issuer as a "true sale" for Texas law purposes.
13. Sidley Austin LLP, counsel for the Issuer and ETI, shall have furnished to the Representatives their written opinion (substantially in the form attached as Annex I (m) hereto), dated the Closing Date, regarding certain federal constitutional matters relating to the Transition Property.
14. Stradley, Ronon, Stevens & Young LLP, counsel for the Indenture Trustee, shall have furnished to the Representatives their written opinion (each substantially in the form attached as Annex I (n) hereto), dated the Closing Date, regarding certain matters relating to the Indenture Trustee.
15. Clark, Thomas & Winters, a Professional Corporation, special regulatory counsel for ETI and the Issuer, shall have furnished to the representatives their written opinion (substantially in the form attached as Annex I (o) hereto), dated the Closing Date, regarding certain Texas regulatory issues.
16. Clark, Thomas & Winters, a Professional Corporation, special regulatory counsel for ETI and the Issuer, shall have furnished to the representatives their written opinion (substantially in the form attached as Annex I (p) hereto), dated the Closing Date, with respect to the treatment of retail electric provider payments as Transition Charges.
17. Clark, Thomas & Winters, a Professional Corporation, counsel to ETI and the Issuer, shall have furnished to the Representatives their written opinion (substantially in the form attached as Annex I (q) hereto), dated the Closing Date, regarding various issues requested by the Representative, including enforceability and certain Texas perfection and priority issues.
18. Sidley Austin LLP, counsel for the Issuer and ETI, shall have furnished to the Representatives their written opinion (substantially in the form attached as Annex I (r) hereto), dated the Closing Date, regarding certain bankruptcy and creditors' rights issues relating to the Issuer.
19. Richards, Layton & Finger, P.A., special Delaware counsel for the Issuer and ETI, shall have furnished to the Representatives their written opinion (substantially in the form attached as Annex I (s) hereto), dated the Closing Date, regarding certain matters of Delaware law.
20. Clark, Thomas & Winters, a Professional Corporation, Texas counsel for the Issuer and ETI, shall have furnished to the Representatives their written opinion (substantially in the form attached as Annex I (t) hereto), dated the Closing Date, regarding the possibility and merits of an appeal or attack of the Financing Act.
21. Clark, Thomas & Winters, a Professional Corporation, Texas counsel for the Issuer and ETI, shall have furnished to the Representatives their written opinion (substantially in the form attached as Annex I (u) hereto), dated the Closing Date, as to certain Texas tax matters.
22. Clark, Thomas & Winters, a Professional Corporation, Texas counsel for the Issuer and ETI, shall have furnished to the Representatives their written opinion (substantially in the form attached as Annex I (v) hereto), dated the Closing Date, as to the consequences of the abolishment of the PUCT or the repeal of the Financing Act by operation of the Texas Sunset Act.
23. Clark, Thomas & Winters, a Professional Corporation, Texas counsel for the Issuer and ETI, shall have furnished to the Representatives their written opinion (substantially in the form attached as Annex I (w) hereto), dated the Closing Date, with respect to additional corporate matters.
24. Dawn A. Abuso, Esq., Senior Counsel-Corporate and Securities of Entergy Services, Inc., shall have furnished to the Representatives her written opinion (substantially in the form attached as Annex I (x) hereto), dated the Closing Date, with respect to additional corporate matters.
25. Reserved.
26. On or prior to the date of this Underwriting Agreement and on or before the Closing Date, Deloitte & Touche LLP shall have furnished to the Representatives one or more agreed upon procedure reports regarding certain calculations and computations relating to the Bonds, contained in the Pricing Prospectus, the Final Prospectus or any Free Writing Prospectus, in form or substance reasonably satisfactory to the Representatives, in each case in respect of which the Representatives shall have made specific requests therefor and shall have provided acknowledgment or similar letters to Deloitte & Touche LLP reasonably necessary in order for Deloitte & Touche LLP to issue such reports.
27. Subsequent to the respective dates as of which information is given in each of the Registration Statement, the Pricing Prospectus and the Final Prospectus, there shall not have been any change specified in the Rating Agency letters required by subsection (dd) of this Section 9 which is, in the judgment of the Representatives, so material and adverse as to make it impracticable or inadvisable to proceed with the offering or the delivery of the Bonds as contemplated by the Registration Statement and the Pricing Prospectus.
28. The LLC Agreement, the Administration Agreement, the Sale Agreement, the Servicing Agreement and the Indenture and any amendment or supplement to any of the foregoing shall have been executed and delivered.
29. Since the respective dates as of which information is given in each of the Registration Statement and the Pricing Prospectus, and as of the Closing Date, there shall have been no (i) material adverse change in the business, property or financial condition of ETI and its subsidiaries, taken as a whole, whether or not in the ordinary course of business, or the Issuer or (ii) adverse development concerning the business or assets of ETI and its subsidiaries, taken as a whole, or the Issuer which would be reasonably likely to result in a material adverse change in the prospective business, property or financial condition of ETI and its subsidiaries, taken as a whole, whether or not in the ordinary course of business, or the Issuer or (iii) development which would be reasonably likely to result in a material adverse change in the Transition Property, the Bonds or the Financing Order.
30. At the Closing Date, (i) the Bonds shall be rated at least "Aaa", "AAA", and "AAA" by Moody's Investors Service, Inc. ("Moody's"), Standard & Poor's, a division of the McGraw-Hill Companies, Inc. ("S&P"), and Fitch, Inc. ("Fitch"), respectively, and the Issuer shall have delivered to the Underwriters a letter from each such Rating Agency, or other evidence satisfactory to the Underwriters, confirming that the Bonds have such ratings, and (ii) none of Moody's, S&P and Fitch shall have, since the date of this Underwriting Agreement, downgraded or publicly announced that it has under surveillance or review, with possible negative implications, its ratings of the Bonds.
31. The Issuer and ETI shall have furnished or caused to be furnished to the Representatives at the Closing Date certificates of officers of ETI and the Issuer, reasonably satisfactory to the Representatives, as to the accuracy of the representations and warranties of the Issuer and ETI herein, in the Sale Agreement, the Servicing Agreement and the Indenture at and as of the Closing Date, as to the performance by the Issuer and ETI of all of their obligations hereunder to be performed at or prior to such Closing Date, as to the matters set forth in subsections (b) and (cc) of this Section 9 and as to such other matters as the Representatives may reasonably request.
32. An issuance advice letter, in a form consistent with the provisions of the Financing Order, shall have been filed with the PUCT and shall have become effective.
33. On or prior to the Closing Date, the Issuer shall have delivered to the Representatives evidence, in form and substance reasonably satisfactory to the Representatives, that appropriate filings have been or are being made in accordance with the Financing Act, the Financing Order and other applicable law reflecting the grant of a security interest by the Issuer in the collateral relating to the Bonds to the Indenture Trustee, including the filing of the requisite notices in the office of the Secretary of State of the State of Texas.
34. On or prior to the Closing Date, ETI shall have funded the capital subaccount of the Issuer with cash in an amount equal to $[ ].
35. The Issuer and ETI shall have furnished or caused to be furnished or agree to furnish to the Rating Agencies at the Closing Date such opinions and certificates as the Rating Agencies shall have reasonably requested prior to such Closing Date.
36. On or prior to the Closing Date, the Issuer shall have delivered to the Representatives evidence, in form and substance reasonably satisfactory to the Representatives, of (i) a certificate that attaches a true, correct and complete copy of the Financing Order and certifies such copy to be the act and deed of the PUCT and (ii) a certificate that states the Financing Order has not been altered, rescinded, amended, modified, revoked, or supplemented as of the Closing Date.

Any opinion letters delivered on the Closing Date to the Rating Agencies beyond those being delivered to the Underwriters above shall either (i) include the Underwriters as addressees or (ii) be accompanied by reliance letters addressed to the Underwriters referencing such letters.

If any of the conditions specified in this Section 9 shall not have been fulfilled in all material respects when and as provided in this Underwriting Agreement, or if any of the opinions and certificates mentioned above or elsewhere in this Underwriting Agreement shall not be in all material respects reasonably satisfactory in form and substance to the Representatives and Counsel for the Underwriters, this Underwriting Agreement and all obligations of the Underwriters hereunder may be canceled at, or at any time prior to, the Closing Date by the Representatives. Notice of such cancellation shall be given to the Issuer in writing or by telephone or facsimile confirmed in writing.

10. Conditions of Issuer's Obligations.

    The obligation of the Issuer to deliver the Bonds shall be subject to the conditions that no stop order suspending the effectiveness of the Registration Statement shall be in effect at the Closing Date and no proceeding for that purpose shall be pending before, or threatened by, the Commission at the Closing Date and the issuance advice letter described in Section 9(ff) shall have become effective. In case these conditions shall not have been fulfilled, this Underwriting Agreement may be terminated by the Issuer upon notice thereof to the Underwriters. Any such termination shall be without liability of any party to any other party except as otherwise provided in Sections 8(a)(ii) and 11 hereof.

11. Indemnification and Contribution.

1. ETI and the Issuer, jointly and severally, will indemnify and hold harmless each Underwriter, and its directors and officers, and each person who controls any Underwriter within the meaning of either Section 15 of the Securities Act or Section 20 of the Exchange Act against any and all losses, claims, damages or liabilities, joint or several, to which they or any of them may become subject under the Financing Act, the Securities Act, the Exchange Act or other federal or state statutory law or regulation, at common law or otherwise, insofar as such losses, claims, damages or liabilities (or actions in respect thereof) arise out of or are based upon (i) any untrue statement or alleged untrue statement of a material fact contained in the Registration Statement as originally filed or in any amendment or supplement thereof, (ii) any untrue statement or alleged untrue statement of a material fact contained in the Pricing Prospectus, the Final Prospectus, the Issuer Free Writing Prospectuses or in any amendment thereof or amendment or supplement thereto, (iii) the omission or alleged omission to state in the Registration Statement, the Pricing Prospectus, the Final Prospectus or the Issuer Free Writing Prospectuses a material fact required to be stated therein or necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading, or (iv) any information prepared by or on behalf of the Issuer or ETI and provided to the Underwriters, and will reimburse each such indemnified party, as incurred, for any legal or other expenses reasonably incurred by them in connection with investigating or defending any such loss, claim, damage, liability or action; provided, however, that neither the Issuer nor ETI will be liable in any such case to the extent that any such loss, claim, damage or liability arises out of or is based upon any such untrue statement or alleged untrue statement or omission or alleged omission made therein in reliance upon and in conformity with written information furnished to the Issuer or ETI by or on behalf any Underwriter through the Representatives specifically for inclusion therein it being understood and agreed that the only such information furnished by any Underwriter consists of the information set forth in Schedule IV hereto, or arises out of, or based upon, statements in or omissions from that part of the Registration Statement that shall constitute the Statement of Eligibility under the Trust Indenture Act of the Indenture Trustee with respect to any indenture qualified pursuant to the Registration Statement; and provided further, that the indemnity agreement contained in this Section 11 shall not inure to the benefit of any Underwriter (or of any officer or director of such Underwriter or of any person controlling such Underwriter within the meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act) on account of any such losses, claims, damages, liabilities, expenses or actions, joint or several , arising from the sale of the Bonds to any person if a copy of the Pricing Prospectus (including any amendment or supplement thereto if any amendments or supplements thereto shall have been furnished to the Underwriters at or prior to the time of entry into the contract for such sale of the Bonds) (exclusive of the Incorporated Documents) shall not have been given or sent to such person by or on behalf of such Underwriter with or prior to the entry into the contract for the sale of the Bonds to such person, unless the alleged omission or alleged untrue statement was not corrected in the Pricing Prospectus (including any amendment or supplement thereto if any amendments or supplements thereto shall have been furnished to the Underwriters at or prior to the time of entry into the contract for such sale of the Bonds) at the time of entry into the contract for such sale of the Bonds.
2. Each Underwriter severally agrees to indemnify and hold harmless ETI and the Issuer, each of their directors, officers and managers, each of their officers, directors or managers who signs the Registration Statement, and each person who controls ETI or the Issuer within the meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act, against any and all losses, claims, damages or liabilities, joint or several, to which they or any of them may become subject under the Financing Act, the Securities Act, the Exchange Act or other federal or state statutory law or regulation, at common law or otherwise, insofar as such losses, claims, damages or liabilities (or actions in respect thereof) arise out of or are based upon, (i) any untrue statement or alleged untrue statement of a material fact contained in the Registration Statement as originally filed or in any amendment or supplement thereof, (ii) any untrue statement or alleged untrue statement of a material fact contained in the Pricing Prospectus, the Final Prospectus, the Issuer Free Writing Prospectuses or in any amendment thereof or amendment or supplement thereto, (iii) the omission or alleged omission to state in the Registration Statement, the Pricing Prospectus, the Final Prospectus or the Issuer Free Writing Prospectuses a material fact required to be stated therein or necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading, but only with reference to written information relating to such Underwriter furnished to the Issuer or ETI by or on behalf of such Underwriter through the Representatives specifically for inclusion in the documents referred to in the foregoing indemnity it being understood and agreed that the only such information furnished by any Underwriter consists of the information set forth in Schedule IV hereto. This indemnity agreement will be in addition to any liability that any Underwriter may otherwise have.
3. ETI and the several Underwriters each shall, upon the receipt of notice of the commencement of any action against it or any person controlling it as aforesaid, in respect of which indemnity may be sought on account of any indemnity agreement contained herein, promptly give written notice of the commencement thereof to the party or parties against whom indemnity shall be sought under (a) or (b) above, but the failure to notify such indemnifying party or parties of any such action shall not relieve such indemnifying party or parties from any liability hereunder to the extent such indemnifying party or parties is/are not materially prejudiced as a result of such failure to notify and in any event shall not relieve such indemnifying party or parties from any liability which it or they may have to the indemnified party otherwise than on account of such indemnity agreement. In case such notice of any such action shall be so given, such indemnifying party shall be entitled to participate at its own expense in the defense, or, if it so elects, to assume (in conjunction with any other indemnifying parties) the defense of such action, in which event such defense shall be conducted by counsel chosen by such indemnifying party or parties and reasonably satisfactory to the indemnified party or parties who shall be defendant or defendants in such action, and such defendant or defendants shall bear the fees and expenses of any additional counsel retained by them; but if the indemnifying party shall elect not to assume the defense of such action, such indemnifying party will reimburse such indemnified party or parties for the reasonable fees and expenses of any counsel retained by them; provided, however, that if the defendants in any such action (including impleaded parties) include both the indemnified party and the indemnifying party and counsel for the indemnifying party shall have reasonably concluded that there may be a conflict of interest involved in the representation by a single counsel of both the indemnifying party and the indemnified party, the indemnified party or parties shall have the right to select separate counsel, satisfactory to the indemnifying party, whose reasonable fees and expenses shall be paid by such indemnifying party, to participate in the defense of such action on behalf of such indemnified party or parties (it being understood, however, that the indemnifying party shall not be liable for the fees and expenses of more than one separate counsel (in addition to local counsel) representing the indemnified parties who are parties to such action). Each of ETI, the Issuer and the several Underwriters agrees that without the other party's prior written consent, which consent shall not be unreasonably withheld, it will not settle, compromise or consent to the entry of any judgment in any claim in respect of which indemnification may be sought under the indemnification provisions of this Underwriting Agreement, unless such settlement, compromise or consent (i) includes an unconditio nal release of such other party from all liability arising out of such claim and (ii) does not include a statement as to or an admission of fault, culpability or a failure to act by or on behalf of such other party.
4. In the event that the indemnity provided in paragraph (a) or (b) of this Section 11 is unavailable to or insufficient to hold harmless an indemnified party for any reason, ETI , the Issuer and the Underwriters agree to contribute to the aggregate losses, claims, damages and liabilities (including legal or other expenses reasonably incurred in connection with investigating or defending same) (collectively "Losses") to which the Issuer and one or more of the Underwriters may be subject in such proportion as is appropriate to reflect the relative benefits received by the Issuer and ETI, on the one hand, and by such Underwriter, on the other hand, from the offering of the Bonds . If the allocation provided by the immediately preceding sentence is unavailable for any reason, ETI, the Issuer and the Underwriters shall contribute in such proportion as is appropriate to reflect not only such relative benefits but also the relative fault of ETI, the Issuer and the applicable Underwriter res pectively in connection with the statements or omissions that resulted in such Losses as well as any other relevant equitable considerations. Relative fault shall be determined by reference to whether any alleged untrue statement or omission relates to information provided by ETI, the Issuer or such Underwriter, as the case may be. ETI, the Issuer and the Underwriters agree that it would not be just and equitable if contribution were determined by pro rata allocation or any other method of allocation that does not take account of the equitable considerations referred to above. Notwithstanding the provisions of this paragraph (d), no person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act) shall be entitled to contribution from any person who was not guilty of such fraudulent misrepresentation. For purposes of this Section 11, each person who controls an Underwriter within the meaning of either the Securities Act or the Exchange Act and each director or off icer of an Underwriter shall have the same rights to contribution as such Underwriter, and each person who controls the Issuer or ETI within the meaning of either the Securities Act or the Exchange Act, each director, officer or manager of the Issuer or ETI who shall have signed the Registration Statement and each director, officer or manager of the Issuer or ETI shall have the same rights to contribution as the Issuer or ETI , subject in each case to the applicable terms and conditions of this paragraph (d). The Underwriters' obligations in this Section 11 to contribute are several in proportion to the respective principal amounts of Bonds set forth opposite their names in Schedule II hereto and not joint. Notwithstanding the provisions of this Section 11, no Underwriter shall be required to contribute in excess of the amount equal to the excess of (i) the total underwriting fees, discounts and commissions received by it, over (ii) the amount of any damages which such Underwriter has otherwis e been required to pay by reason of any such untrue or alleged untrue statement or omission or alleged omission.

12. Termination.

    This Underwriting Agreement shall be subject to termination in the absolute discretion of the Representatives, by written notice given to ETI and the Issuer prior to delivery of and payment for the Bonds, if prior to such time (i) there shall have occurred any change, or any development involving a prospective change, in or affecting either (A) the business, properties or financial condition of the Issuer or ETI or (B) the Transition Property, the Bonds, the Financing Order or the Financing Act, the effect of which, in either case and in the reasonable judgment of the Representatives, materially impairs the investment quality of the Bonds or makes it impractical or inadvisable to market the Bonds, (ii) trading in securities generally on the New York Stock Exchange shall have been suspended or limited or minimum prices shall have been established on such Exchange, (iii) a banking moratorium shall have been declared either by federal, State of New York or State of Texas authorities, (iv) there shall hav e occurred a material disruption in securities settlement, payment or clearing systems, (v) there shall have occurred any outbreak or escalation of hostilities, declaration by the United States of a national emergency or war or (vi) there shall have occurred any terrorist act in the United States or any other calamity (including any natural calamity, such as an earthquake) or crisis or any change in financial, political or economic condition in the United States or elsewhere, if the effect of any such event specified in clause (v) or (vi), in the reasonable judgment of the Representatives, makes it impracticable or inadvisable to proceed with the offering or delivery of the Bonds as contemplated by the Final Prospectus (exclusive of any amendment or supplement thereto).

13. Absence of Fiduciary Relationship.

    Each of the Issuer and ETI acknowledges and agrees that the Issuer and ETI, respectively, each have arm's length business relationships with Morgan Stanley & Co. Incorporated, Citigroup Global Markets Inc., Goldman, Sachs & Co., RBS Securities Inc. and Loop Capital Markets, LLC, and their respective affiliates, that create no fiduciary duty on the part of Morgan Stanley & Co. Incorporated, Citigroup Global Markets Inc., Goldman, Sachs & Co., RBS Securities Inc. and Loop Capital Markets, LLC, and their respective affiliates, in connection with all aspects of the transactions contemplated by this Underwriting Agreement, and each such party expressly disclaims any fiduciary relationship. Nothing in this Section is intended to modify in any way the Underwriters' obligations expressly set forth in the Underwriting Agreement. Notwithstanding any other provision of this Underwriting Agreement, immediately upon commencement of discussions with respect to the transactions contemplated hereby, the Issuer and ETI (and each employee, representative or other agent of the Issuer or ETI , as the case may be) may disclose to any and all persons, without limitation of any kind, the tax treatment and tax structure of the transactions contemplated by this Agreement and all materials of any kind (including opinions or other tax analyses) that are provided to the Issuer or ETI relating to such tax treatment and tax structure. For purposes of the foregoing, the term "tax treatment" is the purported or claimed federal, state or local income tax treatment of the sale of the transition property, the collection of the transition charges or the payment on the Bonds, and the term "tax structure" includes any fact that may be relevant to understanding the purported or claimed federal, state or local income tax treatment of the transactions contemplated hereby.

14. Notices.

    Unless otherwise specifically provided herein, all notices, directions, consents and waivers required under the terms and provisions of this Underwriting Agreement shall be in English and in writing, and any such notice, direction, consent or waiver may be given by United States first class mail, reputable overnight courier service, facsimile transmission or electronic mail (confirmed by telephone, United States first class mail or reputable overnight courier service in the case of notice by facsimile transmission or electronic mail) or any other customary means of communication, and any such notice, direction, consent or waiver shall be effective when delivered or transmitted, or if mailed, three days after deposit in the United States mail with proper first class postage prepaid, at the addresses specified below until otherwise provided, in writing, by the respective parties:

If to the Representatives:	c/o Morgan Stanley & Co. Incorporated 1585 Broadway New York, New York 10036 Attention: Investment Banking Division Facsimile:  212-507-8999 Citigroup Global Markets Inc. 388 Greenwich Street New York, New York 10013 Attention: General Counsel Facsimile: 212-816-7912
If to ETI:	Entergy Texas, Inc. 350 Pine Street Beaumont, Texas 77701 Attention: Treasurer
If to the Issuer:	Entergy Texas Restoration Funding, LLC Capital Center 919 Congress Avenue, Suite 840-C Austin, Texas 78701 Attention: Secretary

15. Successors.

    This Underwriting Agreement will inure to the benefit of and be binding upon the parties hereto and their respective successors and the officers and directors and controlling persons referred to in Section 11 hereof, and no other person will have any right or obligation hereunder.

16. Applicable Law.

    This Underwriting Agreement will be governed by and construed in accordance with the laws of the State of New York.

17. Counterparts.

    This Underwriting Agreement may be signed in any number of counterparts, each of which shall be deemed an original, which taken together shall constitute one and the same instrument.

18. Integration.

This Underwriting Agreement supersedes all prior agreements and understandings (whether written or oral) among the Issuer, ETI and the Underwriters, or any of them, with respect to the subject matter hereof.

[Signature page follows]

If the foregoing is in accordance with your understanding of our agreement, please sign and return to us the enclosed duplicate hereof, whereupon this letter and your acceptance shall represent a binding agreement among ETI, the Issuer and the several Underwriters.

Very truly yours,

Entergy Texas, Inc

By:

Name:
Title:

Entergy Texas Restoration Funding, LLC

By:

Name:
Title:

The foregoing Underwriting Agreement
is hereby confirmed and accepted by the
Representatives on behalf of the
Underwriters named in Schedule II hereto:

By: Morgan Stanley & Co. Incorporated

By:

Name:
Title:

By: Citigroup Global Markets Inc.

By:

Name:
Title:

SCHEDULE I

Underwriting Agreement dated October [ ], 2009

Registration Statement Nos.: 333- 161911 and 333-161911-01

Representatives:

Morgan Stanley & Co. Incorporated

Citigroup Global Markets Inc.

c/o Morgan Stanley & Co. Incorporated
1585 Broadway
New York, New York 10036
Attention: Investment Banking Division
Facsimile:  212-507-8999
Citigroup Global Markets Inc.
388 Greenwich Street
New York, New York 10013
Attention: General Counsel
Facsimile: 212-816-7912

Title, Purchase Price and Description of Bonds:

Title: Entergy Texas Restoration Funding, LLC Senior Secured Transition Bonds

	Total Principal Amount of Tranche	Bond Rate	Price to Public
Tranche A-1	$ [ ]	[ ]%	[ ]%
Tranche A-2	[ ]	[ ]%	[ ]%
Tranche A-3	[ ]	[ ]%	[ ]%
Total	$ [ ]

Aggregate price to be paid to the Issuer by the Underwriters for the Bonds:	$[ ]
Underwriters' fees:	$[ ]
Original Issue Discount (if any):	$[ ]
Redemption provisions:	None
Other provisions:	[None]
Closing Date and Time:	[ ], 2009, 9:00 a.m.
Closing Location:	Offices of: Sidley Austin LLP 787 Seventh Avenue New York, New York 10019

SCHEDULE II

Principal Amount of Bonds to be Purchased

Name of Underwriters	Tranche A-1	Tranche A-2	Tranche A-3	Total
Morgan Stanley & Co. Incorporated	$ [ ]	$ [ ]	$ [ ]	$ [ ]
Citigroup Global Markets Inc.	[ ]	[ ]	[ ]	[ ]
Goldman, Sachs & Co.	[ ]	[ ]	[ ]	[ ]
RBS Securities Inc.	[ ]	[ ]	[ ]	[ ]
Loop Capital Markets, LLC	[ ]	[ ]	[ ]	[ ]
Total	$ [ ]	$ [ ]	$ [ ]	$ [ ]

SCHEDULE III

Schedule of Issuer Free Writing Prospectuses

A. Free Writing Prospectuses not required to be filed with the Commission

Electronic Road Show

B. Free Writing Prospectuses Required to be filed with the Commission pursuant to Rule 433 of the Securities Act

• Preliminary Term Sheet, dated October [ ], 2009, as filed with the Commission on October [ ], 2009
• Pricing Term Sheet, dated October [ ], 2009, as filed with the Commission on October [ ], 2009

SCHEDULE IV

DESCRIPTIVE LIST OF UNDERWRITER PROVIDED INFORMATION

A: Pricing Prospectus:

(a) under the heading "UNDERWRITING THE BONDS":

(i) the third sentence under the caption "No Assurance as to Resale Price or Resale Liquidity for the Bonds",

(ii) the entire first full paragraph under the caption "Various Types of Underwriter Transactions That May Affect the Price of the Bonds" (except the last sentence thereof),

(iii) the last sentence of the second full paragraph under the caption "Various Types of Underwriter Transactions That May Affect the Price of the Bonds", and

(iv) the last sentence of the fifth full paragraph under the caption "Various Types of Underwriter Transactions That May Affect the Price of the Bonds"; and

(b) under the heading "OTHER RISKS ASSOCIATED WITH AN INVESTMENT IN THE TRANSITION BONDS", the first sentence under the caption "The absence of a secondary market for a series of transition bonds might limit your ability to resell your transition bonds".

B. Final Prospectus:

(a) under the heading "UNDERWRITING THE BONDS":

(i) the third sentence under the caption "No Assurance as to Resale Price or Resale Liquidity for the Bonds",

(ii) the entire first full paragraph under the caption "Various Types of Underwriter Transactions That May Affect the Price of the Bonds" (except the last sentence thereof),

(iii) the last sentence of the second full paragraph under the caption "Various Types of Underwriter Transactions That May Affect the Price of the Bonds", and

(iv) the last sentence of the fifth full paragraph under the caption "Various Types of Underwriter Transactions That May Affect the Price of the Bonds"; and

(b) under the heading "OTHER RISKS ASSOCIATED WITH AN INVESTMENT IN THE TRANSITION BONDS", the first sentence under the caption "The absence of a secondary market for a series of transition bonds might limit your ability to resell your transition bonds".

EX-3

Exhibit 3.3

CERTIFICATE OF FORMATION

OF

ENTERGY TEXAS RESTORATION FUNDING, LLC

This Certificate of Formation of Entergy Texas Restoration Funding, LLC (the "Company"), dated August 12, 2009 is being duly executed and filed by Entergy Texas, Inc., a Texas corporation, as an authorized person, to form a limited liability company under the Delaware Limited Liability Company Act (6 Del.C. Sections 18-101, et seq.).

FIRST. The name of the limited liability company formed hereby is Entergy Texas Restoration Funding, LLC.

SECOND. The address of the registered office of the Company in the State of Delaware is: c/o The Corporation Trust Company, 1209 Orange Street, Wilmington, New Castle County, Delaware 19801.

THIRD. The name and address of the registered agent for service of process on the Company in the State of Delaware are: The Corporation Trust Company, 1209 Orange Street, Wilmington, New Castle County, Delaware 19801.

FOURTH. This Certificate of Formation shall be effective upon filing.

IN WITNESS WHEREOF, the undersigned has executed this Certificate of Formation as of the date first written above.

ENTERGY TEXAS, INC.

as an authorized person

By: /s/ Jack Blakley
Name: Jack Blakley
Title: Vice President, Regulatory Affairs

EX-3

Exhibit 3.4

AMENDED AND RESTATED
LIMITED LIABILITY COMPANY AGREEMENT


OF


Entergy Texas Restoration Funding, LLC


Dated and Effective as of


October 16, 2009

TABLE OF CONTENTS

ARTICLE I

GENERAL PROVISIONS

		Page
SECTION 1.01	Definitions.	1
SECTION 1.02	Sole Member; Registered Office and Agent.	2
SECTION 1.03	Other Offices	3
SECTION 1.04	Name	3
SECTION 1.05	Purpose; Nature of Business Permitted; Powers	3
SECTION 1.06	Limited Liability Company Agreement; Certificate of Formation	5
SECTION 1.07	Separate Existence	5
SECTION 1.08	Limitation on Certain Activities	9
SECTION 1.09	No State Law Partnership	10

ARTICLE II

CAPITAL

SECTION 2.01	Initial Capital	10
SECTION 2.02	Additional Capital Contributions	10
SECTION 2.03	Capital Account	10
SECTION 2.04	Interest	10

ARTICLE III

ALLOCATIONS; BOOKS

SECTION 3.01	Allocations of Income and Loss.	11
SECTION 3.02	Company to be Disregarded for Tax Purposes	11
SECTION 3.03	Books of Account	11
SECTION 3.04	Access to Accounting Records	12
SECTION 3.05	Annual Tax Information	12
SECTION 3.06	Internal Revenue Service Communications	12

ARTICLE IV

MEMBER

SECTION 4.01	Powers	12
SECTION 4.02	Compensation of Member	13
SECTION 4.03	Other Ventures	13
SECTION 4.04	Actions by the Member	13

ARTICLE V

OFFICERS

SECTION 5.01	Designation; Term; Qualifications.	14
SECTION 5.02	Removal and Resignation	15
SECTION 5.03	Vacancies	15
SECTION 5.04	Compensation	15

ARTICLE VI

MEMBERSHIP INTEREST

SECTION 6.01	General	16
SECTION 6.02	Distributions	16
SECTION 6.03	Rights on Liquidation, Dissolution or Winding Up.	16
SECTION 6.04	Redemption	16
SECTION 6.05	Voting Rights	16
SECTION 6.06	Transfer of Membership Interests.	16
SECTION 6.07	Admission of Transferee as Member.	17

ARTICLE VII

MANAGERS

SECTION 7.01	Managers.	17
SECTION 7.02	Powers of the Managers	18
SECTION 7.03	Compensation	19
SECTION 7.04	Removal of Managers.	19
SECTION 7.05	Resignation of Manager	19
SECTION 7.06	Vacancies	19
SECTION 7.07	Meetings of the Managers	19
SECTION 7.08	Electronic Communications	19
SECTION 7.09	Committees of Managers.	20
SECTION 7.10	Limitations on Independent Managers	20

ARTICLE VIII

EXPENSES

SECTION 8.01 Expenses 20

ARTICLE IX

PERPETUAL EXISTENCE; DISSOLUTION, LIQUIDATION AND WINDING-UP

SECTION 9.01	Existence.	21
SECTION 9.02	Dissolution	22
SECTION 9.03	Accounting	22
SECTION 9.04	Certificate of Cancellation	22
SECTION 9.05	Winding Up	22
SECTION 9.06	Order of Payment of Liabilities Upon Dissolution	23
SECTION 9.07	Limitations on Payments Made in Dissolution	23
SECTION 9.08	Limitation on Liability	23

ARTICLE X

INDEMNIFICATION

SECTION 10.01	Indemnity	23
SECTION 10.02	Indemnity for Actions By or In the Right of the Company	23
SECTION 10.03	Indemnity If Successful	24
SECTION 10.04	Expenses	24
SECTION 10.05	Advance Payment of Expenses	24
SECTION 10.06	Other Arrangements Not Excluded	25

ARTICLE XI

MISCELLANEOUS PROVISIONS

SECTION 11.01	No Bankruptcy Petition; Dissolution.	25
SECTION 11.02	Amendments.	26
SECTION 11.03	PUCT Condition	26
SECTION 11.04	Governing Law	28
SECTION 11.05	Headings	28
SECTION 11.06	Severability	28
SECTION 11.07	Assigns	28
SECTION 11.08	Enforcement by Independent Managers	28
SECTION 11.09	Waiver of Partition; Nature of Interest	28
SECTION 11.10	Separate Counterparts	28

EXHIBITS AND SCHEDULES
 

Schedule A	Schedule of Capital Contributions of Member
Schedule B	Initial Managers
Schedule C	Initial Officers
Exhibit A	Management Agreement

AMENDED AND RESTATED LIMITED LIABILITY COMPANY AGREEMENT OF

ENTERGY TEXAS RESTORATION FUNDING, LLC

This AMENDED AND RESTATED LIMITED LIABILITY COMPANY AGREEMENT (as it may be amended, supplemented or otherwise modified and in effect from time to time) (this "Agreement") dated October 16, 2009 of ENTERGY TEXAS RESTORATION FUNDING, LLC, a Delaware limited liability company having its principal office at Capital Center, 919 Congress Avenue, Suite 840-C Austin, Texas 78701 (the "Company").

WHEREAS, ENTERGY TEXAS, INC. (including any additional or successor members of the Company other than Special Members, the "Member" or "ETI") formed the Company as a limited liability company pursuant to, and in accordance with, the Delaware Limited Liability Company Act (6 Del. C. 18-101, et seq.), as amended from time to time (the "LLC Act"), by filing a certificate of formation with the office of the Secretary of State of the State of Delaware on August 12, 2009 and entering into a Limited Liability Company Agreement of the Company dated as of August 12, 2009 (the "Original Agreement").

NOW, THEREFORE, in consideration of the mutual promises made herein, and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties, intending to be legally bound, hereby amend and restate the Original Agreement in its entirety and hereby agree as follows:

1. 
   
   GENERAL PROVISIONS

   1. Definitions.
      1. Unless otherwise defined herein, capitalized terms used herein shall have the meanings assigned to them in that certain Indenture (including Appendix A) between the Company and the Indenture Trustee, executed in connection with the issuance and sale of the Transition Bonds, as the same may be amended, restated, supplemented or otherwise modified from time to time.
      2. All terms defined in this Agreement shall have the defined meanings when used in any certificate or other document made or delivered pursuant hereto unless otherwise defined therein.
      3. The words "hereof," "herein," "hereunder" and words of similar import, when used in this Agreement, shall refer to this Agreement as a whole and not to any particular provision of this Agreement; Section, Schedule, Exhibit, Annex and Attachment references contained in this Agreement are references to Sections, Schedules, Exhibits, Annexes and Attachments in or to this Agreement unless otherwise specified; and the term "including" shall mean "including without limitation."
      4. The definitions contained in this Agreement are applicable to the singular as well as the plural forms of such terms.
      5. Non-capitalized terms used herein which are defined in the Utilities Code shall, as the context requires, have the meanings assigned to such terms in the Utilities Code, but without giving effect to amendments to the Utilities Code.
   2. Sole Member; Registered Office and Agent.
      1. The initial sole member of the Company shall be Entergy Texas, Inc., a Texas corporation, or any successor as sole member pursuant to Sections 1.02(c), 6.06 and 6.07. The registered office and registered agent of the Company in the State of Delaware shall be The Corporation Trust Company, 1209 Orange Street, Wilmington, New Castle County, Delaware 19801. The Member may change said registered office and agent from one location to another in the State of Delaware. The Member shall provide notice of any such change to the Indenture Trustee.
      2. Upon the occurrence of any event that causes the Member to cease to be a member of the Company (other than upon the transfer or assignment by the Member of all of its limited liability company interest in the Company and the admission of the transferee or an additional member of the Company pursuant to Sections 6.06 and 6.07), each person acting as an Independent Manager pursuant to the terms of this Agreement shall, without any action of any Person and simultaneously with the Member ceasing to be a member of the Company, automatically be admitted to the Company as a Special Member and shall continue the Company without dissolution. No Special Member may resign from the Company or transfer its rights as Special Member unless (i) a successor Special Member has been admitted to the Company as Special Member by executing a counterpart to this Agreement, and (ii) such successor has also accepted its appointment as Independent Manager pursuant to this Agreement; provided, however, the Speci al Members shall automatically cease to be members of the Company upon the admission to the Company of a substitute Member. Upon the occurrence of any event that causes there to be no Member of the Company, the personal representative of such former Member shall be authorized to admit a substitute Member of the Company pursuant to Sections 6.06 and 6.07, which substitute Member shall be such personal representative or its nominee or designee. Pending such admission of the personal representative or its nominee or designee, as the case may be, as a substitute Member, such former Member (or if such former Member no longer exists, its personal representative), shall retain the limited liability company interest in the Company of such former Member, including without limitation, all economic rights associated with such interest (which economic rights shall continue to represent the sole economic rights associated with any ownership interest in the Company). Upon the admission to the Company of a substitu te Member, such substitute Member shall acquire, upon terms agreed to by the former Member (or its personal representative) and the substitute Member, all right, title and interest in and to such former Member's limited liability company interest in the Company. Each Special Member shall be a member of the Company that has no interest in the profits, losses and capital of the Company and has no right to receive any distributions of Company assets (and no Special Member shall be treated as a member of the Company for federal income tax purposes). Pursuant to Section 18-301 of the LLC Act, a Special Member shall not be required to make any capital contributions to the Company and shall not receive a limited liability company interest in the Company. A Special Member, in its capacity as Special Member, may not bind the Company. Except as required by any mandatory provision of the LLC Act, each Special Member, in its capacity as Special Member, shall have no right to vote on, approve or otherwise consent to any action by, or matter relating to, the Company, including the merger, consolidation or conversion of the Company. In order to implement the admission to the Company of each Special Member, each person acting as an Independent Manager pursuant to this Agreement shall execute a counterpart to this Agreement. Prior to its admission to the Company as Special Member, each person acting as an Independent Manager pursuant to this Agreement shall not be a member of the Company. A "Special Member" means, upon such person's admission to the Company as a member of the Company pursuant to this Section 1.02(b), a person acting as Independent Manager, in such Person's capacity as a member of the Company. A Special Member shall only have the rights and duties expressly set forth in this Agreement. For purposes of this Agreement, a Special Member is not included within the defined term "Member."
      3. The Company may admit additional members with the affirmative vote of a majority of the Managers, which vote must include the affirmative vote of all of the Independent Managers. Notwithstanding the preceding sentence, it shall be a condition to the admission of any additional member that the sole Member shall have received an opinion of Independent tax counsel (as selected by the Member in form and substance reasonably satisfactory to the Member and the Indenture Trustee) that the admission of such additional member shall not cause the Company to be treated, for federal income tax purposes, as having more than a "sole owner" and that the Company shall not be treated, for federal income tax purposes, as an entity separate from such "sole owner".
   3. Other Offices. The Company may have an office at Capital Center, 919 Congress Avenue, Suite 840-C, Austin, Texas 78701, or at any other offices that may at any time be established by the Member at any place or places within or outside the State of Delaware. The Member shall provide notice to the Indenture Trustee of any change in the location of the Company's office.
   4. Name. The name of the Company shall be "Entergy Texas Restoration Funding, LLC". The name of the Company may be changed from time to time by the Member with ten (10) days' prior written notice to the Managers and the Indenture Trustee, and the filing of an appropriate amendment to the Certificate of Formation with the Secretary of State as required by the LLC Act.
   5. Purpose; Nature of Business Permitted; Powers. The purposes for which the Company is formed are limited to:
      1. acquire, own, hold, administer, service or enter into agreements regarding the receipt and servicing of the Transition Property and the other Transition Bond Collateral, along with certain other related assets;
      2. manage, sell, assign, pledge, collect amounts due on or otherwise deal with the Transition Property and the other Transition Bond Collateral and related assets to be so acquired in accordance with the terms of the Basic Documents;
      3. negotiate, authorize, execute, deliver, assume the obligations under, and perform its duties under, the Basic Documents and any other agreement or instrument or document relating to the activities set forth in clauses (a) and (b) above; provided, that each party to any such agreement under which material obligations are imposed upon the Company shall covenant that it shall not, prior to the date which is one year and one day after the termination of the Indenture and the payment in full of the Transition Bonds and any other amounts owed under the Indenture, acquiesce, petition or otherwise invoke or cause the Company to invoke the process of any court or Governmental Authority for the purpose of commencing or sustaining an involuntary case against the Company under any federal or state bankruptcy, insolvency or similar law or appointing a receiver, liquidator, assignee, trustee, custodian, sequestrator or other similar official of the Company or any substantial part of the property o f the Company; or ordering the winding up or liquidation of the affairs of the Company; and provided, further, that the Company shall be permitted to incur additional indebtedness or other liabilities payable to service providers and trade creditors in the ordinary course of business in connection with the foregoing activities;
      4. file with the SEC one or more registration statements, including any pre-effective or post-effective amendments thereto and any registration statement filed pursuant to Rule 462(b) under the Securities Act (including any prospectus supplement, prospectus and exhibits contained therein) and file such applications, reports, surety bonds, irrevocable consents, appointments of attorney for service of process and other papers and documents necessary or desirable to register the Transition Bonds under the securities or "Blue Sky" laws of various jurisdictions;
      5. authorize, execute, deliver and issue the Transition Bonds from time to time;
      6. pledge its interest in Transition Property and other Transition Bond Collateral to the Indenture Trustee under the Indenture in order to secure the Transition Bonds; and
      7. engage in any lawful act or activity and exercise any powers permitted to limited liability companies formed under the laws of the State of Delaware that, in either case, are incidental to, or necessary, suitable or convenient for the accomplishment of the above-mentioned purposes.

      The Company shall engage only in any activities related to the foregoing purposes or required or authorized by the terms of the Basic Documents or other agreements referenced above. The Company shall have all powers reasonably incidental, necessary, suitable or convenient to effect the foregoing purposes, including all powers granted under the LLC Act. The Company, the Member, any Manager, or any officer of the Company, acting singly or collectively, on behalf of the Company, may enter into and perform the Basic Documents and all registration statements, documents, agreements, certificates or financing statements contemplated thereby or related thereto, all without any further act, vote or approval of any Member, Manager or other Person, notwithstanding any other provision of this Agreement, the LLC Act, or other applicable law, rule or regulation. The authorization set forth in the preceding sentence shall not be deemed a restriction on the power and authority of the Member or any Mana ger to enter into other agreements or documents on behalf of the Company as authorized pursuant to this Agreement and the LLC Act. The Company shall possess and may exercise all the powers and privileges granted by the LLC Act or by any other law or by this Agreement, together with any powers incidental thereto, insofar as such powers and privileges are incidental, necessary, suitable or convenient to the conduct, promotion or attainment of the business purposes or activities of the Company.

   6. Limited Liability Company Agreement; Certificate of Formation. This Agreement shall constitute a "limited liability company agreement" within the meaning of the LLC Act. ETI, as an authorized person within the meaning of the LLC Act, has caused a certificate of formation of the Company to be executed and filed in the office of the Secretary of State of the State of Delaware on August 12, 2009 (such execution and filing being hereby ratified and approved in all respects). The existence of the Company as a separate legal entity shall continue until cancellation of the Certificate of Formation of the Company as provided in the LLC Act.
   7. Separate Existence. Except for financial reporting purposes (to the extent required by generally accepted accounting principles) and for federal income tax purposes and, to the extent consistent with applicable state tax law, state income and franchise tax purposes, the Member and the Managers shall take all steps necessary to continue the identity of the Company as a separate legal entity and to make it apparent to third Persons that the Company is an entity with assets and liabilities distinct from those of the Member, Affiliates of the Member or any other Person, and that, the Company is not a division of any of the Affiliates of the Company or any other Person. In that regard, and without limiting the foregoing in any manner, the Company shall:
      1. maintain office space separate and clearly delineated from the office space of any Affiliate;
      2. maintain the assets of the Company in such a manner that it is not costly or difficult to segregate, identify or ascertain its individual assets from those of any other Person, including any Affiliate;
      3. maintain a separate telephone number;
      4. conduct all transactions with Affiliates on an arm's-length basis;
      5. not guarantee, become obligated for or pay the debts of any Affiliate or hold the credit of the Company out as being available to satisfy the obligations of any Affiliate or other Person (nor, except as contemplated in the Basic Documents, indemnify any Person for losses resulting therefrom), nor, except as contemplated in the Basic Documents, have any of its obligations guaranteed by any Affiliate or hold the Company out as responsible for the debts of any Affiliate or other Person or for the decisions or actions with respect to the business and affairs of any Affiliate, nor seek or obtain credit or incur any obligation to any third Party based upon the creditworthiness or assets of any Affiliate or any other Person (i.e. other than based on the assets of the Company) nor allow any Affiliate to do such things based on the credit of the Company;
      6. except as expressly otherwise permitted hereunder or under any of the Basic Documents, not permit the commingling or pooling of the Company's funds or other assets with the funds or other assets of any Affiliate;
      7. maintain separate deposit and other bank accounts and funds (separately identifiable from those of the Member or any other Person) to which no Affiliate has any access, which accounts shall be maintained in the name and, to the extent not inconsistent with applicable federal tax law, with the tax identification number of the Company;
      8. maintain full books of accounts and records (financial or other) and financial statements separate from those of its Affiliates or any other Person, prepared and maintained in accordance with generally accepted accounting principles (including, all resolutions, records, agreements or instruments underlying or regarding the transactions contemplated by the Basic Documents or otherwise) and audited annually by an independent accounting firm which shall provide such audit to the Indenture Trustee;
      9. pay its own liabilities out of its own funds, including fees and expenses of the Administrator pursuant to the Administration Agreement and the Servicer pursuant to any Servicing Agreement;
      10. compensate (either directly or through reimbursement of the Company's allocable share of any shared expenses) all employees, consultants and agents and Affiliates, to the extent applicable, for services provided to the Company by such employees, consultants and agents or Affiliates, in each case, from the Company's own funds and maintain a sufficient number of employees in light of its contemplated operations;
      11. allocate fairly and reasonably the salaries of and the expenses related to providing the benefits of officers or other employees shared with the Member, any Special Member or any Manager;
      12. allocate fairly and reasonably any overhead shared with the Member, any Special Member or any Manager;
      13. pay from its own bank accounts for accounting and payroll services, rent, lease and other expenses (or the Company's allocable share of any such amounts provided by one or more other Affiliate) and not have such operating expenses (or the Company's allocable share thereof) paid by any Affiliates, provided, that the Member shall be permitted to pay the initial organization expenses of the Company and certain of the expenses related to the transactions contemplated by the Basic Documents as provided therein;
      14. maintain adequate capitalization to conduct its business and affairs considering the Company's size and the nature of its business and intended purposes and, after giving effect to the transactions contemplated by the Basic Documents, refrain from engaging in a business for which its remaining property represents an unreasonably small capital;
      15. conduct all of the Company's business (whether in writing or orally) solely in the name of the Company through the Member and the Company's Managers, employees, officers and agents and hold the Company out as an entity separate from any Affiliate;
      16. not make or declare any distributions of cash or property to the Member except in accordance with appropriate limited liability company formalities and only consistent with sound business judgment to the extent that it is permitted pursuant to the Basic Documents and not violative of any applicable law;
      17. otherwise practice and adhere to all limited liability company procedures and formalities to the extent required by this Agreement or all other appropriate constituent documents;
      18. not appoint an Affiliate or any employee of an Affiliate as an agent of the Company, except as otherwise permitted in the Basic Documents (although such Persons can qualify as a Manager or as an officer of the Company);
      19. not acquire obligations or securities of or make loans or advances to or pledge its assets for the benefit of any Affiliate, the Member or any Affiliate of the Member;
      20. not permit the Member or any Affiliate to acquire obligations of or make loans or advances to the Company;
      21. except as expressly provided in the Basic Documents, not permit the Member or any Affiliate to guarantee, pay or become liable for the debts of the Company nor permit any such Person to hold out its creditworthiness as being available to pay the liabilities and expenses of the Company nor, except for the indemnities in this Agreement and the Basic Documents, indemnify any Person for losses resulting therefrom;
      22. maintain separate minutes of the actions of the Member and the Managers, including the transactions contemplated by the Basic Documents;
      23. cause (i) all written and oral communications, including letters, invoices, purchase orders, and contracts, of the Company to be made solely in the name of the Company, (ii) the Company to have its own tax identification number (to the extent not inconsistent with applicable federal tax law), stationery, checks and business forms, separate from those of any Affiliate, (iii) all Affiliates not to use the stationery or business forms of the Company, and cause the Company not to use the stationery or business forms of any Affiliate, and (iv) all Affiliates not to conduct business in the name of the Company, and cause the Company not to conduct business in the name of any Affiliate;
      24. direct creditors of the Company to send invoices and other statements of account of the Company directly to the Company and not to any Affiliate and cause the Affiliates to direct their creditors not to send invoices and other statements of accounts of such Affiliates to the Company;
      25. cause the Member to maintain as official records all resolutions, agreements, and other instruments underlying or regarding the transactions contemplated by the Basic Documents;
      26. disclose, and cause the Member to disclose, in its financial statements the effects of all transactions between the Member and the Company in accordance with generally accepted accounting principles, and in a manner which makes it clear that (i) the Company is a separate legal entity, (ii) the assets of the Company (including the Transition Property transferred to the Company pursuant to the Sale Agreement) are not assets of any Affiliate and are not available to pay creditors of any Affiliate and (iii) neither the Member nor any other Affiliate is liable or responsible for the debts of the Company;
      27. treat and cause the Member to treat the transfer of the Transition Property from the Member to the Company as a sale under the Utilities Code;
      28. except as described herein with respect to tax purposes and financial reporting, describe and cause each Affiliate to describe the Company, and hold the Company out as a separate legal entity and not as a division or department of any Affiliate, and promptly correct any known misunderstanding regarding the Company's identity separate from any Affiliate or any Person;
      29. so long as any of the Transition Bonds are outstanding, treat the Transition Bonds as debt for all purposes and specifically as debt of the Company, other than for financial reporting, state or federal regulatory or tax purposes;
      30. solely for purposes of federal taxes and, to the extent consistent with applicable state, local and other tax law, solely for purposes of state, local and other taxes, so long as any of the Transition Bonds are outstanding, treat the Transition Bonds as indebtedness of the Member secured by the Transition Bond Collateral unless otherwise required by appropriate taxing authorities;
      31. file its own tax returns, if any, as may be required under applicable law, to the extent (i) not part of a consolidated group filing a consolidated return or returns or (ii) not treated as a disregarded entity for tax purposes of another taxpayer, and pay any taxes so required to be paid under applicable law;
      32. maintain its valid existence in good standing under the laws of the State of Delaware and maintain its qualification to do business under the laws of such other jurisdictions as its operations require;
      33. not form, or cause to be formed, any subsidiaries;
      34. comply with all laws applicable to the transactions contemplated by this Agreement and the Basic Documents; and
      35. cause the Member to observe in all material respects all limited liability company procedures and formalities, if any, required by its constituent documents and the laws of its state of formation and all other appropriate jurisdictions.

      Failure of the Company, or the Member or the Managers on behalf of the Company, to comply with any of the foregoing covenants or any other covenants contained in this Agreement shall not affect the status of the Company as a separate legal entity or the limited liability of the Member or the Managers. In addition, none of the foregoing shall require the Member to make any additional capital contributions to the Company.

   8. Limitation on Certain Activities. Notwithstanding any other provisions of this Agreement, the Company, and the Member or Managers on behalf of the Company, shall not:
      1. engage in any business or activity other than as set forth in Article I hereof;
      2. without the affirmative vote of its Member and the affirmative vote of all of the Managers, including all of the Independent Managers, file a voluntary petition for relief under the Bankruptcy Code or similar law, consent to the institution of insolvency or bankruptcy proceedings against the Company or otherwise institute insolvency or bankruptcy proceedings with respect to the Company or take any company action in furtherance of any such filing or institution of a proceeding;
      3. without the affirmative vote of all Managers, including all of the Independent Managers, and then only to the extent permitted by the Basic Documents, convert, merge or consolidate with any other Person or sell all or substantially all of its assets or acquire all or substantially all of the assets or capital stock or other ownership interest of any other Person;
      4. take any action, file any tax return, or make any election inconsistent with the treatment of the Company, for purposes of federal income taxes and, to the extent consistent with applicable state tax law, state income and franchise tax purposes, as a disregarded entity that is not separate from the Member;
      5. issue any transition bonds other than the Transition Bonds contemplated by the Basic Documents;
      6. incur any indebtedness or assume or guarantee any indebtedness of any Person (other than the indebtedness incurred under the Basic Documents); or
      7. to the fullest extent permitted by law, without the affirmative vote of its Member and the affirmative vote of all Managers, including all of the Independent Managers, execute any dissolution, liquidation, or winding up of the Company.

      To the fullest extent permitted by applicable law, including Section 18-1101(c) of the LLC Act, the fiduciary duty of each Manager, including the Independent Manager, in respect of any decision on any matter referred to in this Section 1.08 shall be owed solely to the Company (including its creditors) and not to the Member or any other holders of equity interest in the Company as may exist at such time.

   9. No State Law Partnership. No provisions of this Agreement shall be deemed or construed to constitute a partnership (including a limited partnership) or joint venture, or the Member a partner or joint venturer of or with any Manager or the Company, for any purposes.

2. 
   
   CAPITAL

   1. Initial Capital. The initial capital of the Company shall be the sum of cash contributed to the Company by the Member (the "Capital Contribution") in the amount set out opposite the name of the Member on Schedule A hereto, as amended from time to time and incorporated herein by this reference.
   2. Additional Capital Contributions. The assets of the Company are expected to generate a return sufficient to satisfy all obligations of the Company under this Agreement and the Basic Documents and any other obligations of the Company. It is expected that no capital contributions to the Company will be necessary after the purchase of the Transition Property. On or prior to the date of issuance of the Transition Bonds, the Member shall make an additional contribution to the Company in an amount equal to at least 0.50% of the initial principal amount of the Transition Bonds or such greater amount as agreed to by the Member in connection with the issuance by the Company of the Transition Bonds which amount the Company shall deposit into the Capital Subaccount established by the Indenture Trustee as provided under Section 8.02 of the Indenture. No capital contribution by the Member to the Company will be made for the purpose of mitigating losses on Transition Property that has previously been transferred to the Company, and all capital contributions shall be made in accordance with all applicable limited liability company procedures and requirements, including proper record keeping by the Member and the Company. Each capital contribution will be acknowledged by a written receipt signed by any one of the Managers. The Managers acknowledge and agree that, notwithstanding anything in this Agreement to the contrary, such additional contribution will be managed by an investment manager selected by the Indenture Trustee who shall invest such amounts only in Eligible Investments, and all income earned thereon shall be allocated or paid by the Indenture Trustee in accordance with the provisions of the Indenture.
   3. Capital Account. A Capital Account shall be established and maintained for the Member on the Company's books (the "Capital Account").
   4. Interest. No interest shall be paid or credited to the Member on its Capital Account or upon any undistributed profits left on deposit with the Company. Except as provided herein or by law, the Member shall have no right to demand or receive the return of its Capital Contribution.

3. 
   
   ALLOCATIONS; BOOKS

   1. Allocations of Income and Loss.
      1. Book Allocations. The net income and net loss of the Company shall be allocated entirely to the Member.
      2. Tax Allocations. Because the Company is not making (and will not make) an election to be treated as an association taxable as a corporation under Section 301.7701-3(a) of the Treasury Regulations, and because the Company is a business entity that has a single owner and is not a corporation, it is expected to be disregarded as an entity separate from its owner for federal income tax purposes under Section 301.7701-3(b)(1) of the Treasury Regulations. Accordingly, all items of income, gain, loss, deduction and credit of the Company for all taxable periods will be treated for federal income tax purposes, and for state and local income and other tax purposes to the extent permitted by applicable law, as realized or incurred directly by the Member. To the extent not so permitted, all items of income, gain, loss, deduction and credit of the Company shall be allocated entirely to the Member as permitted by applicable tax law, and the Member shall pay (or indemnify the Com pany, the Indenture Trustee and each of their officers, managers, employees or agents for, and defend and hold harmless each such person from and against its payment of) any taxes levied or assessed upon all or any part of the Company's property or assets based on existing law as of the date hereof, including any sales, gross receipts, general corporation, personal property, privilege, franchise or license taxes (but excluding any taxes imposed as a result of a failure of such person to properly withhold or remit taxes imposed with respect to payments on any Transition Bond). The Indenture Trustee (on behalf of the Secured Parties) shall be a third party beneficiary of the Member's obligations set forth in this Section 3.01, it being understood that Bondholders shall be entitled to enforce their rights against the Member under this Section 3.01 solely through a cause of action brought for their benefit by the Indenture Trustee.
   2. Company to be Disregarded for Tax Purposes. The Company shall comply with the applicable provisions of the Code and the applicable Treasury Regulations thereunder in the manner necessary to effect the intention of the parties that the Company be treated, for federal income tax purposes, as a disregarded entity that is not separate from the Member pursuant to Treasury Regulations Section 301.7701-1 et seq. and that the Company be accorded such treatment until its dissolution pursuant to Article IX hereof and shall take all actions, and shall refrain from taking any action, required by the Code or Treasury Regulations thereunder in order to maintain such status of the Company. In addition, for federal income tax purposes, the Company may not claim any credit on, or make any deduction from the principal or premium, if any, or interest payable in respect of, the Transition Bonds (other than amounts properly withheld from such payments under the Code or other tax laws) or assert any claim against any present or former Bondholder by reason of the payment of the taxes levied or assessed upon any part of the Transition Bond Collateral.
   3. Books of Account. At all times during the continuance of the Company, the Company shall maintain or cause to be maintained full, true, complete and correct books of account in accordance with generally accepted accounting principles, using the fiscal year and taxable year of the Member. In addition, the Company shall keep all records required to be kept pursuant to the LLC Act.
   4. Access to Accounting Records. All books and records of the Company shall be maintained at any office of the Company or at the Company's principal place of business, and the Member, and its duly authorized representative, shall have access to them at such office of the Company and the right to inspect and copy them at reasonable times.
   5. Annual Tax Information. The Managers shall cause the Company to deliver to the Member all information necessary for the preparation of the Member's federal income tax return.
   6. Internal Revenue Service Communications. The Member shall communicate and negotiate with the Internal Revenue Service on any federal tax matter on behalf of the Member and the Company.

4. 
   
   MEMBER

   1. Powers. Subject to the provisions of this Agreement and the LLC Act, all powers shall be exercised by or under the authority of, and the business and affairs of the Company shall be controlled by, the Member pursuant to Section 4.04. The Member may delegate any or all such powers to the Managers, as provided in Section 7.01. Without prejudice to such general powers, but subject to the same limitations, it is hereby expressly declared that the Member shall have the following powers:
      1. To select and remove the Managers and all officers, agents and employees of the Company, prescribe such powers and duties for them as may be consistent with the LLC Act and other applicable law and this Agreement, fix their compensation, and require from them security for faithful service; provided that prior to issuance of the Transition Bonds, the Member shall appoint at least one Independent Manager, and thereafter, except as specified in Section 7.06, at all times the Company shall have at least one Independent Manager. An "Independent Manager" is a Manager that is a natural person and is not and has not been for at least five years from the date of his or her or its appointment (i) a direct or indirect legal or beneficial owner of the Company or the Member or any of their respective Affiliates, (ii) a relative, supplier, employee, officer, director (other than as an independent director), manager (other than as an independent manager), contractor or material creditor of the Company or the Member or any of their respective Affiliates or (iii) a Person who controls (whether directly, indirectly or otherwise) the Member or its Affiliates or any creditor, employee, officer, director, manager or material supplier or contractor of the Member or its Affiliates; provided, that the indirect or beneficial ownership of stock of the Member or its Affiliates through a mutual fund or similar diversified investment vehicle with respect to which the owner does not have discretion or control over the investments held by such diversified investment vehicle shall not preclude such owner from being an Independent Manager. All right, power and authority of the Independent Managers shall be limited to the extent necessary to exercise those rights and perform those duties specifically set forth in this Agreement. Except as provided in this Agreement, including Section 1.08, in exercising their rights and performing their duties under this Agreement, any Independent Manager shall have a f iduciary duty of loyalty and care similar to that of a director of a business corporation organized under the General Corporation Law of the State of Delaware. No Independent Manager shall at any time serve as trustee in bankruptcy for any Affiliate of the Company. The Company shall pay the Independent Manager annual fees totaling not more than $5,000 per year (the "Independent Manager Fee"). Such fees shall be determined without regard to the income of the Company, shall not be deemed to constitute distributions to the recipient of any profit, loss or capital of the Company and shall be considered a fixed Operating Expense of the Company subject to the limitations on such expenses set forth in the Financing Order. Each Manager, including each Independent Manager, is hereby deemed to be a "manager" within the meaning 18-101(10) of the LLC Act.
      2. Subject to Article VII hereof, to conduct, manage and control the affairs and business of the Company, and to make such rules and regulations therefor consistent with the LLC Act and other applicable law and this Agreement.
      3. To change the registered agent and office of the Company in Delaware from one location to another; to fix and locate from time to time one or more other offices of the Company; and to designate any place within or without the State of Delaware for the conduct of the business of the Company.
   2. Compensation of Member. To the extent permitted by applicable law, the Company shall have authority to reimburse the Member for out-of-pocket expenses incurred by the Member in connection with its service to the Company. It is understood that the compensation paid to the Member under the provisions of this Section 4.02 shall be determined without regard to the income of the Company, shall not be deemed to constitute distributions to the recipient of any profit, loss or capital of the Company and shall be considered as a fixed Operating Expense of the Company subject to the limitations on such expenses set forth in the Financing Order.
   3. Other Ventures. It is expressly agreed that the Member, the Managers and any Affiliates, officers, directors, managers, stockholders, partners or employees of the Member, may engage in other business ventures of any nature and description, whether or not in competition with the Company, independently or with others, and the Company shall not have any rights in and to any independent venture or activity or the income or profits derived therefrom.
   4. Actions by the Member. All actions of the Member may be taken by written resolution of the Member which shall be signed on behalf of the Member by an authorized officer of the Member and filed with the records of the Company.

5. 
   
   OFFICERS

   1. Designation; Term; Qualifications.
      1. Officers. The Managers may, from time to time, designate one or more persons to be officers of the Company. Any officer so designated shall have such title and authority and perform such duties as the Managers may, from time to time, delegate to them. Each officer shall hold office for the term for which such officer is designated and until its successor shall be duly designated and shall qualify or until its death, resignation or removal as provided in this Agreement. Any person may hold any number of offices. No officer need be a Manager, the Member, a Delaware resident, or a United States citizen. The Member hereby appoints the persons identified on Schedule C to be the officers of the Company.
      2. President. The President shall be the chief executive officer of the Company, shall preside at all meetings of the Managers, shall be responsible for the general and active management of the business of the Company and shall see that all orders and resolutions of the Managers are carried into effect. The President or any other officer authorized by the President or the Managers may execute all contracts, except: (i) where required or permitted by law or this Agreement to be otherwise signed and executed, including Section 1.08; and (ii) where signing and execution thereof shall be expressly delegated by the Managers to some other officer or agent of the Company.
      3. Vice President. In the absence of the President or in the event of the President's inability to act, the Vice President, if any (or in the event there be more than one Vice President, the Vice Presidents in the order designated by the Managers, or in the absence of any designation, then in the order of their election), shall perform the duties of the President, and when so acting, shall have all the powers of and be subject to all the restrictions upon the President. The Vice Presidents, if any, shall perform such other duties and have such other powers as the Managers may from time to time prescribe.
      4. Secretary and Assistant Secretary. The Secretary shall be responsible for filing legal documents and maintaining records for the Company. The Secretary shall attend all meetings of the Managers and record all the proceedings of the meetings of the Company and of the Managers in a book to be kept for that purpose and shall perform like duties for the standing committees when required. The Secretary shall give, or shall cause to be given, notice of all meetings of the Member, if any, and special meetings of the Managers, and shall perform such other duties as may be prescribed by the Managers or the President, under whose supervision the Secretary shall serve. The Assistant Secretary, or if there be more than one, the Assistant Secretaries in the order determined by the Managers (or if there be no such determination, then in order of their designation), shall, in the absence of the Secretary or in the event of the Secretary's inability to act, perform the duties and exercise the powers of th e Secretary and shall perform such other duties and have such other powers as the Managers may from time to time prescribe.
      5. Treasurer and Assistant Treasurer. The Treasurer shall have the custody of the Company funds and securities and shall keep full and accurate accounts of receipts and disbursements in books belonging to the Company and shall deposit all moneys and other valuable effects in the name and to the credit of the Company in such depositories as may be designated by the Manager. The Treasurer shall disburse the funds of the Company as may be ordered by the Manager, taking proper vouchers for such disbursements, and shall render to the President and to the Managers, at its regular meetings or when the Managers so require, an account of all of the Treasurer's transactions and of the financial condition of the Company. The Assistant Treasurer, or if there shall be more than one, the Assistant Treasurers in the order determined by the Managers (or if there be no such determination, then in the order of their designation), shall, in the absence of the Treasurer or in the event of the Treasurer's inabilit y to act, perform the duties and exercise the powers of the Treasurer and shall perform such other duties and have such other powers as the Managers may from time to time prescribe.
      6. Chief Accounting Officer. The Chief Accounting Officer shall be responsible for overseeing all aspects of the Company's accounting and reporting functions.
      7. Tax Officer. One or more Tax Officers shall have the authority to communicate with the Internal Revenue Service and with state and local tax authorities, may sign tax returns, shall pay or cause to be paid taxes and shall have the authority to settle tax liabilities in the name or on behalf of the Company.
      8. Officers as Agents. The officers of the Company, to the extent their powers as set forth in this Agreement or otherwise vested in them by action of the Managers are not inconsistent with this Agreement, are agents of the Company for the purpose of the Company's business and, subject to Section 1.08, the actions of the officers taken in accordance with such powers shall bind the Company.
      9. Duties of Managers and Officers. Except to the extent otherwise provided herein, each Manager and officer of the Company shall have a fiduciary duty of loyalty and care similar to that of directors and officers of business corporations organized under the General Corporation Law of the State of Delaware.
   2. Removal and Resignation. Any officer of the Company may be removed as such, with or without cause, by the Managers at any time. Any officer of the Company may resign as such at any time upon written notice to the Company. Such resignation shall be made in writing and shall take effect at the time specified therein or, if no time is specified therein, at the time of its receipt by the Managers.
   3. Vacancies. Any vacancy occurring in any office of the Company may be filled by the Managers.
   4. Compensation. The compensation, if any, of the officers of the Company shall be fixed from time to time by the Managers. Such compensation shall be determined without regard to the income of the Company, shall not be deemed to constitute distributions to the recipient of any profit, loss or capital of the Company and shall be considered a fixed Operating Expense of the Company subject to the limitations on such expenses set forth in the Financing Order.

6. 
   
   MEMBERSHIP INTEREST

   1. General. "Membership Interest" means the limited liability company interest of the Member in the Company. The Membership Interest constitutes personal property and, subject to Section 6.06, shall be freely transferable and assignable in whole but not in part upon registration of such transfer and assignment on the books of the Company in accordance with the procedures established for such purpose by the Managers of the Company.
   2. Distributions. The Member shall be entitled to receive, out of the assets of the Company legally available therefor, distributions payable in cash in such amounts, if any, as the Managers shall declare. Notwithstanding any provision to the contrary contained in this Agreement, the Company shall not be required to make a distribution to the Member on account of its interest in the Company if such distribution would violate Section 18-607 of the LLC Act or any other applicable law or any Basic Document.
   3. Rights on Liquidation, Dissolution or Winding Up.
      1. In the event of any liquidation, dissolution or winding up of the Company, the Member shall be entitled to all remaining assets of the Company available for distribution to the Member after satisfaction (whether by payment or reasonable provision for payment) of all liabilities, debts and obligations of the Company.
      2. Neither the sale of all or substantially all of the property or business of the Company, nor the merger or consolidation of the Company into or with another Person or other entity, shall be deemed to be a dissolution, liquidation or winding up, voluntary or involuntary, for the purpose of this Section 6.03.
   4. Redemption. The Membership Interest shall not be redeemable.
   5. Voting Rights. Subject to the terms of this Agreement, the Member shall have the sole right to vote on all matters as to which members of a limited liability company shall be entitled to vote pursuant to the LLC Act and other applicable law.
   6. Transfer of Membership Interests.
      1. The Member may transfer its Membership Interest, in whole but not in part, but the transferee shall not be admitted as a Member except in accordance with Section 6.07. Until the transferee is admitted as a Member, the Member shall continue to be the sole member of the Company (subject to Section 1.02) and to be entitled to exercise any rights or powers of a Member of the Company with respect to the Membership Interest transferred.
      2. To the fullest extent permitted by law, any purported transfer of any Membership Interest in violation of the provisions of this Agreement shall be wholly void and shall not effectuate the transfer contemplated thereby. Notwithstanding anything contained herein to the contrary and to the fullest extent permitted by law, the Member may not transfer any Membership Interest in violation of any provision of this Agreement or in violation of any applicable federal or state securities laws.
   7. Admission of Transferee as Member.
      1. A transferee of a Membership Interest desiring to be admitted as a Member must execute a counterpart of, or an agreement adopting, this Agreement and, except as permitted by paragraph (b) below, shall not be admitted without unanimous affirmative vote of the Managers, which vote must include the affirmative vote of the Independent Manager. Upon admission of the transferee as a Member, the transferee shall have the rights, powers and duties and shall be subject to the restrictions and liabilities of the Member under this Agreement and the LLC Act. The transferee shall also be liable, to the extent of the Membership Interest transferred, for the unfulfilled obligations, if any, of the transferor Member to make capital contributions to the Company, but shall not be obligated for liabilities unknown to the transferee at the time such transferee was admitted as a Member and that could not be ascertained from this Agreement. Except as set forth in paragraph (b) below, whether or not the transferee of a Membership Interest becomes a Member, the Member transferring the Membership Interest is not released from any liability to the Company under this Agreement or the LLC Act.
      2. The approval of the Managers, including the Independent Managers, shall not be required for the transfer of the Membership Interest from the Member to any successor pursuant to Section 5.02 of the Sale Agreement or the admission of such Person as a Member. Once the transferee of a Membership Interest pursuant to this paragraph (b) becomes a Member, the prior Member shall be released from any liability to the Company under this Agreement and the LLC Act.

7. 
   
   MANAGERS

   1. Managers.
      1. Subject to Sections 1.08 and 4.01, the business and affairs of the Company shall be managed by or under the direction of two or more Managers designated by the Member. Subject to the terms of this Agreement, the Member may determine at any time in its sole and absolute discretion the number of Managers. Subject in all cases to the terms of this Agreement, the authorized number of Managers may be increased or decreased by the Member at any time in its sole and absolute discretion, upon notice to all Managers; provided, that, except as provided in Section 7.06, at all times the Company shall have at least one Independent Manager. The initial number of Managers shall be four, and, upon the appointment of the Independent Manager, five. Each Manager designated by the Member shall hold office until a successor is elected and qualified or until such Manager's earlier death, resignation, expulsion or removal. Each Manager shall execute and deliver the Management Agreement in th e form attached hereto as Exhibit A. Managers need not be a Member. The initial Managers designated by the Member are listed on Schedule B hereto.
      2. Each Manager shall be designated by the Member and shall hold office for the term for which designated and until a successor has been designated.
      3. The Managers shall be obliged to devote only as much of their time to the Company's business as shall be reasonably required in light of the Company's business and objectives. A Manager shall perform his or her duties as a Manager in good faith, in a manner he or she reasonably believes to be in the best interests of the Company, and with such care as an ordinarily prudent Person in a like position would use under similar circumstances.
      4. Except as otherwise provided in this Agreement, the Managers shall act by the affirmative vote of a majority of the Managers. Each Manager shall have the authority to sign duly authorized agreements and other instruments on behalf of the Company without the joinder of any other Manager.
      5. Subject to the terms of this Agreement, any action may be taken by the Managers without a meeting and without prior notice if authorized by the written consent of a majority of the Managers (or such greater number as is required by this Agreement), which written consent shall be filed with the records of the Company.
      6. Every Manager is an agent of the Company for the purpose of its business, and the act of every Manager, including the execution in the Company name of any instrument for carrying on the business of the Company, binds the Company, unless such act is in contravention of this Agreement or unless the Manager so acting otherwise lacks the authority to act for the Company and the Person with whom he or she is dealing has knowledge of the fact that he or she has no such authority.
   2. Powers of the Managers. Subject to the terms of this Agreement, the Managers shall have the right and authority to take all actions which the Managers deem incidental, necessary, suitable or convenient for the day-to-day management and conduct of the Company's business.

      The Independent Managers may not delegate their duties, authorities or responsibilities hereunder. If any Independent Manager resigns, dies or becomes incapacitated, or such position is otherwise vacant, no action requiring the unanimous affirmative vote of the Managers shall be taken until a successor Independent Manager is appointed by the Member and qualifies and approves such action.

      Each Independent Manager will, to the fullest extent permitted by law, including Section 18-1101(c) of the LLC Act, owe its primary fiduciary duty to the Company (including the creditors of the Company).

      No Independent Manager shall at any time serve as trustee in bankruptcy for any Affiliate of the Company.

      Subject to the terms of this Agreement, the Managers may exercise all powers of the Company and do all such lawful acts and things as are not prohibited by the LLC Act, other applicable law or this Agreement directed or required to be exercised or done by the Member. All duly authorized instruments, contracts, agreements and documents providing for the acquisition or disposition of property of the Company shall be valid and binding on the Company if executed by one or more of the Managers.

   3. Compensation. To the extent permitted by applicable law, the Company may reimburse any Manager, directly or indirectly, for out-of-pocket expenses incurred by such Manager in connection with its services rendered to the Company. Such compensation shall be determined by the Managers without regard to the income of the Company, shall not be deemed to constitute distributions to the recipient of any profit, loss or capital of the Company and shall be considered a fixed Operating Expense of the Company subject to the limitations on such expenses set forth in the Financing Order.
   4. Removal of Managers.
      1. Subject to Section 4.01, the Member may remove any Manager with or without cause at any time.
      2. Subject to Sections 4.01 and 7.05, any removal of a Manager shall become effective on such date as may be specified by the Member and in a notice delivered to any remaining Managers or the Manager designated to replace the removed Manager (except that it shall not be effective on a date earlier than the date such notice is delivered to the remaining or newly-elected Manager). Should a Manager be removed who is also the Member, the Member shall continue to participate in the Company as the Member and receive its share of the Company's income, gains, losses, deductions and credits pursuant to this Agreement.
   5. Resignation of Manager. A Manager other than an Independent Manager may resign as a Manager at any time by thirty (30) days' prior notice to the Member. An Independent Manager may not withdraw or resign as a Manager of the Company without the consent of the Member. No resignation or removal of an Independent Manager, and no appointment of a successor Independent Manager, shall be effective until such successor (i) shall have accepted his or her appointment as an Independent Manager by a written instrument, which may be a counterpart signature page to the Management Agreement, and (ii) shall have executed a counterpart to this Agreement.
   6. Vacancies. Subject to Section 4.01, any vacancies among the Managers may be filled by the Member. In the event of a vacancy in the position of Independent Manager, the Member shall, as soon as practicable, appoint a successor Independent Manager.
   7. Meetings of the Managers. The Managers may hold meetings, both regular and special, within or outside the State of Delaware. Regular meetings of the Managers may be held without notice at such time and at such place as shall from time to time be determined by the Managers. Special meetings of the Managers may be called by the President on not less than one day's notice to each Manager by telephone, facsimile, mail, telegram or any other means of communication, and special meetings shall be called by the President or Secretary in like manner and with like notice upon the written request of any one or more of the Managers.
   8. Electronic Communications. Managers, or any committee designated by the Managers, may participate in meetings of the Managers, or any committee, by means of telephone conference or similar communications equipment that allows all persons participating in the meeting to hear each other, and such participation in a meeting shall constitute presence in person at the meeting. If all the participants are participating by telephone conference or similar communications equipment, the meeting shall be deemed to be held at the principal place of business of the Company.
   9. Committees of Managers.
      1. The Managers may, by resolution passed by a majority of the Managers, designate one or more committees, each committee to consist of one or more of the Managers. The Managers may designate one or more Managers as alternate members of any committee, who may replace any absent or disqualified member at any meeting of the committee.
      2. In the absence or disqualification of a member of a committee, the member or members thereof present at any meeting and not disqualified from voting, whether or not such members constitute a quorum, may unanimously appoint another Manager to act at the meeting in the place of any such absent or disqualified member.
      3. Any such committee, to the extent provided in the resolution of the Managers, shall have and may exercise all the powers and authority of the Managers in the management of the business and affairs of the Company. Such committee or committees shall have such name or names as may be determined from time to time by resolution adopted by the Managers. Each committee shall keep regular minutes of its meetings and report the same to the Managers when required.
   10. Limitations on Independent Managers. All right, power and authority of the Independent Managers shall be limited to the extent necessary to exercise those rights and perform those duties specifically set forth in this Agreement.

8. 
   
   EXPENSES

   1. Expenses. Except as otherwise provided in this Agreement or the Basic Documents, the Company shall be responsible for all expenses and the allocation thereof including without limitation:
      1. all expenses incurred by the Member or its Affiliates in organizing the Company;
      2. all expenses related to the business of the Company and all routine administrative expenses of the Company, including the maintenance of books and records of the Company, the preparation and dispatch to the Member of checks, financial reports, tax returns and notices required pursuant to this Agreement;
      3. all expenses incurred in connection with any litigation or arbitration involving the Company (including the cost of any investigation and preparation) and the amount of any judgment or settlement paid in connection therewith;
      4. all expenses for indemnity or contribution payable by the Company to any Person;
      5. all expenses incurred in connection with the collection of amounts due to the Company from any Person;
      6. all expenses incurred in connection with the preparation of amendments to this Agreement;
      7. all expenses incurred in connection with the liquidation, dissolution and winding up of the Company; and
      8. all expenses otherwise allocated in good faith to the Company by the Managers.

9. 
   
   PERPETUAL EXISTENCE; DISSOLUTION, LIQUIDATION AND WINDING-UP

   1. Existence.
      1. The Company shall have a perpetual existence. So long as any of the Company's Transition Bonds shall remain Outstanding, the Member shall not be entitled to consent to the dissolution of the Company.
      2. Notwithstanding any provision of this Agreement, the Bankruptcy of the Member or Special Member will not cause such Member or Special Member to cease to be a member of the Company, and upon the occurrence of such an event, the business of the Company shall continue without dissolution. For purposes of this Section 9.01(b), "Bankruptcy" means, with respect to any Person, if such Person (i) makes an assignment for the benefit of creditors, (ii) files a voluntary petition in bankruptcy, (iii) is adjudged a bankrupt or insolvent, or has entered against it an order for relief, in any bankruptcy or insolvency proceedings, (iv) files a petition or answer seeking for itself any reorganization, arrangement, composition, readjustment, liquidation or similar relief under any statute, law or regulation, (v) files an answer or other pleading admitting or failing to contest the material allegations of a petition filed against it in any proceeding of this nature, (vi) seeks, consents to or acquiesces in the appointment of a trustee, receiver or liquidator of the Person or of all or any substantial part of its properties, or (vii) if 120 days after the commencement of any proceeding against the Person seeking reorganization, arrangement, composition, readjustment, liquidation or similar relief under any statute, law or regulation, if the proceeding has not been dismissed or if within 90 days after the appointment without such Person's consent or acquiescence of a trustee, receiver or liquidator of such Person or of all or any substantial part of its properties, the appointment is not vacated or stayed, or within 90 days after the expiration of any such stay, the appointment is not vacated. The foregoing definition of "Bankruptcy" is intended to replace and shall supersede and replace the definition of "Bankruptcy" set for in Sections 18-101(1) and 18-304 of the LLC Act. Upon the occurrence of any event that causes the last remaining Member of the Company to cease to be a member of the Company, to the fullest extent permitted by law, the personal representative of such member is hereby authorized to, and shall, within ninety (90) days after the occurrence of the event that terminated the continued membership of such member in the Company, agree in writing (i) to continue the Company and (ii) to the admission of the personal representative or its nominee or designee, as the case may be, as a substitute member of the Company, effective as of the occurrence of the event that terminated the continued membership of the last remaining member of the Company in the Company.
   2. Dissolution. The Company shall be dissolved and its affairs shall be wound up upon the occurrence of the earliest of the following events:
      1. subject to Section 1.07, the election to dissolve the Company made in writing by the Member and each Manager, including the Independent Managers, as permitted under the Basic Documents and after the discharge in full of the Transition Bonds;
      2. the termination of the legal existence of the last remaining member of the Company or the occurrence of any event that causes the last remaining member of the Company to cease to be a member of the Company unless the business of the Company is continued without dissolution in a manner permitted by the LLC Act or this Agreement; or
      3. the entry of a decree of judicial dissolution of the Company pursuant to Section 18-802 of the LLC Act.
   3. Accounting. In the event of the dissolution, liquidation and winding-up of the Company, a proper accounting shall be made of the Capital Account of the Member and of the net income or net loss of the Company from the date of the last previous accounting to the date of dissolution.
   4. Certificate of Cancellation. As soon as possible following the occurrence of any of the events specified in Section 9.02 and the completion of the winding up of the Company, the Person winding up the business and affairs of the Company, as an authorized Person, shall cause to be executed a Certificate of Cancellation of the Certificate of Formation and file the Certificate of Cancellation of the Certificate of Formation as required by the LLC Act.
   5. Winding Up. Upon the occurrence of any event specified in Section 9.02, the Company shall continue solely for the purpose of winding up its affairs in an orderly manner, liquidating its assets, and satisfying the claims of its creditors. The Member, or if there is no Member, the Managers, shall be responsible for overseeing the winding up and liquidation of the Company, shall take full account of the liabilities of the Company and its assets, shall either cause its assets to be sold or distributed, and if sold as promptly as is consistent with obtaining the fair market value thereof, shall cause the proceeds therefrom, to the extent sufficient therefor, to be applied and distributed as provided in Section 9.06.
   6. Order of Payment of Liabilities Upon Dissolution. After determining that all debts and liabilities of the Company, including all contingent, conditional or unmatured liabilities of the Company, in the process of winding-up, including, without limitation, debts and liabilities to the Member in the event it is a creditor of the Company to the extent otherwise permitted by law, have been paid or adequately provided for, the remaining assets shall be distributed in cash or in kind to the Member.
   7. Limitations on Payments Made in Dissolution. Except as otherwise specifically provided in this Agreement, the Member shall only be entitled to look solely to the assets of Company for the return of its positive Capital Account balance and shall have no recourse for its Capital Contribution and/or share of net income (upon dissolution or otherwise) against any Manager.
   8. Limitation on Liability. Except as otherwise provided by the LLC Act and except as otherwise characterized for tax and financial reporting purposes, the debts, obligations and liabilities of the Company, whether arising in contract, tort or otherwise, shall be solely the debts, obligations and liabilities of the Company, and no Member or Manager shall be obligated personally for any such debt, obligation or liability of the Company solely by reason of being a Member or a Manager.

10. 
    
    INDEMNIFICATION

    1. Indemnity. Subject to the provisions of Section 10.04 hereof, to the fullest extent permitted by law, the Company shall indemnify any Person who was or is a party or is threatened to be made a party to any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative, except an action by or in the right of the Company, by reason of the fact that such Person is or was a Manager, Member, officer, controlling Person, employee, legal representative or agent of the Company, or is or was serving at the request of the Company as a member, manager, director, officer, partner, shareholder, controlling Person, employee, legal representative or agent of another limited liability company, partnership, corporation, joint venture, trust or other enterprise, against expenses, including attorneys' fees, judgments, fines and amounts paid in settlement actually and reasonably incurred by such Person in connection with the action, suit or proceeding if such Person acted in good faith and in a manner which such Person reasonably believed to be in or not opposed to the best interests of the Company, and, with respect to a criminal action or proceeding, had no reasonable cause to believe such Person's conduct was unlawful; provided that such Person shall not be entitled to indemnification if such judgment, penalty, fine or other expense was directly caused by such Person's fraud, gross negligence or willful misconduct.
    2. Indemnity for Actions By or In the Right of the Company. Subject to the provisions of Section 10.04 hereof, to the fullest extent permitted by law, the Company shall indemnify any Person who was or is a party or is threatened to be made a party to any threatened, pending or completed action or suit by or in the rights of the Company to procure a judgment in its favor by reason of the fact that such Person is or was a Member, Manager, officer, controlling Person, employee, legal representative or agent of the Company, or is or was serving at the request of the Company as a member, manager, director, officer, partner, shareholder, controlling Person, employee, legal representative or agent of another limited liability company, corporation, partnership, joint venture, trust or other enterprise, against expenses, including amounts paid in settlement and attorneys' fees actually and reasonably incurred by such Person in connection with the defense or settlement of the actions o r suit if such Person acted in good faith and in a manner which such Person reasonably believed to be in or not opposed to the best interests of the Company; provided that such Person shall not be entitled to indemnification if such judgment, penalty, fine or other expense was directly caused by such Person's fraud, gross negligence or willful misconduct. Indemnification may not be made for any claim, issue or matter as to which such Person has been adjudged by a court of competent jurisdiction, after exhaustion of all appeals therefrom, to be liable to the Company or for amounts paid in settlement to the Company, unless and only to the extent that the court in which the action or suit was brought or other court of competent jurisdiction determines upon application that in view of all the circumstances of the case, the Person is fairly and reasonably entitled to indemnity for such expenses as the court deems proper.
    3. Indemnity If Successful. The Company shall indemnify any Person who is or was a Manager, Member, officer, controlling Person, employee, legal representative or agent of the Company, or is or was serving at the request of the Company as a member, manager, director, officer, partner, shareholder, controlling Person, employee, legal representative or agent of another limited liability company, corporation, partnership, joint venture, trust or other enterprise against expenses, including attorneys' fees, actually and reasonably incurred by him or her in connection with the defense of any action, suit or proceeding referred to in Sections 10.01 and 10.02 or in defense of any claim, issue or matter therein, to the extent that such Person has been successful on the merits.
    4. Expenses. Any indemnification under Sections 10.01 and 10.02, as well as the advance payment of expenses permitted under Section 10.05 unless ordered by a court or advanced pursuant to Section 10.05 below, must be made by the Company only as authorized in the specific case upon a determination that indemnification of the Manager, Member, officer, controlling Person, employee, legal representative or agent is proper in the circumstances. The determination must be made:
       1. by the Member if the Member was not a party to the act, suit or proceeding; or
       2. if the Member was a party to the act, suit or proceeding by independent legal counsel in a written opinion.
    5. Advance Payment of Expenses. The expenses of each Person who is or was a Manager, Member, officer, controlling Person, employee, legal representative or agent, or is or was serving at the request of the Company as a member, manager, director, officer, partner, shareholder, controlling Person, employee, legal representative or agent of another limited liability company, corporation, partnership, joint venture, trust or other enterprise, incurred in defending a civil or criminal action, suit or proceeding may be paid by the Company as they are incurred and in advance of the final disposition of the action, suit or proceeding, upon receipt of an undertaking by or on behalf of such Person to repay the amount if it is ultimately determined by a court of competent jurisdiction that such Person is not entitled to be indemnified by the Company. The provisions of this Section 10.05 shall not affect any rights to advancement of expenses to which personnel other t han the Member or the Managers (other than the Independent Managers) may be entitled under any contract or otherwise by law.
    6. Other Arrangements Not Excluded. The indemnification and advancement of expenses authorized in or ordered by a court pursuant to this Article X:
       1. does not exclude any other rights to which a Person seeking indemnification or advancement of expenses may be entitled under any agreement, decision of the Member or otherwise, for either an action of any Person who is or was a Manager, Member, officer, controlling Person, employee, legal representative or agent, or is or was serving at the request of the Company as a member, manager, director, officer, partner, shareholder, controlling Person, employee, legal representative or agent of another limited liability company, corporation, partnership, joint venture, trust or other enterprise, in the official capacity of such Person or an action in another capacity while holding such position, except that indemnification and advancement, unless ordered by a court pursuant to Section 10.05 above, may not be made to or on behalf of such Person if a final adjudication established that its acts or omissions involved intentional misconduct, fraud or a knowing violation of the law and were material to the cause of action; and
       2. continues for a Person who has ceased to be a Member, Manager, officer, employee, legal representative or agent and inures to the benefit of the successors, heirs, executors and administrators of such a Person.

11. 
    
    MISCELLANEOUS PROVISIONS

    1. No Bankruptcy Petition; Dissolution.
       1. To the fullest extent permitted by law, the Member, each Special Member and each Manager hereby covenant and agree (or shall be deemed to have hereby covenanted and agreed) that, prior to the date which is one year and one day after the termination of the Indenture and the payment in full of the Transition Bonds and any other amounts owed under the Indenture, it will not acquiesce, petition or otherwise invoke or cause the Company to invoke the process of any court or Governmental Authority for the purpose of commencing or sustaining an involuntary case against the Company under any federal or state bankruptcy, insolvency or similar law or appointing a receiver, liquidator, assignee, trustee, custodian, sequestrator or other similar official of the Company or any substantial part of the property of the Company, or ordering the winding up or liquidation of the affairs of the Company; provided, however, that nothing in this Section 11.01 shall constitute a wai ver of any right to indemnification, reimbursement or other payment from the Company pursuant to this Agreement. This Section 11.01 is not intended to apply to the filing of a voluntary bankruptcy petition on behalf of the Company which is governed by Sections 1.08 and 7.02 of this Agreement.
       2. To the fullest extent permitted by law, the Member, each Special Member and each Manager hereby covenants and agrees (or shall be deemed to have hereby covenanted and agreed) that, until the termination of the Indenture and the payment in full of the Transition Bonds and any other amounts owed under the Indenture, the Member, such Special Member and such Manager will not consent to, or make application for, or institute or maintain any action for, the dissolution of the Company under Section 18-801 or 18-802 of the Act or otherwise.
       3. In the event that the Member, any Special Member or any Manager takes action in violation of this Section 11.01, the Company agrees that it shall file an answer with the court or otherwise properly contest the taking of such action and raise the defense that the Member, the Special Member or Manager, as the case may be, has agreed in writing not to take such action and should be estopped and precluded therefrom and such other defenses, if any, as its counsel advises that it may assert.
       4. The provisions of this Section 11.01 shall survive the termination of this Agreement and the resignation, withdrawal or removal of the Member, any Special Member or any Manager. Nothing herein contained shall preclude participation by the Member, any Special Member or a Manager in assertion or defense of its claims in any such proceeding involving the Company.
    2. Amendments.
       1. The power to alter, amend or repeal this Agreement shall be only on the consent of the Member, provided, that:
          1. the Company shall not alter, amend or repeal any provision of Sections 1.02(b), 1.05, 1.07, 1.08, 3.01(b), 3.02, 6.06, 6.07, 7.02, 7.05, 9.01, 9.02, 11.01, 11.02 and 11.07 of this Agreement or the definition of an Independent Manager contained herein or the requirement that at all times the Company have at least one Independent Manager without, in each case, the affirmative vote of a majority of the Managers, which vote must include the affirmative vote of all of the Independent Managers; and
          2. the Company may amend Sections 4.01 (with respect to the Independent Manager Fee described in subsection (a)), 4.02, 5.04, and 7.03 of this Agreement, provided that if the contemplated amendment may in the judgment of the PUCT increase ongoing Qualified Costs, the Company must obtain the consent of the PUCT pursuant to Section 11.03.
       2. The Company's power to alter or amend the Certificate of Formation shall be vested in the Member. Upon obtaining the approval of any amendment, supplement or restatement as to the Certificate of Formation, the Member on behalf of the Company shall cause a Certificate of Amendment or Amended and Restated Certificate of Formation to be prepared, executed and filed in accordance with the LLC Act.
    3. PUCT Condition. Notwithstanding anything to the contrary in Section 11.02, no amendment or modification of Sections 4.01 (with respect to the Independent Manager Fee described in subsection (a)), 4.02, 5.04, and 7.03 of this Agreement shall be effective unless the process set forth in this Section 11.03 has been followed.
       1. At least thirty-one (31) days prior to the effectiveness of any such amendment or modification and after obtaining the other necessary approvals set forth in Section 11.02 above, the Member shall have delivered to the PUCT's executive director and general counsel written notification of any proposed amendment or modification, which notification shall contain:
          1. a reference to Docket No. 37247;
          2. an Officer's Certificate stating that the proposed amendment or modification has been approved by all parties to this Agreement; and
          3. a statement identifying the person to whom the PUCT or its staff is to address any response to the proposed amendment or modification or to request additional time.
          2. The PUCT or its staff shall, within thirty (30) days of receiving the notification complying with Section 11.03(a) above, either:
             1. provide notice of its determination that the proposed amendment or modification will not under any circumstances have the effect of increasing the ongoing Qualified Costs related to the Transition Bonds,
             2. provide notice of its consent or lack of consent to the person specified in Section 11.03(a)(iii) above, or
             3. be conclusively deemed to have consented to the proposed amendment or modification,

             unless, within thirty (30) days of receiving the notification complying with Section 11.03(a) above, the PUCT or its staff delivers to the office of the person specified in Section 11.03(a)(iii) above a written statement requesting an additional amount of time not to exceed thirty (30) days in which to consider whether to consent to the proposed amendment or modification. If the PUCT or its staff requests an extension of time in the manner set forth in the preceding sentence, then the PUCT shall either provide notice of its consent or lack of consent or notice of its determination that the proposed amendment or modification will not under any circumstances increase ongoing qualified costs to the person specified in Section 11.03(a)(iii) above no later than the last day of such extension of time or be conclusively deemed to have consented to the proposed amendment or modification on the last day of such extension of time. Any amendment or modification requiring the consent of the PUCT sha ll become effective on the later of (i) the date proposed by the parties to such amendment or modification and (ii) the first day after the expiration of the thirty (30)-day period provided for in this Section 11.03(b), or, if such period has been extended pursuant hereto, the first day after the expiration of such period as so extended.

          3. Following the delivery of a notice to the PUCT by the Member under Section 11.03(a) above, the Member shall have the right at any time to withdraw from the PUCT further consideration of any notification of a proposed amendment. Such withdrawal shall be evidenced by the prompt written notice thereof by the Member to the PUCT, the Indenture Trustee, the Independent Managers and the Servicer.
    4. Governing Law. THIS AGREEMENT SHALL BE CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF DELAWARE, WITHOUT REFERENCE TO ITS CONFLICT OF LAW PROVISIONS, AND THE OBLIGATIONS, RIGHTS AND REMEDIES OF THE PARTIES HEREUNDER SHALL BE DETERMINED IN ACCORDANCE WITH SUCH LAWS.
    5. Headings. The headings of the various Articles and Sections herein are for convenience of reference only and shall not define or limit any of the terms or provisions hereof.
    6. Severability. Any provision of this Agreement that is prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability without invalidating the remainder of such provision (if any) or the remaining provisions hereof (unless such construction shall be unreasonable), and any such prohibition or unenforceability in any jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction.
    7. Assigns. Each and all of the covenants, terms, provisions and agreements contained in this Agreement shall be binding upon and inure to the benefit of the Member, and its permitted successors and assigns.
    8. Enforcement by Independent Managers. Notwithstanding any other provision of this Agreement, the Member agrees that this Agreement constitutes a legal, valid and binding agreement of the Member, and is enforceable against the Member by the Independent Manager in accordance with its terms. The Independent Manager is an intended beneficiary of this Agreement.
    9. Waiver of Partition; Nature of Interest. Except as otherwise expressly provided in this Agreement, to the fullest extent permitted by law, each of the Member and the Special Members hereby irrevocably waives any right or power that such Person might have to cause the Company or any of its assets to be partitioned, to cause the appointment of a receiver for all or any portion of the assets of the Company, to compel any sale of all or any portion of the assets of the Company pursuant to any applicable law or to file a complaint or to institute any proceeding at law or in equity to cause the dissolution, liquidation, winding up or termination of the Company. The Member shall not have any interest in any specific assets of the Company, and the Member shall not have the status of a creditor with respect to any distribution pursuant to this Agreement.
    10. Separate Counterparts. This Agreement may be executed by the parties hereto in separate counterparts, each of which when so executed and delivered shall be an original, but all such counterparts shall together constitute but one and the same instrument.

IN WITNESS WHEREOF, this Agreement is hereby executed by the undersigned as the sole Member of the Company and is effective as of the date first written above.

ENTERGY TEXAS, INC.

By: /s/ Jack Blakley
Name: Jack Blakley
Title: Vice President, Regulatory Affairs

SCHEDULE A

Schedule of Capital Contributions of Member

MEMBER'S NAME	CAPITAL CONTRIBUTION	MEMBERSHIP INTEREST PERCENTAGE	CAPITAL ACCOUNT
Entergy Texas, Inc.	$100	100%	$100

SCHEDULE B

Initial Managers

Eddie Peebles

Tom Wagner

Paul Scheurich

Steven C. McNeal

SCHEDULE C

Initial Officers

Name	Office
Eddie Peebles	President
Theodore H. Bunting Jr.	Chief Accounting Officer
Tom Wagner	Secretary
Steven C. McNeal	Vice President and Treasurer
Dawn Abuso	Assistant Secretary
Paul Wichers	Tax Officer

EXHIBIT A

Management Agreement

_______ __, 2009

Entergy Texas Restoration Funding, LLC
Capital Center
919 Congress Avenue, Suite 840-C
Austin, Texas 78701

Re: Management Agreement -Entergy Texas Restoration Funding, LLC

Ladies and Gentlemen:

For good and valuable consideration, each of the undersigned Persons, who have been designated as managers of Entergy Texas Restoration Funding, LLC, a Delaware limited liability company (the "Company"), in accordance with the Limited Liability Company Agreement of the Company, dated as of August __, 2009 (as it may be amended, restated, supplemented or otherwise modified from time to time, the "LLC Agreement"), hereby agree as follows:

1. Each of the undersigned accepts such Person's rights and authority as a Manager under the LLC Agreement and agrees to perform and discharge such Person's duties and obligations as a Manager under the LLC Agreement, and further agrees that such rights, authorities, duties and obligations under the LLC Agreement shall continue until such Person's successor as a Manager is designated or until such Person's resignation or removal as a Manager in accordance with the LLC Agreement. Each of the undersigned agrees and acknowledges that it has been designated as a "manager" of the Company within the meaning of the Delaware Limited Liability Company Act.

2. Until a year and one day has passed since the date that the last obligation under the Basic Documents was paid, to the fullest extent permitted by law, each of the undersigned agrees, solely in its capacity as a creditor of the Company on account of any indemnification or other payment owing to the undersigned by the Company, not to acquiesce, petition or otherwise invoke or cause the Company to invoke the process of any court or governmental authority for the purpose of commencing or sustaining a case against the Company under any federal or state bankruptcy, insolvency or similar law or appointing a receiver, liquidator, assignee, trustee, custodian, sequestrator or other similar official of the Company or any substantial part of the property of the Company, or ordering the winding up or liquidation of the affairs of the Company.

3. THIS MANAGEMENT AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF DELAWARE, AND ALL RIGHTS AND REMEDIES SHALL BE GOVERNED BY SUCH LAWS WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF LAWS.

Capitalized terms used and not otherwise defined herein have the meanings set forth in the LLC Agreement.

This Management Agreement may be executed in any number of counterparts, each of which shall be deemed an original of this Management Agreement and all of which together shall constitute one and the same instrument.

IN WITNESS WHEREOF, the undersigned have executed this Management Agreement as of the day and year first above written.

___________________
Eddie Peebles

___________________
Tom Wagner

___________________
Paul Scheurich

___________________
Steven C. McNeal

EX-4

Exhibit 4.1

Entergy Texas Restoration Funding, LLC,

Issuer,

and

THE BANK OF NEW YORK MELLON,

Indenture Trustee and Securities Intermediary

______________________________

INDENTURE

Dated as of _______ __, 2009

______________________________

TABLE OF CONTENTS

Page

ARTICLE I
Definitions and Incorporation by Reference

		Page
SECTION 1.01	Definitions.	2
SECTION 1.02	Incorporation by Reference of Trust Indenture Act	2
SECTION 1.03	Rules of Construction	2

ARTICLE II
The Transition Bonds

SECTION 2.01	Form	3
SECTION 2.02	Denominations; Transition Bonds	3
SECTION 2.03	Execution, Authentication and Delivery	4
SECTION 2.04	Temporary Transition Bonds	5
SECTION 2.05	Registration; Registration of Transfer and Exchange of Transition Bonds	5
SECTION 2.06	Mutilated, Destroyed, Lost or Stolen Transition Bonds	7
SECTION 2.07	Persons Deemed Owner	7
SECTION 2.08	Payment of Principal, Premium, if any, and Interest; Interest on Overdue Principal; Principal, Premium, if any, and Interest Rights Preserved.	8
SECTION 2.09	Cancellation	9
SECTION 2.10	Outstanding Amount; Authentication and Delivery of Transition Bonds	9
SECTION 2.11	Book-Entry Transition Bonds	18
SECTION 2.12	Notices to Clearing Agency	19
SECTION 2.13	Definitive Transition Bonds	19
SECTION 2.14	CUSIP Number	20
SECTION 2.15	Letter of Representations	20
SECTION 2.16	[RESERVED]	20
SECTION 2.17	Tax Treatment	20
SECTION 2.18	State Pledge	20
SECTION 2.19	Security Interests	21

ARTICLE III
Covenants

SECTION 3.01	Payment of Principal, Premium, if any, and Interest	22
SECTION 3.02	Maintenance of Office or Agency	23
SECTION 3.03	Money for Payments To Be Held in Trust	23
SECTION 3.04	Existence	24
SECTION 3.05	Protection of Transition Bond Collateral	24
SECTION 3.06	Opinions as to Transition Bond Collateral.	25
SECTION 3.07	Performance of Obligations; Servicing; SEC Filings.	26
SECTION 3.08	Certain Negative Covenants	28
SECTION 3.09	Annual Statement as to Compliance	29
SECTION 3.10	Issuer May Consolidate, etc., Only on Certain Terms.	30
SECTION 3.11	Successor or Transferee.	32
SECTION 3.12	No Other Business	32
SECTION 3.13	No Borrowing	32
SECTION 3.14	Servicer's Obligations	32
SECTION 3.15	Guarantees, Loans, Advances and Other Liabilities	33
SECTION 3.16	Capital Expenditure	33
SECTION 3.17	Restricted Payments	33
SECTION 3.18	Notice of Events of Default	33
SECTION 3.19	Further Instruments and Acts	33
SECTION 3.20	[RESERVED]	33
SECTION 3.21	Inspection	33
SECTION 3.22	Sale Agreement, Servicing Agreement, and Administration Agreement Covenants.	34
SECTION 3.23	Taxes	36

ARTICLE IV
Satisfaction and Discharge; Defeasance

SECTION 4.01	Satisfaction and Discharge of Indenture; Defeasance.	36
SECTION 4.02	Conditions to Defeasance	38
SECTION 4.03	Application of Trust Money	39
SECTION 4.04	Repayment of Moneys Held by Paying Agent	39

ARTICLE V
Remedies

SECTION 5.01	Events of Default	40
SECTION 5.02	Acceleration of Maturity; Rescission and Annulment	41
SECTION 5.03	Collection of Indebtedness and Suits for Enforcement by Indenture Trustee.	42
SECTION 5.04	Remedies; Priorities.	44
SECTION 5.05	Optional Preservation of the Transition Bond Collateral	45
SECTION 5.06	Limitation of Suits	45
SECTION 5.07	Unconditional Rights of Holders To Receive Principal, Premium, if any, and Interest	46
SECTION 5.08	Restoration of Rights and Remedies	46
SECTION 5.09	Rights and Remedies Cumulative	47
SECTION 5.10	Delay or Omission Not a Waiver	47
SECTION 5.11	Control by Holders	47
SECTION 5.12	Waiver of Past Defaults	48
SECTION 5.13	Undertaking for Costs	48
SECTION 5.14	Waiver of Stay or Extension Laws	48
SECTION 5.15	Action on Transition Bonds	48

ARTICLE VI
The Indenture Trustee

SECTION 6.01	Duties of Indenture Trustee.	49
SECTION 6.02	Rights of Indenture Trustee	50
SECTION 6.03	Individual Rights of Indenture Trustee	51
SECTION 6.04	Indenture Trustee's Disclaimer	51
SECTION 6.05	Notice of Defaults.	52
SECTION 6.06	Reports by Indenture Trustee to Holders.	52
SECTION 6.07	Compensation and Indemnity	53
SECTION 6.08	Replacement of Indenture Trustee and Securities Intermediary.	54
SECTION 6.09	Successor Indenture Trustee by Merger	55
SECTION 6.10	Appointment of Co-Trustee or Separate Trustee.	55
SECTION 6.11	Eligibility; Disqualification	56
SECTION 6.12	Preferential Collection of Claims Against Issuer	57
SECTION 6.13	Representations and Warranties of Indenture Trustee	57
SECTION 6.14	Annual Report by Independent Registered Public Accountants	57
SECTION 6.15	Custody of Transition Bond Collateral	57

ARTICLE VII
Holders' Lists and Reports

SECTION 7.01	Issuer To Furnish Indenture Trustee Names and Addresses of Holders	58
SECTION 7.02	Preservation of Information; Communications to Holders.	58
SECTION 7.03	Reports by Issuer.	59
SECTION 7.04	Reports by Indenture Trustee	59

ARTICLE VIII
Accounts, Disbursements and Releases

SECTION 8.01	Collection of Money	59
SECTION 8.02	Collection Account and REP Deposit Accounts.	60
SECTION 8.03	General Provisions Regarding the Collection Accounts.	63
SECTION 8.04	Release of Transition Bond Collateral.	65
SECTION 8.05	Opinion of Counsel	65
SECTION 8.06	Reports by Independent Registered Public Accountants	66

ARTICLE IX
Supplemental Indentures

SECTION 9.01	Supplemental Indentures Without Consent of Holders.	66
SECTION 9.02	Supplemental Indentures with Consent of Holders	68
SECTION 9.03	PUCT Condition	69
SECTION 9.04	Execution of Supplemental Indentures	70
SECTION 9.05	Effect of Supplemental Indenture	70
SECTION 9.06	Conformity with Trust Indenture Act	71
SECTION 9.07	Reference in Transition Bonds to Supplemental Indentures	71

ARTICLE X
Miscellaneous

SECTION 10.01	Compliance Certificates and Opinions, etc.	71
SECTION 10.02	Form of Documents Delivered to Indenture Trustee	73
SECTION 10.03	Acts of Holders.	73
SECTION 10.04	Notices, etc., to Indenture Trustee, Issuer and Rating Agencies.	74
SECTION 10.05	Notices to Holders; Waiver	75
SECTION 10.06	[Intentionally Omitted.]	75
SECTION 10.07	Conflict with Trust Indenture Act	75
SECTION 10.08	Effect of Headings and Table of Contents	76
SECTION 10.09	Successors and Assigns	76
SECTION 10.10	Severability	76
SECTION 10.11	Benefits of Indenture	76
SECTION 10.12	Legal Holidays	76
SECTION 10.13	GOVERNING LAW	76
SECTION 10.14	Counterparts	77
SECTION 10.15	Recording of Indenture	77
SECTION 10.16	Issuer Obligation	77
SECTION 10.17	No Recourse to Issuer	77
SECTION 10.18	Basic Documents	77
SECTION 10.19	No Petition	77
SECTION 10.20	Securities Intermediary	78

EXHIBITS AND SCHEDULES

EXHIBIT A Form of Transition Bonds

EXHIBIT B Form of Series Supplement

EXHIBIT C Servicing Criteria to be Addressed by Indenture Trustee in Assessment of Compliance

APPENDIX

APPENDIX A Definitions

TRUST INDENTURE ACT CROSS REFERENCE TABLE

TIA Section		Indenture Section
310	(a)(1)	6.11
	(a)(2)	6.11
	(a)(3)	6.10(b)(i)
	(a)(4)	N.A.
	(a)(5)	6.11
	(b)	6.11
	(c)	N.A.
311	(a)	6.12
	(b)	6.12
	(c)	N.A.
312	(a)	7.01 and 7.02
	(b)	7.02
	(c)	7.02
313	(a)	7.04
	(b)(1)	7.04
	(b)(2)	7.04
	(c)	7.04
	(d)	7.04
314	(a)	3.09, 4.01, and 7.03(a)
	(b)	3.06 and 4.01
	(c)(1)	2.10, 4.01, 8.04(b) and 10.01(a)
	(c)(2)	2.10, 4.01, 8.04(b) and 10.01(a)
	(c)(3)	2.10 4.01 and 10.01(a)
	(d)	2.10, 8.04(b) and 10.01(b)
	(e)	10.01(a)
	(f)	10.01(a)
315	(a)	6.01(b)(i)(ii)
	(b)	6.05
	(c)	6.01 (a)
	(d)	6.01(c)(i)-(iii)
	(e)	5.13
316	(a) (last sentence)	Appendix A - definition of "Outstanding"
	(a)(1)(A)	5.11
	(a)(1)(B)	5.12
	(a)(2)	Omitted
	(b)	5.07
	(c)	Appendix A - definition of "Record Date"
317	(a)(1)	5.03(a)
	(a)(2)	5.03(c)(iv)
	(b)	3.03
318	(a)	10.07

** "N.A." shall mean "not applicable".

This cross reference table shall not, for any purpose,
be deemed to be part of this Indenture.

This INDENTURE dated as of _____ __, 2009, by and between Entergy Texas Restoration Funding, LLC, a Delaware limited liability company (the "Issuer"), and The Bank of New York Mellon, a New York banking corporation, in its capacity as indenture trustee (the "Indenture Trustee") for the benefit of the Secured Parties (as defined herein) and in its separate capacity as a securities intermediary (the "Securities Intermediary").

In consideration of the mutual agreements herein contained, each party agrees as follows for the benefit of the other and each of the Holders:

RECITALS OF THE ISSUER

The Issuer has duly authorized the execution and delivery of this Indenture and the creation and issuance of the Transition Bonds issuable hereunder, which will be of substantially the tenor set forth herein and in the Series Supplement.

The Transition Bonds shall be non-recourse obligations and shall be secured by and payable solely out of the proceeds of the Transition Property and the other Transition Bond Collateral. If and to the extent that such proceeds of Transition Property and the other Transition Bond Collateral are insufficient to pay all amounts owing with respect to the Transition Bonds, then, except as otherwise expressly provided hereunder, the Holders shall have no Claim in respect of such insufficiency against the Issuer or the Indenture Trustee, and the Holders, by their acceptance of the Transition Bonds, waive any such Claim.

All things necessary to (a) make the Transition Bonds, when executed by the Issuer and authenticated and delivered by the Indenture Trustee hereunder and duly issued by the Issuer, valid obligations, and (b) make this Indenture a valid agreement of the Issuer, in each case, in accordance with their respective terms, have been done.

NOW, THEREFORE, THIS INDENTURE WITNESSETH:

That the Issuer, in consideration of the premises herein contained and of the purchase of the Transition Bonds by the Holders and of other good and lawful consideration, the receipt and sufficiency of which are hereby acknowledged, and to secure, equally and ratably without prejudice, priority or distinction, except as specifically otherwise set forth in this Indenture, the payment of the Transition Bonds, the payment of all other amounts due under or in connection with this Indenture (including, without limitation, all fees, expenses, counsel fees, indemnity amounts and other amounts due and owing to the Indenture Trustee) and the performance and observance of all of the covenants and conditions contained herein or in such Transition Bonds, has hereby executed and delivered this Indenture and by these presents does hereby and under the Series Supplement will convey, grant and assign, transfer and pledge, in and unto the Indenture Trustee, its successors and assigns forever, for the benefi t of the Secured Parties, all and singular the property described in the Series Supplement (such property hereinafter referred to as the "Transition Bond Collateral"). The Series Supplement will more particularly describe the obligations of the Issuer secured by the Transition Bond Collateral.

AND IT IS HEREBY COVENANTED, DECLARED AND AGREED between the parties hereto that all Transition Bonds are to be issued, countersigned and delivered and that all of the Transition Bond Collateral is to be held and applied, subject to the further covenants, conditions, releases, uses and trusts hereinafter set forth, and the Issuer, for itself and any successor, does hereby covenant and agree to and with the Indenture Trustee and its successors in said trust, for the benefit of the Secured Parties, as follows:

1. 
   
   Definitions and Incorporation by Reference

   1. Definitions. Except as otherwise specified herein or as the context may otherwise require, the capitalized terms used herein shall have the respective meanings set forth in Appendix A attached hereto and made a part hereof for all purposes of this Indenture.
   2. Incorporation by Reference of Trust Indenture Act. Whenever this Indenture refers to a provision of the TIA, that provision is incorporated by reference in and made a part of this Indenture. The following TIA terms used in this Indenture have the following meanings:

      "indenture securities" means the Transition Bonds.

      "indenture security holder" means a Holder.

      "indenture to be qualified" means this Indenture.

      "indenture trustee" or "institutional trustee" means the Indenture Trustee.

      "obligor" on the indenture securities means the Issuer and any other obligor on the indenture securities.

      All other TIA terms used in this Indenture that are defined by the TIA, defined by TIA reference to another statute or defined by SEC rule have the meanings assigned to them by such definitions.

   3. Rules of Construction. Unless the context otherwise requires:
      1. a term has the meaning assigned to it;
      2. an accounting term not otherwise defined has the meaning assigned to it in accordance with generally accepted accounting principles in the United States of America as in effect from time to time;
      3. "or" is not exclusive;
      4. "including" means including without limitation;
      5. words in the singular include the plural and words in the plural include the singular; and
      6. the words "herein," "hereof," "hereunder" and other words of similar import refer to this Indenture as a whole and not to any particular Article, Section or other subdivision.

2. 
   
   The Transition Bonds

   1. Form. The Transition Bonds and the Indenture Trustee's certificate of authentication shall be in substantially the forms set forth in Exhibit A, with such appropriate insertions, omissions, substitutions and other variations as are required or permitted by this Indenture or by the Series Supplement and may have such letters, numbers or other marks of identification and such legends or endorsements placed thereon as may, consistently herewith, be determined by the officers executing the Transition Bonds, as evidenced by their execution of the Transition Bonds. Any portion of the text of any Transition Bond may be set forth on the reverse thereof, with an appropriate reference thereto on the face of the Transition Bond.

      The Transition Bonds shall be typewritten, printed, lithographed or engraved or produced by any combination of these methods (with or without steel engraved borders), all as determined by the officers executing the Transition Bonds, as evidenced by their execution of the Transition Bonds.

      Each Transition Bond shall be dated the date of its authentication. The terms of the Transition Bonds set forth in Exhibit A are part of the terms of this Indenture.

   2. Denominations; Transition Bonds. The Transition Bonds shall be issuable in the Minimum Denomination.

      The Transition Bonds may, at the election of and as authorized by a Responsible Officer of the Issuer, be issued in one or more Tranches, and shall be designated generally as the "Transition Bonds" of the Issuer, with such further particular designations added or incorporated in such title for the Transition Bonds of any particular Tranche as a Responsible Officer of the Issuer may determine. Each Transition Bond shall bear upon its face the designation so selected for the Tranche to which it belongs. All Transition Bonds shall be identical in all respects except for the denominations thereof, unless the Transition Bonds are comprised of one or more Tranches, in which case all Transition Bonds of the same Tranche shall be identical in all respects except for the denominations thereof. All Transition Bonds of a particular Tranche shall be in all respects equally and ratably entitled to the benefits hereof without preference, priority, or distinction on account of the actual tim e or times of authentication and delivery, all in accordance with the terms and provisions of this Indenture.

      The Transition Bonds shall be created by the Series Supplement authorized by a Responsible Officer of the Issuer and establishing the terms and provisions of the Transition Bonds. The several Tranches thereof may differ as between Tranches, in respect of any of the following matters:

      1. designation of the Tranches thereof;
      2. the principal amount;
      3. the Transition Bond Interest Rate;
      4. the Payment Dates;
      5. the Scheduled Payment Dates;
      6. the Scheduled Final Payment Date;
      7. the Final Maturity Date;
      8. the Closing Date;
      9. the place or places for the payment of interest, principal and premium, if any;
      10. the Minimum Denominations;
      11. the Expected Amortization Schedule;
      12. provisions with respect to the definitions set forth in Appendix A hereto;
      13. whether or not the Transition Bonds are to be Book-Entry Transition Bonds and the extent to which Section 2.11 should apply;
      14. to the extent applicable, the extent to which payments on the Transition Bonds of any Tranche are subordinate to or pari passu in right of payment of principal and interest to other Tranches;
      15. provisions with respect to application of the proceeds of the Transition Bonds including the payment of costs of issuing the Transition Bonds; and
      16. any other provisions expressing or referring to the terms and conditions upon which the Transition Bonds of the applicable Tranche are to be issued under this Indenture that are not in conflict with the provisions of this Indenture and as to which the Rating Agency Condition is satisfied.
   3. Execution, Authentication and Delivery. The Transition Bonds shall be executed on behalf of the Issuer by any of its Responsible Officers. The signature of any such Responsible Officer on the Transition Bonds may be manual or facsimile.

      Transition Bonds bearing the manual or facsimile signature of individuals who were at any time Responsible Officers of the Issuer shall bind the Issuer, notwithstanding that such individuals or any of them have ceased to hold such offices prior to the authentication and delivery of such Transition Bonds or did not hold such offices at the date of such Transition Bonds.

      At any time and from time to time after the execution and delivery of this Indenture, the Issuer may deliver Transition Bonds executed by the Issuer to the Indenture Trustee pursuant to an Issuer Order for authentication; and the Indenture Trustee shall authenticate and deliver such Transition Bonds as in this Indenture provided and not otherwise.

      No Transition Bond shall be entitled to any benefit under this Indenture or be valid or obligatory for any purpose, unless there appears on such Transition Bond a certificate of authentication substantially in the form provided for therein executed by the Indenture Trustee by the manual signature of one of its authorized signatories, and such certificate upon any Transition Bond shall be conclusive evidence, and the only evidence, that such Transition Bond has been duly authenticated and delivered hereunder.

   4. Temporary Transition Bonds. Pending the preparation of Definitive Transition Bonds pursuant to Section 2.13, the Issuer may execute, and upon receipt of an Issuer Order the Indenture Trustee shall authenticate and deliver, Temporary Transition Bonds which are printed, lithographed, typewritten, mimeographed or otherwise produced, of the tenor of the Definitive Transition Bonds in lieu of which they are issued and with such variations not inconsistent with the terms of this Indenture as the officers executing such Transition Bonds may determine, as evidenced by their execution of such Transition Bonds.

      If Temporary Transition Bonds are issued, the Issuer will cause Definitive Transition Bonds to be prepared without unreasonable delay. After the preparation of Definitive Transition Bonds, the Temporary Transition Bonds shall be exchangeable for Definitive Transition Bonds upon surrender of the Temporary Transition Bonds at the office or agency of the Issuer to be maintained as provided in Section 3.02, without charge to the Holder. Upon surrender for cancellation of any one or more Temporary Transition Bonds, the Transition Bond Issuer shall execute and the Indenture Trustee shall authenticate and deliver in exchange therefor a like principal amount of Definitive Transition Bonds of authorized denominations. Until so delivered in exchange, the Temporary Transition Bonds shall in all respects be entitled to the same benefits under this Indenture as Definitive Transition Bonds.

   5. Registration; Registration of Transfer and Exchange of Transition Bonds. The Issuer shall cause to be kept a register (the "Transition Bond Register") in which the Issuer shall provide for the registration of Transition Bonds and the registration of transfers of Transition Bonds. The Indenture Trustee shall be "Transition Bond Registrar" for the purpose of registering Transition Bonds and transfers of Transition Bonds as herein provided. Upon any resignation of any Transition Bond Registrar, the Issuer shall promptly appoint a successor or, if it elects not to make such an appointment, assume the duties of Transition Bond Registrar.

      If a Person other than the Indenture Trustee is appointed by the Issuer as Transition Bond Registrar, the Issuer will give the Indenture Trustee prompt written notice of the appointment of such Transition Bond Registrar and of the location, and any change in the location, of the Transition Bond Register, and the Indenture Trustee shall have the right to inspect the Transition Bond Register at all reasonable times and to obtain copies thereof, and the Indenture Trustee shall have the right to rely conclusively upon a certificate executed on behalf of the Transition Bond Registrar by a Responsible Officer thereof as to the names and addresses of the Holders and the principal amounts and number of such Transition Bonds (separately stated by Tranche).

      Upon surrender for registration of transfer of any Transition Bond at the office or agency of the Issuer to be maintained as provided in Section 3.02, provided that the requirements of Section 8-401 of the UCC are met, the Issuer shall execute, and the Indenture Trustee shall authenticate and the Holder shall obtain from the Indenture Trustee, in the name of the designated transferee or transferees, one or more new Transition Bonds in any Minimum Denominations, of the same Tranche and aggregate principal amount.

      At the option of the Holder, Transition Bonds may be exchanged for other Transition Bonds in any Minimum Denominations, of the same Tranche and aggregate principal amount, upon surrender of the Transition Bonds to be exchanged at such office or agency as provided in Section 3.02. Whenever any Transition Bonds are so surrendered for exchange, the Issuer shall, provided that the requirements of Section 8-401 of the UCC are met, execute and, upon any such execution, the Indenture Trustee shall authenticate and the Holder shall obtain from the Indenture Trustee, the Transition Bonds which the Holder making the exchange is entitled to receive.

      All Transition Bonds issued upon any registration of transfer or exchange of other Transition Bonds shall be the valid obligations of the Issuer, evidencing the same debt, and entitled to the same benefits under this Indenture, as the Transition Bonds surrendered upon such registration of transfer or exchange.

      Every Transition Bond presented or surrendered for registration of transfer or exchange shall be duly endorsed by, or be accompanied by (a) a written instrument of transfer in form satisfactory to the Indenture Trustee duly executed by the Holder thereof or such Holder's attorney duly authorized in writing, with such signature guaranteed by an institution which is a member of one of the following recognized Signature Guaranty Programs: (i) The Securities Transfer Agent Medallion Program (STAMP); (ii) The New York Stock Exchange Medallion Program (MSP); (iii) The Stock Exchange Medallion Program (SEMP); or (iv) such other guarantee program acceptable to the Indenture Trustee, and (b) such other documents as the Indenture Trustee may require.

      No service charge shall be made to a Holder for any registration, transfer or exchange of Transition Bonds, but the Issuer or the Indenture Trustee may require payment of a sum sufficient to cover any tax or other governmental charge or any fees or expenses of the Indenture Trustee that may be imposed in connection with any registration of transfer or exchange of Transition Bonds, other than exchanges pursuant to Sections 2.04 or 2.06 not involving any transfer.

      The preceding provisions of this Section 2.05 notwithstanding, the Issuer shall not be required to make, and the Transition Bond Registrar need not register transfers or exchanges (i) of any Transition Bond that has been submitted within fifteen (15) days preceding the due date for any payment with respect to such Transition Bond until after such due date has occurred or (ii) of Unregistered Transition Bonds unless Section 2.16 has been complied with in connection with such transfer or exchange.

   6. Mutilated, Destroyed, Lost or Stolen Transition Bonds. If (i) any mutilated Transition Bond is surrendered to the Indenture Trustee, or the Indenture Trustee receives evidence to its satisfaction of the destruction, loss or theft of any Transition Bond and (ii) there is delivered to the Indenture Trustee such security or indemnity as may be required by it to hold the Issuer and the Indenture Trustee harmless, then, in the absence of notice to the Issuer, the Transition Bond Registrar or the Indenture Trustee that such Transition Bond has been acquired by a Protected Purchaser, the Issuer shall, provided that the requirements of Section 8-401 of the UCC are met, execute and, upon the Issuer's written request, the Indenture Trustee shall authenticate and deliver, in exchange for or in lieu of any such mutilated, destroyed, lost or stolen Transition Bond, a replacement Transition Bond of like Tranche, tenor and principal amount, bearing a num ber not contemporaneously outstanding; provided, however, that if any such destroyed, lost or stolen Transition Bond, but not a mutilated Transition Bond, shall have become or within seven (7) days shall be due and payable, instead of issuing a replacement Transition Bond, the Issuer may pay such destroyed, lost or stolen Transition Bond when so due or payable without surrender thereof. If, after the delivery of such replacement Transition Bond or payment of a destroyed, lost or stolen Transition Bond pursuant to the proviso to the preceding sentence, a Protected Purchaser of the original Transition Bond in lieu of which such replacement Transition Bond was issued presents for payment such original Transition Bond, the Issuer and the Indenture Trustee shall be entitled to recover such replacement Transition Bond (or such payment) from the Person to whom it was delivered or any Person taking such replacement Transition Bond from such Person to whom such replacement Transition Bond was deli vered or any assignee of such Person, except a Protected Purchaser, and shall be entitled to recover upon the security or indemnity provided therefor to the extent of any loss, damage, cost or expense incurred by the Issuer or the Indenture Trustee in connection therewith.

      Upon the issuance of any replacement Transition Bond under this Section 2.06, the Issuer and/or the Indenture Trustee may require the payment by the Holder of such Transition Bond of a sum sufficient to cover any tax or other governmental charge that may be imposed in relation thereto and any other reasonable expenses (including the fees and expenses of the Indenture Trustee and the Transition Bond Registrar) connected therewith.

      Every replacement Transition Bond issued pursuant to this Section 2.06 in replacement of any mutilated, destroyed, lost or stolen Transition Bond shall constitute an original additional contractual obligation of the Issuer, whether or not the mutilated, destroyed, lost or stolen Transition Bond shall be found at any time or enforced by any Person, and shall be entitled to all the benefits of this Indenture equally and proportionately with any and all other Transition Bonds duly issued hereunder.

      The provisions of this Section 2.06 are exclusive and shall preclude (to the extent lawful) all other rights and remedies with respect to the replacement or payment of mutilated, destroyed, lost or stolen Transition Bonds.

   7. Persons Deemed Owner. Prior to due presentment for registration of transfer of any Transition Bond, the Issuer, the Indenture Trustee, the Transition Bond Registrar and any agent of the Issuer or the Indenture Trustee may treat the Person in whose name any Transition Bond is registered (as of the day of determination) as the owner of such Transition Bond for the purpose of receiving payments of principal of and premium, if any, and interest on such Transition Bond and for all other purposes whatsoever, whether or not such Transition Bond be overdue, and neither the Issuer, the Indenture Trustee nor any agent of the Issuer or the Indenture Trustee shall be affected by notice to the contrary.
   8. Payment of Principal, Premium, if any, and Interest; Interest on Overdue Principal; Principal, Premium, if any, and Interest Rights Preserved.
      1. The Transition Bonds shall accrue interest as provided in the Series Supplement at the applicable Transition Bond Interest Rate, and such interest shall be payable on each applicable Payment Date. Any installment of interest, principal or premium, if any, payable on any Transition Bond which is punctually paid or duly provided for on the applicable Payment Date shall be paid to the Person in whose name such Transition Bond (or one or more Predecessor Transition Bonds) is registered on the Record Date for such Payment Date, by check mailed first-class, postage prepaid to such Person's address as it appears on the Transition Bond Register on such Record Date or in such other manner as may be provided in the Series Supplement except that (i) upon application to the Indenture Trustee by any Holder owning Transition Bonds of any Tranche in the principal amount of $10,000,000 or more not later than the applicable Record Date payment will be made by wire transfer to an account maintained by such Holder an d (ii) with respect to Book-Entry Transition Bonds, payments will be made by wire transfer in immediately available funds to the account designated by the Holder of the applicable Global Transition Bond unless and until such Global Transition Bond is exchanged for Definitive Transition Bonds (in which event payments shall be made as provided above) and except for the final installment of principal and premium, if any, payable with respect to such Transition Bond on a Payment Date which shall be payable as provided below. The funds represented by any such checks returned undelivered shall be held in accordance with Section 3.03.
      2. The principal of each Transition Bond of each Tranche shall be paid, to the extent funds are available therefor in the Collection Account, in installments on each Payment Date specified in the Series Supplement; provided that installments of principal not paid when scheduled to be paid in accordance with the Expected Amortization Schedule shall be paid upon receipt of money available for such purpose, in the order set forth in the Expected Amortization Schedule. Failure to pay principal in accordance with such Expected Amortization Schedule because moneys are not available pursuant to Section 8.02 to make such payments shall not constitute a Default or Event of Default under this Indenture; provided, however that failure to pay the entire unpaid principal amount of the Transition Bonds of a Tranche upon the Final Maturity Date for the Transition Bonds shall constitute a Default or Event of Default with respect to the Transition Bonds under this Indenture. Notwithstandin g the foregoing, the entire unpaid principal amount of the Transition Bonds shall be due and payable, if not previously paid, on the date on which an Event of Default shall have occurred and be continuing, if the Indenture Trustee or the Holders of the Transition Bonds representing not less than a majority of the Outstanding Amount of the Transition Bonds have declared the Transition Bonds to be immediately due and payable in the manner provided in Section 5.02. All payments of principal and premium, if any, on the Transition Bonds shall be made pro rata to the Holders entitled thereto unless otherwise provided in the Series Supplement with respect to any Tranche of Transition Bonds. The Indenture Trustee shall notify the Person in whose name a Transition Bond is registered at the close of business on the Record Date preceding the Payment Date on which the Issuer expects that the final installment of principal of and premium, if any, and interest on such Transition Bond will be paid. Such notice shall be mailed no later than five (5) days prior to such final Payment Date and shall specify that such final installment will be payable only upon presentation and surrender of such Transition Bond and shall specify the place where such Transition Bond may be presented and surrendered for payment of such installment.
      3. If interest on the Transition Bonds is not paid when due, such defaulted interest shall be paid (plus interest on such defaulted interest at the applicable Transition Bond Interest Rate to the extent lawful) to the Persons who are Holders on a subsequent Special Record Date. The Issuer shall fix or cause to be fixed any such Special Record Date and Special Payment Date, and, at least ten (10) days before any such Special Record Date, the Issuer shall mail to each affected Holder a notice that states the Special Record Date, the Special Payment Date and the amount of defaulted interest (plus interest on such defaulted interest) to be paid.
   9. Cancellation. All Transition Bonds surrendered for payment, registration of transfer or exchange shall, if surrendered to any Person other than the Indenture Trustee, be delivered to the Indenture Trustee and shall be promptly canceled by the Indenture Trustee. The Issuer may at any time deliver to the Indenture Trustee for cancellation any Transition Bonds previously authenticated and delivered hereunder which the Issuer may have acquired in any manner whatsoever, and all Transition Bonds so delivered shall be promptly canceled by the Indenture Trustee. No Transition Bonds shall be authenticated in lieu of or in exchange for any Transition Bonds canceled as provided in this Section 2.09, except as expressly permitted by this Indenture. All canceled Transition Bonds may be held or disposed of by the Indenture Trustee in accordance with its standard retention or disposal policy as in effect at the time.
   10. Outstanding Amount; Authentication and Delivery of Transition Bonds. The aggregate Outstanding Amount of Transition Bonds that may be authenticated and delivered under this Indenture shall not exceed the aggregate of the amounts of Transition Bonds that are authorized in the Financing Order.

       Transition Bonds created and established by the Series Supplement may at any time be executed by the Issuer and delivered to the Indenture Trustee for authentication and thereupon the same shall be authenticated and delivered by the Indenture Trustee upon Issuer Request and upon delivery by the Issuer to the Indenture Trustee, and receipt by the Indenture Trustee, or the causing to occur by the Issuer, of the following; provided, however, that compliance with such conditions and delivery of such documents shall only be required in connection with the original issuance of a Transition Bond or Transition Bonds:

       1. Issuer Action. An Issuer Order authorizing and directing the authentication and delivery of the Transition Bonds by the Indenture Trustee and specifying the principal amount of Transition Bonds to be authenticated.
       2. Authorizations. Copies of (x) the Financing Order which shall be in full force and effect and be Final, (y) certified resolutions of the Managers or Member of the Issuer authorizing the execution and delivery of the Series Supplement and the execution, authentication and delivery of such Transition Bonds and (z) a duly executed Series Supplement for the Transition Bonds to be issued.
       3. Opinions.
          1. An Opinion of Counsel of Independent counsel of the Issuer that the Financing Order is in full force and effect, that the Financing Order is Final and that no other authorization, approval or consent of any Federal governmental body or bodies at the time having jurisdiction in the premises is required for the valid issuance, authentication and delivery of such Transition Bonds, except for such registrations as are required under the "Blue Sky" and securities laws of any State or such authorizations, approvals or consents of governmental bodies that have been obtained and copies of which have been delivered with such Opinion of Counsel.
          2. An Opinion of Counsel of Independent counsel of the Issuer that no authorization, approval or consent of any Delaware, New York or Texas governmental body or bodies at the time having jurisdiction in the premises is required for the valid execution and delivery by the Issuer of each of the Basic Documents to which the Issuer is a party and that is executed and delivered in connection with such Transition Bond issuance, except for such authorizations, approvals or consents of governmental bodies that have been obtained and copies of which have been delivered with such Opinion of Counsel.
       4. Authorizing Certificate. An Officer's Certificate, dated the Closing Date, of the Issuer certifying that (a) the Issuer has duly authorized the execution and delivery of this Indenture and the Series Supplement and the execution and delivery of the Transition Bonds and (b) that the Series Supplement for the Transition Bonds is in the form attached thereto, which Series Supplement shall comply with the requirements of Section 2.02.
       5. The Transition Bond Collateral. The Issuer shall have made or caused to be made all filings with the PUCT and the Texas Secretary of State pursuant to the Financing Order and the Securitization Law and all other filings necessary to perfect the Grant of the Transition Bond Collateral to the Indenture Trustee and the Lien of this Indenture.
       6. Certificates of the Issuer and the Seller.
          1. An Officer's Certificate, dated as of the Closing Date:
             1. to the effect that (A) the Issuer is not in Default under this Indenture and that the issuance of the Transition Bonds will not result in any Default or in any breach of any of the terms, conditions or provisions of or constitute a default under the Financing Order relating to the Transition Bonds or any indenture, mortgage, deed of trust or other agreement or instrument to which the Issuer is a party or by which it or its property is bound or any order of any court or administrative agency entered in any Proceeding to which the Issuer is a party or by which it or its property may be bound or to which it or its property may be subject and (B) that all conditions precedent provided in this Indenture relating to the execution, authentication and delivery of the Transition Bonds have been complied with;
             2. to the effect that the Issuer has not assigned any interest or participation in the Transition Bond Collateral except for the Grant contained in the Series Supplement; the Issuer has the power and right to Grant the Transition Bond Collateral to the Indenture Trustee as security hereunder and thereunder; and the Issuer, subject to the terms of this Indenture, has Granted to the Indenture Trustee a first priority perfected security interest in all of its right, title and interest in and to such Transition Bond Collateral free and clear of any Lien, mortgage, pledge, charge, security interest, adverse claim or other encumbrance arising as a result of actions of the Issuer or through the Issuer, except Permitted Liens;
             3. to the effect that the Issuer has appointed the firm of Independent registered public accountants as contemplated in Section 8.06;
             4. to the effect that attached thereto are duly executed, true and complete copies of the Sale Agreement, the Servicing Agreement, and the Administration Agreement, which are, to the knowledge of the Issuer, in full force and effect and, to the knowledge of the Issuer, that no party is in default of its obligations under such agreements; and
             5. stating that all filings with the PUCT, the Texas Secretary of State and the Delaware Secretary of State pursuant to the Securitization Law, the UCC and the Financing Order relating to the Transition Bonds and all UCC financing statements with respect to the Transition Bond Collateral which are required to be filed by the terms of the Financing Order, the Securitization Law, the Sale Agreement, the Servicing Agreement and this Indenture have been filed as required.
          2. An officer's certificate from the Seller, dated as of the Closing Date, to the effect that, in the case of the Transition Property identified in the related Bill of Sale, immediately prior to the conveyance thereof to the Issuer pursuant to the Sale Agreement:
             1. the Seller was the original and the sole owner of such Transition Property, free and clear of any Lien; the Seller had not assigned any interest or participation in such Transition Property and the proceeds thereof other than to the Issuer pursuant to the Sale Agreement; the Seller has the power, authority and right to own, sell and assign such Transition Property and the proceeds thereof to the Issuer; and the Seller, subject to the terms of the Sale Agreement, has validly sold and assigned to the Issuer all of its right, title and interest in and to such Transition Property and the proceeds thereof, free and clear of any Lien (other than Permitted Liens) and such sale and assignment is absolute and irrevocable and has been perfected; and
             2. the attached copy of the Financing Order creating such Transition Property is true and complete and is in full force and effect.
       7. Opinion of Tax Counsel. The Seller shall have received and delivered to the Issuer and the Indenture Trustee an opinion of Independent tax counsel (as selected by the Seller, and in form and substance reasonably satisfactory to the Issuer and the Indenture Trustee) to the effect that (a) the Issuer will not be subject to United States federal income tax as an entity separate from its sole owner and that the Transition Bonds will be treated as debt of the Issuer's sole owner for United States federal income tax purposes and (b) for United States federal income tax purposes, the issuance of the Transition Bonds will not result in gross income to the Seller.
       8. Opinion of Counsel. Unless otherwise specified in the Series Supplement, an Opinion or Opinions of Counsel, portions of which may be delivered by one or more Independent counsel for the Issuer, portions of which may be delivered by one or more Independent counsel for the Servicer, and portions of which may be delivered by one or more Independent counsel for the Seller, dated the Closing Date, in each case subject to the customary exceptions, qualifications and assumptions contained therein, to the collective effect that:
          1. The Indenture has been duly qualified under the Trust Indenture Act and no qualification of the Series Supplement is necessary under the Trust Indenture Act.
          2. All instruments furnished to the Indenture Trustee pursuant to the Indenture conform to the requirements set forth in the Indenture and constitute all of the documents required to be delivered under the Indenture for the Indenture Trustee to authenticate and deliver the Transition Bonds. All conditions precedent provided for in the Indenture relating to the authentication and delivery of the Transition Bonds have been complied with.
          3. The Transition Bonds have been duly authorized, executed and delivered by the Issuer and when duly authenticated by the Indenture Trustee in accordance with the provisions of the Indenture and delivered against payment of the purchase price therefor, as provided in the Underwriting Agreement, the Transition Bonds will constitute legal, valid and binding obligations of the Issuer entitled to the benefits provided by the Indenture and the Series Supplement and will be enforceable against the Issuer in accordance with their terms, except to the extent enforceability may be limited by bankruptcy, insolvency, reorganization, moratorium, fraudulent conveyance or other laws of general applicability relating to or affecting the enforcement of creditors' rights and by the effect of general principles of equity (regardless of whether enforceability is considered in a proceeding in equity or at law).
          4. Each of the Indenture, the Series Supplement, the Administration Agreement, the Sale Agreement, and the Servicing Agreement has been duly authorized, executed and delivered by the Issuer and is a legal, valid and binding agreement of the Issuer, enforceable against the Issuer in accordance with its terms, except to the extent enforceability may be limited by bankruptcy, insolvency, reorganization, moratorium, fraudulent conveyance or other laws of general applicability relating to or affecting the enforcement of creditors' rights and by the effect of general principles of equity (regardless of whether such enforceability is considered in a proceeding in equity or at law). Each of the Administration Agreement, the Sale Agreement, and the Servicing Agreement has been duly authorized, executed and delivered by ETI and constitutes a legal, valid and binding agreement of ETI, enforceable against ETI in accordance with its terms, except to the extent enforceability may be limited by bankruptcy, insolvency, re organization, moratorium, fraudulent conveyance or other laws of general applicability relating to or affecting the enforcement of creditors' rights and by the effect of general principles of equity (regardless of whether such enforceability is considered in a proceeding in equity or at law).
          5. With respect to the Transition Bond Collateral, upon the giving of value by the Holders to the Issuer with respect to the Transition Bond Collateral, the Indenture, together with the Series Supplement, creates in favor of the Indenture Trustee, for the benefit of the Secured Parties, a valid security interest under Article 9 of the NY UCC in the Transition Bond Collateral (to the extent the Transition Bond Collateral is of a type in which a security interest can be created under Article 9 of the NY UCC) to secure the payment of the Secured Obligations with respect to the Series Supplement. Assuming that the collateral described in the Delaware Financing Statement is Transition Bond Collateral pursuant to the Indenture, then insofar as Section 9-509 of the NY UCC is applicable, the Indenture Trustee is authorized to file the Delaware Financing Statement.
             1. Under Section 9-305(a)(3) of the NY UCC, the local law of the Securities Intermediary's jurisdiction as specified in Section 8-110(e) of the NY UCC governs perfection, the effect of perfection or nonperfection and priority in the Securities Account and Security Entitlements. Under the Indenture, for purposes of Section 8-110(e) of the NY UCC, the jurisdiction of the Securities Intermediary is the State of New York.
             2. To the extent that the Collection Account is a Securities Account, the provisions of the Indenture are effective to perfect by control the security interest of the Indenture Trustee, for the benefit of the Secured Parties, in the Collection Account and the Issuer's Security Entitlements with respect to the Financial Assets credited to the Collection Account and, subject to and to the extent provided in Section 9-315 of the NY UCC and the Federal Book-Entry Regulations, identifiable cash proceeds thereof. Such security interest will have priority over any security interest held by a secured party perfected by a means other than control.
             3. Insofar as Article 9 of the NY UCC is applicable, (A) pursuant to Section 9-301 of the NY UCC, the law of the location of the debtor governs the perfection of a nonpossessory security interest in the Transition Bond Collateral; (B) pursuant to 9-307 of the NY UCC, a registered organization that is organized under the law of a State is deemed to be located in that State for purposes of Section 9-301; (C) the Issuer is a "registered organization" as defined in Section 9-102(a)(70) of the NY UCC organized in the State of Delaware; and (D) therefore, the law of the State of Delaware governs the perfection of a nonpossessory security interest in the Transition Bond Collateral.
          6. The Registration Statement covering the Transition Bonds has become effective under the Securities Act; and, to the knowledge of such counsel, no stop order suspending the effectiveness of the Registration Statement has been issued under the Securities Act and no proceedings for that purpose have been initiated or are pending or threatened by the SEC.
          7. Neither the Issuer nor ETI is now and, assuming that the Issuer uses the net proceeds of the sale of the Transition Bonds for the purpose of acquiring Transition Property in accordance with the terms of the Sale Agreement following the sale of the Transition Bonds to the Underwriters pursuant to the Underwriting Agreement, neither the Issuer nor ETI will be required to register as an investment company under the Investment Company Act.
          8. No authorization, approval or consent of any federal governmental body or bodies having jurisdiction in the premises is required for the valid issuance, authentication and delivery of the Transition Bonds and for the valid execution and delivery by the Issuer of each of the Basic Documents except for such authorizations, approvals or consents of federal governmental bodies that have been obtained.
          9. Each of the Sale Agreement, the proviso (relating to Liens in Transition Property governed by Texas law) to Section 10.13, and the portions of this Indenture referred to by such proviso, constitutes the legal, valid and binding obligation of each of ETI and the Issuer, to the extent each is a party thereto, enforceable against such parties in accordance with its terms.
          10. In accordance with the Securitization Law, (i) the rights and interests of ETI under the Financing Order related to the Transition Bonds, including the right to impose, collect, and receive the Transition Charges authorized in the Financing Order related to the Transition Bonds, are assignable and shall become Transition Property when they are first transferred to the Issuer in connection with the issuance of Transition Bonds; (ii) upon the transfer by ETI of the Transition Property to the Issuer, the Issuer shall have all of the rights of ETI with respect to such Transition Property, including, without limitation, the right to exercise any and all rights and remedies with respect thereto, including the right to impose, collect and receive any amounts payable by any Customer in respect of the Transition Property; (iii) the Financing Order related to the Transition Bonds approves the issuance by the Issuer of the Transition Bonds in an aggregate principal amount which equals or exceeds the initial Outstanding Amount of the Transition Bonds; and (iv) the Transition Bonds are "transition bonds" within the meaning of Sections 36.403(e) and 39.302(6) of the Securitization Law.
          11. No governmental approvals are required for the valid issuance, authentication and delivery of the Transition Bonds or the performance by either ETI or the Issuer of its respective obligations under the Basic Documents, and the proviso (relating to Liens in Transition Property governed by Texas law) to Section 10.13, and the portions of this Indenture referred to by such proviso, to which either ETI or the Issuer is a party, except for (i) the Financing Order related to the Transition Bonds and the governmental approvals expressly contemplated therein and (ii) the filings contemplated by paragraphs (n), (p) and (bb) below.
          12. A Texas state court, or a federal court applying Texas conflict-of-law rules, would give effect to the choice of the laws of New York (to the extent so stated therein) as the governing law in each of the Indenture, the Series Supplement and the Underwriting Agreement.
          13. Under the terms of Section 39.309(c) of the Securitization Law, the transfer of the Transition Property by ETI to the Issuer is perfected under Section 39.309(c) of the Securitization Law against all third parties, including subsequent judicial or other lien creditors.
          14. A valid and enforceable lien and security interest in the Transition Property has been created and has attached in favor of the Indenture Trustee (on behalf of the Secured Parties) by the Financing Order related to the Transition Bonds and the execution and delivery of this Indenture and the Series Supplement by the Issuer in connection with the issuance and funding of the Transition Bonds. Such Lien has been perfected in accordance with Section 39.309(b) of the Securitization Law and in accordance with the Financing Order. Such Lien has priority in the order of filing and takes precedence over any subsequent judicial or other lien creditor. Based on lien searches conducted in the appropriate office, such Lien is first priority.
          15. UCC lien searches identify no secured party who has filed with the Secretary of State of the State of Texas naming ETI or the Issuer as debtor and describing any of the Transition Bond Collateral.
          16. The Transition Property Notices related to the Transition Bonds are in appropriate form for filing pursuant to the Section 39.309 of the Securitization Law and pursuant to Chapter 96 of the Rules of the Secretary of State of the State of Texas with respect to the Transition Property.
          17. The Issuer has been duly formed and is validly existing in good standing as a limited liability company under the laws of the State of Delaware, and is in good standing in the State of Texas.
          18. The LLC Agreement constitutes a valid and binding agreement of ETI and is enforceable against ETI, in its capacity as member of the Issuer, in accordance with its terms.
          19. Under the LLC Act and the LLC Agreement, the Issuer has the limited liability company power and authority to execute and deliver each of this Indenture, the Sale Agreement, the Servicing Agreement, the Underwriting Agreement and the Transition Bonds and to perform its obligations hereunder or thereunder. Under the LLC Act and the LLC Agreement, the execution and delivery by the Issuer of each of this Indenture, the Sale Agreement, the Servicing Agreement, the Underwriting Agreement and the Transition Bonds, and the performance by the Issuer of its obligations hereunder or thereunder, have been duly authorized by all necessary limited liability company action on the part of the Issuer.
          20. Neither the execution or delivery by the Issuer of each of this Indenture, the Sale Agreement, the Servicing Agreement, the Underwriting Agreement or the Transition Bonds nor the compliance by the Issuer with the terms hereof or thereof, nor the consummation by the Issuer of any of the transactions contemplated hereby or thereby requires the consent or approval of, the giving of notice to, the registration with, or the taking of any other action with respect to any Delaware court, or Delaware governmental or Delaware regulatory authority or Delaware agency under the laws of the State of Delaware, except for the filing of the Certificate of Formation with the Secretary of State of the State of Delaware, which Certificate of Formation has been duly filed.
          21. Neither the execution and delivery by the Issuer of the Indenture, the Sale Agreement, the Servicing Agreement, the Underwriting Agreement or the Transition Bonds nor the compliance by the Issuer with the terms hereof or thereof, nor the consummation by the Issuer of any of the transactions contemplated hereby or thereby conflicts with or constitutes a breach of or default under the Certificate of Formation or the LLC Agreement, or violates any law, governmental rule or regulation of the State of Delaware.
          22. After due inquiry, limited to, and solely to the extent disclosed thereupon, court dockets for active cases of the Court of Chancery of the State of Delaware in and for New Castle County, Delaware, of the Superior Court of the State of Delaware in and for New Castle County, Delaware, and of the United States District Court sitting in the State of Delaware, such counsel is not aware of any legal or governmental proceeding pending against the Issuer.
          23. If properly presented to a Delaware court, a Delaware court applying Delaware law would conclude that (i) in order for any Person to file a voluntary bankruptcy petition on behalf of the Issuer, the affirmative vote of the Member and the affirmative vote of all the Managers, including the one (1) Independent Managers, as provided in Section 1.08(b) of the LLC Agreement, is required and (ii) such provision, contained in Section 1.08(b) of the LLC Agreement that requires the affirmative vote of the Member and the affirmative vote of all the Managers, including the one (1) Independent Managers, in order for a Person to file a voluntary bankruptcy petition on behalf of the Issuer, constitutes a legal, valid and binding agreement of the Member, and is enforceable against ETI, in accordance with its terms.
          24. Under the LLC Act and the LLC Agreement, the bankruptcy (as defined in the LLC Act) or dissolution of ETI will not, by itself, cause the Issuer to be dissolved or its affairs to be wound up.
          25. While under the LLC Act, on application to a court of competent jurisdiction, a judgment creditor of the Member may be able to charge ETI's share of any profits and losses of the Issuer and ETI's right to receive distributions of Issuer assets ("ETI's Interest"), to the extent so charged, the judgment creditor has only the right to receive any distribution or distributions to which the Member would otherwise have been entitled in respect of such Member's Interest. Under the LLC Act, no creditor of ETI shall have any right to obtain possession of, or otherwise exercise legal or equitable remedies with respect to, the property of the Issuer. Thus, under the LLC Act, a judgment creditor of ETI may not satisfy its claims against ETI by asserting a claim against the assets of the Issuer.
          26. Under the LLC Act (i) the Issuer is a separate legal entity, and (ii) the existence of the Issuer as a separate legal entity shall continue until the cancellation of its Certificate of Formation.
          27. The Delaware Financing Statements are in an appropriate form for filing in the State of Delaware under Section 9-502(a) and 9-516 of the Delaware UCC.
          28. Insofar as Article 9 of the Delaware UCC is applicable (without regard to conflict of laws principles), upon the filing of the Delaware Financing Statements, the Indenture Trustee will have a perfected security interest in the Issuer's rights in that portion of the Transition Bond Collateral described in the Delaware Financing Statements that may be perfected by the filing of a UCC financing statement and the proceeds thereof (as defined in Section 9-102(a)(64) of the Delaware UCC), and such security interest will be prior to any other security interest granted by the Issuer that is perfected solely by the filing of financing statements under the Delaware UCC. Insofar as Article 9 of the Delaware UCC is applicable (without regard to conflict of laws principles), the Delaware Secretary of State is the appropriate place to file a financing statement to perfect a security interest except for as-extracted collateral or timber to be cut (as described in Section 9-501(a)(1)(A) of the Delaw are UCC) or fixture filings where the collateral is goods that are or are to become fixtures (as described in Section 9-501(a)(1)(B) of the Delaware UCC).
          29. UCC lien searches have been conducted in the proper filing office and against the proper debtor necessary to identify those Persons who under the Delaware UCC have on file financing statements against the Issuer covering the Transition Bond Collateral. The UCC lien searches identify no secured party who has filed a financing statement naming the Issuer as debtor and describing the Transition Bond Collateral.
          30. Insofar as Article 9 of the Delaware UCC is applicable (without regard to conflict of laws principles), the provisions of the Indenture are sufficient to constitute authorization by the Issuer of the filing of the Delaware Financing Statements for purposes of Section 9-509 of the Delaware UCC.
          31. Insofar as Article 9 of the Delaware UCC is applicable (without regard to conflict of laws principles), for purposes of the Delaware UCC, the Issuer is a "registered organization" (as defined in Section 9-102(a)(70) of the Delaware UCC).
       9. Accountant's Certificate or Letter. One or more certificates or letters, addressed to the Issuer complying with the requirements of Section 10.01(a), of a firm of Independent registered public accountants of recognized national reputation to the effect that (a) such accountants are Independent with respect to the Issuer within the meaning of this Indenture, and are independent public accountants within the meaning of the standards of The American Institute of Certified Public Accountants, and (b) with respect to the Transition Bond Collateral, they have applied such procedures as instructed by the addressee of such certificate or letter.
       10. Rating Agency Condition. The Indenture Trustee shall receive evidence reasonably satisfactory to it that the Rating Agency Condition will be satisfied with respect to the issuance of such new Transition Bonds.
       11. Requirements of Series Supplement. Such other funds, accounts, documents, certificates, agreements, instruments or opinions as may be required by the terms of the Series Supplement.
       12. Required Capital Level. Evidence that the Required Capital Level has been credited to the Capital Subaccount.
       13. Other Requirements. Such other documents, certificates, agreements, instruments or opinions as the Indenture Trustee may reasonably require.
   11. Book-Entry Transition Bonds. Unless the Series Supplement provides otherwise, all of the Transition Bonds shall be issued in Book-Entry Form, and the Issuer shall execute and the Indenture Trustee shall, in accordance with this Section 2.11 and the Issuer Order, authenticate and deliver one or more Global Transition Bonds, evidencing the Transition Bonds which (i) shall be an aggregate original principal amount equal to the aggregate original principal amount of such Transition Bonds to be issued pursuant to the applicable Issuer Order, (ii) shall be registered in the name of the Clearing Agency therefor or its nominee, which shall initially be Cede & Co., as nominee for The Depository Trust Company, the initial Clearing Agency, (iii) shall be delivered by the Indenture Trustee pursuant to such Clearing Agency's or such nominee's instructions, and (iv) shall bear a legend substantially to the effect set forth in Exhibit A.

       Each Clearing Agency designated pursuant to this Section 2.11 must, at the time of its designation and at all times while it serves as Clearing Agency hereunder, be a "clearing agency" registered under the Exchange Act and any other applicable statute or regulation.

       No Holder of the Transition Bonds issued in Book-Entry Form shall receive a Definitive Transition Bond representing such Holder's interest in any such Transition Bonds, except as provided in Section 2.13. Unless (and until) certificated, fully registered Transition Bonds (the "Definitive Transition Bonds") have been issued to the Holders pursuant to Section 2.13 or pursuant to the Series Supplement relating thereto:

       1. the provisions of this Section 2.11 shall be in full force and effect;
       2. the Issuer, the Servicer, the Paying Agent, the Transition Bond Registrar and the Indenture Trustee may deal with the Clearing Agency for all purposes (including the making of distributions on the Transition Bonds and the giving of instructions or directions hereunder) as the authorized representatives of the Holders;
       3. to the extent that the provisions of this Section 2.11 conflict with any other provisions of this Indenture, the provisions of this Section 2.11 shall control;
       4. the rights of Holders of the Transition Bonds shall be exercised only through the Clearing Agency and the Clearing Agency Participants and shall be limited to those established by law and agreements between such Holders and the Clearing Agency and/or the Clearing Agency Participants. Pursuant to the Letter of Representations, unless and until Definitive Transition Bonds are issued pursuant to Section 2.13, the initial Clearing Agency will make book-entry transfers among the Clearing Agency Participants and receive and transmit distributions of principal and interest on the Book-Entry Transition Bonds to such Clearing Agency Participants; and
       5. whenever this Indenture requires or permits actions to be taken based upon instruction or directions of the Holders evidencing a specified percentage of the Outstanding Amount of the Transition Bonds, the Clearing Agency shall be deemed to represent such percentage only to the extent that it has received instructions to such effect from the Holders and/or the Clearing Agency Participants owning or representing, respectively, such required percentage of the beneficial interest in the Transition Bonds and has delivered such instructions to a Responsible Officer of the Indenture Trustee.
   12. Notices to Clearing Agency. Unless and until Definitive Transition Bonds shall have been issued to Holders pursuant to Section 2.13, whenever notice, payment, or other communications to the holders of Book-Entry Transition Bonds is required under this Indenture, the Indenture Trustee, the Servicer and the Paying Agent, as applicable, shall give all such notices and communications specified herein to be given to Holders to the Clearing Agency.
   13. Definitive Transition Bonds. If (a) (i) the Issuer advises the Indenture Trustee in writing that the Clearing Agency is no longer willing or able to properly discharge its responsibilities under any Letter of Representations and (ii) the Issuer is unable to locate a qualified successor Clearing Agency, (b) the Issuer, at its option, advises the Indenture Trustee in writing that it elects to terminate the book-entry system through the Clearing Agency or (c) after the occurrence of an Event of Default hereunder, Holders holding Transition Bonds aggregating not less than a majority of the aggregate Outstanding Amount of the Transition Bonds maintained as Book-Entry Transition Bonds advise the Indenture Trustee, the Issuer and the Clearing Agency (through the Clearing Agency Participants) in writing that the continuation of a book-entry system through the Clearing Agency is no longer in the best interests of the Holders, the Issuer shall notify the Clearing Agency, the Indenture Trustee and all such Holders in writing of the occurrence of any such event and of the availability of Definitive Transition Bonds to the Holders requesting the same. Upon surrender to the Indenture Trustee of the Global Transition Bonds by the Clearing Agency accompanied by registration instructions from such Clearing Agency for registration, the Issuer shall execute, and the Indenture Trustee shall authenticate and deliver, Definitive Transition Bonds in accordance with the instructions of the Clearing Agency. None of the Issuer, the Transition Bond Registrar, the Paying Agent or the Indenture Trustee shall be liable for any delay in delivery of such instructions and may conclusively rely on, and shall be fully protected in relying on, such instructions. Upon the issuance of Definitive Transition Bonds, the Indenture Trustee shall recognize the Holders of the Definitive Transition Bonds as Holders hereunder.

       Definitive Transition Bonds will be transferable and exchangeable at the offices of the Transition Bonds Registrar. With respect to any transfer of such Definitive Transition Bonds, the new Definitive Transition Bonds registered in the names specified by the transferee and the original transferor shall be available at the offices of such transfer agent.

   14. CUSIP Number. The Issuer in issuing any Transition Bond may use a "CUSIP" number and, if so used, the Indenture Trustee shall use the CUSIP number provided to it by the Issuer in any notices to the Holders thereof as a convenience to such Holders; provided, that any such notice may state that no representation is made as to the correctness or accuracy of the CUSIP number printed in the notice or on the Transition Bonds and that reliance may be placed only on the other identification numbers printed on the Transition Bonds. The Issuer shall promptly notify the Indenture Trustee in writing of any change in the CUSIP number with respect to any Transition Bond.
   15. Letter of Representations. Notwithstanding anything to the contrary in this Indenture or the Series Supplement, the parties hereto shall comply with the terms of each Letter of Representations applicable to such party.
   16. [RESERVED]
   17. Tax Treatment. The Issuer and the Indenture Trustee, by entering into this Indenture, and the Holders and any Persons holding a beneficial interest in any Transition Bond, by acquiring any Transition Bond or interest therein, (a) express their intention that, solely for the purposes of federal taxes and, to the extent consistent with applicable state, local and other tax law, solely for the purposes of state, local and other taxes, the Transition Bonds qualify under applicable tax law as indebtedness of the Member secured by the Transition Bond Collateral and (b) solely for the purposes of federal taxes and, to the extent consistent with applicable state, local and other tax law, solely for purposes of state, local and other taxes, so long as any of the Transition Bonds are outstanding, agree to treat the Transition Bonds as indebtedness of the Member secured by the Transition Bond Collateral unless otherwise required by appropriate taxing authorities.
   18. State Pledge. Under the laws of the State of Texas in effect on the Closing Date, the State of Texas has agreed for the benefit of the Holders and the Indenture Trustee, pursuant to Sections 39.310 and 36.403 of the Securitization Law, as follows:

       "Transition bonds are not a debt or obligation of the state and are not a charge on its full faith and credit or taxing power. The state pledges, however, for the benefit and protection of financing parties and the electric utility, that it will not take or permit any action that would impair the value of transition property, or, except as permitted by Section 39.307, reduce, alter, or impair the transition charges to be imposed, collected, and remitted to financing parties, until the principal, interest and premium, and any other charges incurred and contracts to be performed in connection with the related transition bonds have been paid and performed in full. Any party issuing transition bonds is authorized to include this pledge in any documentation relating to those bonds."

       The Issuer hereby acknowledges that the purchase of any Transition Bond by a Holder or the purchase of any beneficial interest in a Transition Bond by any Person and the Indenture Trustee's obligations to perform hereunder are made in reliance on such agreement and pledge by the State of Texas.

   19. Security Interests. The Issuer hereby makes the following representations and warranties.
       1. Other than the security interests granted to the Indenture Trustee pursuant to this Indenture, the Issuer has not pledged, granted, sold, conveyed or otherwise assigned any interests or security interests in the Transition Bond Collateral and no security agreement, financing statement or equivalent security or Lien instrument listing the Issuer as debtor covering all or any part of the Transition Bond Collateral is on file or of record in any jurisdiction, except such as may have been filed, recorded or made by the Issuer in favor of the Indenture Trustee on behalf of the Secured Parties in connection with this Indenture;
       2. This Indenture constitutes a valid and continuing lien on, and first priority perfected security interest in, the Transition Bond Collateral in favor of the Indenture Trustee on behalf of the Secured Parties, which lien and security interest is prior to all other Liens and is enforceable as such as against creditors of and purchasers from the Issuer in accordance with its terms, except as such enforceability may be limited by bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium and other similar laws affecting creditors' rights generally or by general equitable principles, whether considered in a proceeding at law or in equity and by an implied covenant of good faith and fair dealing;
       3. With respect to all Transition Bond Collateral, this Indenture, together with the Series Supplement, creates a valid and continuing first priority perfected security interest (as defined in the UCC and as such term is used in the Securitization Law) in such Transition Bond Collateral, which security interest is prior to all other Liens and is enforceable as such as against creditors of and purchasers from the Issuer in accordance with its terms, except as such enforceability may be limited by bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium and other similar laws affecting creditors' rights generally or by general equitable principles, whether considered in a proceeding at law or in equity and by an implied covenant of good faith and fair dealing;
       4. The Issuer has good and marketable title to the Transition Bond Collateral free and clear of any Lien, claim or encumbrance of any Person other than Permitted Liens;
       5. All of the Transition Bond Collateral constitutes either Transition Property or accounts, deposit accounts, investment property or general intangibles (as each such term is defined in the UCC) except that proceeds of the Transition Bond Collateral may also take the form of instruments;
       6. The Issuer has taken, or caused the Servicer to take, all action necessary to perfect the security interest in the Transition Bond Collateral granted to the Indenture Trustee, for the benefit of the Secured Parties;
       7. The Issuer has filed (or has caused the Servicer to file) all appropriate financing statements in the proper filing offices in the appropriate jurisdictions under applicable law in order to perfect the security interest in the Transition Bond Collateral granted to the Indenture Trustee;
       8. The Issuer has not authorized the filing of and is not aware, after due inquiry, of any financing statements against the Issuer that include a description of the Transition Bond Collateral other than those filed in favor of the Indenture Trustee;
       9. The Issuer is not aware of any judgment or tax Lien filings against the Issuer;
       10. The Collection Account (including all subaccounts thereof) constitutes a "securities account" within the meaning of the UCC;
       11. The Issuer has taken all steps necessary to cause the Securities Intermediary of each such securities account to identify in its records the Indenture Trustee as the person having a security entitlement against the Securities Intermediary in such securities account, the Collection Account is not in the name of any person other than the Indenture Trustee, and the Issuer has not consented to the Securities Intermediary to comply with entitlement orders of any person other than the Indenture Trustee;
       12. All of the Transition Bond Collateral constituting investment property has been and will have been credited to the Collection Account or a subaccount thereof, and the Securities Intermediary for the Collection Account has agreed to treat all assets credited to the Collection Account as "financial assets" within the meaning of the UCC. Accordingly, the Indenture Trustee has a first priority perfected security interest in the Collection Account, all funds and financial assets on deposit therein, and all securities entitlements relating thereto; and
       13. The representations and warranties set forth in this Section 2.19 shall survive the execution and delivery of this Indenture and the issuance of any Transition Bonds, shall be deemed re-made on each date on which any funds in the Collection Account are distributed to Issuer or otherwise released from the Lien of this Indenture and may not be waived by any party hereto except pursuant to a supplemental indenture executed in accordance with Article IX and as to which the Rating Agency Condition has been satisfied.

3. 
   
   Covenants

   1. Payment of Principal, Premium, if any, and Interest. The principal of and premium, if any, and interest on the Transition Bonds shall be duly and punctually paid by the Issuer, or the Servicer on behalf of the Issuer, in accordance with the terms of the Transition Bonds and this Indenture; provided that except on the Final Maturity Date or upon the acceleration of the Transition Bonds following the occurrence of an Event of Default, the Issuer shall only be obligated to pay the principal of such Transition Bonds on each Payment Date therefor to the extent moneys are available for such payment pursuant to Section 8.02. Amounts properly withheld under the Code or other tax laws by any Person from a payment to any Holder of interest or principal or premium, if any, shall be considered as having been paid by the Issuer to such Holder for all purposes of this Indenture.
   2. Maintenance of Office or Agency. The Issuer shall maintain in the Borough of Manhattan, the City of New York, an office or agency at the Corporate Trust Office where Transition Bonds may be surrendered for registration of transfer or exchange. The Issuer hereby initially appoints the Indenture Trustee to serve as its agent for the foregoing purposes. The Issuer shall give prompt written notice to the Indenture Trustee of the location, and of any change in the location, of any such office or agency. If at any time the Issuer shall fail to maintain any such office or agency or shall fail to furnish the Indenture Trustee with the address thereof, such surrenders may be made at the office of the Indenture Trustee located at the Corporate Trust Office, and the Issuer hereby appoints the Indenture Trustee as its agent to receive all such surrenders.
   3. Money for Payments To Be Held in Trust. As provided in Section 8.02(a), all payments of amounts due and payable with respect to any Transition Bonds that are to be made from amounts withdrawn from the Collection Account pursuant to Section 8.02(d) shall be made on behalf of the Issuer by the Indenture Trustee or by another Paying Agent, and no amounts so withdrawn from the Collection Account for payments with respect to any Transition Bonds shall be paid over to the Issuer except as provided in this Section 3.03 and Section 8.02.

      The Issuer will cause each Paying Agent other than the Indenture Trustee to execute and deliver to the Indenture Trustee an instrument in which such Paying Agent shall agree with the Indenture Trustee (and if the Indenture Trustee acts as Paying Agent, it hereby so agrees), subject to the provisions of this Section 3.03, that such Paying Agent will:

      1. hold all sums held by it for the payment of amounts due with respect to the Transition Bonds in trust for the benefit of the Persons entitled thereto until such sums shall be paid to such Persons or otherwise disposed of as herein provided and pay such sums to such Persons as herein provided;
      2. give the Indenture Trustee written notice of any Default by the Issuer of which it has actual knowledge in the making of any payment required to be made with respect to the Transition Bonds;
      3. at any time during the continuance of any such Default, upon the written request of the Indenture Trustee, forthwith pay to the Indenture Trustee all sums so held in trust by such Paying Agent;
      4. immediately resign as a Paying Agent and forthwith pay to the Indenture Trustee all sums held by it in trust for the payment of Transition Bonds if at any time the Paying Agent determines that it has ceased to meet the standards required to be met by a Paying Agent at the time of such determination; and
      5. comply with all requirements of the Code and other tax laws with respect to the withholding from any payments made by it on any Transition Bonds of any applicable withholding taxes imposed thereon and with respect to any applicable reporting requirements in connection therewith.

      The Issuer may at any time, for the purpose of obtaining the satisfaction and discharge of this Indenture or for any other purpose, by Issuer Order direct any Paying Agent to pay to the Indenture Trustee all sums held in trust by such Paying Agent, such sums to be held by the Indenture Trustee upon the same trusts as those upon which the sums were held by such Paying Agent; and upon such payment by any Paying Agent to the Indenture Trustee, such Paying Agent shall be released from all further liability with respect to such money.

      Subject to applicable laws with respect to escheat of funds, any money held by the Indenture Trustee or any Paying Agent in trust for the payment of any amount due with respect to any Transition Bond and remaining unclaimed for two (2) years after such amount has become due and payable shall be discharged from such trust and be paid to the Issuer on an Issuer Request; and, subject to Section 10.16, the Holder of such Transition Bond shall thereafter, as an unsecured general creditor, look only to the Issuer for payment thereof (but only to the extent of the amounts so paid to the Issuer), and all liability of the Indenture Trustee or such Paying Agent with respect to such trust money shall thereupon cease; provided, however, that the Indenture Trustee or such Paying Agent, before being required to make any such repayment, may at the expense of the Issuer, cause to be published once, in a newspaper published in the English language, customarily published on ea ch Business Day and of general circulation in The City of New York, notice that such money remains unclaimed and that, after a date specified therein, which shall not be less than thirty (30) days from the date of such publication, any unclaimed balance of such money then remaining will be repaid to the Issuer. The Indenture Trustee may also adopt and employ, at the expense of the Issuer, any other reasonable means of notification of such repayment (including mailing notice of such repayment to Holders whose right to or interest in moneys due and payable but not claimed is determinable from the records of the Indenture Trustee or of any Paying Agent, at the last address of record for each such Holder).

   4. Existence. The Issuer shall keep in full effect its existence, rights and franchises as a limited liability company under the laws of the State of Delaware (unless it becomes, or any successor Issuer hereunder is or becomes, organized under the laws of any other State or of the United States of America, in which case the Issuer will keep in full effect its existence, rights and franchises under the laws of such other jurisdiction) and will obtain and preserve its qualification to do business in each jurisdiction in which such qualification is or shall be necessary to protect the validity and enforceability of this Indenture, the other Basic Documents, the Transition Bonds, the Transition Bond Collateral and each other instrument or agreement referenced herein or therein.
   5. Protection of Transition Bond Collateral. The Issuer shall from time to time execute and deliver all such supplements and amendments hereto and all filings with the PUCT or the Texas Secretary of State pursuant to the Financing Order or to the Securitization Law and all financing statements, continuation statements, instruments of further assurance and other instruments, and shall take such other action necessary or advisable to:
      1. maintain or preserve the Lien and security interest (and the priority thereof) of this Indenture and the Series Supplement or carry out more effectively the purposes hereof;
      2. perfect, publish notice of or protect the validity of any Grant made or to be made by this Indenture;
      3. enforce any of the Transition Bond Collateral;
      4. preserve and defend title to the Transition Bond Collateral and the rights of the Indenture Trustee and the Holders in such Transition Bond Collateral against the Claims of all Persons and parties, including, without limitation, the challenge by any party to the validity or enforceability of the Financing Order, any Tariff, the Transition Property or any proceeding relating thereto and institute any action or proceeding necessary to compel performance by the PUCT or the State of Texas of any of its obligations or duties under the Securitization Law, the State Pledge, or the Financing Order or any Tariff; or
      5. pay any and all taxes levied or assessed upon all or any part of the Transition Bond Collateral.

      The Issuer hereby designates the Indenture Trustee its agent and attorney-in-fact to execute or authorize, as the case may be, any filings with the PUCT or the Texas Secretary of State, financing statements, continuation statements or other instrument required pursuant to this Section 3.05, it being understood that the Indenture Trustee shall have no such obligation or any duty to prepare such documents.

   6. Opinions as to Transition Bond Collateral.
      1. On the Closing Date, the Issuer shall furnish to the Indenture Trustee an Opinion of Counsel of Independent counsel of the Issuer either stating that, in the opinion of such counsel, such action has been taken with respect to the recording and filing of this Indenture, any indentures supplemental hereto, and any other requisite documents, and with respect to the execution and filing of any filings with the PUCT or the Texas Secretary of State pursuant to the Securitization Law and the Financing Order and any financing statements and continuation statements, as are necessary to perfect and make effective the Lien, and the first priority perfected security interest created by this Indenture and the Series Supplement, and no other Lien or security interest is equal or prior to the Lien and security interest of the Indenture Trustee in the Transition Bond Collateral, and reciting the details of such action, or stating that, in the opinion of such counsel, no such action is necessary to make effective such Li en and security interest.
      2. Within ninety (90) days after the beginning of each calendar year beginning with the calendar year beginning January 1, 2011, the Issuer shall furnish to the Indenture Trustee an Opinion of Counsel of Independent counsel of the Issuer either stating that, in the opinion of such counsel, such action has been taken with respect to the recording, filing, re-recording and refiling of this Indenture, any indentures supplemental hereto and any other requisite documents and with respect to the execution and filing of any filings with the PUCT or the Texas Secretary of State pursuant to the Securitization Law and the Financing Order and any financing statements and continuation statements as are necessary to maintain the Lien and the first priority perfected security interest created by this Indenture and the Series Supplement, and reciting the details of such action or stating that, in the opinion of such counsel, no such action is necessary to maintain such Lien and security interest. Such Opinion o f Counsel shall also describe the recording, filing, re-recording and refiling of this Indenture, any indentures supplemental hereto and any other requisite documents and the execution and filing of any filings with the PUCT or the Texas Secretary of State, financing statements and continuation statements that will, in the opinion of such counsel, be required within the twelve-month period following the date of such opinion to maintain the Lien and the first priority perfected security interest created by this Indenture and the Series Supplement.
      3. Prior to the effectiveness of any amendment to the Sale Agreement or the Servicing Agreement, the Issuer shall furnish to the Indenture Trustee an Opinion of Counsel of Independent counsel of the Issuer either (i) stating that, in the opinion of such counsel, all filings, including UCC financing statements and other filings with the PUCT and the Texas Secretary of State pursuant to the Securitization Law or the Financing Order, have been executed and filed that are necessary fully to preserve and protect the Lien and security interest of the Issuer and the Indenture Trustee in the Transition Property and the Transition Bond Collateral, respectively, and the proceeds thereof, and reciting the details of such filings or referring to prior Opinions of Counsel in which such details are given, or (ii) stating that, in the opinion of such counsel, no such action shall be necessary to preserve and protect such Lien and security interest.
   7. Performance of Obligations; Servicing; SEC Filings.
      1. The Issuer (i) shall diligently pursue any and all actions to enforce its rights under each instrument or agreement included in the Transition Bond Collateral and (ii) shall not take any action and shall use its best efforts not to permit any action to be taken by others that would release any Person from any of such Person's covenants or obligations under any such instrument or agreement or that would result in the amendment, hypothecation, subordination, termination or discharge of, or impair the validity or effectiveness of, any such instrument or agreement, except, in each case, as expressly provided in this Indenture, the Series Supplement, the Sale Agreement, the Servicing Agreement or such other instrument or agreement.
      2. The Issuer may contract with other Persons to assist it in performing its duties under this Indenture, and any performance of such duties by a Person identified to the Indenture Trustee herein or in an Officer's Certificate shall be deemed to be action taken by the Issuer. Initially, the Issuer has contracted with the Servicer to assist the Issuer in performing its duties under this Indenture.
      3. The Issuer shall punctually perform and observe all of its obligations and agreements contained in this Indenture, the Series Supplement, the other Basic Documents and in the instruments and agreements included in the Transition Bond Collateral, including filing or causing to be filed all filings with the PUCT or the Texas Secretary of State pursuant to the Securitization Law or the Financing Order, all UCC financing statements and continuation statements required to be filed by it by the terms of this Indenture, the Series Supplement, the Sale Agreement and the Servicing Agreement in accordance with and within the time periods provided for herein and therein.
      4. If the Issuer shall have knowledge of the occurrence of a Servicer Default under the Servicing Agreement, the Issuer shall promptly give written notice thereof to the Indenture Trustee and the Rating Agencies, and shall specify in such notice the response or action, if any, the Issuer has taken or is taking with respect to such default. If a Servicer Default shall arise from the failure of the Servicer to perform any of its duties or obligations under the Servicing Agreement with respect to the Transition Property, the Transition Bond Collateral or the Transition Charges, the Issuer shall take all reasonable steps available to it to remedy such failure.
      5. As promptly as possible after the giving of notice of termination to the Servicer and the Rating Agencies of the Servicer's rights and powers pursuant to Section 7.01 of the Servicing Agreement, the Indenture Trustee shall, at the written direction of the Holders evidencing not less than a majority of the Outstanding Amount of the Transition Bonds, appoint a successor Servicer (the "Successor Servicer"), and such Successor Servicer shall accept its appointment by a written assumption in a form acceptable to the Issuer and the Indenture Trustee. A Person shall qualify as a Successor Servicer only if such Person satisfies the requirements of the Servicing Agreement. If within thirty (30) days after the delivery of the notice referred to above, a new Servicer shall not have been appointed, the Indenture Trustee may petition the PUCT or a court of competent jurisdiction to appoint a Successor Servicer. In connection with any such appointment, ETI may make such arrangement s for the compensation of such Successor Servicer as it and such successor shall agree, subject to the limitations set forth in Section 8.02 and in the Servicing Agreement.
      6. Upon any termination of the Servicer's rights and powers pursuant to the Servicing Agreement, the Indenture Trustee shall promptly notify the Issuer, the Holders and the Rating Agencies. As soon as a Successor Servicer is appointed, the Indenture Trustee shall notify the Issuer, the Holders and the Rating Agencies of such appointment, specifying in such notice the name and address of such Successor Servicer.
      7. The Issuer shall (or shall cause the Sponsor to) post on its website (or the Sponsor's or an affiliate's website) and file with or furnish to the SEC in periodic reports and other reports as are required from time to time under Section 13 or Section 15(d) of the Exchange Act (without regard to the number of Holders of Transition Bonds to the extent permitted by and consistent with the Issuer's and the Sponsor's obligations under applicable law) the following information with respect to the Outstanding Transition Bonds to the extent such information is reasonably available to the Issuer:
         1. statements of any remittances of Transition Charges made to the Indenture Trustee (to be included in a Form 10-D or Form 10-K);
         2. a statement reporting the balances in the Collection Account and in each subaccount of the Collection Account as of the end of each quarter or the most recent date available (to be included in a Form 10-D or Form 10-K);
         3. a statement showing the balance of Outstanding Transition Bonds that reflects the actual periodic payments made on the Transition Bonds versus the expected periodic payments (to be included in the next Form 10-D or Form 10-K filed);
         4. the Semi-Annual Servicer's Certificate and the Monthly Servicer's Certificate which are required to be submitted pursuant to the Servicing Agreement (to be filed with a Form 10-D, Form 10-K or Form 8-K);
         5. the text (or a link to the website where a reader can find the text) of each filing of a True-Up Adjustment and the results of each such filing following the issuance of the Transition Bonds;
         6. any change in the long-term or short-term credit ratings of the Servicer assigned by the Rating Agencies (to be filed or furnished in a Form 8-K);
         7. material legislative or regulatory developments directly relevant to the Outstanding Transition Bonds (to be filed or furnished in a Form 8-K); and
         8. a quarterly statement either affirming that, to the Issuer's or the Sponsor's knowledge, as applicable, in all material respects, for each materially significant REP, if any (to be included in each Form 10-D and each Form 10-K) (A) each such REP has been billed in compliance with the requirements outlined in the Financing Order, (B) each such REP has made payments in compliance with the requirements outlined in the Financing Order, and (C) each such REP satisfies the creditworthiness requirements of the Financing Order, or if clauses (A), (B) and (C) has not occurred, such quarterly statements shall describe the Servicer's actions.
      8. The Issuer shall make all filings required under the Securitization Law relating to the transfer of the ownership or security interest in the Transition Property other than those required to be made by the Seller or the Servicer pursuant to the Basic Documents.
   8. Certain Negative Covenants. So long as any Transition Bonds are Outstanding, the Issuer shall not:
      1. except as expressly permitted by this Indenture and the other Basic Documents, sell, transfer, exchange or otherwise dispose of any of the properties or assets of the Issuer, including those included in the Transition Bond Collateral, unless directed to do so by the Indenture Trustee in accordance with Article V;
      2. &#claim any credit on, or make any deduction from the principal or premium, if any, or interest payable in respect of, the Transition Bonds (other than amounts properly withheld from such payments under the Code or other tax laws) or assert any claim against any present or former Holder by reason of the payment of the taxes levied or assessed upon any part of the Transition Bond Collateral;
      3. terminate its existence or dissolve or liquidate in whole or in part, except in a transaction permitted by Section 3.10;
      4. (A) permit the validity or effectiveness of this Indenture or the other Basic Documents to be impaired, or permit the Lien of this Indenture and the Series Supplement to be amended, hypothecated, subordinated, terminated or discharged, or permit any Person to be released from any covenants or obligations with respect to the Transition Bonds under this Indenture except as may be expressly permitted hereby, (B) permit any Lien (other than the Lien of this Indenture or the Series Supplement) to be created on or extend to or otherwise arise upon or burden the Transition Bond Collateral or any part thereof or any interest therein or the proceeds thereof (other than tax liens arising by operation of law with respect to amounts not yet due) or (C) permit the Lien of the Series Supplement not to constitute a valid first priority perfected security interest in the Transition Bond Collateral;
      5. enter into any swap, hedge or similar financial instrument;
      6. elect to be classified as an association taxable as a corporation for federal income tax purposes or otherwise take any action, file any tax return, or make any election inconsistent with the treatment of the Issuer, for purposes of federal taxes and, to the extent consistent with applicable state tax law, state income and franchise tax purposes, as a disregarded entity that is not separate from the sole owner of the Issuer;
      7. change its name, identity or structure or the location of its chief executive office, unless at least ten (10) days' prior to the effective date of any such change the Issuer delivers to the Indenture Trustee such documents, instruments or agreements, executed by the Issuer, as are necessary to reflect such change and to continue the perfection of the security interest of this Indenture and the Series Supplement;
      8. take any action which is subject to the Rating Agency Condition without satisfying the Rating Agency Condition;
      9. voluntarily suspend or terminate its filing obligations with the SEC as described in Section 3.07(g); or
      10. issue any transition bonds under the Securitization Law or any similar law (other than the Transition Bonds).
   9. Annual Statement as to Compliance. The Issuer will deliver to the Indenture Trustee and the Rating Agencies not later than March 31 of each year (commencing with March 31, 2010), an Officer's Certificate stating, as to the Responsible Officer signing such Officer's Certificate, that:
      1. a review of the activities of the Issuer during the preceding twelve (12) months ended December 31 (or, in the case of the first such Officer's Certificate, since the Closing Date) and of performance under this Indenture has been made; and
      2. to the best of such Responsible Officer's knowledge, based on such review, the Issuer has in all material respects complied with all conditions and covenants under this Indenture throughout such twelve-month period (or such shorter period in the case of the first such Officer's Certificate), or, if there has been a default in the compliance of any such condition or covenant, specifying each such default known to such Responsible Officer and the nature and status thereof.
   10. Issuer May Consolidate, etc., Only on Certain Terms.
       1. The Issuer shall not consolidate or merge with or into any other Person, unless:
          1. the Person (if other than the Issuer) formed by or surviving such consolidation or merger shall (A) be a Person organized and existing under the laws of the United States of America or any State, (B) expressly assume, by an indenture supplemental hereto, executed and delivered to the Indenture Trustee, in form and substance satisfactory to the Indenture Trustee, the performance or observance of every agreement and covenant of this Indenture and the Series Supplement on the part of the Issuer to be performed or observed, all as provided herein and in the Series Supplement, and (C) assume all obligations and succeed to all rights of the Issuer under the Sale Agreement, the Servicing Agreement and each other Basic Document to which the Issuer is a party;
          2. immediately after giving effect to such merger or consolidation, no Default, Event of Default or Servicer Default shall have occurred and be continuing;
          3. the Rating Agency Condition shall have been satisfied with respect to such merger or consolidation;
          4. the Issuer shall have delivered to ETI, the Indenture Trustee and the Rating Agencies an opinion or opinions of Independent tax counsel (as selected by the Issuer, in form and substance reasonably satisfactory to ETI and the Indenture Trustee, and which may be based on a ruling from the Internal Revenue Service (unless the Internal Revenue Service has announced that it will not rule on the issues described in this paragraph)) to the effect that, as a result of the consolidation or merger, (a) the Issuer will not be subject to United States federal income tax as an entity separate from its sole owner and that the Transition Bonds will be treated as debt of the Issuer's sole owner for United States federal income tax purposes and (b) for United States federal income tax purposes, the issuance of the Transition Bonds will not result in gross income to the Seller;
          5. any action as is necessary to maintain the Lien and the first priority perfected security interest in the Transition Bond Collateral created by this Indenture and the Series Supplement shall have been taken as evidenced by an Opinion of Counsel of Independent counsel of the Issuer delivered to the Indenture Trustee; and
          6. the Issuer shall have delivered to the Indenture Trustee an Officer's Certificate and an Opinion of Counsel of Independent counsel of the Issuer each stating that such consolidation or merger and such supplemental indenture comply with this Indenture, the Series Supplement and that all conditions precedent herein provided for in this Section 3.10(a) with respect to such transaction have been complied with (including any filing required by the Exchange Act).
       2. Except as specifically provided herein, the Issuer shall not sell, convey, exchange, transfer or otherwise dispose of any of its properties or assets included in the Transition Bond Collateral, to any Person, unless:
          1. the Person that acquires the properties and assets of the Issuer, the conveyance or transfer of which is hereby restricted shall (A) be a United States citizen or a Person organized and existing under the laws of the United States of America or any State, (B) expressly assumes, by an indenture supplemental hereto, executed and delivered to the Indenture Trustee, in form and substance satisfactory to the Indenture Trustee, the performance or observance of every agreement and covenant of this Indenture on the part of the Issuer to be performed or observed, all as provided herein and in the Series Supplement, (C) expressly agrees by means of such supplemental indenture that all right, title and interest so sold, conveyed, exchanged, transferred or otherwise disposed of shall be subject and subordinate to the rights of Holders, (D) unless otherwise provided in the supplemental indenture referred to in clause (B) above, expressly agrees to indemnify, defend and hold harmles s the Issuer and the Indenture Trustee against and from any loss, liability or expense arising under or related to this Indenture, the Series Supplement and the Transition Bonds, (E) expressly agrees by means of such supplemental indenture that such Person (or if a group of Persons, then one specified Person) shall make all filings with the SEC (and any other appropriate Person) required by the Exchange Act in connection with the Transition Bonds and (F) if such sale, conveyance, exchange, transfer or disposal relates to the Issuer's rights and obligations under the Sale Agreement or the Servicing Agreement, assume all obligations and succeed to all rights of the Issuer under the Sale Agreement and the Servicing Agreement, as applicable;
          2. immediately after giving effect to such transaction, no Default, Event of Default or Servicer Default shall have occurred and be continuing;
          3. the Rating Agency Condition shall have been satisfied with respect to such transaction;
          4. the Issuer shall have delivered to ETI, the Indenture Trustee and the Rating Agencies an opinion or opinions of Independent tax counsel (as selected by the Issuer, in form and substance reasonably satisfactory to ETI and the Indenture Trustee, and which may be based on a ruling from the Internal Revenue Service) to the effect that, as a result of the disposition, (a) the Issuer will not be subject to United States federal income tax as an entity separate from its sole owner and that the Transition Bonds will be treated as debt of the Issuer's sole owner for United States federal income tax purposes and (b) for United States federal income tax purposes, the issuance of the Transition Bonds will not result in gross income to the Seller;
          5. any action as is necessary to maintain the Lien and the first priority perfected security interest in the Transition Bond Collateral created by this Indenture and the Series Supplement shall have been taken as evidenced by an Opinion of Counsel of Independent counsel of the Issuer delivered to the Indenture Trustee; and
          6. the Issuer shall have delivered to the Indenture Trustee an Officer's Certificate and an Opinion of Counsel of Independent counsel of the Issuer each stating that such sale, conveyance, exchange, transfer or other disposition and such supplemental indenture comply with this Indenture and the Series Supplement and that all conditions precedent herein provided for in this Section 3.10(b) with respect to such transaction have been complied with (including any filing required by the Exchange Act).
   11. Successor or Transferee.
       1. Upon any consolidation or merger of the Issuer in accordance with Section 3.10(a), the Person formed by or surviving such consolidation or merger (if other than the Issuer) shall succeed to, and be substituted for, and may exercise every right and power of, the Issuer under this Indenture with the same effect as if such Person had been named as the Issuer herein.
       2. Except as set forth in Section 6.07, upon a sale, conveyance, exchange, transfer or other disposition of all the assets and properties of the Issuer in accordance with Section 3.10(b), the Issuer will be released from every covenant and agreement of this Indenture and the other Basic Documents to be observed or performed on the part of the Issuer with respect to the Transition Bonds and the Transition Property immediately following the consummation of such acquisition upon the delivery of written notice to the Indenture Trustee from the Person acquiring such assets and properties stating that the Issuer is to be so released.
   12. No Other Business. The Issuer shall not engage in any business other than financing, purchasing, owning and managing the Transition Property and the other Transition Bond Collateral and the issuance of the Transition Bonds in the manner contemplated by the Financing Order and this Indenture and the Basic Documents and activities incidental thereto.
   13. No Borrowing. The Issuer shall not issue, incur, assume, guarantee or otherwise become liable, directly or indirectly, for any indebtedness except for the Transition Bonds and any other indebtedness expressly permitted by or arising under the Basic Documents.
   14. Servicer's Obligations. The Issuer shall enforce the Servicer's compliance with and performance of all of the Servicer's material obligations under the Servicing Agreement.
   15. Guarantees, Loans, Advances and Other Liabilities. Except as otherwise contemplated by the Sale Agreement, the Servicing Agreement or this Indenture, the Issuer shall not make any loan or advance or credit to, or guarantee (directly or indirectly or by an instrument having the effect of assuring another's payment or performance on any obligation or capability of so doing or otherwise), endorse or otherwise become contingently liable, directly or indirectly, in connection with the obligations, stocks or dividends of, or own, purchase, repurchase or acquire (or agree contingently to do so) any stock, obligations, assets or securities of, or any other interest in, or make any capital contribution to, any other Person.
   16. Capital Expenditures. Other than the purchase of Transition Property from the Seller on the Closing Date and other than expenditures made out of available funds in an aggregate amount not to exceed $25,000 in any calendar year, the Issuer shall not make any expenditure (by long-term or operating lease or otherwise) for capital assets (either realty or personalty).
   17. Restricted Payments. Except as provided in Section 8.04(c), the Issuer shall not, directly or indirectly, (a) pay any dividend or make any distribution (by reduction of capital or otherwise), whether in cash, property, securities or a combination thereof, to any owner of an interest in the Issuer or otherwise with respect to any ownership or equity interest or similar security in or of the Issuer, (b) redeem, purchase, retire or otherwise acquire for value any such ownership or equity interest or similar security or (c) set aside or otherwise segregate any amounts for any such purpose; provided, however, that, if no Event of Default shall have occurred and be continuing or would be caused thereby, the Issuer may make, or cause to be made, any such distributions to any owner of an interest in the Issuer or otherwise with respect to any ownership or equity interest or similar security in or of the Issuer using funds distributed to the Issu er pursuant to Section 8.02(e)(x) to the extent that such distributions would not cause the balance of the Capital Subaccount to decline below the Required Capital Level. The Issuer will not, directly or indirectly, make payments to or distributions from the Collection Account except in accordance with this Indenture and the other Basic Documents.
   18. Notice of Events of Default. The Issuer agrees to give the Indenture Trustee, the PUCT and the Rating Agencies prompt written notice of each Default or Event of Default hereunder as provided in Section 5.01, and each default on the part of the Seller or the Servicer of its obligations under the Sale Agreement or the Servicing Agreement, respectively.
   19. Further Instruments and Acts. Upon request of the Indenture Trustee, the Issuer shall execute and deliver such further instruments and do such further acts as may be reasonably necessary or proper to carry out more effectively the purpose of this Indenture and to maintain the first priority perfected security interest of the Indenture Trustee in the Transition Bond Collateral.
   20. [RESERVED]
   21. Inspection. The Issuer agrees that, on reasonable prior notice, it will permit any representative of the Indenture Trustee, during the Issuer's normal business hours, to examine all the books of account, records, reports and other papers of the Issuer, to make copies and extracts therefrom, to cause such books to be audited annually by Independent registered public accountants, and to discuss the Issuer's affairs, finances and accounts with the Issuer's officers, employees and Independent registered public accountants, all at such reasonable times and as often as may be reasonably requested. The Indenture Trustee shall and shall cause its representatives to hold in confidence all such information except to the extent disclosure may be required by law (and all reasonable applications for confidential treatment are unavailing) and except to the extent that the Indenture Trustee may reasonably determine that such disclosure is consistent with its obligations hereunder. Notw ithstanding anything herein to the contrary, the preceding sentence shall not be construed to prohibit (a) disclosure of any and all information that is or becomes publicly known, or information obtained by the Indenture Trustee from sources other than the Issuer, provided such parties are rightfully in possession of such information, (b) disclosure of any and all information (i) if required to do so by any applicable statute, law, rule or regulation, (ii) pursuant to any subpoena, civil investigative demand or similar demand or request of any court or regulatory authority exercising its proper jurisdiction, (iii) in any preliminary or final offering circular, registration statement or other document a copy of which has been filed with the SEC or (iv) to any affiliate, independent or internal auditor, agent, employee or attorney of the Indenture Trustee having a need to know the same, provided that such parties agree to be bound by the confidentiality provisions contained in thi s Section 3.21, or (c) any other disclosure authorized by the Issuer.
   22. Sale Agreement, Servicing Agreement, and Administration Agreement Covenants.
       1. The Issuer agrees to take all such lawful actions to enforce its rights under the Sale Agreement, the Servicing Agreement and the Administration Agreement to compel or secure the performance and observance by the Seller, the Servicer, the Administrator and ETI of each of their respective obligations to the Issuer under or in connection with the Sale Agreement, the Servicing Agreement and the Administration Agreement in accordance with the terms thereof. So long as no Event of Default occurs and is continuing, but subject to Section 3.22(f), the Issuer may exercise any and all rights, remedies, powers and privileges lawfully available to the Issuer under or in connection with the Sale Agreement, the Servicing Agreement and the Administration Agreement; provided that such action shall not adversely affect the interests of the Holders in any material respect.
       2. If an Event of Default occurs and is continuing, the Indenture Trustee may, and at the direction (which direction shall be in writing) of Holders of a majority of the Outstanding Amount of the Transition Bonds of all Tranches affected thereby shall, exercise all rights, remedies, powers, privileges and claims of the Issuer against the Seller, ETI, the Administrator and the Servicer, as the case may be, under or in connection with the Sale Agreement, the Servicing Agreement and the Administration Agreement, including the right or power to take any action to compel or secure performance or observance by the Seller, ETI, the Administrator or the Servicer of each of their obligations to the Issuer thereunder and to give any consent, request, notice, direction, approval, extension or waiver under the Sale Agreement, the Servicing Agreement and the Administration Agreement, and any right of the Issuer to take such action shall be suspended.
       3. Except as set forth in Section 3.22(e), with the prior written consent of the Indenture Trustee and the consent of the PUCT pursuant to Section 9.03, the Administration Agreement, the Sale Agreement and the Servicing Agreement may be amended in accordance with the provisions thereof, so long as the Rating Agency Condition is satisfied in connection therewith, at any time and from time to time, without the consent of the Holders of Transition Bonds; provided that such amendment, as evidenced by an Opinion of Counsel of Independent counsel of the Issuer, shall not adversely affect the interest of any Holder of Transition Bonds in any material respect.
       4. Except as set forth in Section 3.22(e), if the Issuer, the Seller, ETI, the Administrator, the Servicer or any other party to the respective agreement proposes to amend, modify, waive, supplement, terminate or surrender, or agree to any amendment, modification, waiver, supplement, termination or surrender of, the terms of the Sale Agreement, the Administration Agreement, or the Servicing Agreement, or waive timely performance or observance by the Seller, ETI, the Administrator or the Servicer under the Sale Agreement, the Administration Agreement or the Servicing Agreement, in each case in such a way as would materially and adversely affect the interests of any Holder of Transition Bonds, the Issuer shall first notify the Rating Agencies of the proposed amendment, modification, waiver, supplement, termination or surrender and shall promptly notify the Indenture Trustee and the PUCT in writing and the Indenture Trustee shall notify the Holders of the Transition Bonds of the proposed amendment, modification, waiver, supplement, termination or surrender and whether the Rating Agency Condition has been satisfied with respect thereto. The Indenture Trustee shall consent to such proposed amendment, modification, waiver, supplement, termination or surrender only with the prior written consent of the Holders of a majority of the Outstanding Amount of Transition Bonds of the Tranches materially and adversely affected thereby and, if the proposed amendment, modification, waiver, supplement, termination or surrender would increase ongoing qualified costs as defined in the Financing Order, the consent of the PUCT pursuant to Section 9.03. If any such amendment, modification, waiver, supplement, termination or surrender shall be so consented to by the Indenture Trustee or such Holders, the Issuer agrees to execute and deliver, in its own name and at its own expense, such agreements, instruments, consents and other documents as shall be necessary or appropriate in the circumstances.
       5. If the Issuer or the Servicer proposes to amend, modify, waive, supplement, terminate or surrender, or to agree to any amendment, modification, supplement, termination, waiver or surrender of, the process for True-Up Adjustments, the Issuer shall notify the PUCT and the Indenture Trustee in writing and the Indenture Trustee shall notify the Holders of the Transition Bonds of such proposal and the Indenture Trustee shall consent thereto only with the consent of the PUCT pursuant to Section 9.03 and the prior written consent of the Holders of a majority of the Outstanding Amount of Transition Bonds of the Tranches affected thereby and only if the Rating Agency Condition has been satisfied with respect thereto.
       6. Promptly following a default by the Seller under the Sale Agreement, by the Administrator under the Administration Agreement or the occurrence of a Servicer Default under the Servicing Agreement, and at the Issuer's expense, the Issuer agrees to take all such lawful actions as the Indenture Trustee may request to compel or secure the performance and observance by each of the Seller, ETI, the Administrator or the Servicer of their obligations under and in accordance with the Sale Agreement, the Servicing Agreement and the Administration Agreement, as the case may be, in accordance with the terms thereof, and to exercise any and all rights, remedies, powers and privileges lawfully available to the Issuer under or in connection with such agreements to the extent and in the manner directed by the Indenture Trustee, including the transmission of notices of any default by the Seller, ETI, the Administrator or the Servicer, respectively, thereunder and the institution of legal or administrative actions or Proce edings to compel or secure performance of their obligations under the Sale Agreement, the Servicing Agreement or the Administration Agreement, as applicable.

       Before consenting to any amendment, modification, supplement, termination, waiver or surrender under Sections 3.22(d) or (e), the Indenture Trustee shall be entitled to receive, and subject to Sections 6.01 and 6.02, shall be fully protected in relying upon, an Opinion of Counsel stating that such action is authorized or permitted by this Indenture.

   23. Taxes. So long as any of the Transition Bonds are Outstanding, the Issuer shall pay or cause to be paid all taxes, assessments and governmental charges imposed upon it or any of its properties or assets or with respect to any of its franchises, business, income or property before any penalty accrues thereon if the failure to pay any such taxes, assessments and governmental charges would, after any applicable grace periods, notices or other similar requirements, result in a Lien on the Transition Bond Collateral; provided that no such tax need be paid if the Issuer is contesting or causing to be contested the same in good faith by appropriate proceedings promptly instituted and diligently conducted and if the Issuer has established appropriate reserves as shall be required in conformity with generally accepted accounting principles.

4. 
   
   Satisfaction and Discharge; Defeasance

   1. Satisfaction and Discharge of Indenture; Defeasance.
      1. This Indenture shall cease to be of further effect with respect to the Transition Bonds and the Indenture Trustee, on reasonable written demand of and at the expense of the Issuer, shall execute proper instruments acknowledging satisfaction and discharge of this Indenture with respect to the Transition Bonds, when:
         1. either
            1. all Transition Bonds theretofore authenticated and delivered (other than (1) Transition Bonds that have been destroyed, lost or stolen and that have been replaced or paid as provided in Section 2.06 and (2) Transition Bonds for whose payment money has theretofore been deposited in trust or segregated and held in trust by the Issuer and thereafter repaid to the Issuer or discharged from such trust, as provided in the last paragraph of Section 3.03) have been delivered to the Indenture Trustee for cancellation; or
            2. either (1) the Scheduled Final Payment Date has occurred with respect to all Transition Bonds not theretofore delivered to the Indenture Trustee for cancellation or (2) such Transition Bonds will be due and payable on their respective Scheduled Final Payment Dates within one year, and in any such case, the Issuer has irrevocably deposited or caused to be irrevocably deposited in trust with the Indenture Trustee (i) cash and/or (ii) U.S. Government Obligations which through the scheduled payments of principal and interest in respect thereof in accordance with their terms are in an amount sufficient to pay principal, interest and premium, if any, on such Transition Bonds not theretofore delivered to the Indenture Trustee for cancellation and all other sums payable hereunder by the Issuer with respect to such Transition Bonds when scheduled to be paid and to discharge the entire indebtedness on such Transition Bonds when due;
         2. the Issuer has paid or caused to be paid all other sums payable hereunder by the Issuer with respect to the Transition Bonds; and
         3. the Issuer has delivered to the Indenture Trustee an Officer's Certificate, an Opinion of Counsel of Independent counsel of the Issuer and (if required by the TIA or the Indenture Trustee) an Independent Certificate from a firm of registered public accountants, each meeting the applicable requirements of Section 10.01(a) and each stating that all conditions precedent herein provided for relating to the satisfaction and discharge of this Indenture with respect to Transition Bonds have been complied with.
      2. Subject to Sections 4.01(c) and 4.02, the Issuer at any time may terminate (i) all its obligations under this Indenture with respect to the Transition Bonds ("Legal Defeasance Option") or (ii) its obligations under Sections 3.04, 3.05, 3.06, 3.07, 3.08, 3.09, 3.10, 3.12, 3.13, 3.14, 3.15, 3.16, 3.17, 3.18 and 3.19 and the operation of Section 5.01(iii) ("Covenant Defeasance Option") with respect to the Transition Bonds. The Issuer may exercise the Legal Defeasance Option with respect to the Transition Bonds notwithstanding its prior exercise of the Covenant Defeasance Option.

         If the Issuer exercises the Legal Defeasance Option, the maturity of the Transition Bonds may not be accelerated because of an Event of Default. If the Issuer exercises the Covenant Defeasance Option, the maturity of the Transition Bonds may not be accelerated because of an Event of Default specified in Section 5.01(iii).

         Upon satisfaction of the conditions set forth herein to the exercise of the Legal Defeasance Option or the Covenant Defeasance Option, the Indenture Trustee, on reasonable written demand of and at the expense of the Issuer, shall execute proper instruments acknowledging satisfaction and discharge of the obligations that are terminated pursuant to such exercise.

      3. Notwithstanding Sections 4.01(a) and 4.01(b) above, (i) rights of registration of transfer and exchange, (ii) substitution of mutilated, destroyed, lost or stolen Transition Bonds, (iii) rights of Holders to receive payments of principal, premium, if any, and interest, (iv) Sections 4.03 and 4.04, (v) the rights, obligations and immunities of the Indenture Trustee hereunder (including the rights of the Indenture Trustee under Section 6.07 and the obligations of the Indenture Trustee under Section 4.03) and (vi) the rights of Holders as beneficiaries hereof with respect to the property deposited with the Indenture Trustee payable to all or any of them, shall survive until the Transition Bonds as to which this Indenture or certain obligations hereunder have been satisfied and discharged pursuant to Section 4.01(a) or 4.01(b) have been paid in full. Thereafter the obligations in Sections 6.07 and 4.04 shall survive.
   2. Conditions to Defeasance. The Issuer may exercise the Legal Defeasance Option or the Covenant Defeasance Option with respect to any of the Transition Bonds only if:
      1. the Issuer has irrevocably deposited or caused to be irrevocably deposited in trust with the Indenture Trustee (i) cash and/or (ii) U.S. Government Obligations which through the scheduled payments of principal and interest in respect thereof in accordance with their terms are in an amount sufficient to pay principal, interest and premium, if any, on the Transition Bonds not therefore delivered to the Indenture Trustee for cancellation and all other sums payable hereunder by the Issuer with respect to the Transition Bonds when scheduled to be paid and to discharge the entire indebtedness on the Transition Bonds when due;
      2. the Issuer delivers to the Indenture Trustee a certificate from a nationally recognized firm of Independent registered public accountants expressing its opinion that the payments of principal and interest when due and without reinvestment of the deposited U.S. Government Obligations plus any deposited cash without investment will provide cash at such times and in such amounts (but, in the case of the Legal Defeasance Option only, not more than such amounts) as will be sufficient to pay in respect of the Transition Bonds (i) principal in accordance with the Expected Amortization Schedule therefor, (ii) interest when due and (iii) all other sums payable hereunder by the Issuer with respect to such Transition Bonds;
      3. in the case of the Legal Defeasance Option, ninety-five (95) days pass after the deposit is made and during the ninety-five (95)-day period no Default specified in Section 5.01(v) or (vi) occurs which is continuing at the end of the period;
      4. no Default has occurred and is continuing on the day of such deposit and after giving effect thereto;
      5. in the case of an exercise of the Legal Defeasance Option, the Issuer shall have delivered to the Indenture Trustee an Opinion of Counsel of Independent tax counsel of the Issuer stating that (i) the Issuer has received from, or there has been published by, the Internal Revenue Service a ruling, or (ii) since the date of execution of this Indenture, there has been a change in the applicable federal income tax law, in either case to the effect that, and based thereon such opinion shall confirm that, the Holders of the Transition Bonds will not recognize income, gain or loss for federal income tax purposes as a result of such legal defeasance and will be subject to federal income tax on the same amounts, in the same manner and at the same times as would have been the case if such legal defeasance had not occurred;
      6. in the case of an exercise of the Covenant Defeasance Option, the Issuer shall have delivered to the Indenture Trustee an Opinion of Counsel of Independent tax counsel of the Issuer to the effect that the Holders of the Transition Bonds will not recognize income, gain or loss for federal income tax purposes as a result of such covenant defeasance and will be subject to federal income tax on the same amounts, in the same manner and at the same times as would have been the case if such covenant defeasance had not occurred;
      7. the Issuer delivers to the Indenture Trustee an Officer's Certificate and an Opinion of Counsel, each stating that all conditions precedent to the satisfaction and discharge of the Transition Bonds to the extent contemplated by this Article IV have been complied with;
      8. the Issuer delivers to the Indenture Trustee an Opinion of Counsel of Independent counsel of the Issuer to the effect that (i) in a case under the Bankruptcy Code in which ETI (or any of its Affiliates, other than the Issuer) is the debtor, the court would hold that the deposited moneys or U.S. Government Obligations would not be in the bankruptcy estate of ETI (or any of its Affiliates, other than the Issuer, that deposited the moneys or U.S. Government Obligations); and (ii) in the event ETI (or any of its Affiliates, other than the Issuer, that deposited the moneys or U.S. Government Obligations) were to be a debtor in a case under the Bankruptcy Code, the court would not disregard the separate legal existence of ETI (or any of its Affiliates, other than the Issuer, that deposited the moneys or U.S. Government Obligations) and the Issuer so as to order substantive consolidation under the Bankruptcy Code of the Issuer's assets and liabilities with the assets and liabilities of ETI or such oth er Affiliate; and
      9. the Rating Agency Condition shall have been satisfied with respect to the exercise of any Legal Defeasance Option or Covenant Defeasance Option.

      Notwithstanding any other provision of this Section 4.02, no delivery of moneys or U.S. Government Obligations to the Indenture Trustee shall terminate any obligation of the Issuer to the Indenture Trustee under this Indenture or the Series Supplement or any obligation of the Issuer to apply such moneys or U.S. Government Obligations under Section 4.03 until such Transition Bonds shall have been redeemed in accordance with the provisions of this Indenture and the Series Supplement.

   3. Application of Trust Money. All moneys or U.S. Government Obligations deposited with the Indenture Trustee pursuant to Section 4.01 or 4.02 shall be held in trust and applied by it, in accordance with the provisions of the Transition Bonds and this Indenture, to the payment, either directly or through any Paying Agent, as the Indenture Trustee may determine, to the Holders of the particular Transition Bonds for the payment of which such moneys have been deposited with the Indenture Trustee, of all sums due and to become due thereon for principal, premium, if any, and interest; but such moneys need not be segregated from other funds except to the extent required herein or in the Servicing Agreement or required by law. Notwithstanding anything to the contrary in this Article IV, the Indenture Trustee shall deliver or pay to the Issuer from time to time upon Issuer Request any moneys or U.S. Government Obligations held by it pursuant to Section 4.02 which, in the opinion of a nationally recognized firm of Independent registered public accountants expressed in a written certification thereof delivered to the Indenture Trustee (and not at the cost or expense of the Indenture Trustee), are in excess of the amount thereof which would be required to be deposited for the purpose for which such moneys or U.S. Government Obligations were deposited, provided that any such payment shall be subject to the satisfaction of the Rating Agency Condition.
   4. Repayment of Moneys Held by Paying Agent. In connection with the satisfaction and discharge of this Indenture or the Covenant Defeasance Option or Legal Defeasance Option with respect to the Transition Bonds, all moneys then held by any Paying Agent other than the Indenture Trustee under the provisions of this Indenture with respect to such Transition Bonds shall, upon demand of the Issuer, be paid to the Indenture Trustee to be held and applied according to Section 3.03 and thereupon such Paying Agent shall be released from all further liability with respect to such moneys.

5. 
   
   Remedies

   1. Events of Default. "Event of Default" with respect to the Transition Bonds, wherever used herein, means any one or more of the following events (whatever the reason for such Event of Default and whether it shall be voluntary or involuntary or be effected by operation of law or pursuant to any judgment, decree or order of any court or any order, rule or regulation of any administrative or governmental body):
      1. default in the payment of any interest on any Transition Bond when the same becomes due and payable (whether such failure to pay interest is caused by a shortfall in Transition Charges received or otherwise), and such default shall continue for a period of five (5) Business Days; or
      2. default in the payment of the then unpaid principal of any Transition Bond of any Tranche on the Final Maturity Date for such Tranche; or
      3. default in the observance or performance of any covenant or agreement of the Issuer made in this Indenture (other than defaults specified in clauses (i) or (ii) above), and such default shall continue or not be cured, for a period of thirty (30) days after the earlier of (A) the date that there shall have been given, by registered or certified mail, to the Issuer by the Indenture Trustee or to the Issuer and the Indenture Trustee by the Holders of at least 25 percent of the Outstanding Amount of the Transition Bonds, a written notice specifying such default and requiring it to be remedied and stating that such notice is a "Notice of Default" hereunder or (B) the date that the Issuer has actual knowledge of the default; or
      4. any representation or warranty of the Issuer made in this Indenture or in any certificate or other writing delivered pursuant hereto or in connection herewith proving to have been incorrect in any material respect as of the time when the same shall have been made, and the circumstance or condition in respect of which such misrepresentation or warranty was incorrect shall not have been eliminated or otherwise cured, within thirty (30) days after the earlier of (A) the date that there shall have been given, by registered or certified mail, to the Issuer by the Indenture Trustee or to the Issuer and the Indenture Trustee by the Holders of at least 25 percent of the Outstanding Amount of the Transition Bonds, a written notice specifying such incorrect representation or warranty and requiring it to be remedied and stating that such notice is a "Notice of Default" hereunder or (B) the date the Issuer has actual knowledge of the default, or
      5. the filing of a decree or order for relief by a court having jurisdiction in the premises in respect of the Issuer or any substantial part of the Transition Bond Collateral in an involuntary case or proceeding under any applicable federal or state bankruptcy, insolvency or other similar law now or hereafter in effect, or appointing a receiver, liquidator, assignee, custodian, trustee, sequestrator or similar official of the Issuer or for any substantial part of the Transition Bond Collateral, or ordering the winding-up or liquidation of the Issuer's affairs, and such decree or order shall remain unstayed and in effect for a period of ninety (90) consecutive days; or
      6. the commencement by the Issuer of a voluntary case under any applicable federal or state bankruptcy, insolvency or other similar law now or hereafter in effect, or the consent by the Issuer to the entry of an order for relief in an involuntary case or proceeding under any such law, or the consent by the Issuer to the appointment or taking possession by a receiver, liquidator, assignee, custodian, trustee, sequestrator or similar official of the Issuer or for any substantial part of the Transition Bond Collateral, or the making by the Issuer of any general assignment for the benefit of creditors, or the failure by the Issuer generally to pay its debts as such debts become due, or the taking of action by the Issuer in furtherance of any of the foregoing; or
      7. any act or failure to act by the State of Texas or any of its agencies (including the PUCT), officers or employees which violates or is not in accordance with the State Pledge; or
      8. any other event designated as such in the Series Supplement.

      The Issuer shall deliver to a Responsible Officer of the Indenture Trustee and to the Rating Agencies, within five (5) days after a Responsible Officer of the Issuer has knowledge of the occurrence thereof, written notice in the form of an Officer's Certificate of any event (I) which is an Event of Default under clauses (i), (ii), (v), (vi), (vii), or (viii) or (II) which with the giving of notice, the lapse of time, or both, would become an Event of Default under clause (iii) or (iv), including, in each case, the status of such Event of Default and what action the Issuer is taking or proposes to take with respect thereto.

   2. Acceleration of Maturity; Rescission and Annulment. If an Event of Default (other than an Event of Default under clause (vii) of Section 5.01) should occur and be continuing, then and in every such case the Indenture Trustee or the Holders representing not less than a majority of the Outstanding Amount of the Transition Bonds may declare the Transition Bonds to be immediately due and payable, by a notice in writing to the Issuer (and to the Indenture Trustee if given by Holders), and upon any such declaration the unpaid principal amount of the Transition Bonds, together with accrued and unpaid interest thereon through the date of acceleration, shall become immediately due and payable.

      At any time after such declaration of acceleration of maturity has been made and before a judgment or decree for payment of the money due has been obtained by the Indenture Trustee as hereinafter in this Article V provided, the Holders representing not less than a majority of the Outstanding Amount of the Transition Bonds, by written notice to the Issuer and the Indenture Trustee, may rescind and annul such declaration and its consequences if:

      1. the Issuer has paid or deposited with the Indenture Trustee a sum sufficient to pay:
         1. all payments of principal of and premium, if any, and interest on all Transition Bonds due and owing at such time as if such Event of Default had not occurred and was not continuing and all other amounts that would then be due hereunder or upon the Transition Bonds if the Event of Default giving rise to such acceleration had not occurred; and
         2. all sums paid or advanced by the Indenture Trustee hereunder and the reasonable compensation, expenses, disbursements and advances of the Indenture Trustee and its agents and counsel; and
      2. all Events of Default, other than the nonpayment of the principal of the Transition Bonds that have become due solely by such acceleration, have been cured or waived as provided in Section 5.12.

      No such rescission shall affect any subsequent default or impair any right consequent thereto.

   3. Collection of Indebtedness and Suits for Enforcement by Indenture Trustee.
      1. If an Event of Default under Section 5.01(i) or (ii) has occurred and is continuing, subject to Section 10.19, the Indenture Trustee, in its own name and as trustee of an express trust, may institute a Proceeding for the collection of the sums so due and unpaid, and may prosecute such Proceeding to judgment or final decree, and, subject to the limitations on recourse set forth herein, may enforce the same against the Issuer or other obligor upon such Transition Bonds and collect in the manner provided by law out of the property of the Issuer or other obligor upon such Transition Bonds, wherever situated the moneys payable, or the related Transition Bond Collateral and the proceeds thereof, the whole amount then due and payable on the Transition Bonds for principal, premium, if any, and interest, with interest upon the overdue principal and premium, if any, and, to the extent payment at such rate of interest shall be legally enforceable, upon overdue installments of int erest, at the respective rate borne by the Transition Bonds or the applicable Tranche and in addition thereto such further amount as shall be sufficient to cover the costs and expenses of collection, including the reasonable compensation, expenses, disbursements and advances of the Indenture Trustee and its agents and counsel.
      2. If an Event of Default (other than Event of Default under clause (vii) of Section 5.01) occurs and is continuing, the Indenture Trustee shall, as more particularly provided in Section 5.04, in its discretion, proceed to protect and enforce its rights and the rights of the Holders, by such appropriate Proceedings as the Indenture Trustee shall deem most effective to protect and enforce any such rights, whether for the specific enforcement of any covenant or agreement in this Indenture or in aid of the exercise of any power granted herein, or to enforce any other proper remedy or legal or equitable right vested in the Indenture Trustee by this Indenture and the Series Supplement or by law, including foreclosing or otherwise enforcing the Lien of the Transition Bond Collateral securing the Transition Bonds or applying to a court of competent jurisdiction for sequestration of revenues arising with respect to the Transition Property.
      3. If an Event of Default under Section 5.01(v) or (vi) has occurred and is continuing, the Indenture Trustee, irrespective of whether the principal of any Transition Bonds shall then be due and payable as therein expressed or by declaration or otherwise and irrespective of whether the Indenture Trustee shall have made any demand pursuant to the provisions of this Section 5.04, shall be entitled and empowered, by intervention in any Proceedings related to such Event of Default or otherwise:
         1. to file and prove a claim or claims for the whole amount of principal, premium, if any, and interest owing and unpaid in respect of the Transition Bonds and to file such other papers or documents as may be necessary or advisable in order to have the claims of the Indenture Trustee (including any claim for reasonable compensation to the Indenture Trustee and each predecessor Indenture Trustee, and their respective agents, attorneys and counsel, and for reimbursement of all expenses and liabilities incurred, and all advances made, by the Indenture Trustee and each predecessor Indenture Trustee, except as a result of negligence or bad faith) and of the Holders allowed in such Proceedings;
         2. unless prohibited by applicable law and regulations, to vote on behalf of the Holders in any election of a trustee in bankruptcy, a standby trustee or Person performing similar functions in any such Proceedings;
         3. to collect and receive any moneys or other property payable or deliverable on any such claims and to distribute all amounts received with respect to the claims of the Holders and of the Indenture Trustee on their behalf; and
         4. to file such proofs of claim and other papers and documents as may be necessary or advisable in order to have the claims of the Indenture Trustee or the Holders allowed in any judicial proceeding relative to the Issuer, its creditors and its property.

         and any trustee, receiver, liquidator, custodian or other similar official in any such Proceeding is hereby authorized by each of such Holders to make payments to the Indenture Trustee, and, in the event that the Indenture Trustee shall consent to the making of payments directly to such Holders, to pay to the Indenture Trustee such amounts as shall be sufficient to cover reasonable compensation to the Indenture Trustee, each predecessor Indenture Trustee and their respective agents, attorneys and counsel, and all other expenses and liabilities incurred, and all advances made, by the Indenture Trustee and each predecessor Indenture Trustee except as a result of negligence or bad faith.

      4. Nothing herein contained shall be deemed to authorize the Indenture Trustee to authorize or consent to or vote for or accept or adopt on behalf of any Holder any plan of reorganization, arrangement, adjustment or composition affecting the Transition Bonds or the rights of any Holder thereof or to authorize the Indenture Trustee to vote in respect of the claim of any Holder in any such proceeding except, as aforesaid, to vote for the election of a trustee in bankruptcy or similar Person.
      5. All rights of action and of asserting claims under this Indenture, or under any of the Transition Bonds, may be enforced by the Indenture Trustee without the possession of any of the Transition Bonds or the production thereof in any trial or other Proceedings relative thereto, and any such action or proceedings instituted by the Indenture Trustee shall be brought in its own name as trustee of an express trust, and any recovery of judgment, subject to the payment of the expenses, disbursements and compensation of the Indenture Trustee, each predecessor Indenture Trustee and their respective agents and attorneys, shall be for the ratable benefit of the Holders of the Transition Bonds.
      6. In any Proceedings brought by the Indenture Trustee (and also any Proceedings involving the interpretation of any provision of this Indenture to which the Indenture Trustee shall be a party), the Indenture Trustee shall be held to represent all the Holders of the Transition Bonds, and it shall not be necessary to make any Holder a party to any such Proceedings.
   4. Remedies; Priorities.
      1. If an Event of Default (other than an Event of Default under clause (vii) of Section 5.01) shall have occurred and be continuing, the Indenture Trustee may do one or more of the following (subject to Section 5.05):
         1. institute Proceedings in its own name and as trustee of an express trust for the collection of all amounts then payable on the Transition Bonds or under this Indenture with respect thereto, whether by declaration of acceleration or otherwise, and, subject to the limitations on recovery set forth herein, enforce any judgment obtained, and collect from the Issuer or any other obligor moneys adjudged due upon such Transition Bonds;
         2. institute Proceedings from time to time for the complete or partial foreclosure of this Indenture with respect to the Transition Bond Collateral;
         3. exercise any remedies of a secured party under the UCC, the Securitization Law or any other applicable law and take any other appropriate action to protect and enforce the rights and remedies of the Indenture Trustee and the Holders of the Transition Bonds;
         4. at the written direction of the Holders of a majority of the Outstanding Amount of the Transition Bonds, sell the Transition Bond Collateral or any portion thereof or rights or interest therein, at one or more public or private sales called and conducted in any manner permitted by law; and
         5. exercise all rights, remedies, powers, privileges and claims of the Issuer against the Seller, the Administrator, ETI or the Servicer under or in connection with, and pursuant to the terms of, the Sale Agreement, the Administration Agreement or the Servicing Agreement;

         provided, however, that the Indenture Trustee may not sell or otherwise liquidate any portion of the Transition Bond Collateral following such an Event of Default, other than an Event of Default described in Section 5.01(i), or (ii), with respect to the Transition Bonds unless (A) the Holders of 100 percent of the Outstanding Amount of the Transition Bonds consent thereto, (B) the proceeds of such sale or liquidation distributable to the Holders are sufficient to discharge in full all amounts then due and unpaid upon the Transition Bonds for principal, premium, if any, and interest after taking into account payment of all amounts due prior thereto pursuant to the priorities set forth in Section 8.02(e) or (C) the Indenture Trustee determines that the Transition Bond Collateral will not continue to provide sufficient funds for all payments on the Transition Bonds as they would have become due if the Transition Bonds had not been de clared due and payable, and the Indenture Trustee obtains the written consent of Holders of 66-2/3 percent of the Outstanding Amount of the Transition Bonds. In determining such sufficiency or insufficiency with respect to clause (B) and (C), the Indenture Trustee may, but need not, obtain and conclusively rely upon an opinion of an Independent investment banking or accounting firm of national reputation as to the feasibility of such proposed action and as to the sufficiency of the Transition Bond Collateral for such purpose.

      2. If an Event of Default under clause (vii) of Section 5.01 shall have occurred and be continuing, the Indenture Trustee, for the benefit of the Secured Parties, shall be entitled and empowered to the extent permitted by applicable law, to institute or participate in Proceedings necessary to compel performance of or to enforce the State Pledge and to collect any monetary damages incurred by the Holders or the Indenture Trustee as a result of any such Event of Default, and may prosecute any such Proceeding to final judgment or decree. Such remedy shall be the only remedy that the Indenture Trustee may exercise if the only Event of Default that has occurred and is continuing is an Event of Default under Section 5.01(vii).
      3. If the Indenture Trustee collects any money pursuant to this Article V, it shall pay out such money in accordance with the priorities set forth in Section 8.02(e).
   5. Optional Preservation of the Transition Bond Collateral. If the Transition Bonds have been declared to be due and payable under Section 5.02 following an Event of Default and such declaration and its consequences have not been rescinded and annulled, the Indenture Trustee may, but need not, elect to maintain possession of the related Transition Bond Collateral. It is the desire of the parties hereto and the Holders that there be at all times sufficient funds for the payment of principal of and premium, if any, and interest on the Transition Bonds, and the Indenture Trustee shall take such desire into account when determining whether or not to maintain possession of the Transition Bond Collateral. In determining whether to maintain possession of the Transition Bond Collateral or sell or liquidate the same, the Indenture Trustee may, but need not, obtain and conclusively rely upon an opinion of an Independent investment banking or accounting firm of national reputation as to the feasibility of such proposed action and as to the sufficiency of the Transition Bond Collateral for such purpose.
   6. Limitation of Suits. Notwithstanding any provision hereof to the contrary, no Holder of any Transition Bond shall have any right to institute any Proceeding, judicial or otherwise, to avail itself of any remedies provided in the Securitization Law or to avail itself of the right to foreclose on the Transition Bond Collateral or otherwise enforce the Lien and the security interest on the Transition Bond Collateral with respect to this Indenture and the Series Supplement, or for the appointment of a receiver or trustee, or for any other remedy hereunder, unless:
      1. such Holder previously has given written notice to the Indenture Trustee of a continuing Event of Default;
      2. the Holders of not less than a majority of the Outstanding Amount of the Transition Bonds have made written request to the Indenture Trustee to institute such Proceeding in respect of such Event of Default in its own name as Indenture Trustee hereunder;
      3. such Holder or Holders have offered to the Indenture Trustee indemnity satisfactory to it against the costs, expenses and liabilities to be incurred in complying with such request;
      4. the Indenture Trustee for sixty (60) days after its receipt of such notice, request and offer of indemnity has failed to institute such Proceedings; and
      5. no direction inconsistent with such written request has been given to the Indenture Trustee during such sixty-day period by the Holders of a majority of the Outstanding Amount of the Transition Bonds;

      it being understood and intended that no one or more Holders shall have any right in any manner whatever by virtue of, or by availing of, any provision of this Indenture to affect, disturb or prejudice the rights of any other Holders or to obtain or to seek to obtain priority or preference over any other Holders or to enforce any right under this Indenture, except in the manner herein provided.

      In the event the Indenture Trustee shall receive conflicting or inconsistent requests and indemnity from two or more groups of Holders, each representing less than a majority of the Outstanding Amount of the Transition Bonds, the Indenture Trustee in its sole discretion may determine what action, if any, shall be taken, notwithstanding any other provisions of this Indenture.

   7. Unconditional Rights of Holders To Receive Principal, Premium, if any, and Interest. Notwithstanding any other provisions in this Indenture, the Holder of any Transition Bond shall have the right, which is absolute and unconditional, (a) to receive payment of (i) the interest, if any, on such Transition Bond on the due dates thereof expressed in such Transition Bond or in this Indenture or (ii) the unpaid principal, if any, of such Transition Bonds on the Final Maturity Date therefor and (b) to institute suit for the enforcement of any such payment, and such right shall not be impaired without the consent of such Holder.
   8. Restoration of Rights and Remedies. If the Indenture Trustee or any Holder has instituted any Proceeding to enforce any right or remedy under this Indenture and such Proceeding has been discontinued or abandoned for any reason or has been determined adversely to the Indenture Trustee or to such Holder, then and in every such case the Issuer, the Indenture Trustee and the Holders shall, subject to any determination in such Proceeding, be restored severally and respectively to their former positions hereunder, and thereafter all rights and remedies of the Indenture Trustee and the Holders shall continue as though no such Proceeding had been instituted.
   9. Rights and Remedies Cumulative. No right or remedy herein conferred upon or reserved to the Indenture Trustee or to the Holders is intended to be exclusive of any other right or remedy, and every right and remedy shall, to the extent permitted by law, be cumulative and in addition to every other right and remedy given hereunder or now or hereafter existing at law or in equity or otherwise. The assertion or employment of any right or remedy hereunder, or otherwise, shall not prevent the concurrent assertion or employment of any other appropriate right or remedy.
   10. Delay or Omission Not a Waiver. No delay or omission of the Indenture Trustee or any Holder to exercise any right or remedy accruing upon any Default or Event of Default shall impair any such right or remedy or constitute a waiver of any such Default or Event of Default or an acquiescence therein. Every right and remedy given by this Article V or by law to the Indenture Trustee or to the Holders may be exercised from time to time, and as often as may be deemed expedient, by the Indenture Trustee or by the Holders, as the case may be.
   11. Control by Holders. The Holders of not less than a majority of the Outstanding Amount of the Transition Bonds of an affected Tranche or Tranches shall have the right to direct the time, method and place of conducting any Proceeding for any remedy available to the Indenture Trustee with respect to the Transition Bonds of such Tranche or Tranches or exercising any trust or power conferred on the Indenture Trustee with respect to such Tranche or Tranches; provided that:
       1. such direction shall not be in conflict with any rule of law or with this Indenture and shall not involve the Indenture Trustee in any personal liability or expense;
       2. subject to other conditions specified in Section 5.04, any direction to the Indenture Trustee to sell or liquidate any Transition Bond Collateral shall be by the Holders representing not less than 100 percent of the Outstanding Amount of the Transition Bonds;
       3. if the conditions set forth in Section 5.05 have been satisfied and the Indenture Trustee elects to retain the Transition Bond Collateral pursuant to Section 5.05, then any direction to the Indenture Trustee by Holders representing less than 100 percent of the Outstanding Amount of the Transition Bonds to sell or liquidate the Transition Bond Collateral shall be of no force and effect; and
       4. the Indenture Trustee may take any other action deemed proper by the Indenture Trustee that is not inconsistent with such direction;

       provided, however, that, the Indenture Trustee's duties shall be subject to Section 6.01, and the Indenture Trustee need not take any action that it determines might involve it in liability or might materially adversely affect the rights of any Holders not consenting to such action. Furthermore and without limiting the foregoing, the Indenture Trustee shall not be required to take any action for which it reasonably believes that it will not be indemnified to its satisfaction against any cost, expense or liabilities.

   12. Waiver of Past Defaults. Prior to the declaration of the acceleration of the maturity of the Transition Bonds as provided in Section 5.02, the Holders representing not less than a majority of the Outstanding Amount of the Transition Bonds of an affected Tranche, together with the PUCT, may waive any past Default or Event of Default and its consequences except a Default (a) in payment of principal of or premium, if any, or interest on any of the Transition Bonds or (b) in respect of a covenant or provision hereof which cannot be modified or amended without the consent of the Holder of each Transition Bond of all Tranches affected. In the case of any such waiver, the Issuer, the Indenture Trustee and the Holders shall be restored to their former positions and rights hereunder, respectively; but no such waiver shall extend to any subsequent or other Default or impair any right consequent thereto.

   Upon any such waiver, such Default shall cease to exist and be deemed to have been cured and not to have occurred, and any Event of Default arising therefrom shall be deemed to have been cured and not to have occurred, for every purpose of this Indenture; but no such waiver shall extend to any subsequent or other Default or Event of Default or impair any right consequent thereto.

   13. Undertaking for Costs. All parties to this Indenture agree, and each Holder of any Transition Bond by such Holder's acceptance thereof shall be deemed to have agreed, that any court may in its discretion require, in any suit for the enforcement of any right or remedy under this Indenture, or in any suit against the Indenture Trustee for any action taken, suffered or omitted by it as Indenture Trustee, the filing by any party litigant in such suit of an undertaking to pay the costs of such suit, and that such court may in its discretion assess reasonable costs, including reasonable attorneys' fees, against any party litigant in such suit, having due regard to the merits and good faith of the claims or defenses made by such party litigant; but the provisions of this Section 5.13 shall not apply to (a) any suit instituted by the Indenture Trustee, (b) any suit instituted by any Holder, or group of Holders, in each case holding in the a ggregate more than ten (10) percent of the Outstanding Amount of the Transition Bonds or (c) any suit instituted by any Holder for the enforcement of the payment of (i) interest on any Transition Bond on or after the due dates expressed in such Transition Bond and in this Indenture or (ii) the unpaid principal, if any, of any Transition Bond on or after the Final Maturity Date therefor.
   14. Waiver of Stay or Extension Laws. The Issuer covenants (to the extent that it may lawfully do so) that it will not at any time insist upon, or plead or in any manner whatsoever, claim or take the benefit or advantage of, any stay or extension law wherever enacted, now or at any time hereafter in force, that may affect the covenants or the performance of this Indenture; and the Issuer (to the extent that it may lawfully do so) hereby expressly waives all benefit or advantage of any such law, and covenants that it will not hinder, delay or impede the execution of any power herein granted to the Indenture Trustee, but will suffer and permit the execution of every such power as though no such law had been enacted.
   15. Action on Transition Bonds. The Indenture Trustee's right to seek and recover judgment on the Transition Bonds or under this Indenture shall not be affected by the seeking, obtaining or application of any other relief under or with respect to this Indenture. Neither the Lien of this Indenture nor any rights or remedies of the Indenture Trustee or the Holders shall be impaired by the recovery of any judgment by the Indenture Trustee against the Issuer or by the levy of any execution under such judgment upon any portion of the Transition Bond Collateral or any other assets of the Issuer.

6. 
   
   The Indenture Trustee

   1. Duties of Indenture Trustee.
      1. If an Event of Default has occurred and is continuing, the Indenture Trustee shall exercise the rights and powers vested in it by this Indenture and use the same degree of care and skill in their exercise as a prudent person would exercise or use under the circumstances in the conduct of such person's own affairs.
      2. Except during the continuance of an Event of Default:
         1. the Indenture Trustee undertakes to perform such duties and only such duties as are specifically set forth in this Indenture and no implied covenants or obligations shall be read into this Indenture against the Indenture Trustee; and
         2. in the absence of bad faith on its part, the Indenture Trustee may conclusively rely, as to the truth of the statements and the correctness of the opinions expressed therein, upon certificates or opinions furnished to the Indenture Trustee and conforming to the requirements of this Indenture.
      3. The Indenture Trustee may not be relieved from liability for its own negligent action, its own bad faith, its own negligent failure to act or its own willful misconduct, except that:
         1. this paragraph (c) does not limit the effect of paragraph (b) of this Section 6.01;
         2. the Indenture Trustee shall not be liable for any error of judgment made in good faith by a Responsible Officer unless it is proved that the Indenture Trustee was negligent in ascertaining the pertinent facts; and
         3. the Indenture Trustee shall not be liable with respect to any action it takes or omits to take in good faith in accordance with a direction received by it hereunder.
      4. Every provision of this Indenture that in any way relates to the Indenture Trustee is subject to paragraphs (a), (b) and (c) of this Section 6.01.
      5. The Indenture Trustee shall not be liable for interest on any money received by it except as the Indenture Trustee may agree in writing with the Issuer.
      6. Money held in trust by the Indenture Trustee need not be segregated from other funds held by the Indenture Trustee except to the extent required by law or the terms of this Indenture, the Sale Agreement, the Servicing Agreement or the Administration Agreement.
      7. No provision of this Indenture shall require the Indenture Trustee to expend or risk its own funds or otherwise incur financial liability in the performance of any of its duties hereunder or in the exercise of any of its rights or powers, if it shall have reasonable grounds to believe that repayments of such funds or indemnity satisfactory to it against such risk or liability is not reasonably assured to it.
      8. Every provision of this Indenture relating to the conduct or affecting the liability of or affording protection to the Indenture Trustee shall be subject to the provisions of this Section 6.01 and to the provisions of the TIA.
      9. In the event that the Indenture Trustee is also acting as Paying Agent or Transition Bond Registrar hereunder, the protections of this Article VI shall also be afforded to the Indenture Trustee in its capacity as Paying Agent or Transition Bond Registrar.
      10. Except for the express duties of the Indenture Trustee with respect to the administrative functions set forth in the Basic Documents, the Indenture Trustee shall have no obligation to administer, service or collect Transition Property or to maintain, monitor or otherwise supervise the administration, servicing or collection of the Transition Property.
      11. Under no circumstance shall the Indenture Trustee be liable for any indebtedness of the Issuer, the Servicer or the Seller evidenced by or arising under the Transition Bonds or the Basic Documents.
      12. On or before March 31 of each fiscal year ending December 31, the Indenture Trustee shall (i) deliver to the Issuer a report (in form and substance reasonably satisfactory to the Issuer and addressed to the Issuer and signed by an authorized officer of the Indenture Trustee) regarding the Indenture Trustee's assessment of compliance, during the immediately preceding fiscal year ending December 31, with each of the applicable servicing criteria specified on Exhibit C hereto as required under Rules 13a-18 and 15d-18 of the Exchange Act and Item 1122 of Regulation AB and (ii) deliver to the Issuer a report of an Independent registered public accounting firm reasonably acceptable to the Issuer that attests to and reports on, in accordance with Rules 1-02(a)(3) and 2-02(g) of Regulation S-X under the Securities Act and the Exchange Act, the assessment of compliance made by the Indenture Trustee and delivered pursuant to clause (i).
   2. Rights of Indenture Trustee. The Indenture Trustee may conclusively rely and shall be fully protected in relying on any document believed by it to be genuine and to have been signed or presented by the proper person. The Indenture Trustee need not investigate any fact or matter stated in such document.
      1. Before the Indenture Trustee acts or refrains from acting, it may require and shall be entitled to receive an Officer's Certificate or an Opinion of Counsel of Independent counsel of the Issuer (at no cost or expense to the Indenture Trustee) that such action is required or permitted hereunder. The Indenture Trustee shall not be liable for any action it takes or omits to take in good faith in reliance on such Officer's Certificate or Opinion of Counsel.
      2. The Indenture Trustee may execute any of the trusts or powers hereunder or perform any duties hereunder either directly or by or through agents or attorneys or a custodian or nominee, and the Indenture Trustee shall not be responsible for any misconduct or negligence on the part of, or for the supervision of, any such agent, attorney, custodian or nominee appointed with due care by it hereunder.
      3. The Indenture Trustee shall not be liable for any action it takes or omits to take in good faith which it believes to be authorized or within its rights or powers; provided, however, that the Indenture Trustee's conduct does not constitute willful misconduct, negligence or bad faith.
      4. The Indenture Trustee may consult with counsel, and the advice or opinion of counsel with respect to legal matters relating to this Indenture and the Transition Bonds shall be full and complete authorization and protection from liability in respect to any action taken, omitted or suffered by it hereunder in good faith and in accordance with the advice or opinion of such counsel.
      5. The Indenture Trustee shall be under no obligation to take any action or exercise any of the rights or powers vested in it by this Indenture or any other Basic Document, or to institute, conduct or defend any litigation hereunder or thereunder or in relation hereto or thereto, at the request, order or direction of any of the Bondholders pursuant to the provisions of this Indenture and the Series Supplement or otherwise, unless it shall have grounds to believe in its discretion that security or indemnity against the costs, expenses and liabilities which may be incurred therein or thereby is to its satisfaction assured to it.
   3. Individual Rights of Indenture Trustee. The Indenture Trustee in its individual or any other capacity may become the owner or pledgee of Transition Bonds and may otherwise deal with the Issuer or its Affiliates with the same rights it would have if it were not Indenture Trustee. Any Paying Agent, Transition Bond Registrar, co-registrar or co-paying agent or agent appointed under Section 3.02 may do the same with like rights. However, the Indenture Trustee must comply with Sections 6.11 and 6.12.
   4. Indenture Trustee's Disclaimer. The Indenture Trustee shall not be responsible for and makes no representation (other than as set forth in Section 6.13) as to the validity or adequacy of this Indenture or the Transition Bonds, it shall not be accountable for the Issuer's use of the proceeds from the Transition Bonds, and it shall not be responsible for any statement of the Issuer in the Indenture or in any document issued in connection with the sale of the Transition Bonds or in the Transition Bonds other than the Indenture Trustee's certificate of authentication. The Indenture Trustee shall not be responsible for the form, character, genuineness, sufficiency, value or validity of any of the Transition Bond Collateral, or for or in respect of the Transition Bonds (other than the certificate of authentication for the Transition Bonds) or the Basic Documents and the Indenture Trustee shall in no event assume or incur any liability, duty or obligation to any Hold er, other than as expressly provided in this Indenture. The Indenture Trustee shall not be liable for the default or misconduct of the Issuer, the Seller, the Servicer or any other Person under the Basic Documents or otherwise, and the Indenture Trustee shall have no obligation or liability to perform the obligations of such Persons.
   5. Notice of Defaults.
      1. If a Default occurs and is continuing and if it is actually known to a Responsible Officer of the Indenture Trustee, the Indenture Trustee shall mail to the PUCT, each Rating Agency and each Bondholder notice of the Default within ninety (90) days after actual notice of such Default was received by a Responsible Officer of the Indenture Trustee. Except in the case of a Default in payment of principal of and premium, if any, or interest on any Transition Bond, the Indenture Trustee may withhold the notice if and so long as a committee of its Responsible Officers in good faith determines that withholding the notice is in the interests of Holders. Except for an Event of Default under Sections 5.01(i) or (ii) that occur at a time when the Indenture Trustee is acting as the Paying Agent, and except as provided in the first sentence of this Section 6.05, in no event shall the Indenture Trustee be deemed to have knowledge of a Default.
      2. If a Default occurs and is continuing and if it is actually known to a Responsible Officer of the Indenture Trustee, the Indenture Trustee shall promptly, but no more frequently than monthly, mail to the PUCT notice of any legal fees or other expenses incurred by the Indenture Trustee in defending or prosecuting any actual or threatened litigation, including any administrative proceeding, in respect of the Transition Bonds or the Transition Bond Collateral.
   6. Reports by Indenture Trustee to Holders.
      1. So long as Transition Bonds are Outstanding and the Indenture Trustee is the Transition Bond Registrar and Paying Agent, upon the written request of any Holder or the Issuer, within the prescribed period of time for tax reporting purposes after the end of each calendar year, it shall deliver to each relevant current or former Holder such information in its possession as may be required to enable such Holder to prepare its federal income and any applicable local or state tax returns. If the Transition Bond Registrar and Paying Agent is other than the Indenture Trustee, such Transition Bond Registrar and Paying Agent, within the prescribed period of time for tax reporting purposes after the end of each calendar year, shall deliver to each relevant current or former Holder such information in its possession as may be required to enable such Holder to prepare its federal income and any applicable local or state tax returns.
      2. With respect to the Transition Bonds, on or prior to the Payment Date or Special Payment Date therefor, the Indenture Trustee will deliver to the PUCT and each Holder of the Transition Bonds on such Payment Date or Special Payment Date a statement as provided and prepared by the Servicer which will include (to the extent applicable) the following information (and any other information so specified in the Series Supplement) as to the Transition Bonds with respect to such Payment Date or Special Payment Date or the period since the previous Payment Date, as applicable:
         1. the amount of the payment to Holders allocable to principal, if any;
         2. the amount of the payment to Holders allocable to interest;
         3. the aggregate Outstanding Amount of such Transition Bonds, before and after giving effect to any payments allocated to principal reported under clause (i) above;
         4. the difference, if any, between the amount specified in clause (iii) above and the Outstanding Amount specified in the related Expected Amortization Schedule;
         5. any other transfers and payments to be made on such Payment Date or Special Payment Date, including amounts paid to the Indenture Trustee and to the Servicer; and
         6. the amounts on deposit in the applicable Capital Subaccount and the applicable Excess Funds Subaccount, after giving effect to the foregoing payments.
      3. The Issuer shall send a copy of each of the Certificate of Compliance delivered to it pursuant to Section 3.03 of the Servicing Agreement and the Annual Accountant's Report delivered to it pursuant to Section 3.04 of the Servicing Agreement to the Rating Agencies. A copy of such certificate and report may be obtained by any Holder by a request in writing to the Indenture Trustee.
      4. The Indenture Trustee may consult with counsel, and the advice or opinion of such counsel with respect to legal matters relating to this Indenture and the Transition Bonds shall be full and complete authorization and protection from liability with respect of any action taken, omitted or suffered by it hereunder in good faith and in accordance with the advice or opinion of such counsel.
   7. Compensation and Indemnity. The Issuer shall pay to the Indenture Trustee from time to time reasonable compensation for its services. The Indenture Trustee's compensation shall not be limited by any law on compensation of a trustee of an express trust. The Issuer shall reimburse the Indenture Trustee for all reasonable out-of-pocket expenses incurred or made by it, including costs of collection, in addition to the compensation for its services. Such expenses shall include the reasonable compensation and expenses, disbursements and advances of the Indenture Trustee's agents, counsel, accountants and experts. The Issuer shall indemnify and hold harmless the Indenture Trustee and its officers, directors, employees and agents against any and all cost, damage, loss, liability, tax or expense (including reasonable attorney's fees and expenses) incurred by it in connection with the administration and the enforcement of this Indenture, the Series Supplement and the Basic Documents and the Indenture Trustee's rights, powers and obligations under this Indenture, the Series Supplement and the Basic Documents and the performance of its duties hereunder and obligations under or pursuant to this Indenture, the Series Supplement and the Basic Documents. The Indenture Trustee shall notify the Issuer as soon as is reasonably practicable of any claim for which it may seek indemnity. Failure by the Indenture Trustee to so notify the Issuer shall not relieve the Issuer of its obligations hereunder. The Issuer shall defend the claim and the Indenture Trustee may have separate counsel and the Issuer shall pay the reasonable fees and expenses of such counsel. The Issuer need not reimburse any expense or indemnify against any loss, liability or expense incurred by the Indenture Trustee through the Indenture Trustee's own willful misconduct, negligence or bad faith. The rights of the Indenture Trustee set forth in this Section 6.07 are subject to and limited by the priority of payments set forth in Section 8.02(e).

      The payment obligations to the Indenture Trustee pursuant to this Section 6.07 shall survive the discharge of this Indenture and the Series Supplement or the earlier resignation or removal of the Indenture Trustee. When the Indenture Trustee incurs expenses after the occurrence of a Default specified in Section 5.01(v) or (vi) with respect to the Issuer, the expenses are intended to constitute expenses of administration under the Bankruptcy Code or any other applicable federal or state bankruptcy, insolvency or similar law.

   8. Replacement of Indenture Trustee and Securities Intermediary.
      1. The Indenture Trustee may resign at any time upon thirty (30) days' prior written notice to the Issuer subject to clause (c) below. The Holders of a majority of the Outstanding Amount of the Transition Bonds may remove the Indenture Trustee by so notifying the Indenture Trustee and may appoint a successor Indenture Trustee. The Issuer shall remove the Indenture Trustee if:
         1. the Indenture Trustee fails to comply with Section 6.11;
         2. the Indenture Trustee is adjudged a bankrupt or insolvent;
         3. a receiver or other public officer takes charge of the Indenture Trustee or its property;
         4. the Indenture Trustee otherwise becomes incapable of acting; or
         5. the Indenture Trustee fails to provide to the Issuer any information reasonably requested by the Issuer pertaining to the Indenture Trustee and necessary for the Issuer or the Sponsor to comply with its reporting obligations under the Exchange Act and Regulation AB and such failure is not resolved to the Issuer's and the Indenture Trustee's mutual satisfaction within a reasonable period of time.

         Any removal or resignation of the Indenture Trustee shall also constitute a removal or resignation of the Securities Intermediary.

      2. If the Indenture Trustee gives notice of resignation or is removed or if a vacancy exists in the office of Indenture Trustee for any reason (the Indenture Trustee in such event being referred to herein as the retiring Indenture Trustee), the Issuer shall promptly appoint a successor Indenture Trustee and Securities Intermediary.
      3. A successor Indenture Trustee shall deliver a written acceptance of its appointment as the Indenture Trustee and as the Securities Intermediary to the retiring Indenture Trustee and to the Issuer. Thereupon the resignation or removal of the retiring Indenture Trustee shall become effective, and the successor Indenture Trustee shall have all the rights, powers and duties of the Indenture Trustee and Securities Intermediary, as applicable, under this Indenture. No resignation or removal of the Indenture Trustee pursuant to this Section 6.08 shall become effective until acceptance of the appointment by a successor Indenture Trustee having the qualifications set forth in Section 6.11. The successor Indenture Trustee shall mail a notice of its succession to Holders. The retiring Indenture Trustee shall promptly transfer all property held by it as Indenture Trustee (including unless otherwise agreed by the successor Indenture Trustee, all REP Deposit Accounts held by the Indenture T rustee) to the successor Indenture Trustee.
      4. If a successor Indenture Trustee does not take office within sixty (60) days after the retiring Indenture Trustee resigns or is removed, the retiring Indenture Trustee, the Issuer or the Holders of a majority in Outstanding Amount of the Transition Bonds may petition any court of competent jurisdiction for the appointment of a successor Indenture Trustee.
      5. If the Indenture Trustee fails to comply with Section 6.11, any Holder may petition any court of competent jurisdiction for the removal of the Indenture Trustee and the appointment of a successor Indenture Trustee.
      6. Notwithstanding the replacement of the Indenture Trustee pursuant to this Section 6.08, the Issuer's obligations under Section 6.07 shall continue for the benefit of the retiring Indenture Trustee.
   9. Successor Indenture Trustee by Merger. If the Indenture Trustee consolidates with, merges or converts into, or transfers all or substantially all its corporate trust business or assets to, another corporation or banking association, the resulting, surviving or transferee corporation or banking association without any further act shall be the successor Indenture Trustee; provided, however, that if such successor Indenture Trustee is not eligible under Section 6.11, then the successor Indenture Trustee shall be replaced in accordance with Section 6.08. Notice of any such event shall be promptly given to each Rating Agency by the successor Indenture Trustee and any agent in Ireland appointed pursuant to Section 3.02.

      In case at the time such successor or successors by merger, conversion, consolidation or transfer shall succeed to the trusts created by this Indenture any of the Transition Bonds shall have been authenticated but not delivered, any such successor to the Indenture Trustee may adopt the certificate of authentication of any predecessor trustee, and deliver such Transition Bonds so authenticated; and in case at that time any of the Transition Bonds shall not have been authenticated, any successor to the Indenture Trustee may authenticate such Transition Bonds either in the name of any predecessor hereunder or in the name of the successor to the Indenture Trustee; and in all such cases such certificates shall have the full force which it is anywhere in the Transition Bonds or in this Indenture provided that the certificate of the Indenture Trustee shall have.

   10. Appointment of Co-Trustee or Separate Trustee.
       1. Notwithstanding any other provisions of this Indenture, at any time, for the purpose of meeting any legal requirement of any jurisdiction in which any part of the trust created by this Indenture or the Transition Bond Collateral may at the time be located, the Indenture Trustee shall have the power and may execute and deliver all instruments to appoint one or more Persons to act as a co-trustee or co-trustees, or separate trustee or separate trustees, of all or any part of the trust created by this Indenture or the Transition Bond Collateral, and to vest in such Person or Persons, in such capacity and for the benefit of the Secured Parties, such title to the Transition Bond Collateral, or any part hereof, and, subject to the other provisions of this Section 6.10, such powers, duties, obligations, rights and trusts as the Indenture Trustee may consider necessary or desirable. No co-trustee or separate trustee hereunder shall be required to meet the terms of eligibility as a successor trustee under Section 6.11 and no notice to Holders of the appointment of any co-trustee or separate trustee shall be required under Section 6.08.
       2. Every separate trustee and co-trustee shall, to the extent permitted by law, be appointed and act subject to the following provisions and conditions:
          1. all rights, powers, duties and obligations conferred or imposed upon the Indenture Trustee shall be conferred or imposed upon and exercised or performed by the Indenture Trustee and such separate trustee or co-trustee jointly (it being understood that such separate trustee or co-trustee is not authorized to act separately without the Indenture Trustee joining in such act), except to the extent that under any law of any jurisdiction in which any particular act or acts are to be performed the Indenture Trustee shall be incompetent or unqualified to perform such act or acts, in which event such rights, powers, duties and obligations (including the holding of title to the Transition Bond Collateral or any portion thereof in any such jurisdiction) shall be exercised and performed singly by such separate trustee or co-trustee, but solely at the direction of the Indenture Trustee;
          2. no trustee hereunder shall be personally liable by reason of any act or omission of any other trustee hereunder; and
          3. the Indenture Trustee may at any time accept the resignation of or remove any separate trustee or co-trustee.
       3. Any notice, request or other writing given to the Indenture Trustee shall be deemed to have been given to each of the then separate trustees and co-trustees, as effectively as if given to each of them. Every instrument appointing any separate trustee or co-trustee shall refer to this Indenture and the conditions of this Article VI. Each separate trustee and co-trustee, upon its acceptance of the trusts conferred, shall be vested with the estates or property specified in its instrument of appointment, either jointly with the Indenture Trustee or separately, as may be provided therein, subject to all the provisions of this Indenture, specifically including every provision of this Indenture relating to the conduct of, affecting the liability of, or affording protection to, the Indenture Trustee. Every such instrument shall be filed with the Indenture Trustee.
       4. Any separate trustee or co-trustee may at any time constitute the Indenture Trustee, its agent or attorney-in-fact with full power and authority, to the extent not prohibited by law, to do any lawful act under or in respect of this Indenture on its behalf and in its name. If any separate trustee or co-trustee shall die, become incapable of acting, resign or be removed, all of its estates, properties, rights, remedies and trusts shall vest in and be exercised by the Indenture Trustee, to the extent permitted by law, without the appointment of a new or successor trustee.
   11. Eligibility; Disqualification. The Indenture Trustee shall at all times satisfy the requirements of TIA  310(a)(1) and  310(a)(5) and Section 26(a)(1) of the Investment Company Act. The Indenture Trustee shall have a combined capital and surplus of at least $50,000,000 as set forth in its most recent published annual report of condition and it shall have a long term debt rating of "Baa3" or better by Moody's "BBB-" or better by Standard & Poor's and, if Fitch provides a rating thereon, "BBB-" or better by Fitch. The Indenture Trustee shall comply with TIA  310(b), including the optional provision permitted by the second sentence of TIA  310(b)(9); provided, however, that there shall be excluded from the operation of TIA  310(b)(1) any indenture or indentures under which other securities of the Issuer are outstanding if the requirements for such exclusion set forth in TI A  310(b)(1) are met.
   12. Preferential Collection of Claims Against Issuer. The Indenture Trustee shall comply with TIA  311(a), excluding any creditor relationship listed in TIA  311(b). An Indenture Trustee who has resigned or been removed shall be subject to TIA  311(a) to the extent indicated therein.
   13. Representations and Warranties of Indenture Trustee. The Indenture Trustee hereby represents and warrants that:
       1. the Indenture Trustee is a banking corporation validly existing and in good standing under the laws of the State of New York; and
       2. the Indenture Trustee has full power, authority and legal right to execute, deliver and perform this Indenture and the Basic Documents to which the Indenture Trustee is a party and has taken all necessary action to authorize the execution, delivery, and performance by it of this Indenture and such Basic Documents.
   14. Annual Report by Independent Registered Public Accountants. In the event the firm of Independent registered public accountants requires the Indenture Trustee to agree or consent to the procedures performed by such firm pursuant to Section 3.05 of the Servicing Agreement, the Indenture Trustee shall deliver such letter of agreement or consent in conclusive reliance upon the direction of the Issuer in accordance with Section 3.05 of the Servicing Agreement. In the event such firm requires the Indenture Trustee to agree to the procedures performed by such firm, the Issuer shall direct the Indenture Trustee in writing to so agree; it being understood and agreed that the Indenture Trustee will deliver such letter of agreement in conclusive reliance upon the direction of the Issuer, and the Indenture Trustee makes no independent inquiry or investigation to, and shall have no obligation or liability in respect of, the sufficiency, validity or correct ness of such procedures.
   15. Custody of Transition Bond Collateral. The Indenture Trustee shall hold such of the Transition Bond Collateral (and any other collateral that may be granted to the Indenture Trustee) as consists of instruments, deposit accounts, negotiable documents, money, goods, letters of credit, and advices of credit in the State of New York. The Indenture Trustee shall hold such of the Transition Bond Collateral as constitute investment property through the Securities Intermediary (which, as of the date hereof, is The Bank of New York Mellon). The initial Securities Intermediary, hereby agrees (and each future Securities Intermediary shall agree) with the Indenture Trustee that (a) such investment property shall at all times be credited to a securities account of the Indenture Trustee, (b) the Securities Intermediary shall treat the Indenture Trustee as entitled to exercise the rights that comprise each financial asset credited to such securities account, (c) all prop erty credited to such securities account shall be treated as a financial asset, (d) the Securities Intermediary shall comply with entitlement orders originated by the Indenture Trustee without the further consent of any other person or entity, (e) the Securities Intermediary will not agree with any person other than the Indenture Trustee to comply with entitlement orders originated by such other person, (f) such securities accounts and the property credited thereto shall not be subject to any Lien, or right of set-off in favor of the Securities Intermediary or anyone claiming through it (other than the Indenture Trustee), and (g) such agreement shall be governed by the internal laws of the State of New York. Terms used in the preceding sentence that are defined in the UCC and not otherwise defined herein shall have the meaning set forth in the UCC. Except as permitted by this Section 6.15, or elsewhere in this Indenture, the Indenture Trustee shall not hold Transition Bond C ollateral through an agent or a nominee.

7. 
   
   Holders' Lists and Reports

   1. Issuer To Furnish Indenture Trustee Names and Addresses of Holders. The Issuer will furnish or cause to be furnished to the Indenture Trustee (a) not more than five (5) days after the earlier of (i) each Record Date and (ii) six (6) months after the last Record Date, a list, in such form as the Indenture Trustee may reasonably require, of the names and addresses of the Bondholders as of such Record Date, (b) at such other times as the Indenture Trustee may request in writing, within thirty (30) days after receipt by the Issuer of any such request, a list of similar form and content as of a date not more than ten (10) days prior to the time such list is furnished; provided, however, that so long as the Indenture Trustee is the Transition Bond Registrar, no such list shall be required to be furnished.
   2. Preservation of Information; Communications to Holders.
      1. The Indenture Trustee shall preserve, in as current a form as is reasonably practicable, the names and addresses of the Holders contained in the most recent list furnished to the Indenture Trustee as provided in Section 7.01 and the names and addresses of Holders received by the Indenture Trustee in its capacity as Transition Bond Registrar. The Indenture Trustee may destroy any list furnished to it as provided in such Section 7.01 upon receipt of a new list so furnished.
      2. Holders may communicate pursuant to TIA  312(b) with other Holders with respect to their rights under this Indenture or under the Transition Bonds. In addition, upon the written request of any Holder or group of Holders of Transition Bonds evidencing not less than 10 percent of the Outstanding Amount of the Transition Bonds, the Indenture Trustee shall afford the Holder or Holders making such request a copy of a current list of Holders of the Transition Bonds for purposes of communicating with other Holders with respect to their rights hereunder.
      3. The Issuer, the Indenture Trustee and the Transition Bond Registrar shall have the protection of TIA  312(c).
   3. Reports by Issuer.
      1. The Issuer shall:
         1. so long as the Issuer or the Sponsor is required to file such documents with the SEC, provide to the Indenture Trustee, within fifteen (15) days after the Issuer is required to file the same with the SEC, copies of the annual reports and of the information, documents and other reports (or copies of such portions of any of the foregoing as the SEC may from time to time by rules and regulations prescribe) which the Issuer or the Sponsor may be required to file with the SEC pursuant to Section 13 or 15(d) of the Exchange Act;
         2. provide to the Indenture Trustee, file with the SEC, in accordance with rules and regulations prescribed from time to time by the SEC such additional information, documents and reports with respect to compliance by the Issuer with the conditions and covenants of this Indenture as may be required from time to time by such rules and regulations; and
         3. supply to the Indenture Trustee (and the Indenture Trustee shall transmit by mail to all Holders described in TIA  313(c)), such summaries of any information, documents and reports required to be filed by the Issuer pursuant to clauses (i) and (ii) of this Section 7.03(a) as may be required by rules and regulations prescribed from time to time by the SEC.
      2. Unless the Issuer otherwise determines, the fiscal year of the Issuer shall end on December 31 of each year.
   4. Reports by Indenture Trustee. If required by TIA  313(a), within sixty (60) days after December 31 of each year, commencing with the year after the issuance of the Transition Bonds, the Indenture Trustee shall mail to each Bondholder as required by TIA  313(c) a brief report dated as of such date that complies with TIA  313(a). The Indenture Trustee also shall comply with TIA  313(b); provided, however, that the initial report so issued shall be delivered not more than twelve (12) months after the Closing Date.

   A copy of each report at the time of its mailing to Holders shall be filed by the Servicer with the SEC and each stock exchange, if any, on which the Transition Bonds are listed. The Issuer shall notify the Indenture Trustee in writing if and when the Transition Bonds are listed on any stock exchange.

8. 
   
   Accounts, Disbursements and Releases

   1. Collection of Money. Except as otherwise expressly provided herein, the Indenture Trustee may demand payment or delivery of, and shall receive and collect, directly and without intervention or assistance of any fiscal agent or other intermediary, all money and other property payable to or receivable by the Indenture Trustee pursuant to this Indenture and the other Basic Documents. The Indenture Trustee shall apply all such money received by it as provided in this Indenture. Except as otherwise expressly provided in this Indenture, if any default occurs in the making of any payment or performance under any agreement or instrument that is part of the Transition Bond Collateral, the Indenture Trustee may take such action as may be appropriate to enforce such payment or performance, subject to Article VI, including the institution and prosecution of appropriate Proceedings. Any such action shall be without prejudice to any righ t to claim a Default or Event of Default under this Indenture and any right to proceed thereafter as provided in Article V.
   2. Collection Account and REP Deposit Accounts.
      1. Prior to the Closing Date, the Issuer shall open or cause to be opened, at the Indenture Trustee's office located at the Corporate Trust Office, or at another Eligible Institution, a segregated trust account in the Indenture Trustee's name for the deposit of TC Collections and all other amounts received with respect to the Transition Bond Collateral (the "Collection Account"). The Collection Account will consist of three subaccounts: a general subaccount (the "General Subaccount"), an excess funds subaccount (the "Excess Funds Subaccount") and a capital subaccount (the "Capital Subaccount" and, together with the General Subaccount and the Excess Funds Subaccount, the "Subaccounts"); provided that the Series Supplement may provide for the establishment of a cost of issuance subaccount to provide for the application of Transition Bond proceeds to the payment of the costs of issuing the Transition Bonds. For administrati ve purposes, the Subaccounts may, but need not, be established by the Indenture Trustee as separate accounts. Such separate accounts will be recognized individually as a Subaccount and collectively as the "Collection Account." Prior to or concurrently with the issuance of the Transition Bonds, the Member shall deposit into the Capital Subaccount an amount equal to the Required Capital Level for the Transition Bonds. All amounts in the Collection Account not allocated to any other subaccount shall be allocated to the General Subaccount. Prior to the initial Payment Date, all amounts in the Collection Account (other than funds deposited into the Capital Subaccount, up to the Required Capital Level for the Transition Bonds) shall be allocated to the General Subaccount. All references to the Collection Account shall be deemed to include reference to all subaccounts contained therein. Withdrawals from and deposits to each of the foregoing subaccounts of the Collection Account shall be made as set forth in Section 8.02(d) and (e). The Collection Account shall at all times be maintained in an Eligible Account, will be under the sole dominion and exclusive control of the Indenture Trustee, and only the Indenture Trustee shall have access to the Collection Account for the purpose of making deposits in and withdrawals from the Collection Account in accordance with this Indenture. Funds in the Collection Account shall not be commingled with any other moneys. All moneys deposited from time to time in the Collection Account, all deposits therein pursuant to this Indenture, and all investments made in Eligible Investments as directed in writing by the Issuer with such moneys, including all income or other gain from such investments, shall be held by the Indenture Trustee in the Collection Account as part of the Transition Bond Collateral as herein provided. The Indenture Trustee shall have no liability in respect of losses incurred as a result of the liquidation of any Eligible Investme nt prior to its stated maturity or its date of redemption or the failure of the Issuer or the Servicer to provide timely written investment direction.
      2. The Securities Intermediary hereby confirms that (i) the Collection Account is, or at inception will be established as, a "securities account" as such term is defined in Section 8-501(a) of the UCC, (ii) it is a "securities intermediary" (as such term is defined in Section 8-102(a) (14) of the UCC) and is acting in such capacity with respect to such accounts, and (iii) the Indenture Trustee for the benefit of the Secured Parties is the sole "entitlement holder" (as such term is defined in Section 8-102(a)(7) of the UCC) with respect to such accounts and no other Person shall have the right to give "entitlement orders" (as such term is defined in Section 8-102(a)(8)) with respect to such accounts. The Securities Intermediary hereby further agrees that each item of property (whether investment property, financial asset, security, instrument or cash) received by it will be credited to the Collection Account and shall be treated by i t as a "financial asset" within the meaning of Section 8-102(a)(9) of the UCC. Notwithstanding anything to the contrary, New York State shall be deemed to be the location and jurisdiction of the Securities Intermediary for purposes of Section 8-110 of the UCC, and the Collection Account (as well as the securities entitlements related thereto) shall be governed by the laws of the State of New York.
      3. The Indenture Trustee shall have sole dominion and exclusive control over all moneys in the Collection Account and shall apply such amounts therein as provided in this Section 8.02. The Indenture Trustee shall also pay from the Collection Account any amounts requested to be paid by or to the Servicer pursuant to Section 6.11(c)(ii) of the Servicing Agreement.
      4. TC Collections shall be deposited in the General Subaccount as provided in Section 6.11 of the Servicing Agreement. All deposits to and withdrawals from the Collection Account, all allocations to the subaccounts of the Collection Account and any amounts to be paid to the Servicer under Section 8.02(c) shall be made by the Indenture Trustee in accordance with the written instructions provided by the Servicer in the Monthly Servicer's Certificate, the Semi-Annual Servicer's Certificate or upon other written notice provided by the Servicer pursuant to Section 6.11(c)(ii) of the Servicing Agreement, as applicable.
      5. On each Payment Date for the Transition Bonds, the Indenture Trustee shall apply all amounts on deposit in the Collection Account, including all net earnings thereon, to pay the following amounts, in accordance with the Semi-Annual Servicer's Certificate, in the following priority:
         1. all amounts owed by the Issuer to the Indenture Trustee (including legal fees and expenses) shall be paid to the Indenture Trustee (subject to Section 6.07) in an amount not to exceed annually the amount set forth in the Series Supplement;
         2. the Servicing Fee for such Payment Date and all unpaid Servicing Fees for prior Payment Dates shall be paid to the Servicer;
         3. the Administration Fee for such Payment Date shall be paid to the Administrator and the Independent Manager Fee for such Payment Date shall be paid to the Independent Manager;
         4. all other Operating Expenses for such Payment Date not described above shall be paid to the parties to which such Operating Expenses are owed;
         5. Periodic Interest for such Payment Date, including any overdue Periodic Interest (together with, to the extent lawful, interest on such overdue Periodic Interest at the applicable Transition Bond Interest Rate), with respect to the Transition Bonds shall be paid to the Holders of the Transition Bonds;
         6. principal due and payable on the Transition Bonds as a result of an Event of Default or on the Final Maturity Date of the Transition Bonds shall be paid to the Holders of the Transition Bonds;
         7. Periodic Principal for such Payment Date, including any overdue Periodic Principal, with respect to the Transition Bonds shall be paid to the Holders of the Transition Bonds in the order provided in the Series Supplement;
         8. any other unpaid Operating Expenses, fees, expenses and indemnity amounts owed to the Indenture Trustee;
         9. the amount, if any, by which the Required Capital Level with respect to the Transition Bonds exceeds the amount in the Capital Subaccount as of such Payment Date shall be allocated to the Capital Subaccount;
         10. if there is a positive balance after making the foregoing allocations, provided that no Event of Default has occurred or is continuing, an amount not to exceed the lesser of such balance and the investment earnings on the Capital Subaccount shall be paid to the Issuer;
         11. the balance, if any, shall be allocated to the Excess Funds Subaccount for distribution on subsequent Payment Dates; and
         12. after principal of and premium, if any, and interest on all Transition Bonds, and all of the other foregoing amounts, have been paid in full, including, without limitation, amounts due and payable to the Indenture Trustee under Section 6.07 or otherwise, the balance (including all amounts then held in the Capital Subaccount and the Excess Funds Subaccount), if any, shall be paid to the Issuer, free from the Lien of this Indenture and the Series Supplement.

         All payments to the Holders pursuant to clauses (v), (vi) and (vii) above shall be made to such Holders pro rata based on the respective amounts of interest and/or principal owed, unless, in the case of Transition Bonds comprised of two or more Tranches, the Series Supplement provides otherwise. Payments in respect of principal of and premium, if any, and interest on any Tranche of Transition Bonds will be made on a pro rata basis among all the Holders of such Tranche. In the case of an Event of Default, then, in accordance with Section 5.04(c), moneys will be applied pursuant to clauses (v) and (vi), in such order, on a pro rata basis, based upon the interest or the principal owed.

         The amounts paid during any calendar year pursuant to clauses (i) and (iv) may not exceed the amounts set forth in the Series Supplement.

      6. If on any Payment Date funds on deposit in the General Subaccount are insufficient to make the payments contemplated by clauses (i) through (viii) of Section 8.02(e), the Indenture Trustee shall (i) first, draw from amounts on deposit in the Excess Funds Subaccount and (ii) second, draw from amounts on deposit in the Capital Subaccount, in each case, up to the amount of such shortfall in order to make the payments contemplated by clauses (i) through (viii) of Section 8.02(e). In addition, if on any Payment Date funds on deposit in the General Subaccount are insufficient to make the allocations contemplated by clause (ix) above, the Indenture Trustee shall draw from amounts on deposit in the Excess Funds Subaccount to make such allocations.
      7. The Indenture Trustee, shall, if in the future directed by the Servicer under Section 3.05(e) of the Servicing Agreement, maintain one or more segregated accounts in the Indenture Trustee's name (the "REP Deposit Accounts") at its office located at the Corporate Trust Office, or at another Eligible Institution, for REP deposits provided pursuant to the Financing Order or any Tariff, each such account for the benefit of the Indenture Trustee. Pursuant to and in accordance with the Financing Order, amounts received from any REP as a security deposit shall be deposited into the applicable REP Deposit Account. To the extent permitted by the Financing Order, any Tariff and PUCT Regulations, the REP Deposit Accounts shall at all times be maintained in Eligible Accounts, shall be subject to a perfected first priority security interest in favor of the Indenture Trustee for the benefit of the Secured Parties, and shall be under the sole dominion and exclusive control of the Indentur e Trustee. Funds in the REP Deposit Accounts shall not be commingled with any other moneys. All or a portion of the funds in the REP Deposit Accounts shall be invested in Eligible Investments and reinvested by the Indenture Trustee in Eligible Investments pursuant to the written direction of the Servicer (or, absent such direction, in accordance with Section 8.03(c)); provided, however, that (i) such Eligible Investments shall not mature or be redeemed later than the Business Day prior to the next Payment Date for the Transition Bonds and (ii) such Eligible Investments shall not be sold, liquidated or otherwise disposed of at a loss prior to the maturity or the date of redemption thereof. All moneys deposited from time to time in the REP Deposit Accounts and all investments made in Eligible Investments with such moneys, including all income or other gain from such investments, shall be held by the Indenture Trustee in a REP Deposit Account as part of the Transition Bond Collateral as herein provided and shall only be allocated and released upon the direction of the Servicer in accordance with Section 3.05(e) of the Servicing Agreement as required or permitted by this Indenture, the Financing Order, any Tariff, or other applicable PUCT Regulations. Any loss resulting from investment made in Eligible Investments with moneys in a REP Deposit Account shall be charged to such REP Deposit Account. The Indenture Trustee shall release property from a REP Deposit Account only as and to the extent directed by the Servicer pursuant to the Financing Order and the Servicing Agreement and as required or permitted by this Indenture. The Indenture Trustee shall have no liability in respect of losses incurred as a result of the liquidation of any Eligible Investment prior to its stated maturity or its date of redemption or the failure of the Issuer or the Servicer to provide timely written investment direction.
   3. General Provisions Regarding the Collection Accounts.
      1. So long as no Default or Event of Default shall have occurred and be continuing, all or a portion of the funds in the Collection Account shall be invested in Eligible Investments and reinvested by the Indenture Trustee upon Issuer Order; provided, however, that (i) such Eligible Investments shall not mature or be redeemed later than the Business Day prior to the next Payment Date or Special Payment Date, if applicable, for the Transition Bonds and (ii) such Eligible Investments shall not be sold, liquidated or otherwise disposed of at a loss prior to the maturity or the date of redemption thereof. All income or other gain from investments of moneys deposited in the Collection Account shall be deposited by the Indenture Trustee in the Collection Account, and any loss resulting from such investments shall be charged to the Collection Account. The Issuer will not direct the Indenture Trustee to make any investment of any funds or to sell any investment held in the Collection Accoun t unless the security interest Granted and perfected in such account will continue to be perfected in such investment or the proceeds of such sale, in either case without any further action by any Person, and, in connection with any direction to the Indenture Trustee to make any such investment or sale, if requested by the Indenture Trustee, the Issuer shall deliver to the Indenture Trustee an Opinion of Counsel of Independent counsel of the Issuer (at the Issuer's cost and expense) to such effect. In no event shall the Indenture Trustee be liable for the selection of Eligible Investments or for investment losses incurred thereon. The Indenture Trustee shall have no liability in respect of losses incurred as a result of the liquidation of any Eligible Investment prior to its stated maturity or its date of redemption or the failure of the Issuer or the Servicer to provide timely written investment direction. The Indenture Trustee shall have no obligation to invest or reinvest any amounts held hereunder in the absence of written investment direction pursuant to an Issuer Order.
      2. Subject to Section 6.01(c), the Indenture Trustee shall not in any way be held liable by reason of any insufficiency in the Collection Account resulting from any loss on any Eligible Investment included therein except for losses attributable to the Indenture Trustee's failure to make payments on such Eligible Investments issued by the Indenture Trustee, in its commercial capacity as principal obligor and not as trustee, in accordance with their terms.
      3. If (i) the Issuer shall have failed to give written investment directions for any funds on deposit in the Collection Account to the Indenture Trustee by 11:00 a.m. Eastern Time (or such other time as may be agreed by the Issuer and Indenture Trustee) on any Business Day; or (ii) a Default or Event of Default shall have occurred and be continuing with respect to the Transition Bonds but the Transition Bonds shall not have been declared due and payable pursuant to Section 5.02, then the Indenture Trustee shall, to the fullest extent practicable, invest and reinvest funds in the Collection Account in one or more money market funds described under clause (d) of the definition of "Eligible Investments" pursuant to the most recent written investment directions delivered by the Issuer to the Indenture Trustee with respect to such type of Eligible Investments; provided that if the Issuer has never delivered written investment directions to the Indenture Tru stee, the Indenture Trustee shall not invest or reinvest such funds in any investments.
      4. The parties hereto acknowledge that the Servicer may, pursuant to the Servicing Agreement, select Eligible Investments on behalf of the Issuer.
   4. Release of Transition Bond Collateral.
      1. So long as the Issuer is not in default hereunder and no Default hereunder would occur as a result of such action, the Issuer, through the Servicer, may collect, sell or otherwise dispose of written-off receivables, at any time and from time to time in the ordinary course of business, without any notice to, or release or consent by, the Indenture Trustee, but only as and to the extent permitted by the Basic Documents; provided, however, that any and all proceeds of such dispositions shall become Transition Bond Collateral and be deposited to the General Subaccount immediately upon receipt thereof by the Issuer or any other Person, including the Servicer. Without limiting the foregoing, the Servicer, may, at any time and from time to time without any notice to, or release or consent by, the Indenture Trustee, sell or otherwise dispose of any Transition Bond Collateral which is part of a Bill previously written-off as a defaulted or uncollectible account in accordance with the terms of the S ervicing Agreement and the requirements of the proviso in the immediately preceding sentence.
      2. The Indenture Trustee may, and when required by the provisions of this Indenture shall, execute instruments to release property from the Lien of this Indenture, or convey the Indenture Trustee's interest in the same, in a manner and under circumstances that are not inconsistent with the provisions of this Indenture. No party relying upon an instrument executed by the Indenture Trustee as provided in this Article VIII shall be bound to ascertain the Indenture Trustee's authority, inquire into the satisfaction of any conditions precedent or see to the application of any moneys. The Indenture Trustee shall release property from the Lien of this Indenture pursuant to this Section 8.04(b) only upon receipt of an Issuer Request accompanied by an Officer's Certificate, an Opinion of Counsel of Independent counsel of the Issuer (at the Issuer's cost and expense) and (if required by the TIA) Independent Certificates in accordance with TIA  314(c) and 314(d)(1) meeting the applicable requirements of Section 10.01.
      3. The Indenture Trustee shall, at such time as there are no Transition Bonds Outstanding and all sums payable to the Indenture Trustee pursuant to Section 6.07 or otherwise have been paid, release any remaining portion of the Transition Bond Collateral that secured the Transition Bonds from the Lien of this Indenture, release to the Issuer or any other Person entitled thereto any funds or investments then on deposit in or credit to the Collection Account and, subject to the instructions of the Servicer, shall release the REP Deposit Accounts in accordance with Section 8.02.
   5. Opinion of Counsel. The Indenture Trustee shall receive at least seven (7) days' notice when requested by the Issuer to take any action pursuant to Section 8.04, accompanied by copies of any instruments involved, and the Indenture Trustee shall also require, as a condition to such action, an Opinion of Counsel of Independent counsel of the Issuer, in form and substance satisfactory to the Indenture Trustee, stating the legal effect of any such action, outlining the steps required to complete the same, and concluding that all conditions precedent to the taking of such action have been complied with and such action will not materially and adversely impair the security for the Transition Bonds or the rights of the Holders in contravention of the provisions of this Indenture and the Series Supplement; provided, however, that such Opinion of Counsel shall not be required to express an opinion as to the fair value of the Transiti on Bond Collateral. Counsel rendering any such opinion may rely, without independent investigation, on the accuracy and validity of any certificate or other instrument delivered to the Indenture Trustee in connection with any such action.
   6. Reports by Independent Registered Public Accountants. As of the Closing Date, the Issuer shall appoint a firm of Independent registered public accountants of recognized national reputation for purposes of preparing and delivering the reports or certificates of such accountants required by this Indenture and the Series Supplement. In the event such firm requires the Indenture Trustee to agree to the procedures performed by such firm, the Issuer shall direct the Indenture Trustee in writing to so agree; it being understood and agreed that the Indenture Trustee will deliver such letter of agreement in conclusive reliance upon the direction of the Issuer, and the Indenture Trustee makes no independent inquiry or investigation to, and shall have no obligation or liability in respect of, the sufficiency, validity or correctness of such procedures. Upon any resignation by, or termination by the Issuer of, such firm the Issuer shall provide written notice thereof to the Indentur e Trustee and shall promptly appoint a successor thereto that shall also be a firm of Independent registered public accountants of recognized national reputation. If the Issuer shall fail to appoint a successor to a firm of Independent registered public accountants that has resigned or been terminated within fifteen (15) days after such resignation or termination, the Indenture Trustee shall promptly notify the Issuer of such failure in writing. If the Issuer shall not have appointed a successor within ten (10) days thereafter the Indenture Trustee shall promptly appoint a successor firm of Independent registered public accountants of recognized national reputation; provided that the Indenture Trustee shall have no liability with respect to such appointment. The fees of such Independent registered public accountants and its successor shall be payable by the Issuer.

9. 
   
   Supplemental Indentures

   1. Supplemental Indentures Without Consent of Holders.
      1. Without the consent of the Holders of any Transition Bonds but with prior notice to the Rating Agencies, the Issuer and the Indenture Trustee, when authorized by an Issuer Order, and, if the contemplated amendment may in the judgment of the PUCT increase ongoing Qualified Costs, with the consent of the PUCT pursuant to Section 9.03 (which consent shall not be required with regard to the Series Supplement), at any time and from time to time, may enter into one or more indentures supplemental hereto (which shall conform to the provisions of the TIA as in force at the date of the execution thereof), in form satisfactory to the Indenture Trustee, for any of the following purposes:
         1. to correct or amplify the description of any property, including, without limitation, the Transition Bond Collateral, at any time subject to the Lien of this Indenture, or better to assure, convey and confirm unto the Indenture Trustee any property subject or required to be subjected to the Lien of this Indenture and the Series Supplement;
         2. to evidence the succession, in compliance with the applicable provisions hereof, of another person to the Issuer, and the assumption by any such successor of the covenants of the Issuer herein and in the Transition Bonds;
         3. to add to the covenants of the Issuer, for the benefit of the Secured Parties, or to surrender any right or power herein conferred upon the Issuer;
         4. to convey, transfer, assign, mortgage or pledge any property to or with the Indenture Trustee;
         5. to cure any ambiguity, to correct or supplement any provision herein or in any supplemental indenture, including the Series Supplement, which may be inconsistent with any other provision herein or in any supplemental indenture, including the Series Supplement, or to make any other provisions with respect to matters or questions arising under this Indenture or in any supplemental indenture; provided that (i) such action shall not, as evidenced by an Opinion of Counsel of Independent counsel of the Issuer, adversely affect in any material respect the interests of the Holders of the Transition Bonds and (ii) the Rating Agency Condition shall have been satisfied with respect thereto;
         6. to evidence and provide for the acceptance of the appointment hereunder by a successor trustee with respect to the Transition Bonds and to add to or change any of the provisions of this Indenture as shall be necessary to facilitate the administration of the trusts hereunder by more than one trustee, pursuant to the requirements of Article VI;
         7. to modify, eliminate or add to the provisions of this Indenture to such extent as shall be necessary to effect the qualification of this Indenture under the TIA or under any similar or successor federal statute hereafter enacted and to add to this Indenture such other provisions as may be expressly required by the TIA;
         8. to set forth the terms of any Tranche that has not theretofore been authorized by the Series Supplement;
         9. to qualify the Transition Bonds for registration with a Clearing Agency; or
         10. to satisfy any Rating Agency requirements.

         The Indenture Trustee is hereby authorized to join in the execution of any such supplemental indenture and to make any further appropriate agreements and stipulations that may be therein contained.

      2. The Issuer and the Indenture Trustee, when authorized by an Issuer Order, may, also without the consent of any of the Holders of the Transition Bonds, with the consent of the PUCT pursuant to Section 9.03, enter into an indenture or indentures supplemental hereto for the purpose of adding any provisions to, or changing in any manner or eliminating any of the provisions of, this Indenture or of modifying in any manner the rights of the Holders of the Transition Bonds under this Indenture; provided, however, that (i) such action shall not, as evidenced by an Opinion of Counsel of nationally recognized counsel of the Issuer experienced in structured finance transactions, adversely affect in any material respect the interests of the Holders and (ii) the Rating Agency Condition shall have been satisfied with respect thereto.
   2. Supplemental Indentures with Consent of Holders. The Issuer and the Indenture Trustee, when authorized by an Issuer Order, also may, with the consent of the PUCT pursuant to Section 9.03, with prior notice to the Rating Agencies and with the consent of the Holders of not less than a majority of the Outstanding Amount of the Transition Bonds of each Tranche to be affected, by Act of such Holders delivered to the Issuer and the Indenture Trustee, enter into an indenture or indentures supplemental hereto for the purpose of adding any provisions to, or changing in any manner or eliminating any of the provisions of, this Indenture or of modifying in any manner the rights of the Holders of the Transition Bonds under this Indenture; provided, however, that no such supplemental indenture shall, without the consent of the Holder of each Outstanding Transition Bond of each Tranche affected thereby:
      1. change the date of payment of any installment of principal of or premium, if any, or interest on any Transition Bond of such Tranche, or reduce the principal amount thereof, the interest rate thereon or premium, if any, with respect thereto, change the provisions of this Indenture and the Series Supplement relating to the application of collections on, or the proceeds of the sale of, the Transition Bond Collateral to payment of principal of or premium, if any, or interest on the Transition Bonds, or change any place of payment where, or the coin or currency in which, any Transition Bond or the interest thereon is payable, or impair the right to institute suit for the enforcement of the provisions of this Indenture requiring the application of funds available therefor, as provided in Article V, to the payment of any such amount due on the Transition Bonds on or after the respective due dates thereof;
      2. reduce the percentage of the Outstanding Amount of the Transition Bonds or of a Tranche thereof, the consent of the Holders of which is required for any such supplemental indenture, or the consent of the Holders of which is required for any waiver of compliance with certain provisions of this Indenture or certain defaults hereunder and their consequences provided for in this Indenture;
      3. reduce the percentage of the Outstanding Amount of the Transition Bonds required to direct the Indenture Trustee to direct the Issuer to sell or liquidate the Transition Bond Collateral pursuant to Section 5.04;
      4. modify any provision of this Section 9.02 except to increase any percentage specified herein or to provide that those provisions of this Indenture referenced in this Section 9.02 cannot be modified or waived without the consent of the Holder of each Outstanding Transition Bond affected thereby;
      5. modify any of the provisions of this Indenture in such manner as to affect the calculation of the amount of any payment of interest, principal or premium, if any, due on any Transition Bond on any Payment Date (including the calculation of any of the individual components of such calculation) or change the Expected Amortization Schedules or Final Maturity Dates of any Tranche of Transition Bonds;
      6. decrease the Required Capital Level;
      7. permit the creation of any Lien ranking prior to or on a parity with the Lien of this Indenture with respect to any part of the Transition Bond Collateral or, except as otherwise permitted or contemplated herein, terminate the Lien of this Indenture on any property at any time subject hereto or deprive the Holder of any Transition Bond of the security provided by the Lien of this Indenture; or
      8. cause any material adverse federal income tax consequence to the Seller, the Issuer, the Managers, the Indenture Trustee or the then existing Holders.

      It shall not be necessary for any Act of Holders under this Section 9.02 to approve the particular form of any proposed supplemental indenture, but it shall be sufficient if such Act shall approve the substance thereof.

      Promptly after the execution by the Issuer and the Indenture Trustee of any supplemental indenture pursuant to this Section 9.02, the Issuer shall mail to the Rating Agencies and the Holders of the Transition Bonds to which such supplemental indenture relates a notice setting forth in general terms the substance of such supplemental indenture. Any failure of the Issuer to mail such notice, or any defect therein, shall not, however, in any way impair or affect the validity of any such supplemental indenture.

   3. PUCT Condition. Notwithstanding anything to the contrary in Section 9.01 or 9.02, no supplemental indenture (other than the Series Supplement) shall be effective unless the process set forth in this Section 9.03 has been followed.
      1. At least thirty-one (31) days prior to the effectiveness of any such supplemental indenture and after obtaining the other necessary approvals set forth in Section 9.01 or 9.02, as applicable, except for the consent of the Indenture Trustee and the Holders if the consent of the Holders is required or sought by the Indenture Trustee in connection with such supplemental indenture, the Issuer shall have delivered to the PUCT's executive director and general counsel written notification of any proposed supplemental indenture, which notification shall contain:
         1. a reference to Docket No. 37247;
         2. an Officer's Certificate stating that the proposed supplemental indenture has been approved by all parties to this Indenture; and
         3. a statement identifying the person to whom the PUCT or its staff is to address any response to the proposed supplemental indenture or to request additional time.
      2. The PUCT or its staff shall, within thirty (30) days of receiving the notification complying with Section 9.03(a) above, either:
         1. &#provide notice of its determination that the proposed supplemental indenture will not under any circumstances have the effect of increasing the ongoing Qualified Costs related to the Transition Bonds,
         2. provide notice of its consent or lack of consent to the person specified in Section 9.03(a)(iii) above, or
         3. be conclusively deemed to have consented to the proposed supplemental indenture,

         unless, within thirty (30) days of receiving the notification complying with Section 9.03(a) above, the PUCT or its staff delivers to the office of the person specified in Section 9.03(a)(iii) above a written statement requesting an additional amount of time not to exceed thirty (30) days in which to consider whether to consent to the proposed supplemental indenture. If the PUCT or its staff requests an extension of time in the manner set forth in the preceding sentence, then the PUCT shall either provide notice of its consent or lack of consent or notice of its determination that the proposed supplemental indenture will not under any circumstances increase ongoing Qualified Costs to the person specified in Section 9.03(a)(iii) above no later than the last day of such extension of time or be conclusively deemed to have consented to the proposed supplemental indenture on the last day of such extension of time. Any supplemental indenture requir ing the consent of the PUCT shall become effective on the later of (i) the date proposed by the parties to such supplemental indenture and (ii) the first day after the expiration of the thirty (30)-day period provided for in this Section 9.03(b), or, if such period has been extended pursuant hereto, the first day after the expiration of such period as so extended.

      3. Following the delivery of a notice to the PUCT by the Issuer under Section 9.03(a) above, the Issuer shall have the right at any time to withdraw from the PUCT further consideration of any notification of a proposed supplemental indenture. Such withdrawal shall be evidenced by the prompt written notice thereof by the Issuer to the PUCT, the Indenture Trustee and the Servicer.
   4. Execution of Supplemental Indentures. In executing any supplemental indenture permitted by this Article IX or the modifications thereby of the trust created by this Indenture, the Indenture Trustee shall be entitled to receive, and subject to Sections 6.01 and 6.02, shall be fully protected in relying upon, an Opinion of Counsel stating that the execution of such supplemental indenture is authorized or permitted by this Indenture. The Indenture Trustee may, but shall not be obligated to, enter into any such supplemental indenture that affects the Indenture Trustee's own rights, duties, liabilities or immunities under this Indenture or otherwise.
   5. Effect of Supplemental Indenture. Upon the execution of any supplemental indenture pursuant to the provisions hereof, this Indenture shall be and be deemed to be modified and amended in accordance therewith with respect to each Tranche of Transition Bonds affected thereby, and the respective rights, limitations of rights, obligations, duties, liabilities and immunities under this Indenture of the Indenture Trustee, the Issuer and the Holders shall thereafter be determined, exercised and enforced hereunder subject in all respects to such modifications and amendments, and all the terms and conditions of any such supplemental indenture shall be and be deemed to be part of the terms and conditions of this Indenture for any and all purposes.
   6. Conformity with Trust Indenture Act. Every amendment of this Indenture and every supplemental indenture executed pursuant to this Article IX shall conform to the requirements of the TIA as then in effect so long as this Indenture shall then be qualified under the TIA.
   7. Reference in Transition Bonds to Supplemental Indentures. Transition Bonds authenticated and delivered after the execution of any supplemental indenture pursuant to this Article IX may, and if required by the Indenture Trustee shall, bear a notation in form approved by the Indenture Trustee as to any matter provided for in such supplemental indenture. If the Issuer or the Indenture Trustee shall so determine, new Transition Bonds so modified as to conform, in the opinion of the Indenture Trustee and the Issuer, to any such supplemental indenture may be prepared and executed by the Issuer and authenticated and delivered by the Indenture Trustee in exchange for Outstanding Transition Bonds.

10. 
    
    Miscellaneous

    1. Compliance Certificates and Opinions, etc.
       1. Upon any application or request by the Issuer to the Indenture Trustee to take any action under any provision of this Indenture, the Issuer shall furnish to the Indenture Trustee (i) an Officer's Certificate stating that all conditions precedent, if any, provided for in this Indenture relating to the proposed action have been complied with, (ii) an Opinion of Counsel stating that in the opinion of such counsel all such conditions precedent, if any, have been complied with and (iii) (if required by the TIA) an Independent Certificate from a firm of registered public accountants meeting the applicable requirements of this Section 10.01, except that, in the case of any such application or request as to which the furnishing of such documents is specifically required by any provision of this Indenture, no additional certificate or opinion need be furnished.

          Every certificate or opinion with respect to compliance with a condition or covenant provided for in this Indenture shall include:

          1. a statement that each signatory of such certificate or opinion has read or has caused to be read such covenant or condition and the definitions herein relating thereto;
          2. a brief statement as to the nature and scope of the examination or investigation upon which the statements or opinions contained in such certificate or opinion are based;
          3. a statement that, in the opinion of each such signatory, such signatory has made such examination or investigation as is necessary to enable such signatory to express an informed opinion as to whether or not such covenant or condition has been complied with; and
          4. a statement as to whether, in the opinion of each such signatory, such condition or covenant has been complied with.
       2. Prior to the deposit of any Transition Bond Collateral or other property or securities with the Indenture Trustee that is to be made the basis for the release of any property or securities subject to the Lien of this Indenture, the Issuer shall, in addition to any obligation imposed in Section 10.01(a) or elsewhere in this Indenture, furnish to the Indenture Trustee an Officer's Certificate certifying or stating the opinion of each person signing such certificate as to the fair value (within ninety (90) days of such deposit) to the Issuer of the Transition Bond Collateral or other property or securities to be so deposited.
          1. Whenever the Issuer is required to furnish to the Indenture Trustee an Officer's Certificate certifying or stating the opinion of any signer thereof as to the matters described in clause (i) above, the Issuer shall also deliver to the Indenture Trustee an Independent Certificate as to the same matters, if the fair value to the Issuer of the securities to be so deposited and of all other such securities made the basis of any such withdrawal or release since the commencement of the then-current fiscal year of the Issuer, as set forth in the certificates delivered pursuant to clause (i) above and this clause (ii), is ten percent or more of the Outstanding Amount of the Transition Bonds, but such a certificate need not be furnished with respect to any securities so deposited, if the fair value thereof to the Issuer as set forth in the related Officer's Certificate is less than the lesser of (A) $25,000 or (B) one percent of the Outstanding Amount of the Transition Bonds.
          2. Whenever any property or securities are to be released from the Lien of this Indenture other than pursuant to Section 8.02(e), the Issuer shall also furnish to the Indenture Trustee an Officer's Certificate certifying or stating the opinion of each person signing such certificate as to the fair value (within ninety (90) days of such release) of the property or securities proposed to be released and stating that in the opinion of such person the proposed release will not impair the security under this Indenture in contravention of the provisions hereof.
          3. Whenever the Issuer is required to furnish to the Indenture Trustee an Officer's Certificate certifying or stating the opinion of any signatory thereof as to the matters described in clause (iii) above, the Issuer shall also furnish to the Indenture Trustee an Independent Certificate as to the same matters if the fair value of the property or securities and of all other property with respect to the Transition Bonds, or securities released from the Lien of this Indenture (other than pursuant to Section 8.02(e)) since the commencement of the then-current calendar year, as set forth in the certificates required by clause (iii) above and this clause (iv), equals 10 percent or more of the Outstanding Amount of the Transition Bonds, but such certificate need not be furnished in the case of any release of property or securities if the fair value thereof as set forth in the related Officer's Certificate is less than the lesser of (A) $25,000 or (B) one per cent of the then Outstanding Amount of the Transition Bonds.
          4. Notwithstanding Section 2.16 or any other provision of this Section 10.01, the Indenture Trustee may (A) collect, liquidate, sell or otherwise dispose of the Transition Property and the other Transition Bond Collateral as and to the extent permitted or required by the Basic Documents and (B) make cash payments out of each Collection Account as and to the extent permitted or required by the Basic Documents.
    2. Form of Documents Delivered to Indenture Trustee. In any case where several matters are required to be certified by, or covered by an opinion of, any specified Person, it is not necessary that all such matters be certified by, or covered by the opinion of, only one such Person, or that they be so certified or covered by only one document, but one such Person may certify or give an opinion with respect to some matters and one or more other such Persons as to other matters, and any such Person may certify or give an opinion as to such matters in one or several documents.

       Any certificate or opinion of a Responsible Officer of the Issuer may be based, insofar as it relates to legal matters, upon a certificate or opinion of, or representations by, counsel, unless such officer knows, or in the exercise of reasonable care should know, that the certificate or opinion or representations with respect to the matters upon which his or her certificate or opinion is based are erroneous. Any such certificate of a Responsible Officer or Opinion of Counsel may be based, insofar as it relates to factual matters, upon a certificate or opinion of, or representations by, an officer or officers of the Servicer or the Issuer stating that the information with respect to such factual matters is in the possession of the Servicer or the Issuer, unless such counsel knows, or in the exercise of reasonable care should know, that the certificate or opinion or representations with respect to such matters are erroneous.

       Whenever in this Indenture, in connection with any application or certificate or report to the Indenture Trustee, it is provided that the Issuer shall deliver any document as a condition of the granting of such application, or as evidence of the Issuer's compliance with any term hereof, it is intended that the truth and accuracy, at the time of the granting of such application or at the effective date of such certificate or report (as the case may be), of the facts and opinions stated in such document shall in such case be conditions precedent to the right of the Issuer to have such application granted or to the sufficiency of such certificate or report. The foregoing shall not, however, be construed to affect the Indenture Trustee's right to rely conclusively upon the truth and accuracy of any statement or opinion contained in any such document as provided in Article VI.

       Where any Person is required to make, give or execute two or more applications, requests, consents, certificates, statements, opinions or other instruments under this Indenture, they may, but need not, be consolidated and form one instrument.

    3. Acts of Holders.
       1. Any request, demand, authorization, direction, notice, consent, waiver or other action provided by this Indenture to be given or taken by Holders may be embodied in and evidenced by one or more instruments of substantially similar tenor signed by such Holders in person or by agents duly appointed in writing; and except as herein otherwise expressly provided such action shall become effective when such instrument or instruments are delivered to the Indenture Trustee, and, where it is hereby expressly required, to the Issuer. Such instrument or instruments (and the action embodied therein and evidenced thereby) are herein sometimes referred to as the "Act" of the Holders signing such instrument or instruments. Proof of execution of any such instrument or of a writing appointing any such agent shall be sufficient for any purpose of this Indenture and (subject to Section 6.01) conclusive in favor of the Indenture Trustee and the Issuer, if made in the manner provided in this Section 10.03.
       2. The fact and date of the execution by any Person of any such instrument or writing may be proved in any manner that the Indenture Trustee deems sufficient.
       3. The ownership of Transition Bonds shall be proved by the Transition Bond Register.
       4. Any request, demand, authorization, direction, notice, consent, waiver or other action by the Holder of any Transition Bonds shall bind the Holder of every Transition Bond issued upon the registration thereof or in exchange therefor or in lieu thereof, in respect of anything done, omitted or suffered to be done by the Indenture Trustee or the Issuer in reliance thereon, whether or not notation of such action is made upon such Transition Bond.
    4. Notices, etc., to Indenture Trustee, Issuer and Rating Agencies.
       1. Any request, demand, authorization, direction, notice, consent, waiver or Act of Holders or other documents provided or permitted by this Indenture to be made upon, given or furnished to or filed with:
          1. the Indenture Trustee by any Holder or by the Issuer shall be sufficient for every purpose hereunder if made, given, furnished or filed in writing by facsimile transmission, first-class mail or overnight delivery service to or with the Indenture Trustee at the Corporate Trust Office,
          2. the Issuer by the Indenture Trustee or by any Holder shall be sufficient for every purpose hereunder if in writing and mailed, first-class, postage prepaid, to the Issuer addressed to: Entergy Texas Restoration Funding, LLC at Capital Center, 919 Congress Avenue, Suite 840-C, Austin, Texas 78701, Attention: Manager, Telephone: (512) 487-3982, Facsimile: (512) 487-3958, or at any other address previously furnished in writing to the Indenture Trustee by the Issuer. The Issuer shall promptly transmit any notice received by it from the Holders to the Indenture Trustee, or
          3. the PUCT by the Seller, the Issuer or the Indenture Trustee shall be sufficient for every purpose hereunder if in writing and mailed, first-class, postage prepaid, to the PUCT addressed to: to 1701 N. Congress Avenue, P.O. Box 13326, Austin, Texas 78711-3326, Attention of Executive Director, telephone: (512) 936-7040, facsimile: (512) 936-7036 and General Counsel, telephone: (512) 936-7261, Facsimile: (512) 936-7268.
       2. Notices required to be given to the Rating Agencies by the Issuer or the Indenture Trustee shall be in writing, facsimile, personally delivered or mailed by certified mail, or email in the case of Standard & Poor's, return receipt requested to:
          1. in the case of Moody's, to: Moody's Investors Service, Inc., ABS Monitoring Department, 7 World Trade Center at 250 Greenwich Street, New York, New York 10007, Telephone: (212) 553-3686, Facsimile (212) 553-0573,
          2. in the case of Standard & Poor's, to: Standard & Poor's Ratings Services, a Standard & Poor's Financial Services LLC business, 55 Water Street, 41st Floor, New York, New York 10041, Attention: Structured Credit Surveillance Group, 41st Floor, Telephone: (212) 438-2000, Facsimile: (212) 438-2665; monthly reports should be sent to servicerreports@sandp.com,
          3. in the case of Fitch, to Fitch Ratings, One State Street Plaza, New York, New York 10004, Attention: ABS Surveillance, Telephone: (212) 908-0500, Facsimile: (212) 908-0355, and
          4. as to each of the foregoing, at such other address as shall be designated by written notice to the other parties.
    5. Notices to Holders; Waiver. Where this Indenture provides for notice to Holders of any event, such notice shall be sufficiently given (unless otherwise herein expressly provided) if in writing and mailed, first-class, postage prepaid to each Holder affected by such event, at such Holder's address as it appears on the Transition Bond Register, not later than the latest date, and not earlier than the earliest date, prescribed for the giving of such notice. In any case where notice to Holders is given by mail, neither the failure to mail such notice nor any defect in any notice so mailed to any particular Holder shall affect the sufficiency of such notice with respect to other Holders, and any notice that is mailed in the manner herein provided shall conclusively be presumed to have been duly given.

       Where this Indenture provides for notice in any manner, such notice may be waived in writing by any Person entitled to receive such notice, either before or after the event, and such waiver shall be the equivalent of such notice. Waivers of notice by Holders shall be filed with the Indenture Trustee but such filing shall not be a condition precedent to the validity of any action taken in reliance upon such a waiver.

       In case, by reason of the suspension of regular mail service as a result of a strike, work stoppage or similar activity, it shall be impractical to mail notice of any event of Holders when such notice is required to be given pursuant to any provision of this Indenture, then any manner of giving such notice as shall be satisfactory to the Indenture Trustee shall be deemed to be a sufficient giving of such notice.

       Where this Indenture provides for notice to the Rating Agencies, failure to give such notice shall not affect any other rights or obligations created hereunder, and shall not under any circumstance constitute a Default or Event of Default.

    6. [Intentionally Omitted.]
    7. Conflict with Trust Indenture Act. If any provision hereof limits, qualifies or conflicts with another provision hereof that is required to be included in this Indenture by any of the provisions of the TIA, such required provision shall control.

       The provisions of TIA  310 through 317 that impose duties on any person (including the provisions automatically deemed included herein unless expressly excluded by this Indenture) are a part of and govern this Indenture, whether or not physically contained herein.

    8. Effect of Headings and Table of Contents. The Article and Section headings herein and the Table of Contents are for convenience only and shall not affect the construction hereof.
    9. Successors and Assigns. All covenants and agreements in this Indenture and the Transition Bonds by the Issuer shall bind its successors and assigns, whether so expressed or not. All agreements of the Indenture Trustee in this Indenture shall bind its successors.
    10. Severability. Any provision in this Indenture or in the Transition Bonds that is prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability without invalidating the remainder of such provision (if any) or the remaining provisions hereof (unless such construction shall be unreasonable), and any such prohibition or unenforceability in any jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction.
    11. Benefits of Indenture. Nothing in this Indenture or in the Transition Bonds, express or implied, shall give to any Person, other than the parties hereto and their successors hereunder, and the Holders, and any other party secured hereunder, and any other Person with an ownership interest in any part of the Transition Bond Collateral, any benefit or any legal or equitable right, remedy or claim under this Indenture.
    12. Legal Holidays. In any case where the date on which any payment is due shall not be a Business Day, then (notwithstanding any other provision of the Transition Bonds or this Indenture) payment need not be made on such date, but may be made on the next succeeding Business Day with the same force and effect as if made on the date on which nominally due, and no interest shall accrue for the period from and after any such nominal date.
    13. GOVERNING LAW. THIS INDENTURE SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT REFERENCE TO ITS CONFLICT OF LAW PROVISIONS (OTHER THAN SECTION 5-1401 OF THE NEW YORK GENERAL OBLIGATIONS LAW AND SECTIONS 9-301 THROUGH 9-306 OF THE NY UCC), AND THE OBLIGATIONS, RIGHTS AND REMEDIES OF THE PARTIES HEREUNDER SHALL BE DETERMINED IN ACCORDANCE WITH SUCH LAWS; PROVIDED THAT THE CREATION, ATTACHMENT AND PERFECTION OF ANY LIENS CREATED HEREUNDER IN TRANSITION PROPERTY, AND ALL RIGHTS AND REMEDIES OF THE INDENTURE TRUSTEE AND THE HOLDERS WITH RESPECT TO SUCH TRANSITION PROPERTY, SHALL BE GOVERNED BY THE LAWS OF THE STATE OF TEXAS.
    14. Counterparts. This Indenture may be executed in any number of counterparts, each of which so executed shall be deemed to be an original, but all such counterparts shall together constitute but one and the same instrument.
    15. Recording of Indenture. If this Indenture is subject to recording in any appropriate public recording offices, such recording is to be effected by the Issuer and at its expense accompanied by an Opinion of Counsel at the Issuer's cost and expense (which may be counsel to the Indenture Trustee or any other counsel reasonably acceptable to the Indenture Trustee or, if requested by the Indenture Trustee, Independent counsel of the Issuer) to the effect that such recording is necessary either for the protection of the Holders or any other Person secured hereunder or for the enforcement of any right or remedy granted to the Indenture Trustee under this Indenture.
    16. Issuer Obligation. No recourse may be taken, directly or indirectly, with respect to the obligations of the Issuer or the Indenture Trustee on the Transition Bonds or under this Indenture or any certificate or other writing delivered in connection herewith or therewith, against (i) the Indenture Trustee or the Managers in their respective individual capacities, (ii) any owner of a membership interest in the Issuer (including ETI) or (iii) any shareholder, partner, owner, beneficiary, agent, officer, or employee of the Indenture Trustee, the Managers or any owner of a membership interest in the Issuer (including ETI) in its respective individual capacity, or of any successor or assign of any of them in their respective individual or corporate capacities, except as any such Person may have expressly agreed in writing (it being understood that none of the Indenture Trustee, the Managers or ETI has any such obligations in their respective individual or corporate capacities).
    17. No Recourse to Issuer. Notwithstanding any provision of this Indenture or the Series Supplement to the contrary, Holders shall have no recourse against the Issuer, but shall look only to the Transition Bond Collateral with respect to any amounts due to the Holders hereunder and under the Transition Bonds.
    18. Basic Documents. The Indenture Trustee is hereby authorized to execute and deliver the Servicing Agreement and to execute and deliver any other Basic Document which it is requested to acknowledge.
    19. No Petition. The Indenture Trustee, by entering into this Indenture, each Holder, by accepting a Transition Bond (or interest therein) issued hereunder, hereby covenant and agree that they shall not, prior to the date which is one year and one day after the termination of this Indenture, acquiesce, petition or otherwise invoke or cause the Issuer or any Manager to invoke the process of any court or government authority for the purpose of commencing or sustaining a case against the Issuer under any insolvency law or appointing a receiver, liquidator, assignee, trustee, custodian, sequestrator or other similar official of the Issuer or any substantial part of its respective property, or ordering the dissolution, winding up or liquidation of the affairs of the Issuer. Nothing in this paragraph shall preclude, or be deemed to estop, such Holder or the Indenture Trustee (A) from taking or omitting to take any action prior to such date in (i) any case or proceeding vo luntarily filed or commenced by or on behalf of the Issuer under or pursuant to any such law or (ii) any involuntary case or proceeding pertaining to the Issuer which is filed or commenced by or on behalf of a Person other than such Holder and is not joined in by such Holder (or any person to which such holder shall have assigned, transferred or otherwise conveyed any part of the obligations of the Issuer hereunder) under or pursuant to any such law, or (B) from commencing or prosecuting any legal action which is not an involuntary case or proceeding under or pursuant to any such law against the Issuer or any of its properties.
    20. Securities Intermediary. The Securities Intermediary, in acting under this Indenture, is entitled to all rights, benefits, protections, immunities and indemnities accorded The Bank of New York Mellon, a New York banking corporation, in its capacity as Indenture Trustee under this Indenture.

[SIGNATURE PAGE FOLLOWS]

IN WITNESS WHEREOF, the Issuer, the Indenture Trustee and Securities Intermediary have caused this Indenture to be duly executed by their respective officers thereunto duly authorized and duly attested, all as of the day and year first above written.

Entergy Texas Restoration Funding, LLC, as Issuer

By: ________________________________
Name:
Title:

THE BANK OF NEW YORK MELLON, a New York banking corporation, as Indenture Trustee and as Securities Intermediary

By: ________________________________
Name:
Title:

STATE OF [STATE]           )
&#                                            ) ss:
COUNTY OF [COUNTY] )

On the ____ day of ________________, 2009, before me, ________________, a Notary Public in and for said county and state, personally appeared __________________________, personally known to me (or proved to me on the basis of satisfactory evidence) to be the person and officer whose name is subscribed to the within instrument and acknowledged to me that such person executed the same in such person's authorized capacity, and that by the signature on the instrument The Bank of New York Mellon, a New York banking association, and the entity upon whose behalf the person acted, executed this instrument.

WITNESS my hand and official seal.

___________________________
Notary Public
My commission expires: _______

STATE OF [STATE]           )
&#                                            ) ss:
COUNTY OF [COUNTY] )

On the ____ day of _____________, 2009, before me, ___________________, a Notary Public in and for said county and state, personally appeared __________________________, personally known to me (or proved to me on the basis of satisfactory evidence) to be the person whose name is subscribed to the within instrument and acknowledged to me that he executed the same in his capacity as a manager of Entergy Texas Restoration Funding, LLC, and that by his signature on the instrument Entergy Texas Restoration Funding, LLC, a Delaware limited liability company and the entity upon whose behalf such person acted, executed this instrument.

WITNESS my hand and official seal.

___________________________
Notary Public
My commission expires: _______

EXHIBIT A

FORM OF TRANSITION BOND

UNLESS AND UNTIL IT IS EXCHANGED IN WHOLE OR IN PART FOR SECURITIES IN DEFINITIVE REGISTERED FORM, THIS SECURITY MAY NOT BE TRANSFERRED EXCEPT AS A WHOLE BY THE DEPOSITARY TO THE NOMINEE OF THE DEPOSITARY OR BY A NOMINEE OF THE DEPOSITARY TO THE DEPOSITARY OR ANOTHER NOMINEE OF THE DEPOSITARY OR BY THE DEPOSITARY OR ANY SUCH NOMINEE TO A SUCCESSOR DEPOSITARY OR A NOMINEE OF SUCH SUCCESSOR DEPOSITARY. UNLESS THIS SECURITY IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO THE ISSUER OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY SECURITY ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL I NASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.

REGISTERED No. _____ $________

SEE REVERSE FOR CERTAIN DEFINITIONS

CUSIP NO.

EX-5

SIDLEY AUSTIN LLP 787 Seventh Avenue New York, NY 10019 (212) 839 5300 (212) 839 5599 fax	BEIJING BRUSSELS CHICAGO DALLAS FRANKFURT GENEVA HONG KONG LONDON	LOS ANGELES NEW YORK SAN FRANCISCO SHANGHAI SINGAPORE SYDNEY TOKYO WASHINGTON, D.C.
	FOUNDED 1866

October 20, 2009

Exhibit 5.1

Entergy Texas, Inc.

350 Pine Street

Beaumont, Texas 77701

Entergy Texas Restoration Funding, LLC

Capital Center

919 Congress Avenue, Suite 840-C

Austin, Texas 78701

Re: Entergy Texas Restoration Funding, LLC

Ladies and Gentlemen:

We have acted as special counsel to Entergy Texas Restoration Funding, LLC, a Delaware limited liability company (the "Company"), in connection with the preparation of the Registration Statement filed on Form S-3 (the "Registration Statement") with the Securities and Exchange Commission (the "Commission") under the Securities Act of 1933, as amended (the "Securities Act"), relating to the registration of transition bonds (the "Transition Bonds") of the Company to be offered in such manner as described in the form of the prospectus (the "Prospectus") included as part of the Registration Statement. The Transition Bonds are to be issued under an Indenture (the "Indenture") between the Company and The Bank of New York Mellon, a New York banking corporation, as indenture trustee (the "Indenture Trustee").

We are familiar with the proceedings taken and proposed to be taken by the Company in connection with the proposed authorization, issuance and sale of the Transition Bonds. We have examined and relied upon originals, or copies of originals, certified or otherwise identified to our satisfaction of such records of the Company and such agreements, certificates of public officials, certificates of officers or other representatives of the Company and other instruments, and examined such questions of law and satisfied ourselves to such matters of fact as we deemed relevant or necessary as a basis for this letter. In rendering the opinions expressed in this letter, we have assumed the legal capacity of all natural persons, the genuineness of all signatures, the authenticity of all documents submitted to us as originals and the conformity with the original documents of any copies thereof submitted to us for examination. As to any facts material to the opinions expressed herein which we have not independently e stablished or verified, we have relied upon statements and representations of officers and other representatives of the Company or others.

Based upon the foregoing, we are of the opinion that:

1. The Company is a limited liability company validly existing and in good standing under the laws of the State of Delaware.

2. The Company has limited liability company power and authority to execute and deliver the Indenture and to authorize and issue the Transition Bonds and to perform its obligations under the Indenture and the Transition Bonds.

3. The Transition Bonds will be legally issued and binding obligations of the Company, except as may be limited by applicable bankruptcy, insolvency, reorganization, moratorium, fraudulent transfer or similar laws affecting creditors' and contracting parties rights generally or general principles of equity (regardless of whether enforceability is considered in a proceeding in equity or at law) when (i) the Registration Statement, as finally amended (including any post-effective amendments), shall have become effective under the Securities Act; (ii) the Indenture (including any necessary supplemental indenture) shall have been qualified under the Trust Indenture Act of 1939, as amended, and duly executed and delivered by the Company and the Indenture Trustee; (iii) a Prospectus Supplement with respect to the Transition Bonds shall have been filed (or transmitted for filing) with the Commission pursuant to Rule 424 under the Securities Act; (iv) all necessary orders, approvals and authorizations for the Company's purchase of the transition property from Entergy Texas, Inc., a Texas corporation ("ETI"), in exchange for the net proceeds of the Transition Bonds, shall have been obtained by the Company; (v) the Transition Property Purchase and Sale Agreement between the Company and ETI, as seller, shall have been executed and delivered; (vi) the Transition Property Servicing Agreement between the Company and ETI, as servicer, shall have been executed and delivered; (vii) the Company shall have taken appropriate limited liability company action authorizing the issuance and sale of the Transition Bonds as contemplated by the Registration Statement and the Indenture; and (viii) the Transition Bonds shall have been duly executed and authenticated as provided in the Indenture and shall have been duly delivered to the purchasers thereof against payment of the agreed consideration therefor.

For the purposes of this letter, we have assumed that there will be no changes in the laws currently applicable to the Company and the validity, legally binding character or enforceability of the Transition Bonds, and that such laws will be the only laws applicable to the Company and the Transition Bonds.

This letter is limited to the Limited Liability Company Act of the State of Delaware, the laws of the State of New York and the federal laws of the United States of America. We do not find it necessary for the purposes of this letter to cover, and accordingly we express no opinion as to, the application of the securities or blue sky laws of the various states to sales of the Transition Bonds.

We hereby consent to the filing of this letter as an exhibit to the above-referenced Registration Statement and to all references to our firm included in or made a part of the Registration Statement. In giving the foregoing consents, we do not thereby admit that we are within the category of persons whose consent is required under Section 7 of the Securities Act or the related rules and regulations of the Commission. Except as stated above, without our prior written consent, this letter may not be furnished or quoted to, or relied upon by, any other person for any purpose.

Very truly yours,

/s/ Sidley Austin LLP

EX-8

SIDLEY AUSTIN LLP 787 Seventh Avenue New York, NY 10019 (212) 839 5300 (212) 839 5599 fax	BEIJING BRUSSELS CHICAGO DALLAS FRANKFURT GENEVA HONG KONG LONDON	LOS ANGELES NEW YORK SAN FRANCISCO SHANGHAI SINGAPORE SYDNEY TOKYO WASHINGTON, D.C.
	FOUNDED 1866

October 20, 2009

Exhibit 8.1

Entergy Texas, Inc.

350 Pine Street

Beaumont, Texas 77701

Entergy Texas Restoration Funding, LLC

Capital Center
919 Congress Avenue, Suite 840-C

Austin, Texas 78701

Re: Entergy Texas Restoration Funding, LLC

Ladies and Gentlemen:

We have acted as special counsel to Entergy Texas, Inc., a Texas corporation ("ETI") and Entergy Texas Restoration Funding, LLC, a Delaware limited liability company (the "Company"), in connection with the preparation of the Registration Statement filed on Form S-3 (the "Registration Statement") with the Securities and Exchange Commission (the "Commission") under the Securities Act of 1933, as amended (the "Securities Act"), relating to the proposed issuance of up to $550,000,000 of transition bonds (the "Transition Bonds") of the Company to be offered in such manner as described in the form of the prospectus (the "Prospectus") and the form of prospectus supplement (the "Prospectus Supplement") included as part of the Registration Statement. The Transition Bonds are to be issued under an Indenture (the "Indenture") between the Company and The Bank of New York Mellon, a New York banking corporation, as indenture trus tee (the "Indenture Trustee").

We are familiar with the proceedings taken and proposed to be taken by the Company in connection with the proposed authorization, issuance and sale of the Transition Bonds. We have examined and relied upon originals, or copies of originals, certified or otherwise identified to our satisfaction of such records of the Company and such agreements, certificates of public officials, certificates of officers or other representatives of the Company and other instruments, and examined such questions of law and satisfied ourselves to such matters of fact as we deemed relevant or necessary as a basis for this letter. In rendering the opinions expressed in this letter, we have assumed the legal capacity of all natural persons, the genuineness of all signatures, the authenticity of all documents submitted to us as originals and the conformity with the original documents of any copies thereof submitted to us for examination. As to any facts material to the opinions expressed herein which we have not independently e stablished or verified, we have relied upon statements and representations of officers and other representatives of the Company or others.

Based upon the foregoing, it is our opinion that for U.S. federal income tax purposes, (1) the Company will not be treated as a taxable entity separate and apart from ETI and (2) the Transition Bonds will be treated as debt of ETI.

Our opinion is limited to the United States federal income tax matters specifically covered hereby, and we have not been asked to address, nor have we addressed, any other tax consequences regarding the transaction referred to above or any other transaction. This opinion is rendered as of the date hereof based on the current provisions of the Internal Revenue Code and the Treasury Regulations issued or proposed thereunder, revenue rulings, revenue procedures and other published releases of the Internal Revenue Service and current case law, any of which can change at any time. Any change could apply retroactively and modify the legal conclusions upon which our opinions are based. This opinion is rendered as of the date hereof and we do not undertake, and hereby disclaim, any obligation to advise you of any changes in law or fact, whether or not material, which may be brought to our attention at a later date.

We are furnishing this opinion to you solely in connection with the issuance of the Transition Bonds described above, and this opinion is not to be relied on, circulated, quoted or otherwise referred to for any other purpose. However, we hereby consent to the filing of this opinion as an exhibit to the above-referenced Registration Statement and to the references to this Firm in the Prospectus under the section captioned "Prospectus Summary - - U.S. Federal Income Tax Status", the Prospectus under the section captioned "Material U.S. Federal Income Tax Consequences", the Prospectus under the section captioned "Legal Matters", and the Prospectus Supplement under the section captioned "Material U.S. Federal Income Tax Consequences". In giving such consent, we do not thereby admit that we are within the category of persons whose consent is required under Section 7 of the Securities Act, or the rules and regulations of the Commission thereunder.

Very truly yours,

/s/ Sidley Austin LLP

EX-25

Exhibit 25.1

SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

STATEMENT OF ELIGIBILITY
UNDER THE TRUST INDENTURE ACT OF 1939 OF A
CORPORATION DESIGNATED TO ACT AS TRUSTEE

CHECK IF AN APPLICATION TO DETERMINE
ELIGIBILITY OF A TRUSTEE PURSUANT TO
SECTION 305(b)(2)           |__|

___________________________

THE BANK OF NEW YORK MELLON
(Exact name of trustee as specified in its charter)

New York (State of incorporation if not a U.S. national bank)	13-5160382 (I.R.S. employer identification no.)
One Wall Street, New York, N.Y. (Address of principal executive offices)	10286 (Zip code)

Lincoln S. Finkenberg, Managing Counsel
The Bank of New York Mellon
One Wall Street, New York, New York 10286
Telephone: 212-635-1270
(Name, address and telephone number for agent for service)

___________________________

ENTERGY TEXAS RESTORATION FUNDING, LLC
(Exact name of obligor as specified in its charter)

Delaware (State or other jurisdiction of incorporation or organization)	27-0727900 (I.R.S. employer identification no.)
Capital Center 919 Congress Avenue, Suite 840-C Austin, Texas (Address of principal executive offices)	78701 (Zip code)

___________________________

Entergy tEXAS RESTORATION Funding, LLC
SENIOR SECURED TRANSITION BONDS
(Title of the indenture securities)

= = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = =

1. General information. Furnish the following information as to the Trustee:

(a) Name and address of each examining or supervising authority to which it is subject.

Name	Address
Superintendent of Banks of the State of New York	One State Street, New York, N.Y. 10004-1417, and Albany, N.Y. 12223
Federal Reserve Bank of New York	33 Liberty Street, New York, N.Y. 10045
Federal Deposit Insurance Corporation	Washington, D.C. 20429
New York Clearing House Association	New York, New York 10005

(b) Whether it is authorized to exercise corporate trust powers.

Yes.

2. Affiliations with Obligor.

If the obligor is an affiliate of the trustee, describe each such affiliation.

None.

16. List of Exhibits.

Exhibits identified in parentheses below, on file with the Commission, are incorporated herein by reference as an exhibit hereto, pursuant to Rule 7a-29 under the Trust Indenture Act of 1939 (the "Act") and 17 C.F.R. 229.10(d).

1. A copy of the Organization Certificate of The Bank of New York Mellon (formerly known as The Bank of New York, itself formerly Irving Trust Company) as now in effect, which contains the authority to commence business and a grant of powers to exercise corporate trust powers. (Exhibit 1 to Amendment No. 1 to Form T-1 filed with Registration Statement No. 33-6215, Exhibits 1a and 1b to Form T-1 filed with Registration Statement No. 33-21672, Exhibit 1 to Form T-1 filed with Registration Statement No. 33-29637, Exhibit 1 to Form T-1 filed with Registration Statement No. 333-121195 and Exhibit 1 to Form T-1 filed with Registration Statement No. 333-152735).

4. A copy of the existing By-laws of the Trustee. (Exhibit 4 to Form T-1 filed with Registration Statement No. 333-154173).

6. The consent of the Trustee required by Section 321(b) of the Act (Exhibit 6 to Form T-1 filed with Registration Statement No. 333-152735).

7. A copy of the latest report of condition of the Trustee published pursuant to law or to the requirements of its supervising or examining authority.

SIGNATURE

Pursuant to the requirements of the Act, the Trustee, The Bank of New York Mellon, a corporation organized and existing under the laws of the State of New York, has duly caused this statement of eligibility to be signed on its behalf by the undersigned, thereunto duly authorized, all in The City of New York, and State of New York, on the 25 day of September, 2009.

THE BANK OF NEW YORK MELLON

By: /s/ Jared Fischer
Name: Jared Fischer
Title: Assistant Treasurer

Exhibit 7

Consolidated Report of Condition of

THE BANK OF NEW YORK MELLON

of One Wall Street, New York, N.Y. 10286
And Foreign and Domestic Subsidiaries,

a member of the Federal Reserve System, at the close of business June 30, 2009, published in accordance with a call made by the Federal Reserve Bank of this District pursuant to the provisions of the Federal Reserve Act.

ASSETS	Dollar Amounts In Thousands
Cash and balances due from depository institutions:
Noninterest-bearing balances and currency and coin	3,228,000
Interest-bearing balances	56,028,000
Securities:
Held-to-maturity securities	6,782,000
Available-for-sale securities	39,436,000
Federal funds sold and securities purchased under agreements to resell:
Federal funds sold in domestic offices	1,319,000
Securities purchased under agreements to resell	50,000
Loans and lease financing receivables:
Loans and leases held for sale	0
Loans and leases, net of unearned income	29,318,000
LESS: Allowance for loan and lease losses	414,000
Loans and leases, net of unearned income and allowance	28,904,000
Trading assets	6,282,000
Premises and fixed assets (including capitalized leases)	1,115,000
Other real estate owned	6,000
Investments in unconsolidated subsidiaries and associated companies	830,000
Direct and indirect investments in real estate ventures	0
Intangible assets:
Goodwill	4,949,000
Other intangible assets	1,514,000
Other assets	11,560,000
Total assets	162,003,000
LIABILITIES
Deposits:
In domestic offices	57,327,000
Noninterest-bearing	32,885,000
Interest-bearing	24,442,000
In foreign offices, Edge and Agreement subsidiaries, and IBFs	74,161,000
Noninterest-bearing	2,846,000
Interest-bearing	71,315,000
Federal funds purchased and securities sold under agreements to  repurchase:
Federal funds purchased in domestic offices	414,000
Securities sold under agreements to repurchase	13,000
Trading liabilities	6,144,000
Other borrowed money:   (includes mortgage indebtedness and obligations under capitalized leases)	2,695,000
Not applicable
Not applicable
Subordinated notes and debentures	3,490,000
Other liabilities	5,064,000
Total liabilities	149,308,000
EQUITY CAPITAL
Perpetual preferred stock and related surplus	0
Common stock	1,135,000
Surplus (exclude all surplus related to preferred stock)	8,297,000
Retained earnings	7,991,000
Accumulated other comprehensive income	-5,097,000
Other equity capital components	0
Total bank equity capital	12,326,000
Noncontrolling (minority) interests in consolidated subsidiaries	369,000
Total equity capital	12,695,000
Total liabilities and equity capital	162,003,000

I, Thomas P. Gibbons, Chief Financial Officer of the above-named bank do hereby declare that this Report of Condition is true and correct to the best of my knowledge and belief.

Thomas P. Gibbons,
Chief Financial Officer

We, the undersigned directors, attest to the correctness of this statement of resources and liabilities. We declare that it has been examined by us, and to the best of our knowledge and belief has been prepared in conformance with the instructions and is true and correct.

Gerald L. Hassell
Robert P. Kelly
Catherine A. Rein
Directors

EX-99

Exhibit 99.1
 

FORM OF TRANSITION PROPERTY SERVICING AGREEMENT

by and between

ENTERGY TEXAS RESTORATION FUNDING, LLC,

Issuer

and

ENTERGY TEXAS, INC.,

Servicer

Dated as of _________ __, 2009

TABLE OF CONTENTS

ARTICLE I

DEFINITIONS

		Page
SECTION 1.01	Definitions.	1

ARTICLE II

APPOINTMENT AND AUTHORIZATION

SECTION 2.01	Appointment of Servicer; Acceptance of Appointment	2
SECTION 2.02	Authorization	2
SECTION 2.03	Dominion and Control Over the Transition Property	2

ARTICLE III

ROLE OF SERVICER

SECTION 3.01	Duties of Servicer	3
SECTION 3.02	Servicing and Maintenance Standards	5
SECTION 3.03	Annual Reports on Compliance with Regulation AB.	6
SECTION 3.04	Annual Report by Independent Registered Public Accountants.	7
SECTION 3.05	Monitoring of Third-Party Collectors	7

ARTICLE IV

SERVICES RELATED TO TRUE-UP ADJUSTMENTS

SECTION 4.01	True-Up Adjustments	10
SECTION 4.02	Limitation of Liability	14

ARTICLE V

THE TRANSITION PROPERTY

SECTION 5.01	Custody of Transition Property Records	15
SECTION 5.02	Duties of Servicer as Custodian.	15
SECTION 5.03	Custodian's Indemnification	16
SECTION 5.04	Effective Period and Termination	17

ARTICLE VI

THE SERVICER

SECTION 6.01	Representations and Warranties of Servicer	17
SECTION 6.02	Indemnities of Servicer; Release of Claims	19
SECTION 6.03	Binding Effect of Servicing Obligations	20
SECTION 6.04	Limitation on Liability of Servicer and Others	22
SECTION 6.05	ETI Not to Resign as Servicer	23
SECTION 6.06	Servicing Compensation	23
SECTION 6.07	Compliance with Applicable Law	24
SECTION 6.08	Access to Certain Records and Information Regarding Transition Property	24
SECTION 6.09	Appointments	24
SECTION 6.10	No Servicer Advances	24
SECTION 6.11	Remittances	24
SECTION 6.12	Maintenance of Operations	25

ARTICLE VII

DEFAULT

SECTION 7.01	Servicer Default	26
SECTION 7.02	Appointment of Successor.	27
SECTION 7.03	Waiver of Past Defaults	28
SECTION 7.04	Notice of Servicer Default	28
SECTION 7.05	Cooperation with Successor	28

ARTICLE VIII

MISCELLANEOUS PROVISIONS

SECTION 8.01	Amendment.	28
SECTION 8.02	PUCT Condition	29
SECTION 8.03	Maintenance of Accounts and Records	30
SECTION 8.04	Notices	31
SECTION 8.05	Assignment	31
SECTION 8.06	Limitations on Rights of Others	31
SECTION 8.07	Severability	32
SECTION 8.08	Separate Counterparts	32
SECTION 8.09	Headings	32
SECTION 8.10	GOVERNING LAW	32
SECTION 8.11	Assignment to Indenture Trustee	32
SECTION 8.12	Nonpetition Covenants	32
SECTION 8.13	Limitation of Liability	33

EXHIBITS AND SCHEDULES

Exhibit A	Form of Monthly Servicer's Certificate
Exhibit B	Form of Semi-Annual Servicer's Certificate
Exhibit C-1	Form of Servicer's Regulation AB Compliance Certificate
Exhibit C-2	Form of Certificate of Compliance
Schedule 4.01(a)	Expected Amortization Schedule

ANNEXES

Annex I Servicing Procedures

This TRANSITION PROPERTY SERVICING AGREEMENT (this "Agreement"), dated as of _______ __, 2009, is between ENTERGY TEXAS RESTORATION FUNDING, LLC, a Delaware limited liability company, as issuer (the "Issuer"), and ENTERGY TEXAS, INC. ("ETI"), a Texas corporation, as servicer (the "Servicer").

RECITALS

WHEREAS, pursuant to the Securitization Law and the Financing Order, ETI, in its capacity as seller (the "Seller"), and the Issuer are concurrently entering into the Sale Agreement pursuant to which the Seller is selling and the Issuer is purchasing certain Transition Property created pursuant to the Securitization Law and the Financing Order described therein;

WHEREAS, in connection with its ownership of the Transition Property and in order to collect the associated Transition Charges, the Issuer desires to engage the Servicer to carry out the functions described herein (such functions or similar functions currently performed by the Servicer for itself with respect to its own charges to its Customers) and the Servicer desires to be so engaged;

WHEREAS, the Issuer desires to engage the Servicer to act on its behalf in obtaining True-Up Adjustments from the PUCT and the Servicer desires to be so engaged;

WHEREAS, the TC Collections initially will be commingled with other funds collected by the Servicer;

WHEREAS, although the Service Area is not open to retail competition, the parties agree that certain standards and procedures shall be included in this Agreement concerning REPs when and if retail competition is introduced into the Service Area; and

WHEREAS, the PUCT, or its attorney, will enforce this Agreement for the benefit of the Customers to the extent permitted by law;

NOW, THEREFORE, in consideration of the premises and the mutual covenants herein contained, the parties hereto agree as follows:

1. 
   DEFINITIONS

   1. Definitions.
      1. Unless otherwise defined herein, capitalized terms used herein shall have the meanings assigned to them in that certain Indenture (including Appendix A thereto) dated as of the date hereof between the Issuer and The Bank of New York Mellon, a New York banking corporation, in its capacity as the indenture trustee (the "Indenture Trustee") and in its separate capacity as a securities intermediary (the "Securities Intermediary"), as the same may be amended, restated, supplemented or otherwise modified from time to time.
      2. All terms defined in this Agreement shall have the defined meanings when used in any certificate or other document made or delivered pursuant hereto unless otherwise defined therein.
      3. The words "hereof," "herein," "hereunder" and words of similar import, when used in this Agreement, shall refer to this Agreement as a whole and not to any particular provision of this Agreement; Section, Schedule, Exhibit, Annex and Attachment references contained in this Agreement are references to Sections, Schedules, Exhibits, Annexes and Attachments in or to this Agreement unless otherwise specified; and the term "including" shall mean "including without limitation."
      4. The definitions contained in this Agreement are applicable to the singular as well as the plural forms of such terms.
      5. Non-capitalized terms used herein which are defined in the Utilities Code shall, as the context requires, have the meanings assigned to such terms in the Utilities Code, but without giving effect to amendments to the Utilities Code after the date hereof which have a material adverse effect on the Issuer or the Holders.

2. 
   APPOINTMENT AND AUTHORIZATION

   1. Appointment of Servicer; Acceptance of Appointment. The Issuer hereby appoints the Servicer, and the Servicer hereby accepts such appointment, to perform the Servicer's obligations pursuant to this Agreement on behalf of and for the benefit of the Issuer or any assignee thereof in accordance with the terms of this Agreement and applicable law. This appointment and the Servicer's acceptance thereof may not be revoked except in accordance with the express terms of this Agreement.
   2. Authorization. With respect to all or any portion of the Transition Property, the Servicer shall be, and hereby is, authorized and empowered by the Issuer to (a) execute and deliver, on behalf of itself and/or the Issuer, as the case may be, any and all instruments, documents or notices, and (b) on behalf of itself and/or the Issuer, as the case may be, make any filing and participate in proceedings of any kind with any Governmental Authority, including with the PUCT. The Issuer shall execute and deliver to the Servicer such documents as have been prepared by the Servicer for execution by the Issuer and shall furnish the Servicer with such other documents as may be in the Issuer's possession, in each case as the Servicer may determine to be necessary or appropriate to enable it to carry out its servicing and administrative duties hereunder. Upon the Servicer's written request, the Issuer shall furnish the Servicer with any powers of attorney or other documents necessary or appropriate to enable the Servicer to carry out its duties hereunder.
   3. Dominion and Control Over the Transition Property. Notwithstanding any other provision herein, the Issuer shall have dominion and control over the Transition Property, and the Servicer, in accordance with the terms hereof, is acting solely as the servicing agent and custodian for the Issuer with respect to the Transition Property and the Transition Property Records. The Servicer shall not take any action that is not authorized by this Agreement, that would contravene the Utilities Code, the PUCT Regulations or the Financing Order, that is not consistent with its customary procedures and practices, or that shall impair the rights of the Issuer in the Transition Property, in each case unless such action is required by applicable law or court or regulatory order.

3. 
   ROLE OF SERVICER

   1. Duties of Servicer. The Servicer, as agent for the Issuer, shall have the following duties:
      1. Duties of Servicer Generally. The Servicer's duties in general shall include management, servicing and administration of the Transition Property; obtaining meter reads, calculating usage (including demand and including any such usage by Customers served by a REP, when and if the Service Area becomes subject to retail competition), billing, collections and posting of all payments in respect of the Transition Property; responding to inquiries by Customers, REPs, the PUCT, or any other Governmental Authority with respect to the Transition Property; delivering Bills to Customers or REPs, if any; investigating and handling delinquencies (and furnishing reports with respect to such delinquencies to the Issuer), processing and depositing collections and making periodic remittances; furnishing periodic reports to the Issuer, the Indenture Trustee and the Rating Agencies; making all filings with the PUCT and taking such other action as may be necessary to perfect the Issuer's ownership interests in and th e Indenture Trustee's first priority Lien on the Transition Property; making all filings and taking such other action as may be necessary to perfect and maintain the perfection and priority of the Indenture Trustee's Lien on all Transition Bond Collateral; selling as the agent for the Issuer as its interests may appear defaulted or written off accounts in accordance with the Servicer's usual and customary practices; taking all necessary action in connection with True-Up Adjustments as set forth herein; and performing such other duties as may be specified under the Financing Order to be performed by it. Anything to the contrary notwithstanding, the duties of the Servicer set forth in this Agreement shall be qualified in their entirety by any PUCT Regulations, the Financing Order, and the federal securities laws and the rules and regulations promulgated thereunder, including Regulation AB, as in effect at the time such duties are to be performed. Without limiting the generality of this Section 3.01(a), in furtherance of the foregoing, the Servicer hereby agrees that it shall also have, and shall comply with, the duties and responsibilities relating to data acquisition, usage and bill calculation, billing, customer service functions, collections, payment processing and remittance set forth in Annex I hereto, as it may be amended from time to time. For the avoidance of doubt, the term "usage" when used herein refers to both kilowatt hour consumption and kilowatt demand.
      2. Reporting Functions.
         1. Monthly Servicer's Certificate. On or before the twenty-fifth calendar day of each month (or if such day is not a Servicer Business Day, on the immediately preceding Servicer Business Day), the Servicer shall prepare and deliver to the Issuer, the PUCT, the Indenture Trustee and the Rating Agencies a written report substantially in the form of Exhibit A hereto (a "Monthly Servicer's Certificate") setting forth certain information relating to TC Payments received by the Servicer during the Collection Period immediately preceding such date, including the Remittance Shortfall or Excess Remittance as required by Section 6.11(c) hereof; provided, however, that for any month in which the Servicer is required to deliver a Semi-Annual Servicer's Certificate pursuant to Section 4.01(c)(ii), the Servicer shall prepare and deliver the Monthly Servicer's Certificate no later than the date of delivery of such Semi-Annual Servicer's Certificate.
         2. Notification of Laws and Regulations. The Servicer shall immediately notify the Issuer, the Indenture Trustee and the Rating Agencies in writing of any Requirements of Law or PUCT Regulations hereafter promulgated that have a material adverse effect on the Servicer's ability to perform its duties under this Agreement.
         3. Other Information. Upon the reasonable request of the Issuer, the Indenture Trustee or any Rating Agency, the Servicer shall provide to the Issuer, the Indenture Trustee or such Rating Agency, as the case may be, any public financial information in respect of the Servicer, or any material information regarding the Transition Property to the extent it is reasonably available to the Servicer, as may be reasonably necessary and permitted by law to enable the Issuer, the Indenture Trustee or the Rating Agencies to monitor the performance by the Servicer hereunder. In addition, so long as any of the Transition Bonds are outstanding, the Servicer shall provide the Issuer and the Indenture Trustee, within a reasonable time after written request therefor, any information available to the Servicer or reasonably obtainable by it that is necessary to calculate the Transition Charges applicable to each TC Customer Class.
         4. Preparation of Reports. The Servicer shall prepare and deliver such additional reports as required under this Agreement, including a copy of each Semi-Annual Servicer's Certificate described in Section 4.01(c)(ii), the annual Servicer's Regulation AB Compliance Certificate and Certificate of Compliance described in Section 3.03, and the Annual Accountant's Report described in Section 3.04. In addition, the Servicer shall prepare, procure, deliver and/or file, or cause to be prepared, procured, delivered or filed, any reports, attestations, exhibits, certificates or other documents required to be delivered or filed with the SEC (and/or any other Governmental Authority) by the Issuer or the Sponsor under the federal securities or other applicable laws or in accordance with the Basic Documents, including, but without limiting the generality of foregoing, filing with the SEC, if applicable, a copy or copies of (i) the Monthly Servicer's Certificates described in Section 3.01(b) ( under Form 10-D or any other applicable form), (ii) the Semi-Annual Servicer's Certificates described in Section 4.01(c)(ii) (under Form 10-D or any other applicable form), (iii) the annual statements of compliance, attestation reports and other certificates described in Section 3.03, and (iv) the Annual Accountant's Report (and any attestation required under Regulation AB) described in Section 3.04. In addition, the appropriate officer or officers of the Servicer shall (in its separate capacity as Servicer) sign the Sponsor's annual report on Form 10-K (and any other applicable SEC or other reports, attestations, certifications and other documents), to the extent that the Servicer's signature is required by, and consistent with, the federal securities laws and/or any other applicable law.
      3. Opinions of Counsel. The Servicer shall deliver to the Issuer and the Indenture Trustee:
         1. upon execution and delivery of this Agreement and the Sale Agreement or of any amendment hereto or thereto, an Opinion of Counsel from Independent counsel of the Issuer either (A) to the effect that, in the opinion of such counsel, all filings, including filings with the PUCT and the Texas Secretary of State and all filings pursuant to the UCC, that are necessary under the UCC and the Securitization Law to fully preserve, protect and perfect the Liens of the Indenture Trustee in the Transition Property have been authorized, executed and filed, and reciting the details of such filings, or (B) to the effect that, in the opinion of such counsel, no such action shall be necessary to preserve, protect and perfect such Liens; and
         2. within ninety (90) days after the beginning of each calendar year beginning with the first calendar year beginning more than three (3) months after the date hereof, an Opinion of Counsel from Independent counsel of the Issuer, dated as of a date during such ninety (90)-day period, either (A) to the effect that, in the opinion of such counsel, all filings, including filings with the PUCT and the Texas Secretary of State and all filings pursuant to the UCC, have been executed and filed that are necessary under the UCC and the Securitization Law to fully preserve, protect and perfect the Liens of the Indenture Trustee in the Transition Property, and reciting the details of such filings, or (B) to the effect that, in the opinion of such counsel, no such action shall be necessary to preserve, protect and perfect such Liens.

      Each Opinion of Counsel referred to in clause (i) or (ii) above shall specify any action necessary (as of the date of such opinion) to be taken in the following year to preserve, protect and continue the perfection of such interest or Lien.

   2. Servicing and Maintenance Standards. On behalf of the Issuer, the Servicer shall manage, service, administer and make collections in respect of the Transition Property with reasonable care and in material compliance with applicable Requirements of Law, including all applicable PUCT Regulations and guidelines, using the same degree of care and diligence that the Servicer exercises with respect to similar assets for its own account and, if applicable, for others; follow customary standards, policies and procedures for the industry in Texas in performing its duties as Servicer; use all reasonable efforts, consistent with its customary servicing procedures, to enforce, and maintain rights in respect of, the Transition Property and to bill and collect the Transition Charges; comply with all Requirements of Law, including all applicable PUCT Regulations and guidelines, applicable to and binding on it relating to the Transition Property; file all PUCT noti ces described in the Securitization Law and file and maintain the effectiveness of UCC financing statements with respect to the property transferred from time to time under the Sale Agreement, and (f) take such other action on behalf of the Issuer to ensure that the Lien of the Indenture Trustee on the Transition Bond Collateral remains perfected and of first priority. The Servicer shall follow such customary and usual practices and procedures as it shall deem necessary or advisable in its servicing of all or any portion of the Transition Property, which, in the Servicer's judgment, may include the taking of legal action, at the Issuer's expense but subject to the priority of payments set forth in Section 8.02(e) of the Indenture.
   3. Annual Reports on Compliance with Regulation AB.
      1. The Servicer shall deliver to the Issuer, the PUCT, the Indenture Trustee and the Rating Agencies, on or before the earlier of (a) March 31 of each year, beginning March 31, 2010, or (b) with respect to each calendar year during which the Sponsor's annual report on Form 10-K is required to be filed in accordance with the Exchange Act and the rules and regulations thereunder, the date on which the annual report on Form 10-K is required to be filed in accordance with the Exchange Act and the rules and regulations thereunder, certificates from a Responsible Officer of the Servicer (i) containing, and certifying as to, the statements of compliance required by Item 1123 (or any successor or similar items or rule) of Regulation AB, as then in effect and (ii) containing, and certifying as to, the statements and assessment of compliance required by Item 1122(a) (or any successor or similar items or rule) of Regulation AB, as then in effect. These certificates may be in the for m of, or shall include the forms attached hereto as Exhibit C-1 and Exhibit C-2 hereto, with, in the case of Exhibit C-1, such changes as may be required to conform to applicable securities laws.
      2. The Servicer shall use commercially reasonable efforts to obtain from each other party, if any, participating in the servicing function any additional certifications as to the statements and assessment required under Item 1122 or Item 1123 of Regulation AB to the extent required in connection with the filing of the annual report on Form 10-K; provided, however, that a failure to obtain such certifications shall not be a breach of the Servicer's duties hereunder. The parties acknowledge that the Indenture Trustee's certifications shall be limited to the Item 1122 certifications described in Exhibit E of the Indenture.
      3. The initial Servicer, in its capacity as Sponsor, shall post on its own website or on one maintained by an Affiliate and file with or furnish to the SEC, in periodic reports and other reports as are required from time to time under Section 13 or Section 15(d) of the Exchange Act (without regard to the number of Holders of Transition Bonds to the extent permitted by and consistent with the Sponsor's obligations under applicable law), the information described in Section 3.07(g) of the Indenture with respect to the Outstanding Transition Bonds to the extent such information is reasonably available to the Sponsor. The initial Servicer, in its capacity as Sponsor, shall not voluntarily suspend or terminate its filing obligations as Sponsor with the SEC as described in this Section 3.03(c). The covenants of the initial Servicer, in its capacity as Sponsor, pursuant to this Section 3.03(c) shall survive the resignation, removal or termination of the initial Servicer as Servicer hereu nder.
   4. Annual Report by Independent Registered Public Accountants.
      1. The Servicer, at its own expense in partial consideration of the Servicing Fee paid to it, shall cause a firm of Independent registered public accountants (which may provide other services to the Servicer or the Seller) to prepare annually, and the Servicer shall deliver annually to the Issuer, the PUCT, the Indenture Trustee and the Rating Agencies on or before the earlier of (a) March 31 of each year, beginning March 31, 2010 or (b) with respect to each calendar year during which the Sponsor's annual report on Form 10-K is required to be filed in accordance with the Exchange Act and the rules and regulations thereunder, the date on which the annual report on Form 10-K is required to be filed in accordance with the Exchange Act and the rule and regulations thereunder, a report addressed to the Servicer (the "Annual Accountant's Report") to the effect that such firm has performed certain procedures, agreed between the Servicer and such accountants, in connec tion with the Servicer's compliance with its obligations under this Agreement during the preceding twelve (12) months ended December 31 (or, in the case of the first Annual Accountant's Report to be delivered on or before March 31, 2010, the period of time from the date of this Agreement until December 31, 2009), identifying the results of such procedures and including any exceptions noted. In the event that the accounting firm providing such report requires the Indenture Trustee to agree or consent to the procedures performed by such firm, the Issuer shall direct the Indenture Trustee in writing to so agree; it being understood and agreed that the Indenture Trustee will deliver such letter of agreement or consent in conclusive reliance upon the direction of the Issuer, and the Indenture Trustee will not make any independent inquiry or investigation as to, and shall have no obligation or liability in respect of the sufficiency, validity or correctness of such procedures.
      2. The Annual Accountant's Report shall also indicate that the accounting firm providing such report is independent of the Servicer in accordance with the Rules of the Public Company Accounting Oversight Board, and shall include the attestation report required under Item 1122(b) of Regulation AB (or any successor or similar items or rule), as then in effect.
   5. Monitoring of Third-Party Collectors. If a Third-Party Collector does bill or collect Transition Charges on behalf of the Issuer, then, from time to time, until the Retirement of the Transition Bonds, the Servicer shall, in accordance with the Servicing Standard, take all actions with respect to such Third-Party Collectors required to be taken by the Servicer as set forth, if applicable, in any agreement with the Servicer, the Financing Order, Tariffs, other tariffs and any other PUCT Regulations in effect from time to time and implement such additional procedures and policies as are necessary to ensure that the obligations of all Third-Party Collectors in connection with Transition Charges are properly enforced in accordance with, if applicable, the terms of any agreement with the Servicer, the Financing Order, Tariffs, other tariffs and any other PUCT Regulations in effect from time to time. Such procedures and policies shall include the following:
      1. Maintenance of Records and Information. In addition to any actions required by the Tariffs, PUCT Regulations or other applicable law, the Servicer shall:
         1. maintain adequate records for promptly identifying and contacting each Third-Party Collector;
         2. maintain records of end-user Customers which are billed by Third-Party Collectors to permit prompt transfer of billing responsibilities in the event of default by such Third-Party Collectors;
         3. maintain adequate records for enforcing compliance by all Third-Party Collectors with their obligations with respect to Transition Charges, including compliance with all Remittance Requirements, REP Credit Requirements and REP Deposit Requirements; and
         4. provide to each Third-Party Collector such information necessary for such Third-Party Collector to confirm the Servicer's calculation of Transition Charges and remittances, including, if applicable, charge-off amounts.

         The Servicer shall update the records described above no less frequently than quarterly.

      2. Credit and Collection Policies. The Servicer shall, to the fullest extent permitted under the Financing Order, impose such terms with respect to credit and collection policies applicable to Third-Party Collectors as may be reasonably necessary to prevent the then-current rating of the Transition Bonds from being downgraded, withdrawn or suspended. The Servicer shall, in accordance with and to the extent permitted by the Utilities Code, applicable PUCT Regulations and the terms of the Financing Order, include and impose the above-described terms in all tariffs filed under the Utilities Code which would allow REPs or other utilities to issue single bills which include Transition Charges to ETI's Customers. The Servicer shall periodically review the need for modified or additional terms based upon, among other things, the relative amount of TC Payments received through REPs relative to the Periodic Billing Requirement, the historical payment and default experience of each REP and such other credit and collection policies to which the REPs are subject, and if permitted by applicable law, will set out any such modified or additional terms in a supplemental tariff filed with the PUCT.
      3. Monitoring of Performance and Payment by REPs. In addition to any actions required by the Tariffs, PUCT Regulations or other applicable law, the Servicer shall undertake to do the following:
         1. The Servicer shall require each REP to pay all Transition Charges (less any applicable charge-off allowances) billed to such REP in accordance with the provisions of the Initial Tariff, and PUCT Regulations (whether or not disputed). The Servicer shall monitor compliance by each REP with all Remittance Requirements, REP Credit Requirements and REP Deposit Requirements and take prompt action to enforce such requirements.
         2. Where a REP is responsible for billing the Customers, the Servicer shall, consistent with its customary billing practices, bill each Applicable REP no less frequently than the billing cycle otherwise applicable to such Customers.
         3. The Servicer shall work with REPs to resolve any disputes using the dispute resolution procedures established in the Initial Tariff and any PUCT Regulations, in accordance with the Servicing Standard.
      4. Enforcement of REP Obligations. The Servicer shall, in accordance with the terms of the Initial Tariff, ensure that each REP remits all TC Payments which it is obligated to remit to the Servicer. In the event of any default by any REP, the Servicer shall enforce all rights set forth in and take all other steps permitted by, if applicable, the Financing Order, Tariffs, other tariffs and any other PUCT Regulations as it determines, in accordance with the Servicing Standard, are reasonably necessary to ensure the prompt payment of TC Payments by such REP and to preserve the rights of the Holders with respect thereto, including, where appropriate, terminating the right of any REP to bill and collect Transition Charges or petitioning the PUCT to impose such other remedies or penalties as may be available under the circumstances. Any agreement entered into between the Servicer and a defaulted REP will be limited to the terms of this Agreement and will satisfy the Rating Agency Condition. In the even t the Servicer has actual knowledge that a REP is in default, including due to the downgrade by the Rating Agencies of any party providing credit support for such REP, the Servicer shall promptly notify a Responsible Officer of the Indenture Trustee in writing of the same and, shall, if applicable, instruct the Indenture Trustee either to:
         1. withdraw from such REP's REP Deposit Account and deposit into the Collection Account the lesser of (x) the amount of cash on deposit in such REP Deposit Account and allocable to the Transition Property at such time and (y) the amount of any Transition Charges then due and payable by such REP; or
         2. make demand under any letter of credit, guarantee or other credit support up to the lesser of (x) the amount of such letter of credit, guarantee or other credit support and (y) the amount of any Transition Charges then due and payable by such REP, and forward the amounts received, if any, as a result of such demand to the Collection Account.

         The Indenture Trustee shall, within two (2) Business Days of receipt of such written notice, withdraw such funds from the REP Deposit Account or make demand under such credit support, as applicable, and deposit such funds withdrawn or received, as applicable, into the Collection Account.

      5. Maintenance of REP Deposit Accounts. If any REPs collect Transition Charges within the Service Area, then the Servicer shall cause the entity acting as Indenture Trustee to maintain one or more REP Deposit Accounts as described in Section 8.02(g) of the Indenture. The Servicer shall provide written direction to the Indenture Trustee regarding the allocation and release of funds on deposit in the REP Deposit Accounts, as permitted or required by the Indenture, this Agreement, the Financing Order or any Tariff or PUCT Regulations. The Indenture Trustee shall be entitled to conclusively rely on any such written directions from the Servicer. The Servicer will seek and use reasonable best efforts to obtain, from any REP which wishes to satisfy its credit support requirements by making a deposit to a REP Deposit Account, a written security agreement stating that (i) by making such deposit the REP has granted a security interest in such deposit in favor of the Indenture T rustee, and (ii) the Indenture Trustee, in holding such deposit as collateral, will have the rights and remedies of a secured party under Article 9 of the UCC with respect to such collateral, and the Servicer will promptly forward any such agreement to the Indenture Trustee.
      6. Affiliated Third-Party Collectors. In performing its obligations under this Section 3.05, the Servicer shall deal with any Third-Party Collectors which are Affiliates of the Servicer on terms which are no more favorable in the aggregate to such affiliated Third-Party Collector than those used by the Servicer in its dealings with any Third-Party Collectors that are not affiliates of the Servicer.

4. 
   SERVICES RELATED TO TRUE-UP ADJUSTMENTS

   1. True-Up Adjustments. From time to time, until the Retirement of the Transition Bonds, the Servicer shall identify the need for Annual True-Up Adjustments, Interim True-Up Adjustments and Non-Standard True-Up Adjustments and shall take all reasonable action to obtain and implement such True-Up Adjustments, all in accordance with the following:
      1. [RESERVED]
      2. True-Up Adjustments.
         1. Annual True-Up Adjustments and Filings. Each year no later than fifteen (15) days prior to the first billing cycle of November the Servicer shall: (A) update the data and assumptions underlying the calculation of the Transition Charges, including projected electricity usage during the next Calculation Period for each TC Customer Class and including interest and estimated expenses and fees of the Issuer to be paid during such period, the Days Sales Outstanding and write-offs; (B) determine the Periodic Payment Requirement and Periodic Billing Requirement for the next Calculation Period based on such updated data and assumptions; (C) determine the Transition Charges to be allocated to each TC Customer Class during the next Calculation Period based on such Periodic Billing Requirement and the terms of the Financing Order and the Tariffs filed pursuant thereto and in doing so the Servicer shall use the Periodic Billing Requirement Allocation Factors approved in the Tariff to allocate t he Transition Charges, including, as applicable, the result of the implementation of the most recent Non-Standard True-Up Adjustment; (D) make all required notice and other filings with the PUCT to reflect the revised Transition Charges, including any Amendatory Tariffs; and (E) take all reasonable actions and make all reasonable efforts to effect such Annual True-Up Adjustment and to enforce the provisions of the Securitization Law and the Financing Order; provided, however, that if the Servicer determines that the forecasted billing units for one or more of the TC Customer Classes for an upcoming period decreases by more than 10% compared to the billing units for the threshold period set forth in the Financing Order, the Servicer shall implement a Non-Standard True-Up Adjustment and, if such Non-Standard True-Up Adjustment shall be made in the time period provided for Annual True-Up Adjustments pursuant to this Section 4.01(b)(i), such Non-Standard True-Up Adjustment shall also qualify as an Annual True-Up Adjustment for purposes of this Agreement. The Servicer shall implement the revised Transition Charges, if any, resulting from such Annual True-Up Adjustment as of the Annual True-Up Adjustment Date.
         2. Non-Standard True-Up Adjustments and Filings. In the event that the Servicer determines that a Non-Standard True-Up Adjustment is required, the Servicer shall, no later than ninety (90) days prior to the first billing cycle of November (A) recalculate the Transition Charges to reallocate such Transition Charges among TC Customer Classes in accordance with the procedures for Non-Standard True-Up Adjustments set forth in the Financing Order and the Tariffs filed pursuant thereto; (B) make all required notice and other filings with the PUCT to reflect the revised Transition Charges, including any Amendatory Tariffs; and (C) take all reasonable actions and make all reasonable efforts to effect such Non-Standard True-Up Adjustment and to enforce the provisions of the Securitization Law and the Financing Order. The Servicer shall implement the revised Transition Charges, if any, resulting from such Non-Standard True-Up Adjustment on the Non-Standard True-Up Adjustment Date. For the avo idance of doubt, no Annual True-Up Adjustment or Interim True-Up Adjustment shall be considered a Non-Standard True-Up Adjustment solely because Transition Charges are allocated under such Annual True-Up Adjustment or Interim True-Up Adjustment in the same manner as in a preceding Non-Standard True-Up Adjustment.
         3. Interim True-Up Adjustments and Filings. Within the 30-day period ending prior to the first billing cycle in May of each year and, within the 30-day period preceding the first billing cycle in August 2023, and in each November, February, May and August thereafter, the Servicer shall compare the anticipated Unrecovered Balance, as of the next Payment Date and after giving effect to payments to be made on such Payment Date, to the Projected Unrecovered Balance as of such Payment Date. The Servicer shall, no later than fifteen (15) days prior to the end of such thirty (30) day period, make a mandatory Interim True-Up Adjustment if the Servicer forecasts that TC Collections will be insufficient (a) to make all scheduled payments of interest, principal and other amounts in respect of any Tranche of Transition Bonds during the current and next succeeding semi-annual period or quarterly period, as applicable, and (b) to replenish the applicable Capital Subaccount to the Required Capital Level . If the Servicer determines that an Interim True-Up Adjustment is required under the immediately preceding sentence, then the Servicer shall: update the data and assumptions underlying the calculation of the Transition Charges, including projected electricity usage during the next Calculation Period for each TC Customer Class and including interest and estimated expenses and fees of the Issuer to be paid during such period, the rate of delinquencies and write-offs; determine the Periodic Payment Requirement and Periodic Billing Requirement for the next Calculation Period based on such updated data and assumptions; determine the Transition Charges to be allocated to each TC Customer Class during the next Calculation Period based on such Periodic Billing Requirement and the terms of the Financing Order and the Tariffs filed pursuant thereto, and in doing so the Servicer shall use the method of allocating Transition Charges then in effect, including as applicable, the result of the implementation of the mo st recent Non-Standard True-Up Adjustment as approved in the Tariff; make all required notice and other filings with the PUCT to reflect the revised Transition Charges, including any Amendatory Tariffs; and take all reasonable actions and make all reasonable efforts to effect such Interim True-Up Adjustment and to enforce the provisions of the Securitization Law and the Financing Order which relate thereto. The Servicer shall implement the revised Transition Charges, if any, resulting from such Interim True-Up Adjustment on the Interim True-Up Adjustment Date. The Servicer may not implement Interim True-Up Adjustments more frequently than every six (6) months; provided that the Servicer may implement Interim True-Up Adjustments quarterly for any Transition Bonds remaining Outstanding commencing in August 2023.
      3. Reports.
         1. Notification of Amendatory Tariff Filings and True-Up Adjustments. Whenever the Servicer files an Amendatory Tariff with the PUCT or implements revised Transition Charges with notice to the PUCT without filing an Amendatory Tariff if permitted by the Financing Order, the Servicer shall send a copy of such filing or notice (together with a copy of all notices and documents which, in the Servicer's reasonable judgment, are material to the adjustments effected by such Amendatory Tariff or notice) to the Issuer, the Indenture Trustee and the Rating Agencies concurrently therewith. If, for any reason any revised Transition Charges are not implemented and effective on the applicable date set forth herein, the Servicer shall notify the Issuer, the Indenture Trustee and each Rating Agency by the end of the second Servicer Business Day after such applicable date.
         2. Semi-Annual Servicer's Certificate. Not later than five (5) Servicer Business Days prior to each Payment Date or Special Payment Date, the Servicer shall deliver a written report for the Transition Bonds, substantially in the form of Exhibit B hereto (the "Semi-Annual Servicer's Certificate") to the Issuer, the PUCT, the Indenture Trustee and the Rating Agencies which shall include all of the following information (to the extent applicable and including any other information so specified in the Series Supplement) as to the Transition Bonds with respect to such Payment Date or Special Payment Date or the period since the previous Payment Date, as applicable:

            (a) the amount of the payment to Holders allocable to principal, if any;

            (b) the amount of the payment to Holders allocable to interest;

            (c) the aggregate Outstanding Amount of such Transition Bonds, before and after giving effect to any payments allocated to principal reported under clause (a) above;

            (d) the difference, if any, between the amount specified in clause (c) above and the Outstanding Amount specified in the Expected Amortization Schedule;

            (e) any other transfers and payments to be made on such Payment Date or Special Payment Date, including amounts paid to the Indenture Trustee and to the Servicer; and

            (f) the amounts on deposit in the Capital Subaccount and the Excess Funds Subaccount, after giving effect to the foregoing payments.

         3. Reports to Customers.
            1. After each revised Transition Charge has gone into effect pursuant to a True-Up Adjustment, the Servicer shall, to the extent and in the manner and time frame required by applicable PUCT Regulations, if any, cause to be prepared and delivered to Customers any required notices announcing such revised Transition Charges.
            2. The Servicer shall comply with the requirements of the Financing Order and Tariff with respect to the identification of Transition Charges on Bills. In addition, at least once each year, the Servicer shall (to the extent that it does not separately identify the Transition Charges as being owned by the Issuer in the Bills regularly sent to Customers or any REPs, when and if ETI's Service Area becomes subject to retail competition) cause to be prepared and delivered to such Customers and REPs a notice stating, in effect, that the Transition Property and the Transition Charges are owned by the Issuer and not the Seller. Unless prohibited by applicable PUCT Regulations, the Servicer shall use reasonable efforts to cause each Applicable REP, at least once each year, to include similar notices in the bills sent by such Applicable REP to Customers indicating additionally that the Transition Charges are not owned by such Applicable REP (to the extent that such Applicable REP does not include such information i n the Bills regularly sent to Customers). Such notice shall be included either as an insert to or in the text of the Bills delivered to such Customers or shall be delivered to Customers by electronic means or such other means as the Servicer or the Applicable REP may from time to time use to communicate with its respective Customers.
            3. Except to the extent that applicable PUCT Regulations make any future Applicable REP responsible for such costs, or the Applicable REP has otherwise agreed to pay such costs, the Servicer shall pay from its own funds all costs of preparation and delivery incurred in connection with clauses (A) and (B) above, including printing and postage costs as the same may increase or decrease from time to time.
         4. REP Reports. When and if the Service Area becomes subject to retail competition and if any REPs collect the Transition Charges within the Service Area, then the Servicer shall provide to the Rating Agencies, upon request, any publicly available reports filed by the Servicer with the PUCT (or otherwise made publicly available by the Servicer) relating to REPs and any other non-confidential and non-proprietary information relating to REPs reasonably requested by the Rating Agencies to the extent such information is reasonably available to the Servicer.
   2. Limitation of Liability.  The Issuer and the Servicer expressly agree and acknowledge that:
      1. In connection with any True-Up Adjustment, the Servicer is acting solely in its capacity as the servicing agent hereunder.
      2. Neither the Servicer nor the Issuer nor the Indenture Trustee is responsible in any manner for, and shall have no liability whatsoever as a result of, any action, decision, ruling or other determination made or not made, or any delay (other than any delay resulting from the Servicer's failure to make any filings required by Section 4.01 in a timely and correct manner or any breach by the Servicer of its duties under this Agreement that adversely affects the Transition Property or the True-Up Adjustments), by the PUCT in any way related to the Transition Property or in connection with any True-Up Adjustment, the subject of any filings under Section 4.01, any proposed True-Up Adjustment, or the approval of any revised Transition Charges and the scheduled adjustments thereto.
      3. Except to the extent that the Servicer is liable under Section 6.02, the Servicer shall have no liability whatsoever relating to the calculation of any revised Transition Charges and the scheduled adjustments thereto, including as a result of any inaccuracy of any of the assumptions made in such calculation regarding expected energy usage and the Days Sales Outstanding, write-offs and estimated expenses and fees of the Issuer, so long as the Servicer has acted in good faith and has not acted in a negligent manner in connection therewith, nor shall the Servicer have any liability whatsoever as a result of any Person, including the Holders, not receiving any payment, amount or return anticipated or expected or in respect of any Transition Bond generally.
      1. Notwithstanding the foregoing, this Section 4.02 shall not relieve the Servicer of liability for any misrepresentation by the Servicer under Section 6.01 or for any breach by the Servicer of its other obligations under this Agreement.

5. 
   THE TRANSITION PROPERTY

   1. Custody of Transition Property Records. To assure uniform quality in servicing the Transition Property and to reduce administrative costs, the Issuer hereby revocably appoints the Servicer, and the Servicer hereby accepts such appointment, to act as the agent of the Issuer as custodian of any and all documents and records that the Seller shall keep on file, in accordance with its customary procedures, relating to the Transition Property, including copies of the Financing Order, Issuance Advice Letters, Tariffs and Amendatory Tariffs relating thereto and all documents filed with the PUCT in connection with any True-Up Adjustment and computational records relating thereto (collectively, the "Transition Property Records"), which are hereby constructively delivered to the Indenture Trustee, as pledgee of the Issuer with respect to all Transition Property.
   2. Duties of Servicer as Custodian.
      1. Safekeeping. The Servicer shall hold the Transition Property Records on behalf of the Issuer and maintain such accurate and complete accounts, records and computer systems pertaining to the Transition Property Records as shall enable the Issuer and the Indenture Trustee, as applicable, to comply with this Agreement, the Sale Agreement and the Indenture. In performing its duties as custodian, the Servicer shall act with reasonable care, using that degree of care and diligence that the Servicer exercises with respect to comparable assets that the Servicer services for itself or, if applicable, for others. The Servicer shall promptly report to the Issuer, the Indenture Trustee and the Rating Agencies any failure on its part to hold the Transition Property Records and maintain its accounts, records and computer systems as herein provided and promptly take appropriate action to remedy any such failure. Nothing herein shall be deemed to require an initial review or any periodic review by the Issuer or the Indenture Trustee of the Transition Property Records. The Servicer's duties to hold the Transition Property Records set forth in this Section 5.02, to the extent such Transition Property Records have not been previously transferred to a successor Servicer pursuant to Article VII, shall terminate one year and one day after the earlier of the date on which (i) the Servicer is succeeded by a successor Servicer in accordance with Article VII and (ii) no Transition Bonds are Outstanding.
      2. Maintenance of and Access to Records. The Servicer shall maintain the Transition Property Records at the address set forth in Section 8.04(a), or at such other office as shall be specified to the Issuer and the Indenture Trustee by written notice at least thirty (30) days prior to any change in location. The Servicer shall make available for inspection, audit and copying to the Issuer and the Indenture Trustee or their respective duly authorized representatives, attorneys or auditors the Transition Property Records at such times during normal business hours as the Issuer or the Indenture Trustee shall reasonably request and which do not unreasonably interfere with the Servicer's normal operations. Nothing in this Section 5.02(b) shall affect the obligation of the Servicer to observe any applicable law (including any PUCT Regulation) prohibiting disclosure of information regarding the Customers, and the failure of the Servicer to provide access to such information as a result of such obliga tion shall not constitute a breach of this Section 5.02(b).
      3. Release of Documents. Upon instruction from the Indenture Trustee in accordance with the Indenture, the Servicer shall release any Transition Property Records to the Indenture Trustee, the Indenture Trustee's agent or the Indenture Trustee's designee, as the case may be, at such place or places as the Indenture Trustee may designate, as soon as practicable. Nothing in this Section 5.02(c) shall affect the obligation of the Servicer to observe any applicable law (including any PUCT Regulation) prohibiting disclosure of information regarding the Customers, and the failure of the Servicer to provide access to such information as a result of such obligation shall not constitute a breach of this Section 5.02(c).
      4. Defending Transition Property Against Claims. The Servicer shall institute any action or proceeding necessary to compel performance by any REP (at the earliest possible time) of any of their respective obligations or duties under the Securitization Law and the Financing Order with respect to the Transition Property, and the Servicer agrees to take such legal or administrative actions, including without limitation defending against or instituting and pursuing legal actions and appearing or testifying at hearings or similar proceedings, as may be reasonably necessary to block or overturn any attempts to cause a repeal of, modification of or supplement to the Securitization Law or the Financing Order. The costs of any action described in this Section 5.02(d) shall be payable from TC Collections as an Operating Expense (and shall not be deemed to constitute a portion of the Servicing Fee) in accordance with the Indenture. The Servicer's obligations pursuant to this Section 5.02(d) shall s urvive and continue notwithstanding that payment of such Operating Expense may be delayed pursuant to the terms of the Indenture (it being understood that the Servicer may be required initially to advance its own funds to satisfy its obligations hereunder).
      5. Additional Litigation to Defend Transition Property. In addition to the above, the Servicer shall, at its own expense, institute any action or proceeding necessary to compel performance by the PUCT or the State of Texas of any of their respective obligations or duties under the Securitization Law or the Financing Order with respect to the Transition Property, and to compel performance by any future REPs with any of their respective obligations or duties under any Tariffs or any agreement with the Servicer entered into pursuant to such Tariffs. In any proceedings related to the exercise of the power of eminent domain by any municipality to acquire a portion of ETI's electric distribution facilities, the Servicer shall assert that the court ordering such condemnation must treat such municipality as a successor to ETI under the Securitization Law and the Financing Order.
   3. Custodian's Indemnification. The Servicer as custodian shall indemnify the Issuer, the Independent Managers and the Indenture Trustee (for itself and for the benefit of the Holders) and each of their respective officers, directors, employees and agents for, and defend and hold harmless each such Person from and against, any and all liabilities, obligations, losses, damages, payments and claims, and reasonable costs or expenses, of any kind whatsoever (collectively, "Losses") that may be imposed on, incurred by or asserted against each such Person as the result of any negligent act or omission in any way relating to the maintenance and custody by the Servicer, as custodian, of the Transition Property Records; provided, however, that the Servicer shall not be liable for any portion of any such amount resulting from the willful misconduct, bad faith or negligence of the Issuer, the Independent Managers or the Indenture Trustee, as the case may b e.

      Indemnification under this Section 5.03 shall survive resignation or removal of the Indenture Trustee or any Independent Manager and shall include reasonable out-of-pocket fees and expenses of investigation and litigation (including reasonable attorney's fees and expenses).

   4. Effective Period and Termination. The Servicer's appointment as custodian shall become effective as of the Closing Date and shall continue in full force and effect until terminated pursuant to this Section 5.04. If the Servicer shall resign as Servicer in accordance with the provisions of this Agreement or if all of the rights and obligations of the Servicer shall have been terminated under Section 7.01, the appointment of the Servicer as custodian shall be terminated effective as of the date on which the termination or resignation of the Servicer is effective. Additionally, if not sooner terminated as provided above, the Servicer's obligations as Custodian shall terminate one year and one day after the date on which no Transition Bonds are Outstanding.

6. 
   THE SERVICER

   1. Representations and Warranties of Servicer. The Servicer makes the following representations and warranties, as of the Closing Date and as of such other dates as expressly provided in this Section 6.01, on which the Issuer and the Indenture Trustee are deemed to have relied in entering into this Agreement relating to the servicing of the Transition Property. The representations and warranties shall survive the execution and delivery of this Agreement, the sale of any Transition Property and the pledge thereof to the Indenture Trustee pursuant to the Indenture.
      1. Organization and Good Standing. The Servicer is duly organized and validly existing and is in good standing under the laws of the State of Texas, with the requisite corporate or other power and authority to own its properties and to conduct its business as such properties are currently owned and such business is presently conducted and to execute, deliver and carry out the terms of this Agreement, and had at all relevant times, and has, the requisite power, authority and legal right to service the Transition Property and to hold the Transition Property Records as custodian.
      2. Due Qualification. The Servicer is duly qualified to do business and is in good standing, and has obtained all necessary licenses and approvals, in all jurisdictions in which the ownership or lease of property or the conduct of its business (including the servicing of the Transition Property as required by this Agreement) shall require such qualifications, licenses or approvals (except where the failure to so qualify would not be reasonably likely to have a material adverse effect on the Servicer's business, operations, assets, revenues or properties or to its servicing of the Transition Property).
      3. Power and Authority. The execution, delivery and performance of this Agreement have been duly authorized by all necessary action on the part of the Servicer under its organizational or governing documents and laws.
      4. Binding Obligation. This Agreement constitutes a legal, valid and binding obligation of the Servicer enforceable against the Servicer in accordance with its terms, subject to applicable insolvency, reorganization, moratorium, fraudulent transfer and other laws relating to or affecting creditors' rights generally from time to time in effect and to general principles of equity (including concepts of materiality, reasonableness, good faith and fair dealing), regardless of whether considered in a proceeding in equity or at law.
      5. No Violation. The consummation of the transactions contemplated by this Agreement and the fulfillment of the terms hereof do not conflict with, result in any breach of any of the terms and provisions of, nor constitute (with or without notice or lapse of time) a default under, the organizational documents of the Servicer, or any indenture or other agreement or instrument to which the Servicer is a party or by which it or any of its property is bound; nor result in the creation or imposition of any Lien upon any of its properties pursuant to the terms of any such indenture, agreement or other instrument (other than any Lien that may be granted under the Basic Documents or any Lien created pursuant to Section 39.309 of the Securitization Law); nor violate any existing law or any existing order, rule or regulation applicable to the Servicer of any Governmental Authority having jurisdiction over the Servicer or its properties.
      6. No Proceedings. There are no proceedings or investigations pending or, to the Servicer's knowledge, threatened, before any Governmental Authority having jurisdiction over the Servicer or its properties involving or relating to the Servicer or the Issuer or, to the Servicer's knowledge, any other Person: (i) asserting the invalidity of this Agreement or any of the other Basic Documents, (ii) seeking to prevent the issuance of the Transition Bonds or the consummation of any of the transactions contemplated by this Agreement or any of the other Basic Documents, (iii) seeking any determination or ruling that could reasonably be expected to materially and adversely affect the performance by the Servicer of its obligations under, or the validity or enforceability of, this Agreement, any of the other Basic Documents or the Transition Bonds or (iv) seeking to adversely affect the federal income tax or state income or franchise tax classification of the Transition Bonds as debt.
      7. Approvals. No approval, authorization, consent, order or other action of, or filing with, any Governmental Authority is required in connection with the execution and delivery by the Servicer of this Agreement, the performance by the Servicer of the transactions contemplated hereby or the fulfillment by the Servicer of the terms hereof, except those that have been obtained or made, those that the Servicer is required to make in the future pursuant to Article IV and those that the Servicer may need to file in the future to continue the effectiveness of any financing statement filed under the UCC.
      8. Reports and Certificates. Each report and certificate delivered in connection with an Issuance Advice Letter or delivered in connection with any filing made to the PUCT by the Issuer with respect to the Transition Charges or True-Up Adjustments will constitute a representation and warranty by the Servicer that each such report or certificate, as the case may be, is true and correct in all material respects; provided, however, that to the extent any such report or certificate is based in part upon or contains assumptions, forecasts or other predictions of future events, the representation and warranty of the Servicer with respect thereto will be limited to the representation and warranty that such assumptions, forecasts or other predictions of future events are reasonable based upon historical performance (and facts known to the Servicer on the date such report or certificate is delivered).
   2. Indemnities of Servicer; Release of Claims.  The Servicer shall be liable in accordance herewith only to the extent of the obligations specifically undertaken by the Servicer under this Agreement.
      1. The Servicer shall indemnify the Issuer, the Indenture Trustee (for itself and for the benefit of the Holders), and the Independent Managers and each of their respective trustees, officers, directors, employees and agents (each, an "Indemnified Person") for, and defend and hold harmless each such Person from and against, any and all Losses imposed on, incurred by or asserted against any such Person as a result of (i) the Servicer's willful misconduct, bad faith or negligence in the performance of its duties or observance of its covenants under this Agreement or its reckless disregard of its obligations and duties under this Agreement, (ii) the Servicer's breach of any of its representations and warranties contained in this Agreement, (iii) any litigation or related expenses relating to the Servicer's status or obligations as Servicer (other than any proceeding the Servicer is required to institute under the Servicing Agreement) or (iv) any finding that interest payabl e to any future REP with respect to disputed funds must be paid by the Issuer or from the Transition Property, except to the extent of Losses either resulting from the willful misconduct, bad faith or gross negligence of such Person seeking indemnification hereunder or resulting from a breach of a representation or warranty made by such Person seeking indemnification hereunder in any of the Basic Documents that gives rise to the Servicer's breach.
      2. For purposes of Section 6.02(b), in the event of the termination of the rights and obligations of ETI (or any successor thereto pursuant to Section 6.03) as Servicer pursuant to Section 7.01, or a resignation by such Servicer pursuant to this Agreement, such Servicer shall be deemed to be the Servicer pending appointment of a successor Servicer pursuant to Section 7.02.
      3. Indemnification under this Section 6.02 shall survive any repeal of, modification of, or supplement to, or judicial invalidation of, the Securitization Law or the Financing Order and shall survive the resignation or removal of the Indenture Trustee or any Independent Manager or the termination of this Agreement and shall include reasonable out-of-pocket fees and expenses of investigation and litigation (including reasonable attorney's fees and expenses).
      4. Except to the extent expressly provided in this Agreement or the other Basic Documents (including the Servicer's claims with respect to the Servicing Fee, reimbursement for any Excess Remittance, reimbursement for costs incurred pursuant to Section 5.02(d) and the payment of the purchase price of Transition Property), the Servicer hereby releases and discharges the Issuer, the Independent Managers, and the Indenture Trustee and each of their respective officers, directors and agents (collectively, the "Released Parties") from any and all actions, claims and demands whatsoever, whenever arising, which the Servicer, in its capacity as Servicer or otherwise, shall or may have against any such Person relating to the Transition Property or the Servicer's activities with respect thereto other than any actions, claims and demands arising out of the willful misconduct, bad faith or gross negligence of the Released Parties.
      5. Promptly after receipt by an Indemnified Person of notice (or, in the case of the Indenture Trustee, receipt of notice by a Responsible Officer only) of the commencement of any action, proceeding or investigation, such Indemnified Person shall, if a claim in respect thereof is to be made against the Servicer under this Section 6.02, notify the Servicer in writing of the commencement thereof. Failure by an Indemnified Person to so notify the Servicer shall relieve the Servicer from the obligation to indemnify and hold harmless such Indemnified Person under this Section 6.02 only to the extent that the Servicer suffers actual prejudice as a result of such failure. With respect to any action, proceeding or investigation brought by a third party for which indemnification may be sought under this Section 6.02, the Servicer shall be entitled to conduct and control, at its expense and with counsel of its choosing that is reasonably satisfactory to such Indemnified Person, the defense of any such action, proceeding or investigation (in which case the Servicer shall not thereafter be responsible for the fees and expenses of any separate counsel retained by the Indemnified Person except as set forth below); provided that the Indemnified Person shall have the right to participate in such action, proceeding or investigation through counsel chosen by it and at its own expense. Notwithstanding the Servicer's election to assume the defense of any action, proceeding or investigation, the Indemnified Person shall have the right to employ separate counsel (including local counsel), and the Servicer shall bear the reasonable fees, costs and expenses of such separate counsel if (i) the defendants in any such action include both the Indemnified Person and the Servicer and the Indemnified Person shall have reasonably concluded that there may be legal defenses available to it that are different from or additional to those available to the Servicer, (ii) the Servicer shall not have employed counsel reason ably satisfactory to the Indemnified Person to represent the Indemnified Person within a reasonable time after notice of the institution of such action, (iii) the Servicer shall authorize the Indemnified Person to employ separate counsel at the expense of the Servicer or (iv) in the case of the Indenture Trustee, such action exposes the Indenture Trustee to a material risk of criminal liability or forfeiture or a Servicer Default has occurred and is continuing. Notwithstanding the foregoing, the Servicer shall not be obligated to pay for the fees, costs and expenses of more than one separate counsel for the Indemnified Persons other than one local counsel, if appropriate.
      6. The Servicer shall indemnify the PUCT (for the benefit of Customers) for, and defend and hold harmless against, any and all Losses that may be imposed upon, incurred by or asserted against the PUCT, including any increase in the Servicing Fee that becomes payable pursuant to Section 6.06, as a result of a Servicer Default resulting from the Servicer's willful misconduct, bad faith or negligence in performance of its duties or observance of its covenants under this Agreement. The indemnification obligation set forth in this paragraph may be enforced by the PUCT but is not enforceable by any REP or any Customer. Any indemnity payments made to the PUCT under this paragraph for the benefit of Customers shall be remitted to the Indenture Trustee promptly for deposit into the applicable Collection Account.
   3. Binding Effect of Servicing Obligations. Any Person (a) into which the Servicer may be merged, converted or consolidated, (b) that may result from any reorganization, merger (including, but not limited to, merger as defined in Art. 1.02.A.(18) of the Texas Business Corporation Act or in Section 1.002(55) of the Texas Business Organizations Code, as applicable to the Servicer, as amended from time to time (including, without limitation, any merger commonly referred to as a "merger by division")), conversion or consolidation to which the Servicer shall be a party, or (c) that may acquire or succeed to (whether by merger, division, conversion, consolidation, reorganization, sale, transfer, lease, management contract or otherwise) (1) the properties and assets of the Servicer substantially as a whole, (2) all or substantially all of the electric transmission and distribution business of the Servicer which is required to provide electric service to the Servicer's customers in the Service Area (or, if transmission and distribution are not provided by a single entity, the distribution business of the Servicer required to provide electric service to the Servicer's Customers in the Service Area), or (3) the distribution system business assets of the Servicer in a portion of the Service Area, and which Person in any of the foregoing cases executes an agreement of assumption to perform all of the obligations of the Servicer hereunder shall be a successor to the Servicer under this Agreement (a "Permitted Successor") without further act on the part of any of the parties to this Agreement; provided, however, that
      1. immediately after giving effect to such transaction, no representation, warranty or covenant made pursuant to Section 6.01 shall be breached and no Servicer Default, and no event which, after notice or lapse of time, or both, would become a Servicer Default shall have occurred and be continuing,
      2. the Servicer shall have delivered to the Issuer, the Indenture Trustee and each Rating Agency an Officer's Certificate and an Opinion of Counsel from Independent counsel stating that such consolidation, conversion, merger, division, reorganization, sale, transfer, lease, management contract transaction, acquisition or other succession and such agreement of assumption comply with this Section 6.03 and that all conditions precedent, if any, provided for in this Agreement relating to such transaction have been complied with,
      3. the Servicer shall have delivered to the Issuer, the Indenture Trustee and each Rating Agency an Opinion of Counsel from Independent counsel of the Servicer either (A) stating that, in the opinion of such counsel, all filings to be made by the Servicer and the Issuer, including filings with the PUCT pursuant to the Securitization Law, have been authorized, executed and filed that are necessary to fully preserve and protect the respective interests of the Issuer and the Indenture Trustee in all of the Transition Property and reciting the details of such filings, or (B) stating that, in the opinion of such counsel, no such action shall be necessary to preserve and protect such interests,
      4. the Servicer shall have delivered to the Issuer, the Indenture Trustee, the Rating Agencies and the PUCT an Opinion of Counsel from Independent tax counsel stating that, for federal income tax purposes, notwithstanding such consolidation, conversion, merger, division, reorganization, sale, transfer, lease, management contract transaction, acquisition or other succession and such agreement of assumption, (a) the Issuer will not be subject to tax as an entity separate from its sole owner, (b) the Transition Bonds will be treated as debt of the Issuer's sole owner, and (c) the Transition Bonds will not be treated as transferred in a taxable exchange; and
      5. the Servicer shall have given the Rating Agencies prior written notice of such transaction, or, in the case of clause (c)(4) above, the Rating Agency Condition shall be satisfied.

      When the conditions set forth in this Section 6.03 have been satisfied, the preceding Servicer shall automatically and without further notice (except as provided in clause (v) above) be released from all of its obligations hereunder.

      When any Person (or more than one Person) acquires the properties and assets of the Servicer substantially as a whole or otherwise becomes the successor, whether by merger, conversion, consolidation, sale, transfer, lease, management contract or otherwise, to all or substantially all of the electric transmission and distribution business of the Servicer (or, if transmission and distribution are not provided by a single entity, provides distribution service directly to Customers taking service at facilities, premises or loads located in the Service Area in accordance with the terms of this Section 6.03), then upon satisfaction of all of the other conditions of this Section 6.03, the preceding Servicer shall automatically and without further notice be released from all of its obligations hereunder.

   4. Limitation on Liability of Servicer and Others. Except as otherwise provided under this Agreement, neither the Servicer nor any of the directors, officers, employees or agents of the Servicer shall be liable to the Issuer or any other Person for any action taken or for refraining from the taking of any action pursuant to this Agreement or for good faith errors in judgment; provided, however, that this provision shall not protect the Servicer or any such person against any liability that would otherwise be imposed by reason of willful misconduct, bad faith or negligence in the performance of duties or by reason of reckless disregard of obligations and duties under this Agreement. The Servicer and any director, officer, employee or agent of the Servicer may rely in good faith on the advice of counsel reasonably acceptable to the Indenture Trustee or on any document of any kind, prima facie properly executed and submitted by any Person, respe cting any matters arising under this Agreement.

      Except as provided in this Agreement, including but not limited to Sections 5.02(d) and (e), the Servicer shall not be under any obligation to appear in, prosecute or defend any legal action relating to the Transition Property that is not directly related to one of the Servicer's enumerated duties in this Agreement or related to its obligation to pay indemnification, and that in its reasonable opinion may cause it to incur any expense or liability; provided, however, that the Servicer may, in respect of any Proceeding, undertake any action that it is not specifically identified in this Agreement as a duty of the Servicer but that the Servicer reasonably determines is necessary or desirable in order to protect the rights and duties of the Issuer or the Indenture Trustee under this Agreement and the interests of the Holders and Customers under this Agreement. The Servicer's costs and expenses incurred in connection with any such proceeding shall be payable from TC Collections as an Operating Expense (and shall not be deemed to constitute a portion of the Servicing Fee) in accordance with the Indenture. The Servicer's obligations pursuant to this Section 6.04 shall survive and continue notwithstanding that payment of such Operating Expense may be delayed pursuant to the terms of the Indenture (it being understood that the Servicer may be required initially to advance its own funds to satisfy its obligations hereunder).

   5. ETI Not to Resign as Servicer. Subject to the provisions of Section 6.03, ETI shall not resign from the obligations and duties hereby imposed on it as Servicer under this Agreement unless ETI delivers to the Indenture Trustee and the PUCT an opinion of Independent counsel to the effect that ETI's performance of its duties under this Agreement shall no longer be permissible under applicable law. No such resignation shall become effective until a successor Servicer shall have assumed the responsibilities and obligations of ETI in accordance with Section 7.02.
   6. Servicing Compensation. In consideration for its services hereunder, until the Retirement of the Transition Bonds, the Servicer shall receive an annual fee (the "Servicing Fee") in an amount equal to (i) $290,000 for so long as ETI or an Affiliate of ETI is the Servicer or (ii) if ETI or any of its Affiliates is not the Servicer, an amount agreed upon by the Successor Servicer and the Issuer, provided that such amount shall not exceed 0.60% of the aggregate initial principal amount of all Outstanding Transition Bonds unless (A) the Rating Agency Condition is satisfied and (B) the amount is approved by the PUCT. The Servicing Fee shall be paid semi-annually with half of the Servicing Fee being paid on each Payment Date. The Servicer also shall be entitled to retain as additional compensation (i) any interest earnings on TC Payments received by the Servicer and invested by the Servicer during each Collection Period prior to remittance to the Collection Account and (ii) all late payment charges, if any, collected from Customers or REPs; provided, however, that if the Servicer has failed to remit the Daily Remittance to the General Subaccount of the Collection Account on the Servicer Business Day that such payment is to be made pursuant to Section 6.11 on more than three (3) occasions during the period that the Transition Bonds are outstanding, then thereafter the Servicer will be required to pay to the Indenture Trustee interest on each Daily Remittance accrued at the Federal Funds Rate from the Servicer Business Day on which such Daily Remittance was required to be made to the date that such Daily Remittance is actually made.
      1. The Servicing Fee set forth in Section 6.06(a) shall be paid to the Servicer by the Indenture Trustee, on each Payment Date in accordance with the priorities set forth in Section 8.02(e) of the Indenture, by wire transfer of immediately available funds from the applicable Collection Account to an account designated by the Servicer. Any portion of the Servicing Fee not paid on any such date should be added to the Servicing Fee payable on the subsequent Payment Date. In no event shall the Indenture Trustee be liable for the payment of any Servicing Fee or other amounts specified in this Section 6.06; provided that this Section 6.06 does not relieve the Indenture Trustee of any duties it has to allocate funds for payment for such fees under Section 8.02 of the Indenture.
      2. Except as expressly provided elsewhere in this Agreement, the Servicer shall be required to pay from its own account expenses incurred by the Servicer in connection with its activities hereunder (including any fees to and disbursements by accountants, counsel, or any other Person, any taxes imposed on the Servicer and any expenses incurred in connection with reports to Holders) out of the compensation retained by or paid to it pursuant to this Section 6.06, and shall not be entitled to any extra payment or reimbursement therefor.
      3. The foregoing Servicing Fees constitute a fair and reasonable price for the obligations to be performed by the Servicer. Such Servicing Fee shall be determined without regard to the income of the Issuer, shall not be deemed to constitute distributions to the recipient of any profit, loss or capital of the Issuer and shall be considered a fixed Operating Expense of the Issuer subject to the limitations on such expenses set forth in the Financing Order.
   7. Compliance with Applicable Law. The Servicer covenants and agrees, in servicing the Transition Property, to comply in all material respects with all laws applicable to, and binding upon, the Servicer and relating to such Transition Property the noncompliance with which would have a material adverse effect on the value of the Transition Property; provided, however, that the foregoing is not intended to, and shall not, impose any liability on the Servicer for noncompliance with any Requirement of Law that the Servicer is contesting in good faith in accordance with its customary standards and procedures.
   8. Access to Certain Records and Information Regarding Transition Property. The Servicer shall provide to the Indenture Trustee access to the Transition Property Records as is reasonably required for the Indenture Trustee to perform its duties and obligations under the Indenture and the other Basic Documents, and shall provide access to such records to the Holders as required by applicable law. Access shall be afforded without charge, but only upon reasonable request and during normal business hours at the respective offices of the Servicer. Nothing in this Section 6.08 shall affect the obligation of the Servicer to observe any applicable law (including any PUCT Regulation) prohibiting disclosure of information regarding the Customers, and the failure of the Servicer to provide access to such information as a result of such obligation shall not constitute a breach of this Section 6.08.
   9. Appointments. The Servicer may at any time appoint any Person to perform all or any portion of its obligations as Servicer hereunder; provided, however, that, unless such Person is an Affiliate of ETI, the Rating Agency Condition shall have been satisfied in connection therewith; provided further that the Servicer shall remain obligated and be liable under this Agreement for the servicing and administering of the Transition Property in accordance with the provisions hereof without diminution of such obligation and liability by virtue of the appointment of such Person and to the same extent and under the same terms and conditions as if the Servicer alone were servicing and administering the Transition Property. The fees and expenses of any such Person shall be as agreed between the Servicer and such Person from time to time and none of the Issuer, the Indenture Trustee, the Holders or any other Person shall have any responsibility therefor or ri ght or claim thereto. Any such appointment shall not constitute a Servicer resignation under Section 6.05.
   10. No Servicer Advances. The Servicer shall not make any advances of interest or principal on the Transition Bonds.
   11. Remittances.  On each Servicer Business Day, commencing [to be calculated when closing date is determined] days after the Closing Date, the Servicer shall remit to the General Subaccount of the Collection Account the total TC Payments estimated to have been received by the Servicer from or on behalf of Customers on such Servicer Business Day in respect of all previously billed Transition Charges (the "Daily Remittance"), which Daily Remittance shall be calculated according to the procedures set forth in Annex I and shall be remitted as soon as reasonably practicable but in any event no later than the second Servicer Business Day after such payments are estimated to have been received. Prior to (or concurrent with) each remittance to the General Subaccount of the Collection Account pursuant to this Section 6.11, the Servicer shall provide written notice to the Indenture Trustee of each such remittance (including the exact dollar amoun t to be remitted). The Servicer shall also, promptly upon receipt, remit to the Collection Account any other proceeds of the Transition Bond Collateral which it may receive from time to time.
       1. The Servicer agrees and acknowledges that it holds all TC Payments collected by it and any other proceeds for the Transition Bond Collateral received by it for the benefit of the Indenture Trustee and the Holders and that all such amounts will be remitted by the Servicer in accordance with this Section 6.11 without any surcharge, fee, offset, charge or other deduction except (i) as set forth in clause (c) below and (ii) for late fees permitted by Section 6.06. The Servicer further agrees not to make any claim to reduce its obligation to remit all TC Payments collected by it in accordance with this Agreement except (i) as set forth in clause (c) below and (ii) for late fees permitted by Section 6.06.
       2. On or before June 30 of each year (or, if such day is not a Servicer Business Day, the immediately preceding Servicer Business Day) commencing with June 30, 2010, the Servicer shall calculate the amount of any Remittance Shortfall or Excess Remittance for the Reconciliation Period, as provided in Section 6(e) of Annex I. The Servicer shall allocate such Remittance Shortfall or Excess Remittance as follows: (A) if a Remittance Shortfall exists, the Servicer shall make a supplemental remittance, to the General Subaccount of the Collection Account within two (2) Servicer Business Days, or (B) if an Excess Remittance exists, the Servicer shall be entitled either (i) to reduce the amount of each Daily Remittance which the Servicer subsequently remits to the General Subaccount of the Collection Account for application to the amount of such Excess Remittance until the balance of such Excess Remittance has been reduced to zero, the amount of such reduction becoming the property of the Servicer or (ii) so long as such withdrawal would not cause the amounts on deposit in the General Subaccount or the Excess Funds Subaccount to be insufficient for the payment of the next installment of interest on the Transition Bonds or principal due at maturity on the next Payment Date or upon acceleration on or before the next Payment Date, to be paid immediately from such General Subaccount or Excess Funds Subaccount, the amount of such Excess Remittance, such payment becoming the property of the Servicer. If there is a Remittance Shortfall, the amount which the Servicer remits to the General Subaccount of the Collection Account on the relevant date set forth above shall be increased by the amount of such Remittance Shortfall, such increase coming from the Servicer's own funds. The Servicer may calculate the Excess Remittance or Remittance Shortfall more often than annually in its discretion if the Servicer believes such reconciliations are appropriate. The results of any such reconciliation shall be reported in the next issued Monthly Servicer's Certificate.
       3. Unless otherwise directed to do so by the Issuer, the Servicer shall be responsible for selecting Eligible Investments in which the funds in the Collection Account shall be invested pursuant to Section 8.03 of the Indenture.
   12. Maintenance of Operations. Subject to Section 6.03, ETI agrees to continue, unless prevented by circumstances beyond its control, to operate its electric transmission and distribution system to provide service (or, if transmission and distribution are split, to provide distribution service directly to its Customers) so long as it is acting as the Servicer under this Agreement.

7. 
   DEFAULT

   1. Servicer Default. If any one or more of the following events (a "Servicer Default") shall occur and be continuing:
      1. any failure by the Servicer to remit to the Collection Account on behalf of the Issuer any required remittance that shall continue unremedied for a period of five (5) Business Days after written notice of such failure is received by the Servicer from the Issuer or the Indenture Trustee or after discovery of such failure by an officer of the Servicer; or
      2. any failure on the part of the Servicer or, so long as the Servicer is ETI or an affiliate thereof, any failure on the part of ETI, as the case may be, duly to observe or to perform in any material respect any covenants or agreements of the Servicer or ETI, as the case may be, set forth in this Agreement (other than as provided in clause (a) of this Section 7.01) or any other Basic Document to which it is a party, which failure shall (i) materially and adversely affect the rights of the Holders and (ii) continue unremedied for a period of sixty (60) days after the date on which (A) written notice of such failure, requiring the same to be remedied, shall have been given to the Servicer or ETI, as the case may be, by the Issuer (with a copy to the Indenture Trustee) or to the Servicer or ETI, as the case may be, by the Indenture Trustee or (B) such failure is discovered by an officer of the Servicer; or
      3. any failure by the Servicer duly to perform its obligations under Section 4.01(b) of this Agreement in the time and manner set forth therein, which failure continues unremedied for a period of five (5) days; or
      4. any representation or warranty made by the Servicer in this Agreement or any Basic Document shall prove to have been incorrect when made, which has a material adverse effect on the Holders and which material adverse effect continues unremedied for a period of sixty (60) days after the date on which (A) written notice thereof, requiring the same to be remedied, shall have been delivered to the Servicer (with a copy to the Indenture Trustee) by the Issuer or the Indenture Trustee or (B) such failure is discovered by an officer of the Servicer; or
      5. an Insolvency Event occurs with respect to the Servicer or ETI;

      then, and in each and every case, so long as the Servicer Default shall not have been remedied, either the Indenture Trustee shall upon the instruction of the PUCT (acting on behalf of Customers) or of Holders evidencing not less than a majority of the Outstanding Amount of the Transition Bonds, by notice then given in writing to the Servicer (and to the Indenture Trustee if given by the Holders) (a "Termination Notice"), terminate all the rights and obligations (other than the obligations set forth in Section 6.02 and the obligation under Section 7.02 to continue performing its functions as Servicer until a successor Servicer is appointed) of the Servicer under this Agreement. In addition, upon a Servicer Default described in Section 7.01(a), the Holders and the Indenture Trustee as financing parties under the Securitization Law (or any of their representatives) shall be entitled to (i) apply to the district court of Travis County, Texas for sequestra tion and payment of revenues arising with respect to the Transition Property, (ii) foreclose on or otherwise enforce the lien and security interests in the Transition Property and (iii) apply to the PUCT for an order that amounts arising from the Transition Charges be transferred to a separate account for the benefit of the Secured Parties, in accordance with the Securitization Law. On or after the receipt by the Servicer of a Termination Notice, all authority and power of the Servicer under this Agreement, whether with respect to the Transition Bonds, the Transition Property, the Transition Charges or otherwise, shall, without further action, pass to and be vested in such successor Servicer as may be appointed under Section 7.02; and, without limitation, the Indenture Trustee is hereby authorized and empowered to execute and deliver, on behalf of the predecessor Servicer, as attorney-in-fact or otherwise, any and all documents and other instruments, and to do or accomplish all other acts or things necessary or appropriate to effect the purposes of such Termination Notice, whether to complete the transfer of the Transition Property Records and related documents, or otherwise. The predecessor Servicer shall cooperate with the successor Servicer, the Issuer and the Indenture Trustee in effecting the termination of the responsibilities and rights of the predecessor Servicer under this Agreement, including the transfer to the successor Servicer for administration by it of all Transition Property Records and all cash amounts that shall at the time be held by the predecessor Servicer for remittance, or shall thereafter be received by it with respect to the Transition Property or the Transition Charges. As soon as practicable after receipt by the Servicer of such Termination Notice, the Servicer shall deliver the Transition Property Records to the successor Servicer. In case a successor Servicer is appointed as a result of a Servicer Default, all reasonable costs and expenses (including reasonable a ttorney's fees and expenses) incurred in connection with transferring the Transition Property Records to the successor Servicer and amending this Agreement to reflect such succession as Servicer pursuant to this Section 7.01 shall be paid by the predecessor Servicer upon presentation of reasonable documentation of such costs and expenses. Termination of ETI as Servicer shall not terminate ETI's rights or obligations under the Sale Agreement (except rights thereunder deriving from its rights as the Servicer hereunder).

   2. Appointment of Successor.
      1. Upon the Servicer's receipt of a Termination Notice pursuant to Section 7.01 or the Servicer's resignation or removal in accordance with the terms of this Agreement, the predecessor Servicer shall continue to perform its functions as Servicer under this Agreement, and shall be entitled to receive the requisite portion of the Servicing Fee, until a successor Servicer shall have assumed in writing the obligations of the Servicer hereunder as described below. In the event of the Servicer's removal or resignation hereunder, the Indenture Trustee shall, at the written direction and with the consent of the Holders of at least a majority of the Outstanding Amount of the Transition Bonds, appoint a successor Servicer with the Issuer's prior written consent thereto (which consent shall not be unreasonably withheld), and the successor Servicer shall accept its appointment by a written assumption in form reasonably acceptable to the Issuer and the Indenture Trustee and provide prompt written notice of such as sumption to the Issuer and the Rating Agencies. If within thirty (30) days after the delivery of the Termination Notice, a new Servicer shall not have been appointed, the Indenture Trustee may petition the PUCT or a court of competent jurisdiction to appoint a successor Servicer under this Agreement. A Person shall qualify as a successor Servicer only if (i) such Person is permitted under PUCT Regulations to perform the duties of the Servicer, (ii) the Rating Agency Condition shall have been satisfied, (iii) such Person enters into a servicing agreement with the Issuer having substantially the same provisions as this Agreement (as the Servicer of the Transition Bonds) and (iv) the PUCT approves the appointment of such Person. In no event shall the Indenture Trustee be liable for its appointment of a successor Servicer. The Indenture Trustee's expenses incurred under this Section 7.02(a) shall be at the sole expense of the Issuer and payable from the Collection Account as provided in Se ction 8.02 of the Indenture.
      2. Upon appointment, the successor Servicer shall be the successor in all respects to the predecessor Servicer and shall be subject to all the responsibilities, duties and liabilities arising thereafter relating thereto placed on the predecessor Servicer and shall be entitled to the Servicing Fee and all the rights granted to the predecessor Servicer by the terms and provisions of this Agreement.
   3. Waiver of Past Defaults. The PUCT, together with Holders evidencing not less than a majority of the Outstanding Amount of the Transition Bonds may, on behalf of all Holders, direct the Indenture Trustee to waive in writing any default by the Servicer in the performance of its obligations hereunder and its consequences, except a default in making any required deposits to the Collection Account in accordance with this Agreement. Upon any such waiver of a past default, such default shall cease to exist, and any Servicer Default arising therefrom shall be deemed to have been remedied for every purpose of this Agreement. No such waiver shall extend to any subsequent or other default or impair any right consequent thereto.
   4. Notice of Servicer Default. The Servicer shall deliver to the Issuer, the Indenture Trustee, the PUCT and the Rating Agencies, promptly after having obtained knowledge thereof, but in no event later than five (5) Business Days thereafter, written notice of any event which with the giving of notice or lapse of time, or both, would become a Servicer Default under Section 7.01.
   5. Cooperation with Successor. The Servicer covenants and agrees with the Issuer that it will, on an ongoing basis, cooperate with the successor Servicer and provide whatever information is, and take whatever actions are, reasonably necessary to assist the successor Servicer in performing its obligations hereunder.

8. 
   MISCELLANEOUS PROVISIONS

   1. Amendment.
      1. This Agreement may be amended in writing by the Servicer and the Issuer with the prior written consent of the Indenture Trustee, the satisfaction of the Rating Agency Condition and, if the contemplated amendment may in the judgment of the PUCT increase ongoing Qualified Costs, the consent of the PUCT pursuant to Section 8.02. Promptly after the execution of any such amendment or consent, the Issuer shall furnish written notification of the substance of such amendment or consent to each of the Rating Agencies.

         Prior to the execution of any amendment to this Agreement, the Issuer and the Indenture Trustee shall be entitled to receive and conclusively rely upon an Opinion of Counsel of Independent counsel stating that such amendment is authorized or permitted by this Agreement and upon the Opinion of Counsel from Independent counsel referred to in Section 3.01(c)(i). The Issuer and the Indenture Trustee may, but shall not be obligated to, enter into any such amendment which affects their own rights, duties, indemnities or immunities under this Agreement or otherwise.

      2. Notwithstanding Section 8.01(a) or anything to the contrary in this Agreement (including Section 8.02), the Servicer and the Issuer may amend Annex I to this Agreement in writing with prior written notice given to the Indenture Trustee, the PUCT and the Rating Agencies, but without the consent of the Indenture Trustee, any Rating Agency or any Holder, solely to address changes to the Servicer's method of calculating TC Payments as a result of changes to the Servicer's current computerized customer information system, including changes which would replace the remittances contemplated by the estimation procedures set forth in Annex I with remittances of TC Collections determined to have been actually received; provided that any such amendment shall not have a material adverse effect on the Holders of then Outstanding Transition Bonds.
      3. If the PUCT adopts a rule or regulation the effect of which is to modify or supplement any provision of this Agreement related to the REP Credit Requirements and the REP Deposit Requirements, this Agreement will be deemed so modified or supplemented on the effective date of such rule or regulation in the manner necessary to comply therewith without the necessity of any further action by any party hereto; provided that (i) the Rating Agency Condition has been satisfied, (ii) the Servicer shall have notified the Issuer and the Indenture Trustee of such modification or supplement and delivered an Opinion of Counsel as described in the second paragraph of Section 8.01 and (iii) neither the Issuer nor the Indenture Trustee shall be bound by any such modification to the extent it affects their own rights, duties, indemnities or immunities under this Agreement or otherwise.
   2. PUCT Condition. Notwithstanding anything to the contrary in Section 8.01(a), no amendment or modification of this Agreement shall be effective unless the process set forth in this Section 8.02 has been followed.
      1. At least thirty-one (31) days prior to the effectiveness of any such amendment or modification and after obtaining the other necessary approvals set forth in Section 8.01(a) (except that the consent of the Indenture Trustee may be subject to the consent of Holders if such consent is required or sought by the Indenture Trustee in connection with such amendment or modification), the Servicer shall have delivered to the PUCT's executive director and general counsel written notification of any proposed amendment, which notification shall contain:
         1. a reference to Docket No. 37247;
         2. an Officer's Certificate stating that the proposed amendment has been approved by all parties to this Agreement; and
         3. a statement identifying the person to whom the PUCT or its staff is to address any response to the proposed amendment or to request additional time;
      2. The PUCT or its staff shall, within thirty (30) days of receiving the notification complying with Section 8.02(a), either:
         1. provide notice of its determination that the proposed amendment or modification will not under any circumstances have the effect of increasing the ongoing Qualified Costs related to the Transition Bonds,
         2. provide notice of its consent or lack of consent to the person specified in Section 8.02(a)(iii), or
         3. be conclusively deemed to have consented to the proposed amendment or modification,

         unless, within thirty (30) days of receiving the notification complying with Section 8.02(a), the PUCT or its staff delivers to the office of the person specified in Section 8.02(a)(iii) a written statement requesting an additional amount of time not to exceed thirty (30) days in which to consider whether to consent to the proposed amendment or modification. If the PUCT or its staff requests an extension of time in the manner set forth in the preceding sentence, then the PUCT shall either provide notice of its consent or lack of consent or notice of its determination that the proposed amendment or modification will not under any circumstances increase ongoing Qualified Costs to the person specified in Section 8.02(a)(iii) no later than the last day of such extension of time or be conclusively deemed to have consented to the proposed amendment or modification on the last day of such extension of time. Any amendment or modification requiring the consent of the PUCT shall bec ome effective on the later of (i) the date proposed by the parties to such amendment or modification and (ii) the first day after the expiration of the thirty (30)-day period provided for in this Section 8.02(b), or, if such period has been extended pursuant hereto, the first day after the expiration of such period as so extended.

      3. Following the delivery of a notice to the PUCT by the Servicer under Section 8.02(a), the Servicer and the Issuer shall have the right at any time to withdraw from the PUCT further consideration of any notification of a proposed amendment. Such withdrawal shall be evidenced by the Servicer's giving prompt written notice thereof to the PUCT, the Issuer and the Indenture Trustee.
   3. Maintenance of Accounts and Records.  The Servicer shall maintain accounts and records as to the Transition Property accurately and in accordance with its standard accounting procedures and in sufficient detail to permit reconciliation between TC Payments received by the Servicer and TC Collections from time to time deposited in the Collection Account.
      1. The Servicer shall permit the Indenture Trustee and its agents at any time during normal business hours, upon reasonable notice to the Servicer and to the extent it does not unreasonably interfere with the Servicer's normal operations, to inspect, audit and make copies of and abstracts from the Servicer's records regarding the Transition Property and the Transition Charges. Nothing in this Section 8.03(b) shall affect the obligation of the Servicer to observe any applicable law (including any PUCT Regulation) prohibiting disclosure of information regarding the Customers, and the failure of the Servicer to provide access to such information as a result of such obligation shall not constitute a breach of this Section 8.03(b).
   4. Notices. Unless otherwise specifically provided herein, all demands, notices and communications upon or to the Servicer, the Issuer, the Indenture Trustee or the Rating Agencies under this Agreement shall be sufficiently given for all purposes hereunder if in writing and delivered personally, sent by documented delivery service or, to the extent receipt is confirmed telephonically, sent by telecopy or other form of electronic transmission:
      1. in the case of the Servicer, to Entergy Texas, Inc., at 350 Pine Street, Beaumont, Texas 77701, Attention: President, Telephone: (409) 838-6631, Facsimile: (409) 981-3016;
      2. in the case of the Issuer, to Entergy Texas Restoration Funding, LLC at Capital Center, 919 Congress Avenue, Suite 840-C, Austin, Texas 78701, Attention: President, Telephone: (512) 487-3982, Facsimile: (512) 487-3958;
      3. in the case of the Indenture Trustee, to the Corporate Trust Office;
      4. in the case of the PUCT, to 1701 N. Congress Avenue, P.O. Box 13326, Austin, Texas 78711-3326, Attention: Executive Director, Telephone: (512) 936-7040, Facsimile: (512) 936-7036 and General Counsel, Telephone: (512) 936-7261, Facsimile: (512) 936-7268;
      5. in the case of Moody's, to Moody's Investors Service, Inc., ABS Monitoring Department, 7 World Trade Center at 250 Greenwich Street, New York, New York 10007, Telephone: (212) 553-3686, Facsimile: (212) 553-0573;
      6. in the case of Standard & Poor's, to Standard & Poor's Ratings Services, a Standard & Poor's Financial Services LLC business, 55 Water Street, 41st Floor, New York, New York 10041, Attention: Asset Backed Surveillance Department, Telephone: (212) 438-2000, Facsimile: (212) 438-2665;
      7. in the case of Fitch, to Fitch Ratings, One State Street Plaza, New York, NY 10004, Attention: ABS Surveillance, Telephone: (212) 908-0500, Facsimile: (212) 908-0355; or
      8. as to each of the foregoing, at such other address as shall be designated by written notice to the other parties.
   5. Assignment. Notwithstanding anything to the contrary contained herein, except as provided in Section 6.03 and as provided in the provisions of this Agreement concerning the resignation of the Servicer, this Agreement may not be assigned by the Servicer.
   6. Limitations on Rights of Others. The provisions of this Agreement are solely for the benefit of the Servicer and the Issuer and, to the extent provided herein or in the Basic Documents, Customers, the Indenture Trustee and the Holders, and the other Persons expressly referred to herein, and such Persons shall have the right to enforce the relevant provisions of this Agreement. Nothing in this Agreement, whether express or implied, shall be construed to give to any other Person any legal or equitable right, remedy or claim in the Transition Property or Transition Bond Collateral or under or in respect of this Agreement or any covenants, conditions or provisions contained herein. Notwithstanding anything to the contrary contained herein, for the avoidance of doubt, any right, remedy or claim to which any Customer may be entitled pursuant to the Financing Order and to this Agreement may be asserted or exercised only by the PUCT (or by the Attorney General of the State of Te xas in the name of the PUCT) for the benefit of such Customer.
   7. Severability. Any provision of this Agreement that is prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability without invalidating the remainder of such provision (if any) or the remaining provisions hereof (unless such a construction shall be unreasonable), and any such prohibition or unenforceability in any jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction.
   8. Separate Counterparts. This Agreement may be executed by the parties hereto in separate counterparts, each of which when so executed and delivered shall be an original, but all such counterparts shall together constitute but one and the same instrument.
   9. Headings. The headings of the various Articles and Sections herein are for convenience of reference only and shall not define or limit any of the terms or provisions hereof.
   10. GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF TEXAS AND THE OBLIGATIONS, RIGHTS AND REMEDIES OF THE PARTIES HEREUNDER SHALL BE DETERMINED IN ACCORDANCE WITH SUCH LAWS.
   11. Assignment to Indenture Trustee. (a) The Servicer hereby acknowledges and consents to any mortgage, pledge, assignment and grant of a security interest by the Issuer to the Indenture Trustee for the benefit of the Secured Parties pursuant to the Indenture of any or all of the Issuer's rights hereunder and (b) in no event shall the Indenture Trustee have any liability for the representations, warranties, covenants, agreements or other obligations of the Issuer hereunder or in any of the certificates delivered pursuant hereto, as to all of which any recourse shall be had solely to the assets of the Issuer subject to the availability of funds therefor under Section 8.02 of the Indenture.
   12. Nonpetition Covenants. Notwithstanding any prior termination of this Agreement or the Indenture, the Servicer shall not, prior to the date which is one year and one day after the satisfaction and discharge of the Indenture, acquiesce, petition or otherwise invoke or cause the Issuer to invoke or join with any Person in provoking the process of any Governmental Authority for the purpose of commencing or sustaining an involuntary case against the Issuer under any federal or state bankruptcy, insolvency or similar law or appointing a receiver, liquidator, assignee, trustee, custodian, sequestrator or other similar official of the Issuer or any substantial part of the property of the Issuer or ordering the dissolution, winding up or liquidation of the affairs of the Issuer.
   13. Limitation of Liability. It is expressly understood and agreed by the parties hereto that this Agreement is executed and delivered by the Indenture Trustee, not individually or personally but solely as Indenture Trustee in the exercise of the powers and authority conferred and vested in it, and that the Indenture Trustee, in acting hereunder, is entitled to all rights, benefits, protections, immunities and indemnities accorded to it under the Indenture.

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed by their respective officers as of the day and year first above written.

	ENTERGY TEXAS RESTORATION FUNDING, LLC, as Issuer
	By: ________________________________ Name: Title:
	ENTERGY TEXAS, INC., as Servicer
	By: ________________________________ Name: Title:
Acknowledged and Accepted:
The Bank of New York Mellon, as Indenture Trustee
By: ______________________________ Name: Title:

EXHIBIT A

FORM OF MONTHLY SERVICER'S CERTIFICATE

See Attached.

Remittance Dates:

Monthly Servicer's Certificate

(to be delivered each month pursuant to Section 3.01(b) of the Transition Property Servicing Agreement)

ENTERGY TEXAS RESTORATION FUNDING, LLC

Entergy Texas, Inc., as Servicer

Pursuant to the Transition Property Servicing Agreement dated ________ __, 2009 (the "Transition Property Servicing Agreement") between
Entergy Texas, Inc., as Servicer, and Entergy Texas Restoration Funding, LLC, as Note Issuer, the Servicer does hereby certify as follows:

Reconciliation Period:
Remittance Dates:

TC Class           Total a. TCs in Effect b. TCs Billed c. Estimated TC
Payments Received    

Results of Annual Reconciliation (if applicable):
Reconciliation Period:

TC Class         Total d. Estimated TC
Payments Received e. Actual TC
Collections f. Remittance Shortfall
for this Collection g. Excess Remittance
for this Collection      

h. Daily remittances previously made by the Servicer to the Collection Account in respect of this Collection Period (c):

i. The amount to be remitted by the Servicer to the Collection Account for this Collection Period is (c + f - g):

j. If (i>h), (i-h) equals net amount due from the Servicer to the Collection Account:

k. If (h>i), (h-i) equals net amount due to the Servicer from the Collection Account:

Capitalized terms used herein have their respective meanings set forth in the Transition Property Servicing Agreement.

In WITNESS HEREOF, the undersigned has duly executed and delivered this Monthly Servicer's Certificate the day of

ENTERGY TEXAS, INC., as Servicer

By __________________________________________________________

Title: ________________________________________________________

EXHIBIT B

FORM OF SEMI-ANNUAL SERVICER'S CERTIFICATE

Pursuant to Section 4.01(c)(ii) of the Transition Property Servicing Agreement, dated as of ________ __, 2009 (the "Servicing Agreement"), between ENTERGY TEXAS, INC., as servicer and ENTERGY TEXAS RESTORATION FUNDING, LLC, the Servicer does hereby certify, for the ________, 20__ Payment Date (the "Current Payment Date"), as follows:

1. Capitalized terms used herein have their respective meanings as set forth in the Indenture. References herein to certain sections and subsections are references to the respective sections of the Servicing Agreement or the Indenture, as the context indicates.
   1. Allocation of Remittances as of Current Payment Date allocable to principal and interest:
      1. Principal

         	Aggregate
         Tranche A-1
         Tranche A-2
         Tranche A-3
         Total:

      2. Interest

         	Aggregate
         Tranche A-1
         Tranche A-2
         Tranche A-3
         Total:

      3. Outstanding Amount of Bonds prior to, and after giving effect to the payment on the Current Payment Date and the difference, if any, between the Outstanding Amount specified in the Expected Amortization Schedule (after giving effect to payments to be made on such Payment Date under 1a) above) and the Principal Balance to be Outstanding (following payment on Current Payment Date):
         1. Principal Balance Outstanding (as of the date of this certification):

         Tranche A-1

         Tranche A-2

         Tranche A-3

         Total:

      4. Principal Balance to be Outstanding (following payment on Current Payment Date):

         Tranche A-1

         Tranche A-2

         Tranche A-3

         Total:

      5. Difference between (b) above and Outstanding Amount specified in Expected Amortization Schedule:

         Tranche A-1

         Tranche A-2

         Tranche A-3

         Total:

      6. All other transfers to be made on the Current Payment Date, including amounts to be paid to the Indenture Trustee and to the Servicer:
         1. Operating Expenses

         Trustee Fees and Expenses: (subject to $1,000,000 cap on Indemnity Amounts per Section 8.02(e)(1))

         Servicing Fee:

         Administration Fee:

         Other Operating Expenses:

         Total:

      7. Other Payments

         Operating Expenses (payable pursuant to Section 8.02(e)(4)):

         Funding of Capital Subaccount (to required amount):

         Interest Earnings on Capital Subaccount to Entergy Texas
         Restoration Funding:

         Operating Expenses and Indemnity Amounts over $1,000,000 (payable pursuant to Section 8.02(e)(8)):

         Deposits to Excess Funds Subaccount:

         Total:

      8. Estimated amounts on deposit in the Capital Subaccount and Excess Funds Subaccount after giving effect to the foregoing payments:
         1. Capital Subaccount

         Total:

      9. Excess Funds Subaccount

         Total:

         IN WITNESS WHEREOF, the undersigned has duly executed and delivered this Servicer's Certificate this __ day of __________.

         ENTERGY TEXAS, INC.,
         as Servicer

         By:
         Name:
         Title:

         EXHIBIT C-1

         FORM OF SERVICER'S REGULATION AB COMPLIANCE CERTIFICATE

         The undersigned hereby certifies that he/she is the duly elected and acting [__________] of ENTERGY TEXAS, INC., as servicer (the "Servicer") under the Transition Property Servicing Agreement dated as of ______ __, 2009 (the "Servicing Agreement") between the Servicer and Entergy Texas Restoration Funding, LLC (the "Issuer") and further that:

         1. The undersigned is responsible for assessing the Servicer's compliance with the servicing criteria set forth in Item 1122(d) of Regulation AB (the "Servicing Criteria").

         2. With respect to each of the Servicing Criteria, the undersigned has made the following assessment of the Servicing Criteria in accordance with Item 1122(d) of Regulation AB, with such discussion regarding the performance of such Servicing Criteria during the fiscal year covered by the Sponsor's annual report on Form 10-K Report (such fiscal year, the "Assessment Period"):

         	Servicing Criteria	Applicable Servicing Criteria
         Reference	Criteria
         	General Servicing Considerations
         1122(d)(1)(i)	Policies and procedures are instituted to monitor any performance or other triggers and events of default in accordance with the transaction agreements.	Applicable; assessment below.
         1122(d)(1)(ii)	If any material servicing activities are outsourced to third parties, policies and procedures are instituted to monitor the third party's performance and compliance with such servicing activities.	Not applicable; no servicing activities were outsourced.
         1122(d)(1)(iii)	Any requirements in the transaction agreements to maintain a back-up servicer for pool assets are maintained.	Not applicable; documents do not provide for a back-up servicer.
         1122(d)(1)(iv)	A fidelity bond and errors and omissions policy is in effect on the party participating in the servicing function throughout the reporting period in the amount of coverage required by and otherwise in accordance with the terms of the transaction agreements.	Not applicable; PUCT rules impose credit standards on ETI and any future retail electric providers who handle customer collections and govern performance requirements of utilities.
         	Cash Collection and Administration
         1122(d)(2)(i)	Payments on pool assets are deposited into the appropriate custodial bank accounts and related bank clearing accounts no more than two business days following receipt, or such other number of days specified in the transaction agreements.	Applicable
         1122(d)(2)(ii)	Disbursements made via wire transfer on behalf of an obligor or to an investor are made only by authorized personnel.	Applicable
         1122(d)(2)(iii)	Advances of funds or guarantees regarding collections, cash flows or distributions, and any interest or other fees charged for such advances, are made, reviewed and approved as specified in the transaction agreements.	Applicable, but no current assessment required; no advances by the Servicer are permitted under the transaction agreements.
         1122(d)(2)(iv)	The related accounts for the transaction, such as cash reserve accounts or accounts established as a form of overcollateralization, are separately maintained (e.g., with respect to commingling of cash) as set forth in the transaction agreements.	Applicable, but no current assessment is required since transaction accounts are maintained by and in the name of the Indenture Trustee.
         1122(d)(2)(v)	Each custodial account is maintained at a federally insured depository institution as set forth in the transaction agreements. For purposes of this criterion, "federally insured depository institution" with respect to a foreign financial institution means a foreign financial institution that meets the requirements of Rule 13k-1(b)(1) of the Securities Exchange Act.	Applicable, but no current assessment required; all "custodial accounts" are maintained by the Indenture Trustee.
         1122(d)(2)(vi)	Unissued checks are safeguarded so as to prevent unauthorized access.	Not applicable; all transfers made by wire transfer.
         1122(d)(2)(vii)	Reconciliations are prepared on a monthly basis for all asset-backed securities related bank accounts, including custodial accounts and related bank clearing accounts. These reconciliations are (A) mathematically accurate; (B) prepared within 30 calendar days after the bank statement cutoff date, or such other number of days specified in the transaction agreements; (C) reviewed and approved by someone other than the person who prepared the reconciliation; and (D) contain explanations for reconciling items. These reconciling items are resolved within 90 calendar days of their original identification, or such other number of days specified in the transaction agreements.	Applicable; assessment below.
         	Investor Remittances and Reporting
         1122(d)(3)(i)	Reports to investors, including those to be filed with the Commission, are maintained in accordance with the transaction agreements and applicable Commission requirements. Specifically, such reports (A) are prepared in accordance with timeframes and other terms set forth in the transaction agreements; (B) provide information calculated in accordance with the terms specified in the transaction agreements; (C) are filed with the Commission as required by its rules and regulations; and (D) agree with investors' or the trustee's records as to the total unpaid principal balance and number of pool assets serviced by the Servicer.	Applicable; assessment below.
         1122(d)(3)(ii)	Amounts due to investors are allocated and remitted in accordance with timeframes, distribution priority and other terms set forth in the transaction agreements.	Applicable; assessment below.
         1122(d)(3)(iii)	Disbursements made to an investor are posted within two business days to the Servicer's investor records, or such other number of days specified in the transaction agreements.	Applicable
         1122(d)(3)(iv)	Amounts remitted to investors per the investor reports agree with cancelled checks, or other form of payment, or custodial bank statements.	Applicable; assessment below.
         	Pool Asset Administration
         1122(d)(4)(i)	Collateral or security on pool assets is maintained as required by the transaction agreements or related documents.	Applicable; assessment below.
         1122(d)(4)(ii)	Pool assets and related documents are safeguarded as required by the transaction agreements.	Applicable; assessment below.
         1122(d)(4)(iii)	Any additions, removals or substitutions to the asset pool are made, reviewed and approved in accordance with any conditions or requirements in the transaction agreements.	Not applicable; no removals or substitutions of transition property are contemplated or allowed under the transaction documents.
         1122(d)(4)(iv)	Payments on pool assets, including any payoffs, made in accordance with the related pool asset documents are posted to the Servicer's obligor records maintained no more than two business days after receipt, or such other number of days specified in the transaction agreements, and allocated to principal, interest or other items (e.g., escrow) in accordance with the related transaction agreements.	Applicable; assessment below.
         1122(d)(4)(v)	The Servicer's records regarding the pool assets agree with the Servicer's records with respect to an obligor's unpaid principal balance.	Not applicable; because underlying obligation (transition charge) is not an interest bearing instrument
         1122(d)(4)(vi)	Changes with respect to the terms or status of an obligor's pool assets (e.g., loan modifications or re-agings) are made, reviewed and approved by authorized personnel in accordance with the transaction agreements and related pool asset documents.	Applicable; assessment below
         1122(d)(4)(vii)	Loss mitigation or recovery actions (e.g., forbearance plans, modifications and deeds in lieu of foreclosure, foreclosures and repossessions, as applicable) are initiated, conducted and concluded in accordance with the timeframes or other requirements established by the transaction agreements.	Applicable; assessment below.
         1122(d)(4)(viii)	Records documenting collection efforts are maintained during the period any pool asset is delinquent in accordance with the transaction agreements. Such records are maintained on at least a monthly basis, or such other period specified in the transaction agreements, and describe the entity's activities in monitoring delinquent pool assets including, for example, phone calls, letters and payment rescheduling plans in cases where delinquency is deemed temporary (e.g., illness or unemployment).	Applicable, but does not require assessment since no explicit documentation requirement with respect to delinquent accounts are imposed under the transactional documents due to availability of "true-up" mechanism.
         1122(d)(4)(ix)	Adjustments to interest rates or rates of return for pool assets with variable rates are computed based on the related pool asset documents.	Not applicable; transition charges are not interest bearing instruments.
         1122(d)(4)(x)	Regarding any funds held in trust for an obligor (such as escrow accounts): (A) such funds are analyzed, in accordance with the obligor's pool asset documents, on at least an annual basis, or such other period specified in the transaction agreements; (B) interest on such funds is paid, or credited, to obligors in accordance with applicable pool asset documents and state laws; and (C) such funds are returned to the obligor within 30 calendar days of full repayment of the related pool assets, or such other number of days specified in the transaction agreements.	Applicable; Servicer will maintain REP deposit accounts in accordance with PUCT rules and regulations.
         1122(d)(4)(xi)	Payments made on behalf of an obligor (such as tax or insurance payments) are made on or before the related penalty or expiration dates, as indicated on the appropriate bills or notices for such payments, provided that such support has been received by the servicer at least 30 calendar days prior to these dates, or such other number of days specified in the transaction agreements.	Not applicable; Servicer does not make payments on behalf of obligors.
         1122(d)(4)(xii)	Any late payment penalties in connection with any payment to be made on behalf of an obligor are paid from the servicer's funds and not charged to the obligor, unless the late payment was due to the obligor's error or omission.	Not applicable; servicer cannot make advances of its own funds on behalf of customers under the transaction documents.
         1122(d)(4)(xiii)	Disbursements made on behalf of an obligor are posted within two business days to the obligor's records maintained by the servicer, or such other number of days specified in the transaction agreements.	Not applicable; servicer cannot make advances of its own funds on behalf of customers to pay principal or interest on the bonds.
         1122(d)(4)(xiv)	Delinquencies, charge-offs and uncollectible accounts are recognized and recorded in accordance with the transaction agreements.	Applicable; assessment below.
         1122(d)(4)(xv)	Any external enhancement or other support, identified in Item 1114(a)(1) through (3) or Item 1115 of Regulation AB, is maintained as set forth in the transaction agreements.	Not applicable; no external enhancement is required under the transaction documents.

         3. To the best of the undersigned's knowledge, based on such review, the Servicer is in compliance in all material respects with the applicable servicing criteria set forth above as of and for the period ending the end of the fiscal year covered by the Sponsor's annual report on Form 10-K. [If not true, include description of any material instance of noncompliance.]

         Executed as of this ______________ day of _________________, ____.

         ENTERGY TEXAS, INC.

         By: ________________________________
         Name:
         Title:

         EXHIBIT C-2

         FORM OF CERTIFICATE OF COMPLIANCE

         The undersigned hereby certifies that he/she is the duly elected and acting [__________] of Entergy Texas, Inc. as servicer (the "Servicer") under the Transition Property Servicing Agreement dated as of ______ __, 2009 (the "Servicing Agreement") between the Servicer and Entergy Texas Restoration Funding, LLC (the "Issuer") and further that:

         1. A review of the activities of the Servicer and of its performance under the Servicing Agreement during the twelve months ended [_______], [       ] has been made under the supervision of the undersigned pursuant to Section 3.03 of the Servicing Agreement; and

         2. To the best of the undersigned's knowledge, based on such review, the Servicer has fulfilled all of its obligations in all material respects under the Servicing Agreement throughout the twelve months ended [________],[ _____], except as set forth on Annex A hereto.

         Executed as of this ______________ day of _________________, ____.

         Entergy Texas, Inc.

         By: ________________________________
         Name:
         Title:

         ANNEX A

         to Certificate of Compliance

         LIST OF SERVICER DEFAULTS

         The following Servicer Defaults, or events which with the giving of notice, the lapse of time, or both, would become Servicer Defaults known to the undersigned occurred during the year ended [__________]:

         Nature of Default Status

         ANNEX I

         SERVICING PROCEDURES

         The Servicer agrees to comply with the following servicing procedures:

         1. Definitions.
            1. Capitalized terms used herein and not otherwise defined herein shall have the meanings ascribed to such terms in the Transition Property Servicing Agreement (the "Agreement").
            2. Whenever used in this Annex I, the following words and phrases shall have the following meanings:

            "Applicable MDMA" means with respect to each Customer, any meter data management agent providing meter reading services for that Customer's account.

            "Billed TCs" means the amounts of Transition Charges billed by the Servicer, whether billed directly to Customers by the Servicer or indirectly through REPs.

            "Days Sales Outstanding" means the average number of days ETI's monthly bills to Customers in its Texas service area (or, following the advent of customer choice, monthly bills to REPs) remain outstanding during the calendar year immediately preceding the calculation thereof pursuant to Section 4.01(b)(i) of the Agreement. The initial Days Sales Outstanding shall be 22 days until updated pursuant to Section 4.01(b)(i) of the Agreement.

            "Other Providers" means each electric utility, municipally owned utility and/or cooperative, which, pursuant to any Tariff, any other tariffs filed with the PUCT, or any agreement with ETI, is obligated to bill, pay or collect Transition Charges.

            "Servicer Policies and Practices" means, with respect to the Servicer's duties under this Annex I, the policies and practices of the Servicer applicable to such duties that the Servicer follows with respect to comparable assets that it services for itself and, if applicable, others.

         2. Data Acquisition.
            1. Installation and Maintenance of Meters. Except to the extent that a REP is responsible for such services, the Servicer shall cause to be installed, replaced and maintained meters in such places and in such condition as will enable the Servicer to obtain usage measurements for each Customer at least once every Billing Period. To the extent an Other Provider is responsible for such services, such Other Provider may obtain usage measurements for each Customer less frequently than once every Billing Period in accordance with its current practices so long as the PUCT Regulations so permit and the number of retail Customers of any such Other Provider for whom such modified terms apply shall be less than 5,000 as of the end of the preceding calendar year. To the extent a REP is responsible for such services, but not performing such services, the Servicer shall take all reasonably necessary actions to obtain usage measurements for each Customer at least once every Billing Period.
            2. Meter Reading. At least once each Billing Period, the Servicer shall obtain usage measurements for each Customer, either directly or if applicable, from the Applicable MDMA; provided, however, that the Servicer may estimate any Customer's usage determined in accordance with applicable PUCT Regulations.
            3. Cost of Metering. The Issuer shall not be obligated to pay any costs associated with the routine metering duties set forth in this Section 2, including the costs of installing, replacing and maintaining meters, nor shall the Issuer be entitled to any credit against the Servicing Fee for any cost savings realized by the Servicer or any REP as a result of new metering and/or billing technologies.
            4. ERCOT. When and if the Service Area becomes subject to retail competition, the Servicer shall take all reasonable actions available under PUCT Regulations to obtain timely information from ERCOT (or, if such information is not available from ERCOT, directly from the Applicable MDMA) which is necessary for the Servicer to fulfill its obligations under this Agreement.
         3. Usage and Bill Calculation.

            The Servicer (a) shall obtain a calculation of each Customer's usage (which may be based on data obtained from such Customer's meter read or on usage estimates determined in accordance with applicable PUCT Regulations) at least once each Billing Period; provided, however that the Servicer may obtain such calculations less frequently for those Customers whose usage is calculated by Other Providers in accordance with such Other Provider's current practices so long as the PUCT Regulations so permit and the number of retail Customers of any such Other Provider for whom such modified terms apply shall be less than 5,000 as of the end of the preceding calendar year; and (b) shall either (i) determine therefrom each Customer's individual Transition Charges to be included on Bills issued by it to such Customer or to the Applicable REP or Other Provider responsible for billing such Customer, or (ii) where the Applicable REP or Other Provider is responsible for billing the Customers, allow the Applicable REP or Other Provider, rather than the Servicer, to determine such Customers' individual Transition Charges to be included on such Customers' Bills based on billing factors provided by the Servicer, and, in such case, the Servicer shall deliver to the Applicable REP or Other Provider such billing factors as are necessary for the Applicable REP or Other Provider to calculate such Customers' respective Transition Charges as such charges may change from time to time pursuant to the True-Up Adjustments.

         4. Billing.

            The Servicer shall implement the Transition Charges as of the Closing Date and shall thereafter bill each Customer or, with respect to Customers billed by a REP or Other Provider, the Applicable REP or Other Provider, for the respective Customer's outstanding current and past due Transition Charges accruing through the date on which such Transition Charges may no longer be billed under the Tariff, all in accordance with the following:

            1. Frequency of Bills; Billing Practices. In accordance with the Servicer's then-existing Servicer Policies and Practices for its own charges, as such Servicer Policies and Practices may be modified from time to time, the Servicer shall generate and issue a Bill to each Customer, or, where an Applicable REP or Other Provider, if any, is responsible for billing the Customers, to the Applicable REP or Other Provider, for such Customers' Transition Charges once every applicable Billing Period, at the same time, with the same frequency and on the same Bill as that containing the Servicer's own charges to such Customers, REPs or Other Providers, as the case may be; provided, however, that the Servicer may bill Other Providers less frequently in accordance with its current practices so long as the PUCT Regulations so permit and the number of retail Customers of any such Other Provider for whom such modified billing terms apply shall be less than 5,000 as of the end of the preceding calendar year. In the event that the Servicer makes any material modification to these practices, it shall notify the Issuer, the Indenture Trustee, and the Rating Agencies prior to the effectiveness of any such modification; provided, however, that the Servicer may not make any modification that will materially adversely affect the Holders.
            2. Format.
               1. Each Bill issued by the Servicer shall contain the charge corresponding to the respective Transition Charges owed by such Customer for the applicable Billing Period. The Transition Charges shall be separately identified if required by and in accordance with the terms of the Financing Order and Tariffs. If such charges are not separately identified, the Servicer shall provide, and unless prohibited by applicable PUCT Regulations, shall cause any and each Applicable REP to provide, Customers with the annual notice required by Section 4.01(c)(iii)(B) of this Agreement.
               2. If a REP is responsible for billing the Customers, the Servicer shall deliver to the Applicable REP itemized charges for such Customer setting forth such Customers' Transition Charges.
               3. The Servicer shall conform to such requirements in respect of the format, structure and text of Bills delivered to Customers and any REPs in accordance with, if applicable, the Financing Order, Tariffs, other tariffs and any other PUCT Regulations. To the extent that Bill format, structure and text are not prescribed by the Utilities Code or by applicable PUCT Regulations, the Servicer shall, subject to clauses (i) and (ii) above, determine the format, structure and text of all Bills in accordance with its reasonable business judgment, its Servicer Policies and Practices with respect to its own charges and prevailing industry standards.
            3. Delivery. The Servicer shall deliver all Bills issued by it (i) by United States mail in such class or classes as are consistent with the Servicer Policies and Practices followed by the Servicer with respect to its own charges to its customers or (ii) by any other means, whether electronic or otherwise, that the Servicer may from time to time use to present its own charges to its customers. If a REP is responsible for billing the Customers, the Servicer shall deliver all Bills to the Applicable REP by such means as are prescribed by applicable PUCT Regulations, or if not prescribed by applicable PUCT Regulations, by such means as are mutually agreed upon by the Servicer and the Applicable REP and are consistent with PUCT Regulations. The Servicer or any and each REP, as applicable, shall pay from its own funds all costs of issuance and delivery of all Bills, including but not limited to printing and postage costs as the same may increase or decrease from time to time.
         5. Customer Service Functions.

            The Servicer shall handle all Customer inquiries and other Customer service matters according to the same procedures it uses to service Customers with respect to its own charges.

         6. Collections; Payment Processing; Remittance.
            1. Collection Efforts, Policies, Procedures.
               1. The Servicer shall use reasonable efforts to collect all Billed TCs from Customers and any Third-Party Collectors as and when the same become due and shall follow such collection procedures as it follows with respect to comparable assets that it services for itself or others, including with respect to the following:
                  1. The Servicer shall prepare and deliver overdue notices to Customers and any REPs in accordance with applicable PUCT Regulations and Servicer Policies and Practices.
                  2. The Servicer shall apply late payment charges to outstanding Customer and REP balances in accordance with applicable PUCT Regulations and as required by the Financing Order.
                  3. In circumstances where the Servicer is allowed to bill Customers directly, the Servicer shall deliver verbal and written final notices of delinquency and possible disconnection in accordance with applicable PUCT Regulations and Servicer Policies and Practices.
                  4. The Servicer shall adhere to and carry out disconnection policies and termination of any future REP billing in accordance with the Utilities Code, the Financing Order, applicable PUCT Regulations and the Servicer Policies and Practices.
                  5. The Servicer may employ the assistance of collection agents to collect any past-due Transition Charges in accordance with applicable PUCT Regulations and Servicer Policies and Practices and the Tariffs.
                  6. The Servicer shall apply Customer and any REP deposits to the payment of delinquent accounts in accordance with applicable PUCT Regulations and Servicer Policies and Practices and according to the priorities set forth in Sections 6(b)(ii), (iii), (iv) and (v) of this Annex I.
               2. The Servicer shall not waive any late payment charge or any other fee or charge relating to delinquent payments, if any, or waive, vary or modify any terms of payment of any amounts payable by a Customer, in each case unless such waiver or action: (A) would be in accordance with the Servicer's customary practices or those of any successor Servicer with respect to comparable assets that it services for itself and for others; (B) would not materially adversely affect the rights of the Holders; and (C) would comply with applicable law; provided, however, that notwithstanding anything in the Agreement or this Annex I to the contrary, the Servicer is authorized to write off any Billed TCs, in accordance with its Servicer Policies and Practices, that have remained outstanding for one hundred eighty (180) days or more.
               3. The Servicer shall accept payment from Customers in respect of Billed TCs in such forms and methods and at such times and places as it accepts for payment of its own charges. The Servicer shall accept payment from any REPs in respect of Billed TCs in such forms and methods and at such times and places as the Servicer and any and each REP shall mutually agree in accordance with, if applicable, the Financing Order, Tariffs, other tariffs and any other PUCT Regulations.
            2. Payment Processing; Allocation; Priority of Payments.
               1. The Servicer shall post all payments received to Customer accounts as promptly as practicable, and, in any event, substantially all payments shall be posted no later than three (3) Business Days after receipt.
               2. Until retail competition is introduced into the Service Area, any amounts collected by the Servicer that represent partial payments of the total Bill to a Customer shall be applied by the Servicer in the following order of priority: (1) to any amounts due with respect to customer deposits, (2) to all electric service charges of ETI on the Bill and to all Transition Charges on the Bill, pro rata based upon the total amount billed, and (3) to tax and remaining charges billed to the Customers. Any amounts allocated to Transition Charge payments pursuant to (2) above shall be further allocated as follows: (A) first to amounts owed to the Issuer, ETI and any other affiliate of ETI which is owed "Transition Charges" as defined in Section 39.302(7) whether as supplemented by 36.403(f) of the Securitization Law or another section of the Utilities Code (excluding any late fees and interest charges), regardless of age, pro rata in proportion to their respective percentages of the total amount of their combined outstanding charges on such Bill; then (B) all late charges shall be allocated to the Servicer; provided that penalty payments owed on late payments of Transition Charges shall be allocated to the Issuer in accordance with the terms of the Tariffs. It is understood that such allocations may be made on a delayed basis in accordance with the reconciliations described in Section 6 of this Annex.
               3. When and if the Service Area becomes subject to retail competition, the Servicer shall apply payments received to each Customer's or any and each Applicable REP's account in proportion to the charges contained on the outstanding Bill to such Customer or Applicable REP. Any amounts collected by the Servicer that represent partial payments of the total Bill to a Customer or any REP shall be allocated as follows: (A) first to amounts owed to the Issuer, ETI and any other affiliate of ETI which is owed "Transition Charges" as defined in Sections 39.302(7) whether as supplemented by 36.403(f) of the Securitization Law or another section of the Utilities Code (excluding any late fees and interest charges), regardless of age, pro rata in proportion to their respective percentages of the total amount of their combined outstanding charges on such Bill; then (B) all late charges shall be allocated to the Servicer; provided that penalty payments owed on late payments of Transition C harges shall be allocated to the Issuer in accordance with the terms of the Tariffs. It is understood that such allocations may be made on a delayed basis in accordance with the reconciliations described in Section 6(e) of this Annex I.
               4. The Servicer shall hold all over-payments for the benefit of the Issuer and ETI and shall apply such funds to future Bill charges in accordance with clauses (ii) and (iii) (as applicable) as such charges become due.
               5. For Customers on a Budget Billing Plan, the Servicer shall treat TC Payments received from such Customers as if such Customers had been billed for their respective Transition Charges in the absence of the Budget Billing Plan; partial payment of a Budget Billing Plan payment shall be allocated according to clause (ii) or (iii) (as applicable) and overpayment of a Budget Billing Plan payment shall be allocated according to clause (iv).
            3. Accounts; Records.

               The Servicer shall maintain accounts and records as to the Transition Property accurately and in accordance with its standard accounting procedures and in sufficient detail (i) to permit reconciliation between payments or recoveries with respect to the Transition Property and the amounts from time to time remitted to the Collection Account in respect of the Transition Property and (ii) to permit the TC Collections held by the Servicer to be accounted for separately from the funds with which they may be commingled, so that the dollar amounts of TC Collections commingled with the Servicer's funds may be properly identified and traced.

            4. Investment of TC Payments Received.

               Prior to each Daily Remittance, the Servicer may invest TC Payments received at its own risk and (except as required by applicable PUCT Regulations) for its own benefit. So long as the Servicer complies with its obligations under Section 6(c) of this Annex I, neither such investments nor such funds shall be required to be segregated from the other investment and funds of the Servicer.

            5. Calculation of Daily Remittance.
               1. For purposes of calculating the Daily Remittance, (i) all Billed TCs shall be estimated to be collected the same number of days after billing as is equal to the Days Sales Outstanding then in effect (or on the next Servicer Business Day) and (ii) the Servicer will, on each Servicer Business Day, remit to the Indenture Trustee for deposit in the Collection Account an amount equal to the product of the applicable Billed TCs multiplied by one hundred percent less the system wide write-off percentage (or if available in the ordinary course of business, gross write-off percentage for each revenue class) used by the Servicer to calculate the most recent Periodic Billing Requirement. Such product shall constitute the amount of Estimated TC Collections for such Servicer Business Day. Pursuant to Section 6.11(c) of the Agreement, commencing no later than June 30 of each year, the Servicer shall calculate and report in the next succeeding Monthly Servicer's Certificate the amount of Actual TC Collections for all completed Collection Periods during the Reconciliation Period as compared to the Estimated TC Collections forwarded to the Collection Account in respect of such Reconciliation Period. No Excess Remittance shall be withdrawn from the Collection Account if such withdrawal would cause the amounts on deposit in the General Subaccount or the Excess Funds Subaccount to be insufficient for the payment of the next installment of interest or principal due at maturity on the next Payment Date or upon acceleration on or before the next Payment Date on the Transition Bonds. The Servicer shall be allowed to use the proceeds from any Excess Remittance to reimburse any Applicable REPs for the excess of their remittances over actual TC Payments received by such REPs in accordance with the terms of PUCT Regulations.
               2. On or before the beginning of the first billing cycle in November of each year in accordance with Section 4.01(b) of the Agreement, the Servicer shall, in a timely manner so as to perform all required calculations under such Section 4.01(b), update the Days Sales Outstanding and the system-wide write-off percentage (or if available in the ordinary course of business, gross write-off percentage for each revenue class) in order to be able to calculate the Periodic Billing Requirement for the next True-Up Adjustment and to calculate any change in the Daily Remittances for the next Calculation Period.
               3. The Servicer and the Issuer acknowledge that, as contemplated in Section 8.01(b) of the Agreement, the Servicer may make certain changes to its current computerized customer information system, which changes, when functional, would affect the Servicer's method of calculating the TC Payments estimated to have been received by the Servicer during each Collection Period as set forth in this Annex I. Should these changes to the computerized customer information system become functional during the term of the Agreement, the Servicer and the Issuer agree that they shall review the procedures used to calculate the TC Payments estimated to have been received in light of the capabilities of such new system and shall amend this Annex I in writing to make such modifications and/or substitutions to such procedures as may be appropriate in the interests of efficiency, accuracy, cost and/or system capabilities; provided, however, that the Servicer may not make any modification or s ubstitution that will materially adversely affect the Holders. As soon as practicable, and in no event later than sixty (60) Business Days after the date on which all Customer accounts are being billed under such new system, the Servicer shall notify the Issuer, the Indenture Trustee and the Rating Agencies of the same.
               4. All calculations of collections, each update of the Days Sales Outstanding, the system-wide write-off percentage (or if available in the ordinary course of business, gross write-off percentage for each revenue class) and any changes in procedures used to calculate the Estimated TC Payments pursuant to this Section 6(e) shall be made in good faith, and in the case of any update pursuant to clause (ii) above or any change in procedures pursuant to clause (iii) above, in a manner reasonably intended to provide estimates and calculations that are at least as accurate as those that would be provided on the Closing Date utilizing the initial procedures.
            6. Remittances.
               1. The Issuer shall cause to be established the Collection Account in the name of the Indenture Trustee in accordance with the Indenture.
               2. The Servicer shall make remittances to the Collection Account in accordance with Section 6.11 of the Agreement.
               3. In the event of any change of account or change of institution affecting the Collection Account, the Issuer shall provide written notice thereof to the Servicer not later than five (5) Business Days from the effective date of such change.

EX-99

Exhibit 99.2

FORM OF TRANSITION PROPERTY PURCHASE AND SALE AGREEMENT

by and between

ENTERGY TEXAS RESTORATION FUNDING, LLC,

Issuer

and

ENTERGY TEXAS, INC.,

Seller


Dated as of _____ __, 2009

TABLE OF CONTENTS

ARTICLE I
DEFINITIONS

		Page
SECTION 1.01	Definitions.	1
SECTION 1.02	Other Definitional Provisions.	2

ARTICLE II
CONVEYANCE OF TRANSITION PROPERTY

SECTION 2.01	Conveyance of Transition Property	2
SECTION 2.02	Conveyance of Subsequent Transition Property	3
SECTION 2.03	Conditions to Conveyance of Transition Property	3

ARTICLE III
REPRESENTATIONS AND WARRANTIES OF SELLER

SECTION 3.01	Organization and Good Standing	4
SECTION 3.02	Due Qualification	4
SECTION 3.03	Power and Authority	5
SECTION 3.04	Binding Obligation	5
SECTION 3.05	No Violation	5
SECTION 3.06	No Proceedings	5
SECTION 3.07	Approvals	5
SECTION 3.08	The Transition Property.	6
SECTION 3.09	Limitations on Representations and Warranties	9

ARTICLE IV
COVENANTS OF THE SELLER

SECTION 4.01	Existence	9
SECTION 4.02	No Liens	10
SECTION 4.03	Delivery of Collections	10
SECTION 4.04	Notice of Liens	10
SECTION 4.05	Compliance with Law	10
SECTION 4.06	Covenants Related to Transition Bonds and Transition Property.	11
SECTION 4.07	Protection of Title	12
SECTION 4.08	Nonpetition Covenants	12
SECTION 4.09	Taxes	12
SECTION 4.10	Issuance Advice Letter	13
SECTION 4.11	Tariff	13
SECTION 4.12	Notice of Breach to Rating Agencies, Etc	13
SECTION 4.13	Use of Proceeds	13
SECTION 4.14	Further Assurances	13

ARTICLE V
THE SELLER

SECTION 5.01	Liability of Seller; Indemnities	13
SECTION 5.02	Merger, Conversion or Consolidation of, or Assumption of the Obligations of, Seller	15
SECTION 5.03	Limitation on Liability of Seller and Others	17

ARTICLE VI
MISCELLANEOUS PROVISIONS

SECTION 6.01	Amendment	17
SECTION 6.02	PUCT Condition	17
SECTION 6.03	Notices	18
SECTION 6.04	Assignment	19
SECTION 6.05	Limitations on Rights of Third Parties	19
SECTION 6.06	Severability	19
SECTION 6.07	Separate Counterparts	19
SECTION 6.08	Headings	19
SECTION 6.09	Governing Law	19
SECTION 6.10	Assignment to Indenture Trustee	20
SECTION 6.11	Limitation of Liability	20
SECTION 6.12	Waivers	20

EXHIBITS

Exhibit A         Form of Bill of Sale

This TRANSITION PROPERTY PURCHASE AND SALE AGREEMENT (this "Agreement"), dated as of ____ __, 2009, is between Entergy Texas Restoration Funding, LLC, a Delaware limited liability company (the "Issuer"), and Entergy Texas, Inc., a Texas corporation (together with its successors in interest to the extent permitted hereunder, the "Seller").

RECITALS

WHEREAS, the Issuer desires to purchase the Transition Property created pursuant to the Securitization Law;

WHEREAS, the Seller is willing to sell the Transition Property to the Issuer;

WHEREAS, the Issuer, in order to finance the purchase of the Transition Property, will issue the Transition Bonds under the Indenture; and

WHEREAS, the Issuer, to secure its obligations under the Transition Bonds and the Indenture, will pledge, among other things, all right, title and interest of the Issuer in and to the Transition Property and this Agreement to the Indenture Trustee for the benefit of the Secured Parties.

NOW, THEREFORE, in consideration of the premises and the mutual covenants herein contained, the parties hereto agree as follows:

1. 
   DEFINITIONS

   1. Definitions. Unless otherwise defined herein, capitalized terms used herein shall have the meanings assigned to them in that certain Indenture (including Appendix A thereto) dated as of the date hereof between the Issuer and The Bank of New York Mellon, a New York banking corporation, in its capacity as indenture trustee (the "Indenture Trustee") and in its separate capacity as securities intermediary (the "Securities Intermediary"), as the same may be amended, restated, supplemented or otherwise modified from time to time.
      1. Whenever used in this Agreement, the following words and phrases shall have the following meanings:

      "Bill of Sale" means a bill of sale substantially in the form of Exhibit A hereto delivered pursuant to Section 2.03(i).

      "Losses" means (i) any and all amounts of principal and interest on the Transition Bonds not paid when due or when scheduled to be paid in accordance with their terms and the amounts of any deposits by or to the Issuer required to have been made in accordance with the terms of the Basic Documents or the Financing Order which are not made when so required and (ii) any and all other liabilities, obligations, losses, claims, damages, payments, costs or expenses of any kind whatsoever.

      "Transfer Date" means, the Closing Date.

      "Transition Property" means the Transition Property sold, transferred, assigned, set over and conveyed by the Seller to the Issuer as of the Transfer Date pursuant to this Agreement.

   2. Other Definitional Provisions.
      1. All terms defined in this Agreement shall have the defined meanings when used in any certificate or other document made or delivered pursuant hereto unless otherwise defined therein.
      2. The words "hereof," "herein," "hereunder" and words of similar import, when used in this Agreement, shall refer to this Agreement as a whole and not to any particular provision of this Agreement; Section, Schedule and Exhibit references contained in this Agreement are references to Sections, Schedules and Exhibits in or to this Agreement unless otherwise specified; and the term "including" shall mean "including without limitation."
      3. The definitions contained in this Agreement are applicable to the singular as well as the plural forms of such terms.

2. 
   CONVEYANCE OF TRANSITION PROPERTY

   1. Conveyance of Transition Property. In consideration of the Issuer's delivery to or upon the order of the Seller of $[__________], subject to the conditions specified in Section 2.03, the Seller does hereby irrevocably sell, transfer, assign, set over and otherwise convey to the Issuer, without recourse or warranty, except as set forth herein, all right, title and interest of the Seller in and to the Transition Property (such sale, transfer, assignment, setting over and conveyance of the Transition Property includes, to the fullest extent permitted by the Securitization Law, the right to impose, collect and receive Transition Charges and the assignment of all revenues, collections, claims, rights, payments, money or proceeds of or arising from the Transition Charges related to the Transition Property, as the same may be adjusted from time to time). Such sale, transfer, assignment, setting over and conveyance is hereby expressly s tated to be a sale and, pursuant to Section 39.308 of the Securitization Law, shall be treated as an absolute transfer of all of the Seller's right, title and interest in and to (as in a true sale), and not as a pledge or other financing of, the Transition Property. The Seller and the Issuer agree that after giving effect to the sale, transfer, assignment, setting over and conveyance contemplated hereby the Seller has no right, title or interest in or to the Transition Property to which a security interest could attach because (i) it has sold, transferred, assigned, set over and conveyed all right, title and interest in and to the Transition Property to the Issuer, (ii) as provided in Section 39.304 of the Securitization Law, such rights are only contract rights until the time of such sale, transfer, assignment, setting over and conveyance and (iii) as provided in Section 39.309(c) of the Securitization Law, appropriate notice has been filed and such transfer is perfected against all third par ties, including subsequent judicial or other lien creditors. If such sale, transfer, assignment, setting over and conveyance is held by any court of competent jurisdiction not to be a true sale as provided in Section 39.308 of the Securitization Law, then such sale, transfer, assignment, setting over and conveyance shall be treated as a pledge of such Transition Property and as the creation of a security interest (within the meaning of the Securitization Law and the UCC) in the Transition Property and, without prejudice to its position that it has absolutely transferred all of its rights in the Transition Property to the Issuer, the Seller hereby grants a security interest in the Transition Property to the Issuer (and, to the extent necessary to qualify the grant as a security interest under the Securitization Law and the UCC, to the Indenture Trustee for the benefit of the Secured Parties to secure the right of the Issuer under the Basic Documents to receive the Transition Charges and all other Transi tion Property).
      1. Subject to Section 2.03, the Issuer does hereby purchase the Transition Property from the Seller for the consideration set forth in Section 2.01(a).
   2. [RESERVED]
   3. Conditions to Conveyance of Transition Property. The obligation of the Issuer to purchase Transition Property on the Transfer Date shall be subject to the satisfaction or waiver by the Issuer of each of the following conditions:
      1. on or prior to the Transfer Date, the Seller shall have delivered to the Issuer a duly executed Bill of Sale identifying the Transition Property to be conveyed on the Transfer Date;
      2. on or prior to the Transfer Date, the Seller shall have received the Financing Order creating the Transition Property;
      3. as of the Transfer Date, the Seller is not insolvent and will not have been made insolvent by such sale and the Seller is not aware of any pending insolvency with respect to itself;
      4. as of the Transfer Date, the representations and warranties of the Seller set forth in this Agreement shall be true and correct with the same force and effect as if made on the Transfer Date (except to the extent that they relate to an earlier date); on and as of the Transfer Date, no breach of any covenant or agreement of the Seller contained in this Agreement has occurred and is continuing; and no Servicer Default shall have occurred and be continuing;
      5. as of the Transfer Date, (A) the Issuer shall have sufficient funds available to pay the purchase price for the Transition Property to be conveyed on such date and (B) all conditions to the issuance of the Transition Bonds intended to provide such funds set forth in the Indenture shall have been satisfied or waived;
      6. on or prior to the Transfer Date, the Seller shall have taken all action required to transfer to the Issuer ownership of the Transition Property to be conveyed on such date, free and clear of all Liens other than Liens created by the Issuer pursuant to the Basic Documents and to perfect such transfer, including, without limitation, filing any statements or filings under the Securitization Law or the UCC; and the Issuer or the Servicer, on behalf of the Issuer, shall have taken all actions required for the Issuer to grant the Indenture Trustee a first priority perfected security interest in the Transition Bond Collateral and maintain such security interest as of such date;
      7. [RESERVED]
      8. the Seller shall have delivered to the Rating Agencies and the Issuer any Opinions of Counsel required by the Rating Agencies;
      9. the Seller shall have received and delivered to the Issuer and the Indenture Trustee: (i) an opinion of Independent tax counsel (as selected by the Seller, and in form and substance reasonably satisfactory to the Issuer and the Indenture Trustee) to the effect that the Issuer will not be subject to United States federal income tax as an entity separate from its sole owner and that the Transition Bonds will be treated as debt of the Issuer's sole owner for United States federal income tax purposes and (ii) an opinion of Independent tax counsel (as selected by the Seller, and in form and substance reasonably satisfactory to the Issuer and the Indenture Trustee) to the effect that, for United States federal income tax purposes, the issuance of the Transition Bonds will not result in gross income to the Seller;
      10. on and as of the Transfer Date, each of the LLC Agreement, the Servicing Agreement, the Administration Agreement, this Agreement, the Indenture, the Financing Order, any issued Tariff and the Securitization Law shall be in full force and effect;
      11. the Transition Bonds shall have received a rating of AAA, or its equivalent, from each Rating Agency; and
      12. the Seller shall have delivered to the Indenture Trustee and the Issuer an Officer's Certificate confirming the satisfaction of each condition precedent specified in this Section 2.03.

3. 
   REPRESENTATIONS AND WARRANTIES OF SELLER

   Subject to Section 3.09, the Seller makes the following representations and warranties, as of the Transfer Date, and the Seller acknowledges that the Issuer has relied thereon in acquiring the Transition Property. The representations and warranties shall survive the sale and transfer of the Transition Property to the Issuer and the pledge thereof to the Indenture Trustee pursuant to the Indenture. The Seller agrees that (i) the Issuer may assign the right to enforce the following representations and warranties to the Indenture Trustee and (ii) the representations and warranties inure to the benefit of the Issuer and the Indenture Trustee.

   1. Organization and Good Standing. The Seller is duly organized and validly existing and is in good standing under the laws of the state of its organization, with the requisite corporate or other power and authority to own its properties as such properties are currently owned and to conduct its business as such business is now conducted by it, and has the requisite corporate or other power and authority to obtain the Financing Order and own, sell and transfer the Transition Property.
   2. Due Qualification. The Seller is duly qualified to do business and is in good standing, and has obtained all necessary licenses and approvals, in all jurisdictions in which the ownership or lease of property or the conduct of its business shall require such qualifications, licenses or approvals (except where the failure to so qualify or obtain such licenses and approvals would not be reasonably likely to have a material adverse effect on the Seller's business, operations, assets, revenues or properties).
   3. Power and Authority. The Seller has the requisite corporate or other power and authority to execute and deliver this Agreement and to carry out its terms; and the execution, delivery and performance of this Agreement have been duly authorized by all necessary action on the part of the Seller under its organizational or governing documents and laws.
   4. Binding Obligation. This Agreement constitutes a legal, valid and binding obligation of the Seller enforceable against it in accordance with its terms, subject to applicable insolvency, reorganization, moratorium, fraudulent transfer and other laws relating to or affecting creditors' or secured parties' rights generally from time to time in effect and to general principles of equity (including concepts of materiality, reasonableness, good faith and fair dealing), regardless of whether considered in a proceeding in equity or at law.
   5. No Violation. The consummation of the transactions contemplated by this Agreement and the fulfillment of the terms hereof do not and will not: (i) conflict with or result in any breach of any of the terms and provisions of, nor constitute (with or without notice or lapse of time) a default under, the Seller's organizational documents, or any indenture or other agreement or instrument to which the Seller is a party or by which it or any of its property is bound; (ii) result in the creation or imposition of any Lien upon any of the Seller's properties pursuant to the terms of any such indenture, agreement or other instrument (other than any Lien that may be granted in the Issuer's favor or any Lien created pursuant to Section 39.309 of the Securitization Law); or (iii) violate any existing law or any existing order, rule or regulation applicable to the Seller of any Governmental Authority having jurisdiction over the Seller or its properties.
   6. No Proceedings. There are no proceedings pending and, to the Seller's knowledge, there are no proceedings threatened and, to the Seller's knowledge, there are no investigations pending or threatened, before any Governmental Authority having jurisdiction over the Seller or its properties involving or relating to the Seller or the Issuer or, to the Seller's knowledge, any other Person: (i) asserting the invalidity of the Securitization Law, the Financing Order, this Agreement, any of the other Basic Documents or the Transition Bonds, (ii) seeking to prevent the issuance of the Transition Bonds or the consummation of any of the transactions contemplated by this Agreement or any of the other Basic Documents, (iii) seeking any determination or ruling that could reasonably be expected to materially and adversely affect the performance by the Seller of its obligations under, or the validity or enforceability of the Securitization Law, the Financing Order, this Agreement, any of t he other Basic Documents or the Transition Bonds or (iv) seeking to adversely affect the federal income tax or state income or franchise tax classification of the Transition Bonds as debt.
   7. Approvals. Except for UCC financing statement filings and other filings under the Securitization Law, no approval, authorization, consent, order or other action of, or filing with, any Governmental Authority is required in connection with the execution and delivery by the Seller of this Agreement, the performance by the Seller of the transactions contemplated hereby or the fulfillment by the Seller of the terms hereof, except those that have been obtained or made and those that the Seller, in its capacity as Servicer under the Servicing Agreement, is required to make in the future pursuant to the Servicing Agreement.
   8. The Transition Property.
      1. Information. Subject to subsection (f) below, at the Transfer Date, all written information, as amended or supplemented from time to time, provided by the Seller to the Issuer with respect to the Transition Property (including the Expected Amortization Schedule, the Financing Order and the Issuance Advice Letter relating thereto) is true and correct in all material respects.
      2. Title. It is the intention of the parties hereto that (other than for federal income tax purposes and, to the extent consistent with applicable state tax law, state income and franchise tax purposes) the transfers and assignments herein contemplated each constitute a sale and absolute transfer of the Transition Property from the Seller to the Issuer and that no interest in, or right or title to, the Transition Property shall be part of the Seller's estate in the event of the filing of a bankruptcy petition by or against the Seller under any bankruptcy law. No portion of the Transition Property has been sold, transferred, assigned or pledged or otherwise conveyed by the Seller to any Person other than the Issuer, and no security agreement, financing statement or equivalent security or lien instrument listing the Seller as debtor covering all or any part of the Transition Property is on file or of record in any jurisdiction, except such as may have been filed, recorded or made in favor of the Issu er or the Secured Parties in connection with the Basic Documents. The Seller has not authorized the filing of and is not aware (after due inquiry) of any financing statement against it that includes a description of collateral including the Transition Property other than any financing statement filed, recorded or made in favor of the Issuer or the Secured Parties in connection with the Basic Documents. The Seller is not aware (after due inquiry) of any judgment or tax lien filings against either the Seller or the Issuer. At the Transfer Date, immediately prior to the sale of the Transition Property hereunder, the Seller is the original and the sole owner of the Transition Property free and clear of all Liens and rights of any other Person, and no offsets, defenses or counterclaims exist or have been asserted with respect thereto.
      3. Transfer Filings. On the Transfer Date, immediately upon the sale hereunder, the Transition Property shall be validly transferred and sold to the Issuer, the Issuer shall own all of the Transition Property free and clear of all Liens (except for any Lien created in favor of the Secured Parties pursuant to Section 39.309 of the Securitization Law or any Lien that may be granted under the Basic Documents) and all filings and action to be made or taken by the Seller (including, without limitation, filings with the Secretary of State of the State of Texas under the Securitization Law) necessary in any jurisdiction to give the Issuer a perfected ownership interest (subject to any Lien created in favor of the Holders pursuant to Section 39.309 of the Securitization Law and any Lien that may be granted under the Basic Documents) in the Transition Property have been made or taken. No further action is required to maintain such ownership interest (subject to any Lien created in favor of the Sec ured Parties pursuant to Section 39.309 of the Securitization Law and any Lien that may be granted under the Basic Documents) and to give the Indenture Trustee a first priority perfected security interest in the Transition Property. All filings and action have also been made or taken to perfect the security interest in the Transition Property granted by the Seller to the Issuer (subject to any Lien created in favor of the Secured Parties pursuant to Section 39.309 of the Securitization Law and any Lien that may be granted under the Basic Documents) and, to the extent necessary the Indenture Trustee, pursuant to Section 2.01.
      4. Financing Order, Issuance Advice Letter and Tariff; Other Approvals. On the Transfer Date, under the laws of the State of Texas and the United States in effect on the Transfer Date, (i) the Financing Order pursuant to which the rights and interests of the Seller, including the right to impose, collect and receive the Transition Charges and, in and to the Transition Property transferred on such date have been created, is Final and non-appealable and is in full force and effect; (ii) as of the issuance of the Transition Bonds, the Transition Bonds are entitled to the protection of the Securitization Law and, accordingly, the Financing Order, the Transition Charges and the Issuance Advice Letter are not revocable by the PUCT; (iii) as of the issuance of the Transition Bonds, the Tariff is in full force and effect and is not subject to modification by the PUCT except as provided under Section 39.307 of the Securitization Law; (iv) the process by which the Financing Order creating the Transition Property transferred on such date was adopted and approved, and such Financing Order, Issuance Advice Letter and Tariff themselves, comply with all applicable laws, rules and regulations; (v) the Issuance Advice Letter and the Tariff relating to the Transition Property transferred on such date have been filed in accordance with the Financing Order creating the Transition Property transferred on such date and an officer of the Seller has provided the certification to the PUCT required by the Issuance Advice Letter; and (vi) no other approval, authorization, consent, order or other action of, or filing with any Governmental Authority is required in connection with the creation of the Transition Property transferred on such date, except those that have been obtained or made.
      5. State Action. Under the Securitization Law, the State of Texas has pledged that it will not take or permit any action that would impair the value of the Transition Property transferred on such date, or, except as permitted by Section 39.307 of the Securitization Law, reduce, alter or impair the Transition Charges relating to the Transition Property until the principal, interest and premium and any other charges incurred and contracts to be performed in connection with the Transition Bonds relating to the Transition Property have been paid and performed in full. Under the laws of the State of Texas and the United States, the State of Texas could not constitutionally take any action of a legislative character including the repeal or amendment of the Securitization Law, which would substantially limit, alter or impair the Transition Property or other rights vested in the Holders pursuant to the Financing Order or substantially limit, alter or reduce the value or amount of the Transition Proper ty, unless such action is a reasonable exercise of the sovereign powers of the State of Texas and of a character reasonable and appropriate to further a legitimate public purpose, and, under the takings clauses of the United States and Texas Constitutions, the State of Texas could not repeal or amend the Securitization Law or take any other action in contravention of its pledge quoted above without paying just compensation to the Holders, as determined by a court of competent jurisdiction if doing so would constitute a permanent appropriation of a substantial property interest of the Holders in the Transition Property and deprive the Holders of their reasonable expectations arising from their investments in the Transition Bonds. There is no assurance, however, that, even if a court were to award just compensation it would be sufficient to pay the full amount of principal and interest on the Transition Bonds.
      6. Assumptions. On the Transfer Date, based upon the information available to the Seller on such date, the assumptions used in calculating the Transition Charges are reasonable and are made in good faith. Notwithstanding the foregoing, the Seller makes no representation or warranty, express or implied, that amounts actually collected arising from those Transition Charges will in fact be sufficient to meet the payment obligations on the Transition Bonds or that the assumptions used in calculating such Transition Charges will in fact be realized.
      7. Creation of Transition Property. Upon the effectiveness of the Financing Order, the Issuance Advice Letter and the Tariff with respect to the Transition Property and the transfer of the Transition Property pursuant to this Agreement: (i) the rights and interests of the Seller under the Financing Order, including the right to impose, collect and receive the Transition Charges authorized in the Financing Order, become Transition Property; (ii) the Transition Property constitutes a present property right vested in the Issuer; (iii) the Transition Property includes (A) the right, title and interest of the Seller in the Financing Order and the Transition Charges and (B) the right to impose, collect and obtain periodic adjustments (with respect to adjustments, in the manner and with the effect provided in Section 4.01(b) of the Servicing Agreement) of such Transition Charges, and the rates and other charges authorized by the Financing Order and all revenues, collections, claims, payments, money o r proceeds of or arising from the Transition Charges; (iv) the owner of the Transition Property is legally entitled to bill Transition Charges and collect payments in respect of the Transition Charges in the aggregate sufficient to pay the interest on and principal of the Transition Bonds in accordance with the Indenture, to pay the fees and expenses of servicing the Transition Bonds, to replenish the Capital Subaccount to the Required Capital Level until the Transition Bonds are paid in full or until the last date permitted for the collection of payments in respect of the Transition Charge under the Financing Order, whichever is earlier, and the Customer class allocation percentages in the Financing Order do not prohibit the owner of the Transition Property from obtaining adjustments and effecting allocations to the Transition Charges in order to collect payments of such amounts; and (v) the Transition Property is not subject to any Lien other than the Lien created by the Basic Documents.
      8. Nature of Representations and Warranties. The representations and warranties set forth in this Section 3.08, insofar as they involve conclusions of law, are made not on the basis that the Seller purports to be a legal expert or to be rendering legal advice, but rather to reflect the parties' good faith understanding of the legal basis on which the parties are entering into this Agreement and the other Basic Documents and the basis on which the Holders are purchasing the Transition Bonds, and to reflect the parties' agreement that, if such understanding turns out to be incorrect or inaccurate, the Seller will be obligated to indemnify the Issuer and its permitted assigns (to the extent required by and in accordance with Section 5.01), and that the Issuer and its permitted assigns will be entitled to enforce any rights and remedies under the Basic Documents, on account of such inaccuracy to the same extent as if the Seller had breached any other representations or warranties hereunder.
      9. Prospectus. As of the date hereof, the information describing the Seller under the caption "The Seller, Initial Servicer and Sponsor" in the prospectus dated [____ __, 2009] relating to the Transition Bonds is true and correct in all material respects.
      10. Solvency. After giving effect to the sale of the Transition Property hereunder, the Seller:
          1. is solvent and expects to remain solvent;
          2. is adequately capitalized to conduct its business and affairs considering its size and the nature of its business and intended purpose;
          3. is not engaged in nor does it expect to engage in a business for which its remaining property represents an unreasonably small capital;
          4. reasonably believes that it will be able to pay its debts as they come due; and
          5. is able to pay its debts as they mature and does not intend to incur, or believes that it will not incur, indebtedness that it will not be able to repay at its maturity.
      11. No Court Order. There is no order by any court providing for the revocation, alteration, limitation or other impairment of the Securitization Law, the Financing Order, the Issuance Advice Letter, the Transition Property or the Transition Charges or any rights arising under any of them or that seeks to enjoin the performance of any obligations under the Financing Order.
      12. No Proceedings Concerning the Securitization Law. Except as disclosed in the Prospectus, there are no proceedings pending, and to the Seller's knowledge, (i) there are no proceedings threatened and (ii) there are no investigations pending or threatened, before any Governmental Authority having jurisdiction over the Issuer or the Seller or their respective properties challenging the Securitization Law or the Financing Order.
      13. Survival of Representations and Warranties The representations and warranties set forth in this Section 3.08 shall survive the execution and delivery of this Agreement and may not be waived by any party hereto except pursuant to a written agreement executed in accordance with Article VI and as to which the Rating Agency Condition has been satisfied.
   9. Limitations on Representations and Warranties. Without prejudice to any of the other rights of the parties, the Seller will not be in breach of any representation or warranty, as a result of a change in law by means of any legislative enactment, constitutional amendment or voter initiative. THE SELLER MAKES NO REPRESENTATION OR WARRANTY, EXPRESS OR IMPLIED, THAT BILLED TRANSITION CHARGES WILL BE ACTUALLY COLLECTED FROM CUSTOMERS.

4. 
   COVENANTS OF THE SELLER

   1. Existence. Subject to Section 5.02, so long as any of the Transition Bonds are Outstanding, the Seller (a) will keep in full force and effect its existence and remain in good standing under the laws of the jurisdiction of its organization, (b) will obtain and preserve its qualification to do business, in each case to the extent that in each such jurisdiction such existence or qualification is or shall be necessary to protect the validity and enforceability of this Agreement, the other Basic Documents to which the Seller is a party and each other instrument or agreement necessary or appropriate to the proper administration of this Agreement and the transactions contemplated hereby or to the extent necessary for the Seller to perform its obligations hereunder or thereunder and (c) will continue to own and operate its transmission and distribution system (or, if by law, the Seller is no longer required to own and/or operate both the transmission and distri bution systems, then the Seller's distribution system) in order and to the extent required to provide electric services to the Seller's Customers within the Service Area. Nothing in this Section 4.01 shall prohibit the Seller from selling, assigning or otherwise divesting any of its properties or assets; provided that in the event that the Seller sells, assigns or otherwise divests of all or any portion of its transmission and distribution system required to provide electric service to the Seller's Customers in the Service Area (or, if by law, the Seller is no longer required to own and/operate both the transmission and distribution systems, if the Seller sells, assigns or otherwise divests all or any portion of its distribution system required to provide electric service to the Seller's Customers in the Service Area), then the entity acquiring such distribution (and if owned and/or operated jointly, transmission) facilities is either required by law or agrees by contract to continue operating the facili ties to provide electric services to Seller's Customers in the Service Area, and, in the case of a portion of the distribution (and, if applicable transmission) assets, the conditions of Section 5.02(c)(4) are satisfied.
   2. No Liens. Except for the conveyances hereunder or any Lien under Section 39.309 of the Securitization Law for the benefit of the Issuer (as the Issuer) and the Secured Parties, the Seller will not sell, pledge, assign or transfer, or grant, create, incur, assume or suffer to exist any Lien on, any of the Transition Property, or any interest therein, and the Seller shall defend the right, title and interest of the Issuer and the Indenture Trustee, on behalf of the Secured Parties, in, to and under the Transition Property against all claims of third parties claiming through or under the Seller. ETI, in its capacity as Seller, will not at any time assert any Lien against, or with respect to, any of the Transition Property.
   3. Delivery of Collections. In the event that the Seller receives Collections in respect of the Transition Charges or the proceeds thereof other than in its capacity as the Servicer, the Seller agrees to pay to the Servicer, on behalf of the Issuer, all payments received by it in respect thereof as soon as practicable after receipt thereof. Prior to such remittance to the Servicer by the Seller, the Seller agrees that such amounts are held by it in trust for the Issuer and the Indenture Trustee. If the Seller becomes a party to any future trade receivables purchase and sale arrangement or similar arrangement under which it sells all or any portion of its accounts receivables, the Seller and the other parties to such arrangement shall enter into an intercreditor agreement in connection therewith and the terms of the documentation evidencing such trade receivables purchase and sale arrangement or similar arrangement shall expressly exclude Transition Charges from any receivab les or other assets pledged or sold under such arrangement.
   4. Notice of Liens. The Seller shall notify the Issuer and the Indenture Trustee promptly after becoming aware of any Lien on any of the Transition Property, other than the conveyances hereunder, any Lien under the Basic Documents or any Lien under Section 39.309 of the Securitization Law or the UCC for the benefit of the Issuer or the Secured Parties.
   5. Compliance with Law. The Seller hereby agrees to comply with its organizational or governing documents and all laws, treaties, rules, regulations and determinations of any Governmental Authority applicable to it, except to the extent that failure to so comply would not materially adversely affect the Issuer's or the Indenture Trustee's interests in the Transition Property or under any of the other Basic Documents to which the Seller is party or the Seller's performance of its obligations hereunder or under any of the other Basic Documents to which it is party.
   6. Covenants Related to Transition Bonds and Transition Property.
      1. So long as any of the Transition Bonds are outstanding, the Seller shall treat the Transition Bonds as debt for all purposes and specifically as debt of the Issuer, other than for financial reporting, state or federal regulatory or tax purposes.
      2. Solely for the purposes of federal taxes and, to the extent consistent with applicable state, local and other tax law, for purposes of state, local and other taxes, so long as any of the Transition Bonds are outstanding, the Seller agrees to treat the Transition Bonds as indebtedness of the Seller (as the sole owner of the Issuer) secured by the Transition Bond Collateral unless otherwise required by appropriate taxing authorities.
      3. So long as any of the Transition Bonds are outstanding, the Seller shall disclose in its financial statements that the Issuer and not the Seller is the owner of the Transition Property and that the assets of the Issuer are not available to pay creditors of the Seller or its Affiliates (other than the Issuer).
      4. So long as any of the Transition Bonds are outstanding, the Seller shall not own or purchase any Transition Bonds.
      5. So long as any of the Transition Bonds are outstanding, the Seller shall disclose the effects of all transactions between the Seller and the Issuer in accordance with generally accepted accounting principles.
      6. The Seller agrees that, upon the sale by the Seller of the Transition Property to the Issuer pursuant to this Agreement, (i) to the fullest extent permitted by law, including applicable PUCT Regulations and the Securitization Law, the Issuer shall have all of the rights originally held by the Seller with respect to the Transition Property, including the right (subject to the terms of the Servicing Agreement) to exercise any and all rights and remedies to collect any amounts payable by any Customer or REP in respect of the Transition Property, notwithstanding any objection or direction to the contrary by the Seller (and the Seller agrees not to make any such objection or to take any such contrary action) and (ii) any payment by any Customer or REP directly to the Issuer shall discharge such Customer's or REP's obligations, if any, to the Seller in respect of the Transition Property to the extent of such payment, notwithstanding any objection or direction to the contrary by the Seller.
      7. So long as any of the Transition Bonds are outstanding, (i) in all proceedings relating directly or indirectly to the Transition Property, the Seller shall affirmatively certify and confirm that it has sold all of its rights and interests in and to such property (other than for financial reporting or tax purposes), (ii) the Seller shall not make any statement or reference in respect of the Transition Property that is inconsistent with the ownership interest of the Issuer (other than for financial accounting, state or federal regulatory or tax purposes), (iii) the Seller shall not take any action in respect of the Transition Property except solely in its capacity as the Servicer thereof pursuant to the Servicing Agreement or as otherwise contemplated by the Basic Documents, (iv) the Seller shall not sell transition property under a separate financing order in connection with the issuance of additional transition bonds unless the Rating Agency Condition shall have been satisfied, and (v) neither the Seller nor the Issuer shall take any action, file any tax return, or make any election inconsistent with the treatment of the Issuer, for purposes of federal taxes and, to the extent consistent with applicable state, local and other tax law, for purposes of state, local and other taxes, as a disregarded entity that is not separate from the Seller (or, if relevant, from another sole owner of the Issuer).
   7. Protection of Title. The Seller shall execute and file such filings, including, without limitation, filings with the Secretary of State of the State of Texas pursuant to the Securitization Law, and cause to be executed and filed such filings, all in such manner and in such places as may be required by law to fully preserve, maintain, protect and perfect the ownership interest of the Issuer and the first priority security interest of the Indenture Trustee in the Transition Property, including, without limitation, all filings required under the Securitization Law and the UCC relating to the transfer of the ownership of the rights and interest in the Transition Property by the Seller to the Issuer or the pledge of the Issuer's interest in such Transition Property to the Indenture Trustee. The Seller shall deliver or cause to be delivered to the Issuer and the Indenture Trustee file-stamped copies of, or filing receipts for, any document filed as provided above, as soon as av ailable following such filing. The Seller shall institute any action or proceeding necessary to compel performance by the PUCT, the State of Texas or any of their respective agents, of any of their obligations or duties under the Securitization Law, the Financing Order or any Issuance Advice Letter, and the Seller agrees to take such legal or administrative actions, including defending against or instituting and pursuing legal actions and appearing or testifying at hearings or similar proceedings, as may be reasonably necessary (i) to protect the Issuer and the Secured Parties from claims, state actions or other actions or proceedings of third parties which, if successfully pursued, would result in a breach of any representation set forth in Article III or any covenant set forth in Article IV and (ii) to block or overturn any attempts to cause a repeal of, modification of or supplement to the Securitization Law, the Financing Order, any Issuance Advice Letter or the rights of Holders by legislative enactment or constitutional amendment that would be materially adverse to the Issuer or the Secured Parties or which would otherwise cause an impairment of the rights of the Issuer or the Secured Parties. The costs of any such actions or proceedings will be payable by the Seller.
   8. Nonpetition Covenants. Notwithstanding any prior termination of this Agreement or the Indenture, the Seller shall not, prior to the date which is one year and one day after the termination of the Indenture and payment in full of the Transition Bonds or any other amounts owed under the Indenture, petition or otherwise invoke or cause the Issuer to invoke the process of any Government Authority for the purpose of commencing or sustaining an involuntary case against the Issuer under any federal or state bankruptcy, insolvency or similar law, appointing a receiver, liquidator, assignee, trustee, custodian, sequestrator or other similar official of the Issuer or any substantial part of the property of the Issuer, or ordering the winding up or liquidation of the affairs of the Issuer.
   9. Taxes. So long as any of the Transition Bonds are outstanding, the Seller shall, and shall cause each of its subsidiaries to, pay all taxes, assessments and governmental charges imposed upon it or any of its properties or assets or with respect to any of its franchises, business, income or property before any penalty accrues thereon if the failure to pay any such taxes, assessments and governmental charges would, after any applicable grace periods, notices or other similar requirements, result in a Lien on the Transition Property; provided that no such tax need be paid if the Seller or one of its subsidiaries is contesting the same in good faith by appropriate proceedings promptly instituted and diligently conducted and if the Seller or such subsidiary has established appropriate reserves as shall be required in conformity with generally accepted accounting principles.
   10. Issuance Advice Letter. The Seller hereby agrees not to withdraw the filing of any Issuance Advice Letter with the PUCT.
   11. Tariff. The Seller hereby agrees to make all reasonable efforts to keep each Tariff in full force and effect at all times.
   12. Notice of Breach to Rating Agencies, Etc. Promptly after obtaining knowledge thereof, in the event of a breach in any material respect (without regard to any materiality qualifier contained in such representation, warranty or covenant) of any of the Seller's representations, warranties or covenants contained herein, the Seller shall promptly notify the Issuer, the Indenture Trustee, the PUCT and the Rating Agencies of such breach. For the avoidance of doubt, any breach which would adversely affect scheduled payments on the Transition Bonds will be deemed to be a material breach for purposes of this Section 4.12.
   13. Use of Proceeds. The Seller shall use the proceeds of the sale of the Transition Property in accordance with the Financing Order and the Securitization Law.
   14. Further Assurances. Upon the request of the Issuer, the Seller shall execute and deliver such further instruments and do such further acts as may be reasonably necessary to carry out more effectually the provisions and purposes of this Agreement.

5. 
   THE SELLER

   1. Liability of Seller; Indemnities.
      1. The Seller shall be liable in accordance herewith only to the extent of the obligations specifically undertaken by the Seller under this Agreement.
      2. The Seller shall indemnify the Issuer and the Indenture Trustee (for the benefit of the Secured Parties) and each of their respective officers, directors, employees, trustees, managers and agents for, and defend and hold harmless each such Person from and against, any and all taxes (other than taxes imposed on Bondholders as a result of their ownership of a Transition Bond) that may at any time be imposed on or asserted against any such Person as a result of the sale of the Transition Property to the Issuer, including any franchise, sales, gross receipts, general corporation, tangible personal property, privilege or license taxes but excluding any taxes imposed as a result of a failure of such Person to withhold or remit taxes with respect to payments on any Transition Bond.
      3. The Seller shall indemnify the Issuer and the Indenture Trustee (for the benefit of the Secured Parties) and each of their respective officers, directors, employees, trustees, managers, and agents for, and defend and hold harmless each such Person from and against, any and all taxes (other than taxes imposed on Bondholders as a result of their ownership of a Transition Bond) that may at any time be imposed on or asserted against any such Person as a result of the Issuer's ownership and assignment of the Transition Property, the issuance and sale by the Issuer of the Transition Bonds or the other transactions contemplated in the Basic Documents, including any franchise, sales, gross receipts, general corporation, tangible personal property, privilege or license taxes but excluding any taxes imposed as a result of a failure of such Person to withhold or remit taxes with respect to payments on any Transition Bond.
      4. The Seller shall indemnify the Issuer, the Indenture Trustee (for the benefit of the Secured Parties) and each of their respective officers, directors, employees and agents for, and defend and hold harmless each such Person from and against all Losses that may be imposed on, incurred by or asserted against each such Person, in each such case, as a result of the Seller's breach of any of its representations, warranties or covenants contained in this Agreement.
      5. Indemnification under Sections 5.01(b), 5.01(c), 5.01(d) and 5.01(f) shall include reasonable out-of-pocket fees and expenses of investigation and litigation (including reasonable attorney's fees and expenses), except as otherwise expressly provided in this Agreement.
      6. The Seller shall indemnify the Indenture Trustee (for itself) and the Independent Managers, and any of their respective affiliates, officers, directors, employees and agents (each, an "Indemnified Person") for, and defend and hold harmless each such Person from and against, any and all Losses incurred by any of such Indemnified Persons as a result of the Seller's breach of any of its representations and warranties or covenants contained in this Agreement, except to the extent of Losses either resulting from the willful misconduct, bad faith or gross negligence of such Indemnified Person or resulting from a breach of a representation or warranty made by such Indemnified Person in any of the Basic Documents that gives rise to the Seller's breach. The Seller shall not be required to indemnify an Indemnified Person for any amount paid or payable by such Indemnified Person in the settlement of any action, proceeding or investigation without the prior written consent of the Seller which consen t shall not be unreasonably withheld. Promptly after receipt by an Indemnified Person of notice of the commencement of any action, proceeding or investigation, such Indemnified Person shall, if a claim in respect thereof is to be made against the Seller under this Section 5.01(f), notify the Seller in writing of the commencement thereof. Failure by an Indemnified Person to so notify the Seller shall relieve the Seller from the obligation to indemnify and hold harmless such Indemnified Person under this Section 5.01(f) only to the extent that the Seller suffers actual prejudice as a result of such failure. With respect to any action, proceeding or investigation brought by a third party for which indemnification may be sought under this Section 5.01(f), the Seller shall be entitled to conduct and control, at its expense and with counsel of its choosing that is reasonably satisfactory to such Indemnified Person, the defense of any such action, proceeding or investigation (in which case the Seller shall not thereafter be responsible for the fees and expenses of any separate counsel retained by the Indemnified Person except as set forth below); provided that the Indemnified Person shall have the right to participate in such action, proceeding or investigation through counsel chosen by it and at its own expense. Notwithstanding the Seller's election to assume the defense of any action, proceeding or investigation, the Indemnified Person shall have the right to employ separate counsel (including local counsel), and the Seller shall bear the reasonable fees, costs and expenses of such separate counsel if (i) the defendants in any such action include both the Indemnified Person and the Seller and the Indemnified Person shall have reasonably concluded that there may be legal defenses available to it that are different from or additional to those available to the Seller, (ii) the Seller shall not have employed counsel reasonably satisfactory to the Indemnified Person to represent the Indemnified Person with in a reasonable time after notice of the institution of such action, (iii) the Seller shall authorize the Indemnified Person to employ separate counsel at the expense of the Seller or (iv) in the case of the Indenture Trustee, such action exposes the Indenture Trustee to a material risk of criminal liability or forfeiture or a Servicer Default has occurred and is continuing. Notwithstanding the foregoing, the Seller shall not be obligated to pay for the fees, costs and expenses of more than one separate counsel for the Indemnified Persons other than one local counsel, if appropriate.
      7. The Seller shall indemnify the Servicer (if the Servicer is not the Seller) for the costs of any action instituted by the Servicer pursuant to Section 5.02(d) of the Servicing Agreement which are not paid as Operating Expenses in accordance with the priorities set forth in Section 8.02(e) of the Indenture.
      8. The remedies provided in this Agreement are the sole and exclusive remedies against the Seller for breach of its representations and warranties in this Agreement.
      9. Indemnification under this Section 5.01 shall survive any repeal of, modification of, or supplement to, or judicial invalidation of, the Securitization Law or the Financing Order and shall survive the resignation or removal of the Indenture Trustee or the termination of this Agreement and will rank in priority with other general, unsecured obligations of the Seller.
   2. Merger, Conversion or Consolidation of, or Assumption of the Obligations of, Seller. Any Person (a) into which the Seller may be merged, converted or consolidated, (b) that may result from any reorganization, merger (including, but not limited to, merger as defined in Art. 1.02.A.(18) of the Texas Business Corporation Act or in Section 1.002(55) of the Texas Business Organizations Code, as applicable to the Seller, as amended from time to time (including, without limitation, any merger commonly referred to as a "merger by division")), conversion or consolidation to which the Seller shall be a party, or (c) that may acquire or succeed to (whether by merger, division, conversion, consolidation, reorganization, sale, transfer, lease, management contract or otherwise) 1) the properties and assets of the Seller substantially as a whole, 2) all or substantially all of the electric transmission and distribution business of the Seller which is required to provide el ectric service to the Seller's customers in the Service Area (or, if transmission and distribution are not provided by a single entity, the distribution business of the Seller required to provide electric service to the Seller's Customers in the Service Area), or 3) the distribution system business assets of the Seller in a portion of the Service Area, and which Person in any of the foregoing cases executes an agreement of assumption to perform all of the obligations of the Seller hereunder (including the Seller's obligations under Section 5.01 incurred at any time prior to or after the date of such assumption), shall be a successor to the Seller under this Agreement (a "Permitted Successor") without further act on the part of any of the parties to this Agreement; provided, however, that
      1. immediately after giving effect to such transaction, no representation, warranty or covenant made pursuant to Article III or Article IV shall be breached and no Servicer Default, and no event which, after notice or lapse of time, or both, would become a Servicer Default shall have occurred and be continuing,
      2. the Seller shall have delivered to the Issuer, the Indenture Trustee and each Rating Agency an Officer's Certificate and an Opinion of Counsel from Independent counsel stating that such consolidation, conversion, merger, division, reorganization, sale, transfer, lease, management contract transaction, acquisition or other succession and such agreement of assumption comply with this Section 5.02 and that all conditions precedent, if any, provided for in this Agreement relating to such transaction have been complied with,
      3. the Seller shall have delivered to the Issuer, the Indenture Trustee and each Rating Agency an Opinion of Counsel from Independent counsel of the Seller either (A) stating that, in the opinion of such counsel, all filings to be made by the Seller and the Issuer, including filings with the PUCT pursuant to the Securitization Law, have been authorized, executed and filed that are necessary to fully preserve and protect the respective interests of the Issuer and the Indenture Trustee in all of the Transition Property and reciting the details of such filings, or (B) stating that, in the opinion of such counsel, no such action shall be necessary to preserve and protect such interests,
      4. the Seller shall have delivered to the Issuer, the Indenture Trustee, the Rating Agencies and the PUCT an Opinion of Counsel from Independent tax counsel stating that, for federal income tax purposes, notwithstanding such consolidation, conversion, merger, division, reorganization, sale, transfer, lease, management contract transaction, acquisition or other succession and such agreement of assumption, (a) the Issuer will not be subject to tax as an entity separate from its sole owner, (b) the Transition Bonds will be treated as debt of the Issuer's sole owner, and (c) the Transition Bonds will not be treated as transferred in a taxable exchange; and
      5. the Seller shall have given the Rating Agencies prior written notice of such transaction, or, in the case of clause (c)(4) above, the Rating Agency Condition shall be satisfied.

      When the conditions set forth in this Section 5.02 have been satisfied, the preceding Seller shall automatically and without further notice (except as provided in clause (v) above) be released from all of its obligations hereunder.

      When any Person (or more than one Person) acquires the properties and assets of the Seller substantially as a whole or otherwise becomes the successor, whether by merger, conversion, consolidation, sale, transfer, lease, management contract or otherwise, to all or substantially all of the electric transmission and distribution business of the Seller (or, if transmission and distribution are not provided by a single entity, provides distribution service directly to Customers taking service at facilities, premises or loads located in the Service Area in accordance with the terms of this Section 5.02), then upon satisfaction of all of the other conditions of this Section 5.02, the preceding Seller shall automatically and without further notice be released from all of its obligations hereunder.

   3. Limitation on Liability of Seller and Others. The Seller and any director, officer, employee or agent of the Seller may rely in good faith on the advice of counsel or on any document of any kind, prima facie properly executed and submitted by any Person, respecting any matters arising hereunder. Subject to Section 4.07, the Seller shall not be under any obligation to appear in, prosecute or defend any legal action that is not incidental to its obligations under this Agreement, and that in its opinion may involve it in any expense or liability.

6. 
   MISCELLANEOUS PROVISIONS

   1. Amendment. This Agreement may be amended in writing by the Seller and the Issuer, with (i) the prior written consent of the Indenture Trustee, (ii) the satisfaction of the Rating Agency Condition, (iii) the satisfaction of the condition set forth below in Section 6.02, (iv) if such amendment may in the judgment of the PUCT increase ongoing Qualified Costs, the consent of the PUCT pursuant to Section 6.02 and (v) if any amendment would adversely affect in any material respect the interest of any Holder of the Transition Bonds, the consent of a majority of the Holders of each affected Tranche of Transition Bonds. Promptly after the execution of any such amendment or consent, the Issuer shall furnish written notification of the substance of such amendment or consent to each of the Rating Agencies.

      Prior to the execution of any amendment to this Agreement, the Issuer and the Indenture Trustee shall be entitled to receive and rely upon an Opinion of Counsel from Independent counsel of the Seller stating that the execution of such amendment is authorized or permitted by this Agreement and the Opinion of Counsel referred to in Section 3.01(c)(i) of the Servicing Agreement. The Issuer and the Indenture Trustee may, but shall not be obligated to, enter into any such amendment which affects the Indenture Trustee's own rights, duties or immunities under this Agreement or otherwise.

   2. PUCT Condition. Notwithstanding anything to the contrary in Section 6.01, no amendment or modification of this Agreement shall be effective unless the process set forth in this Section 6.02 has been followed.
      1. At least thirty-one (31) days prior to the effectiveness of any such amendment or modification and after obtaining the other necessary approvals set forth in Section 6.01, (except that the consent of the Indenture Trustee may be subject to the consent of the Holders if such consent is required or sought by the Indenture Trustee in connection with such amendment or modification), the Seller shall have delivered to the PUCT's executive director and general counsel written notification of any proposed amendment or modification, which notification shall contain:
         1. a reference to Docket No. 37247;
         2. an Officer's Certificate stating that the proposed amendment or modification has been approved by all parties to this Agreement; and
         3. a statement identifying the person to whom the PUCT or its staff is to address any response to the proposed amendment or modification or to request additional time;
      2. The PUCT or its staff shall, within thirty (30) days of receiving the notification complying with Section 6.02(a) above, either:
         1. provide notice of its determination that the proposed amendment or modification will not under any circumstances have the effect of increasing the ongoing Qualified Costs related to the Transition Bonds,
         2. provide notice of its consent or lack of consent to the person specified in Section 6.02(a)(iii) above, or
         3. be conclusively deemed to have consented to the proposed amendment or modification,

         unless, within thirty (30) days of receiving the notification complying with Section 6.02(a) above, the PUCT or its staff delivers to the office of the person specified in Section 6.02(a)(iii) above a written statement requesting an additional amount of time not to exceed thirty (30) days in which to consider whether to consent to the proposed amendment or modification. If the PUCT or its staff requests an extension of time in the manner set forth in the preceding sentence, then the PUCT shall either provide notice of its consent or lack of consent or notice of its determination that the proposed amendment or modification will not under any circumstances increase ongoing Qualified Costs to the person specified in Section 6.02(a)(iii) no later than the last day of such extension of time or be conclusively deemed to have consented to the proposed amendment or modification on the last day of such extension of time. Any amendment or modification requiring the consent of the PU CT shall become effective on the later of (i) the date proposed by the parties to such amendment or modification and (ii) the first day after the expiration of the thirty (30)-day period provided for in this Section 6.02(b), or, if such period has been extended pursuant hereto, the first day after the expiration of such period as so extended.

      3. Following the delivery of a notice to the PUCT by the Seller under Section 6.02(a), the Seller and the Issuer shall have the right at any time to withdraw from the PUCT further consideration of any notification of a proposed amendment. Such withdrawal shall be evidenced by the prompt written notice thereof by the Seller to the PUCT, the Indenture Trustee, the Issuer and the Servicer.
   3. Notices. All demands, notices and communications upon or to the Seller, the Issuer, the Indenture Trustee, or the Rating Agencies under this Agreement shall be sufficiently given for all purposes hereunder if in writing, and delivered personally, sent by documented delivery service or, to the extent receipt is confirmed telephonically, sent by telecopy or other form of electronic transmission:
      1. in the case of the Seller, to Entergy Texas, Inc., at 350 Pine Street, Beaumont, Texas 77701, Attention: President, Telephone: (409) 838-6631, Facsimile: (409) 981-3016;
      2. in the case of the Issuer, to Entergy Texas Restoration Funding, LLC at Capital Center, 919 Congress Avenue, Suite 840-C, Austin, Texas 78701, Attention: President, Telephone: (512) 487-3982, Facsimile: (512) 487-3958;
      3. in the case of the Indenture Trustee, to the Corporate Trust Office;
      4. in the case of the PUCT, to 1701 N. Congress Avenue, P.O. Box 13326, Austin, Texas 78711-3326, Attention: Executive Director, Telephone: (512) 936-7040, Facsimile: (512) 936-7036 and General Counsel, Telephone: (512) 936-7261, Facsimile: (512) 936-7268;
      5. in the case of Moody's, to Moody's Investors Service, Inc., ABS Monitoring Department, 7 World Trade Center at 250 Greenwich Street, New York, New York 10007, Telephone: (212) 553-3686, Facsimile: (212) 553-0573;
      6. in the case of Standard & Poor's, to Standard & Poor's Ratings Services, a Standard & Poor's Financial Services LLC business, 55 Water Street, 41st Floor, New York, New York 10041, Attention: Structured Credit Surveillance Group, Telephone: (212) 438-2000, Facsimile: (212) 438-2665;
      7. in the case of Fitch, to Fitch Ratings, One State Street Plaza, New York, NY 10004, Attention: ABS Surveillance, Telephone: (212) 908-0500, Facsimile: (212) 908-0355; or
      8. as to each of the foregoing, at such other address as shall be designated by written notice to the other parties.
   4. Assignment. Notwithstanding anything to the contrary contained herein, except as provided in Section 5.02, this Agreement may not be assigned by the Seller.
   5. Limitations on Rights of Third Parties. The provisions of this Agreement are solely for the benefit of the Seller, the Issuer, the Indenture Trustee (for the benefit of the Secured Parties) and the other Persons expressly referred to herein, and such Persons shall have the right to enforce the relevant provisions of this Agreement. Nothing in this Agreement, whether express or implied, shall be construed to give to any other Person any legal or equitable right, remedy or claim in the Transition Property or under or in respect of this Agreement or any covenants, conditions or provisions contained herein.
   6. Severability. Any provision of this Agreement that is prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability without invalidating the remainder of such provision (if any) or the remaining provisions hereof (unless such construction shall be unreasonable), and any such prohibition or unenforceability in any jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction.
   7. Separate Counterparts. This Agreement may be executed by the parties hereto in separate counterparts, each of which when so executed and delivered shall be an original, but all such counterparts shall together constitute but one and the same instrument.
   8. Headings. The headings of the various Articles and Sections herein are for convenience of reference only and shall not define or limit any of the terms or provisions hereof.
   9. Governing Law. THIS AGREEMENT SHALL BE CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF TEXAS, WITHOUT REFERENCE TO ITS CONFLICT OF LAW PROVISIONS, AND THE OBLIGATIONS, RIGHTS AND REMEDIES OF THE PARTIES HEREUNDER SHALL BE DETERMINED IN ACCORDANCE WITH SUCH LAWS.
   10. Assignment to Indenture Trustee. The Seller hereby acknowledges and consents to any mortgage, pledge, assignment and grant of a security interest by the Issuer to the Indenture Trustee pursuant to the Indenture for the benefit of the Secured Parties of all right, title and interest of the Issuer in, to and under this Agreement, the Transition Property and the proceeds thereof and the assignment of any or all of the Issuer's rights hereunder to the Indenture Trustee for the benefit of the Secured Parties.
   11. Limitation of Liability. It is expressly understood and agreed by the parties hereto that this Agreement is executed and delivered by the Indenture Trustee, not individually or personally but solely as Indenture Trustee on behalf of the Secured Parties, in the exercise of the powers and authority conferred and vested in it. The Indenture Trustee in acting hereunder is entitled to all rights, benefits, protections, immunities and indemnities accorded to it under the Indenture.
   12. Waivers. Any term or provision of this Agreement may be waived, or the time for its performance may be extended, by the party or parties entitled to the benefit thereof; provided, however, that no such waiver delivered by the Issuer shall be effective unless the Indenture Trustee has given its prior written consent thereto. Any such waiver shall be validly and sufficiently authorized for the purposes of this Agreement if, as to any party, it is authorized in writing by an authorized representative of such party. The failure of any party hereto to enforce at any time any provision of this Agreement shall not be construed to be a waiver of such provision, nor in any way to affect the validity of this Agreement or any part hereof or the right of any party thereafter to enforce each and every such provision. No waiver of any breach of this Agreement shall be held to constitute a waiver of any other or subsequent breach.

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed by their respective officers as of the day and year first above written.

	ENTERGY TEXAS RESTORATION FUNDING, LLC, as Issuer
	By: ________________________________ Name: Title:
	ENTERGY TEXAS, INC., as Seller
	By: ________________________________ Name: Title:
Acknowledged and Accepted:
THE BANK OF NEW YORK MELLON, as Indenture Trustee
By: ______________________________ Name: Title:

EXHIBIT A

FORM OF BILL OF SALE

This Bill of Sale is being delivered pursuant to the Transition Property Purchase and Sale Agreement, dated as of __________, 2009 (the "Sale Agreement"), by and between Entergy Texas, Inc. (the "Seller") and Entergy Texas Restoration Funding, LLC (the "Issuer"). All capitalized terms used but not otherwise defined herein shall have the respective meanings ascribed to such terms in the Sale Agreement.

In consideration of the Issuer's delivery to or upon the order of the Seller of $[______], the Seller does hereby irrevocably sell, transfer, assign, set over and otherwise convey to the Issuer, without recourse or warranty, except as set forth in the Sale Agreement, all right, title and interest of the Seller in and to the Transition Property identified on Schedule 1 hereto (such sale, transfer, assignment, setting over and conveyance of the Transition Property includes, to the fullest extent permitted by the Securitization Law, the right to impose, collect and receive Transition Charges and the assignment of all revenues, collections, claims, rights, payments, money or proceeds of or arising from the Transition Charges related to the Transition Property, as the same may be adjusted from time to time). Such sale, transfer, assignment, setting over and conveyance is hereby expressly stated to be a sale and, pursuant to Section 39.308 of the Securitization Law and other applica ble law, shall be treated as an absolute transfer of all of the Seller's right, title and interest in and to (as in a true sale), and not as a pledge or other financing of, the Transition Property. The Seller and the Issuer agree that after giving effect to the sale, transfer, assignment, setting over and conveyance contemplated hereby the Seller has no right, title or interest in or to the Transition Property to which a security interest could attach because (i) it has sold, transferred, assigned, set over and conveyed all right in and to the Transition Property to the Issuer, (ii) as provided in Section 39.304 of the Securitization Law, such rights are only contract rights until the time of such sale, transfer, assignment, setting over and conveyance and (iii) as provided in Section 39.309(c) of the Securitization Law, appropriate notice has been filed and such transfer is perfected against all third parties, including subsequent judicial or other lien creditors. If such sale, transfer, assignme nt, setting over and conveyance is held by any court of competent jurisdiction not to be a true sale as provided in Section 39.308 of the Securitization Law, then such sale, transfer, assignment, setting over and conveyance shall be treated as a pledge of such Transition Property and as the creation of a security interest (within the meaning of the Securitization Law and the UCC) in the Transition Property and, without prejudice to its position that it has absolutely transferred all of its rights in the Transition Property to the Issuer, the Seller hereby grants a security interest in the Transition Property to the Issuer (and, to the extent necessary to qualify the grant as a security interest under the Securitization Law and the UCC, to the Indenture Trustee for the benefit of the Secured Parties to secure the right of the Issuer under the Basic Documents to receive the Transition Charges and all other Transition Property).

The Issuer does hereby purchase the Transition Property from the Seller for the consideration set forth in the preceding paragraph.

The Seller and the Issuer each acknowledge and agree that the purchase price for the Transition Property sold pursuant to this Bill of Sale and the Sale Agreement is equal to its fair market value at the time of sale.

The Seller confirms that (i) each of the representations and warranties on the part of the Seller contained in the Sale Agreement are true and correct in all respects on the date hereof as if made on the date hereof and (ii) each condition precedent that must be satisfied under Section 2.03 of the Sale Agreement has been satisfied upon or prior to the execution and delivery of this Bill of Sale by the Seller.

This Bill of Sale may be executed by the parties hereto in separate counterparts, each of which when so executed and delivered shall be an original, but all such counterparts shall together constitute but one and the same instrument.

THIS BILL OF SALE SHALL BE CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF TEXAS, WITHOUT REFERENCE TO ITS CONFLICT OF LAW PROVISIONS, AND THE OBLIGATIONS, RIGHTS AND REMEDIES OF THE PARTIES HEREUNDER SHALL BE DETERMINED IN ACCORDANCE WITH SUCH LAW.

IN WITNESS WHEREOF, the Seller and the Issuer have duly executed this Bill of Sale as of the ___ day of ___________, ______.

ENTERGY TEXAS RESTORATION FUNDING, LLC

By: ________________________________
Name:
Title:

ENTERGY TEXAS, INC.

By: ________________________________
Name:
Title:

SCHEDULE 1
to
BILL OF SALE


Transition Property

All Transition Property created or arising under the Financing Order dated as of September 11, 2009, issued by PUCT pursuant to the Securitization Law, Docket No. 37247.

EX-99

Exhibit 99.3

FORM OF ADMINISTRATION AGREEMENT

This ADMINISTRATION AGREEMENT, dated as of ______ __, 2009 (this "Administration Agreement"), is entered into by and between ENTERGY TEXAS, INC. ("ETI"), as administrator (in such capacity, the "Administrator"), and ENTERGY TEXAS RESTORATION FUNDING, LLC, a Delaware limited liability company (the "Issuer"). Capitalized terms used herein and not otherwise defined herein shall have the meanings assigned to such terms in Appendix A to the Indenture (as defined below).

W I T N E S S E T H:

WHEREAS, the Issuer is issuing Transition Bonds pursuant to that certain Indenture (including Appendix A thereto), dated as of the date hereof (the "Indenture"), by and between the Issuer and The Bank of New York Mellon, a New York banking corporation, as the indenture trustee (the "Indenture Trustee"), as the same may be amended, restated, supplemented or otherwise modified from time to time, and the Series Supplement;

WHEREAS, the Issuer has entered into certain agreements in connection with the issuance of the Transition Bonds, including (i) the Indenture, (ii) the Transition Property Servicing Agreement, dated as of ________ __, 2009 (the "Servicing Agreement"), by and between the Issuer and ETI, as Servicer, (iii) the Transition Property Purchase and Sale Agreement, dated as of ________ __, 2009 (the "Sale Agreement"), by and between the Issuer and ETI, as Seller and (iv) the other Basic Documents to which the Issuer is a party, relating to the Transition Bonds (the Indenture, the Servicing Agreement, the Sale Agreement and the other Basic Documents to which the Issuer is a party, as such agreements may be amended and supplemented from time to time, being referred to hereinafter collectively as the "Related Agreements");

WHEREAS, pursuant to the Related Agreements, the Issuer is required to perform certain duties in connection with the Related Agreements, the Transition Bonds and the Transition Bond Collateral pledged to the Indenture Trustee pursuant to the Indenture;

WHEREAS, the Issuer has no employees, other than its officers and managers, and does not intend to hire any employees, and consequently desires to have the Administrator perform certain of the duties of the Issuer referred to in the preceding clauses and to provide such additional services consistent with the terms of this Administration Agreement and the Related Agreements as the Issuer may from time to time request; and

WHEREAS, the Administrator has the capacity to provide the services and the facilities required thereby and is willing to perform such services and provide such facilities for the Issuer on the terms set forth herein.

NOW, THEREFORE, in consideration of the mutual covenants contained herein, and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties agree as follows:

1. Duties of the Administrator - Management Services. The Administrator hereby agrees to provide the following corporate management services to the Issuer and to cause third parties to provide professional services required for or contemplated by such services in accordance with the provisions of this Administration Agreement:

(a) furnish the Issuer with ordinary clerical, bookkeeping and other corporate administrative services necessary and appropriate for the Issuer, including, without limitation, the following services:

(i) maintain at the Premises (as defined below) general accounting records of the Issuer (the "Account Records"), subject to year-end audit, in accordance with generally accepted accounting principles, separate and apart from its own accounting records, prepare or cause to be prepared such quarterly and annual financial statements as may be necessary or appropriate and arrange for year-end audits of the Issuer's financial statements by the Issuer's independent accountants;

(ii) prepare and, after execution by the Issuer, file with the Securities and Exchange Commission (the "Commission") and any applicable state agencies documents required to be filed by the Issuer with the Commission and any applicable state agencies, including, without limitation, periodic reports required to be filed under the Securities Exchange Act of 1934, as amended;

(iii) prepare for execution by the Issuer and cause to be filed such income, franchise or other tax returns of the Issuer as shall be required to be filed by applicable law (the "Tax Returns") and cause to be paid on behalf of the Issuer from the Issuer's funds any taxes required to be paid by the Issuer under applicable law;

(iv) prepare or cause to be prepared for execution by the Issuer's Managers minutes of the meetings of the Issuer's Managers and such other documents deemed appropriate by the Issuer to maintain the separate limited liability company existence and good standing of the Issuer (the "Company Minutes") or otherwise required under the Related Agreements (together with the Account Records, the Tax Returns, the Company Minutes, the LLC Agreement, and the Certificate of Formation, the "Issuer Documents"); and any other documents deliverable by the Issuer thereunder or in connection therewith; and

(v) hold, maintain and preserve at the Premises (or such other place as shall be required by any of the Related Agreements) executed copies (to the extent applicable) of the Issuer Documents and other documents executed by the Issuer thereunder or in connection therewith;

(b) take such actions on behalf of the Issuer, as are necessary or desirable for the Issuer to keep in full effect its existence, rights and franchises as a limited liability company under the laws of the state of Delaware and obtain and preserve its qualification to do business in each jurisdiction in which it becomes necessary to be so qualified;

(c) take such actions on the behalf of the Issuer as are necessary for the issuance and delivery of the Transition Bonds;

(d) provide for the performance by the Issuer of its obligations under each of the Related Agreements, and prepare, or cause to be prepared, all documents, reports, filings, instruments, notices, certificates and opinions that it shall be the duty of the Issuer to prepare, file or deliver pursuant to the Related Agreements;

(e) to the full extent allowable under applicable law, enforce each of the rights of the Issuer under the Related Agreements, at the direction of the Indenture Trustee;

(f) provide for the defense, at the direction of the Issuer's Managers, of any action, suit or proceeding brought against the Issuer or affecting the Issuer or any of its assets;

(g) provide office space (the "Premises") for the Issuer and such reasonable ancillary services as are necessary to carry out the obligations of the Administrator hereunder, including telecopying, duplicating and word processing services;

(h) undertake such other administrative services as may be appropriate, necessary or requested by the Issuer; and

(i) provide such other services as are incidental to the foregoing or as the Issuer and the Administrator may agree.

In providing the services under this Section 1 and as otherwise provided under this Administration Agreement, the Administrator will not knowingly take any actions on behalf of the Issuer which (i) the Issuer is prohibited from taking under the Related Agreements, or (ii) would cause the Issuer to be in violation of any federal, state or local law or the LLC Agreement.

2. Compensation. As compensation for the performance of the Administrator's obligations under this Administration Agreement (including the compensation of Persons serving as Managers, other than the independent managers, and officers of the Issuer, but, for the avoidance of doubt, excluding the performance by ETI of its obligations in its capacity as Servicer), the Administrator shall be entitled to $100,000 annually (the "Administration Fee"), payable by the Issuer in arrears proportionately on each Payment Date. In addition, the Administrator shall be entitled to be reimbursed by the Issuer for all costs and expenses of services performed by unaffiliated third parties and actually incurred by the Administrator in connection with the performance of its obligations under this Administration Agreement in accordance with Section 3 (but, for the avoidance of doubt, excluding any such costs and expenses incurred by ETI in its capacity as Servicer), to the extent th at such costs and expenses are supported by invoices or other customary documentation and are reasonably allocated to the Issuer ("Reimbursable Expenses").

3. Third Party Services. Any services required for or contemplated by the performance of the above-referenced services by the Administrator to be provided by unaffiliated third parties (including independent auditors' fees and counsel fees) may, if provided for or otherwise contemplated by any related financing order issued by the PUCT and if the Issuer deems it necessary or desirable, be arranged by the Issuer or by the Administrator at the direction (which may be general or specific) of the Issuer. Costs and expenses associated with the contracting for such third-party professional services may be paid directly by the Issuer or paid by the Administrator and reimbursed by the Issuer in accordance with Section 2, or otherwise as the Administrator and the Issuer may mutually arrange.

4. Additional Information to be Furnished to the Issuer. The Administrator shall furnish to the Issuer from time to time such additional information regarding the Transition Bond Collateral as the Issuer shall reasonably request.

5. Independence of the Administrator. For all purposes of this Administration Agreement, the Administrator shall be an independent contractor and shall not be subject to the supervision of the Issuer with respect to the manner in which it accomplishes the performance of its obligations hereunder. Unless expressly authorized by the Issuer, the Administrator shall have no authority, and shall not hold itself out as having the authority, to act for or represent the Issuer in any way and shall not otherwise be deemed an agent of the Issuer.

6. No Joint Venture. Nothing contained in this Administration Agreement (a) shall constitute the Administrator and the Issuer as partners or co-members of any partnership, joint venture, association, syndicate, unincorporated business or other separate entity, (b) shall be construed to impose any liability as such on either of them or (c) shall be deemed to confer on either of them any express, implied or apparent authority to incur any obligation or liability on behalf of the other.

7. Other Activities of Administrator. Nothing herein shall prevent the Administrator or any of its members, managers, officers, employees, subsidiaries or affiliates from engaging in other businesses or, in its sole discretion, from acting in a similar capacity as an Administrator for any other person or entity even though such person or entity may engage in business activities similar to those of the Issuer.

8. Term of Agreement; Resignation and Removal of Administrator.

(a) This Administration Agreement shall continue in force until the payment in full of the Transition Bonds and any other amount which may become due and payable under the Indenture, upon which event this Administration Agreement shall automatically terminate.

(b) Subject to Sections 8(e) and 8(f), the Administrator may resign its duties hereunder by providing the Issuer with at least sixty (60) days' prior written notice.

(c) Subject to Sections 8(e) and 8(f), the Issuer may remove the Administrator without cause by providing the Administrator with at least sixty (60) days' prior written notice.

(d) Subject to Sections 8(e) and 8(f), at the sole option of the Issuer, the Administrator may be removed immediately upon written notice of termination from the Issuer to the Administrator if any of the following events shall occur:

(i) the Administrator shall default in the performance of any of its duties under this Administration Agreement and, after notice of such default, shall fail to cure such default within ten (10) days (or, if such default cannot be cured in such time, shall (A) fail to give within ten (10) days such assurance of cure as shall be reasonably satisfactory to the Issuer and (B) fail to cure such default within thirty (30) days thereafter);

(ii) a court of competent jurisdiction shall enter a decree or order for relief, and such decree or order shall not have been vacated within sixty (60) days, in respect of the Administrator in any involuntary case under any applicable bankruptcy, insolvency or other similar law now or hereafter in effect, or such court shall appoint a receiver, liquidator, assignee, custodian, trustee, sequestrator or similar official for the Administrator or any substantial part of its property or order the winding-up or liquidation of its affairs; or

(iii) the Administrator shall commence a voluntary case under any applicable bankruptcy, insolvency or other similar law now or hereafter in effect, shall consent to the entry of an order for relief in an involuntary case under any such law, shall consent to the appointment of a receiver, liquidator, assignee, trustee, custodian, sequestrator or similar official for the Administrator or any substantial part of its property, shall consent to the taking of possession by any such official of any substantial part of its property, shall make any general assignment for the benefit of creditors or shall fail generally to pay its debts as they become due.

The Administrator agrees that if any of the events specified in clauses (ii) or (iii) of this Section 8(d) shall occur, it shall give written notice thereof to the Issuer and the Indenture Trustee as soon as practicable but in any event within seven (7) days after the happening of such event.

(e) No resignation or removal of the Administrator pursuant to this Section 8 shall be effective until a successor Administrator has been appointed by the Issuer, and such successor Administrator has agreed in writing to be bound by the terms of this Administration Agreement in the same manner as the Administrator is bound hereunder.

(f) The appointment of any successor Administrator shall be effective only after satisfaction of the Rating Agency Condition with respect to the proposed appointment.

9. Action upon Termination, Resignation or Removal. Promptly upon the effective date of termination of this Administration Agreement pursuant to Section 8(a), the resignation of the Administrator pursuant to Section 8(b) or the removal of the Administrator pursuant to Section 8(c) or 8(d), the Administrator shall be entitled to be paid a pro-rated portion of the annual fee described in Section 2 hereof through the date of termination and all Reimbursable Expenses incurred by it through the date of such termination, resignation or removal. The Administrator shall forthwith upon such termination pursuant to Section 8(a) deliver to the Issuer all property and documents of or relating to the Transition Bond Collateral then in the custody of the Administrator. In the event of the resignation of the Administrator pursuant to Section 8(b) or the removal of the Administrator pursuant to Section 8(c) or 8(d), the Administrator shall cooperate with the Issuer and take all reasonable ste ps requested to assist the Issuer in making an orderly transfer of the duties of the Administrator.

10. Administrator's Liability. Except as otherwise provided herein, the Administrator assumes no liability other than to render or stand ready to render the services called for herein, and neither the Administrator nor any of its members, managers, officers, employees, subsidiaries or affiliates shall be responsible for any action of the Issuer or any of the members, managers, officers, employees, subsidiaries or affiliates of the Issuer (other than the Administrator itself). The Administrator shall not be liable for nor shall it have any obligation with regard to any of the liabilities, whether direct or indirect, absolute or contingent of the Issuer or any of the members, managers, officers, employees, subsidiaries or affiliates of the Issuer (other than the Administrator itself).

11. INDEMNITY.

(a) SUBJECT TO THE PRIORITY OF PAYMENTS SET FORTH IN THE INDENTURE, THE ISSUER SHALL INDEMNIFY THE ADMINISTRATOR, ITS MEMBERS, MANAGERS, OFFICERS, EMPLOYEES AND AFFILIATES AGAINST ALL LOSSES, CLAIMS, DAMAGES, PENALTIES, JUDGMENTS, LIABILITIES AND EXPENSES (INCLUDING, WITHOUT LIMITATION, ALL EXPENSES OF LITIGATION OR PREPARATION THEREFOR WHETHER OR NOT THE ADMINISTRATOR IS A PARTY THERETO) WHICH ANY OF THEM MAY PAY OR INCUR ARISING OUT OF OR RELATING TO THIS ADMINISTRATION AGREEMENT AND THE SERVICES CALLED FOR HEREIN; PROVIDED, HOWEVER, THAT SUCH INDEMNITY SHALL NOT APPLY TO ANY SUCH LOSS, CLAIM, DAMAGE, PENALTY, JUDGMENT, LIABILITY OR EXPENSE RESULTING FROM THE ADMINISTRATOR'S NEGLIGENCE OR WILLFUL MISCONDUCT IN THE PERFORMANCE OF ITS OBLIGATIONS HEREUNDER.

(b) THE ADMINISTRATOR SHALL INDEMNIFY THE ISSUER, ITS MEMBERS, MANAGERS, OFFICERS AND EMPLOYEES AGAINST ALL LOSSES, CLAIMS, DAMAGES, PENALTIES, JUDGMENTS, LIABILITIES AND EXPENSES (INCLUDING, WITHOUT LIMITATION, ALL EXPENSES OF LITIGATION OR PREPARATION THEREFOR WHETHER OR NOT THE ISSUER IS A PARTY THERETO) WHICH ANY OF THEM MAY INCUR AS A RESULT OF THE ADMINISTRATOR'S GROSS NEGLIGENCE OR WILLFUL MISCONDUCT IN THE PERFORMANCE OF ITS OBLIGATIONS HEREUNDER.

12. Notices. Any notice, report or other communication given hereunder shall be in writing and addressed as follows:

(a) if to the Issuer, to:

Capital Center, 919 Congress Avenue, Suite 840-C, Austin, Texas 78701

(b) if to the Administrator, to:

350 Pine Street, Beaumont, Texas 77701

(c) if to the Indenture Trustee, to the Corporate Trust Office;

or to such other address as any party shall have provided to the other parties in writing. Any notice required to be in writing hereunder shall be deemed given if such notice is mailed by certified mail, postage prepaid, or hand-delivered to the address of such party as provided above.

13. Amendments. This Administration Agreement may be amended from time to time by a written amendment duly executed and delivered by each of the Issuer and the Administrator, with the prior written consent of the Indenture Trustee, the satisfaction of the Rating Agency Condition and, if the contemplated amendment may in the judgment of the PUCT increase ongoing Qualified Costs, the consent of the PUCT pursuant to Section 14. Promptly after the execution of any such amendment or consent, the Issuer shall furnish written notification of the substance of such amendment or consent to each of the Rating Agencies.

14. PUCT Condition. Notwithstanding anything to the contrary in Section 13, no amendment or modification of this Agreement shall be effective unless the process set forth in this Section 14 has been followed.

(a) At least thirty-one (31) days prior to the effectiveness of any such amendment or modification and after obtaining the other necessary approvals set forth in Section 13 above (except that the consent of the Indenture Trustee may be subject to the consent of Holders if such consent is required or sought by the Indenture Trustee in connection with such amendment), the Administrator shall have delivered to the PUCT's executive director and general counsel written notification of any proposed amendment or modification, which notification shall contain:

1. (i) a reference to Docket No. 37247;
2. (ii) #9; an Officer's Certificate stating that the proposed amendment or modification has been approved by all parties to this Administration Agreement; and
3. (iii) a statement identifying the person to whom the PUCT or its staff is to address any response to the proposed amendment or modification or to request additional time.

(b) The PUCT or its staff shall, within thirty (30) days of receiving the notification complying with Section 14(a) above, either:

1. (i) provide notice of its determination that the proposed amendment or modification will not under any circumstances have the effect of increasing the ongoing qualified costs related to the Transition Bonds,
2. (ii) provide notice of its consent or lack of consent to the person specified in Section 14(a)(iii) above, or
3. (iii) be conclusively deemed to have consented to the proposed amendment or modification,
4. unless, within thirty (30) days of receiving the notification complying with Section 14(a) above, the PUCT or its staff delivers to the office of the person specified in Section 14(a)(iii) above a written statement requesting an additional amount of time not to exceed thirty (30) days in which to consider whether to consent to the proposed amendment or modification. If the PUCT or its staff requests an extension of time in the manner set forth in the preceding sentence, then the PUCT shall either provide notice of its consent or lack of consent or notice of its determination that the proposed amendment or modification will not under any circumstances increase ongoing Qualified Costs to the person specified in Section 14(a)(iii) above no later than the last day of such extension of time or be conclusively deemed to have consented to the proposed amendment or modification on the last day of such extension of time. Any amendment or modification requiring the consent of the PUCT shall become effective on t he later of (i) the date proposed by the parties to such amendment or modification and (ii) the first day after the expiration of the thirty (30)-day period provided for in this Section 14(b), or, if such period has been extended pursuant hereto, the first day after the expiration of such period as so extended.
5. (c) Following the delivery of a notice to the PUCT by the Administrator under Section 14(a) above, the Administrator shall have the right at any time to withdraw from the PUCT further consideration of any notification of a proposed amendment. Such withdrawal shall be evidenced by the prompt written notice thereof by the Administrator to the PUCT, the Indenture Trustee, the Issuer and the Servicer.

15. Successors and Assigns. This Administration Agreement may not be assigned by the Administrator unless such assignment is previously consented to in writing by the Issuer and the Indenture Trustee and subject to the satisfaction of the Rating Agency Condition in connection therewith. Any assignment with such consent and satisfaction, if accepted by the assignee, shall bind the assignee hereunder in the same manner as the Administrator is bound hereunder. Notwithstanding the foregoing, this Administration Agreement may be assigned by the Administrator without the consent of the Issuer or the Indenture Trustee and without satisfaction of the Rating Agency Condition to a corporation or other organization that is a successor (by merger, reorganization, consolidation or purchase of assets) to the Administrator, including, without limitation, any Permitted Successor; provided that such successor or organization executes and delivers to the Issuer an Agreement in which such corporation or other organization agrees to be bound hereunder by the terms of said assignment in the same manner as the Administrator is bound hereunder. Subject to the foregoing, this Administration Agreement shall bind any successors or assigns of the parties hereto. Upon satisfaction of all of the conditions of this Section 15, the preceding Administrator shall automatically and without further notice be released from all of its obligations hereunder.

16. Governing Law. This Administration Agreement shall be construed in accordance with the laws of the State of Texas, without reference to its conflict of law provisions, and the obligations, rights and remedies of the parties hereunder shall be determined in accordance with such laws.

17. Headings. The Section headings hereof have been inserted for convenience of reference only and shall not be construed to affect the meaning, construction or effect of this Administration Agreement.

18. Counterparts. This Administration Agreement may be executed in counterparts, each of which when so executed shall be an original, but all of which together shall constitute but one and the same Administration Agreement.

19. Severability. Any provision of this Administration Agreement that is prohibited or unenforceable in any jurisdiction shall be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining provisions hereof and any such prohibition or unenforceability in any jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction.

20. Nonpetition Covenant. Notwithstanding any prior termination of this Administration Agreement, the Administrator covenants that it shall not, prior to the date which is one year and one day after payment in full of the Transition Bonds, acquiesce, petition or otherwise invoke or cause the Issuer to invoke the process of any court or government authority for the purpose of commencing or sustaining an involuntary case against the Issuer under any federal or state bankruptcy, insolvency or similar law or appointing a receiver, liquidator, assignee, trustee, custodian, sequestrator or other similar official of the Issuer or any substantial part of its property, or ordering the winding up or liquidation of the affairs of the Issuer.

21. Assignment to Indenture Trustee. The Administrator hereby acknowledges and consents to any mortgage, pledge, assignment and grant of a security interest by the Issuer to the Indenture Trustee for the benefit of the Secured Parties pursuant to the Indenture of any or all of the Issuer's rights hereunder and the assignment of any or all of the Issuer's rights hereunder to the Indenture Trustee for the benefit of the Secured Parties.

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

IN WITNESS WHEREOF, the parties have caused this Administration Agreement to be duly executed and delivered as of the day and year first above written.

ENTERGY TEXAS RESTORATION FUNDING, LLC, as Issuer

By: ________________________________
Name:
Title:

Entergy TEXAS, Inc., as Administrator

By: ________________________________
Name:
Title:

EX-99

Exhibit 99.4

Docket No. 37247

APPLICATION OF ENTERGY TEXAS, INC. FOR A FINANCING ORDER PUBLIC UTILITY COMMISSION OF TEXAS

FINANCING ORDER

TABLE OF CONTENTS

I.	DISCUSSION AND STATUTORY OVERVIEW	6
II.	DESCRIPTION OF PROPOSED TRANSACTION	12
III.	FINDINGS OF FACT	17
	A.Identification and Procedure	17
	1.Identification of Applicant and Application	17
	2.Procedural History	18
	3.Notice of Application	23
	B.Qualified Costs and Amount to be Securitized	23
	1.Identification and Amounts	23
	2.Carrying Costs Included in the Securitized Amount	25
	3.Accumulated Deferred Federal Income Taxes	25
	4.Balance to be Securitized	26
	5.Issuance Advice Letter	27
	6.Tangible and Quantifiable Benefit	29
	7.Present Value Cap	30
	8.Total Amount of Revenue to be Recovered	31
	C.Structure of the Proposed Securitization	31
	1.BondCo	31
	2. Credit Enhancement and Arrangements to Reduce Interest Rate Risk or Enhance Marketability	33
	3.Transition Property	34
	4.Servicer and the Servicing Agreement	35
	5.Retail Electric Providers	38
	6.Transition Bonds	44
	7.Security for Transition Bonds	45
	8.General Provisions	48
	9.Transition Charges: Imposition and Collection, Nonbypassability and Self-Generation	48
	10.Allocation of Qualified Costs Among Texas Retail Consumers	51
	11.True-Up of Transition Charges	52
	12.Interim True-Up	54
	13.Non-Standard True-Up	54
	14.Additional True-Up Provisions	56
	15.Commission Participation and Designated Representative	57
	16.Lowest Transition Bond Charges	58
	D.Use of Proceeds	60
	E.Waiver of P.U.C. Proc. R. 22.35(b)(2)	60
IV.	CONCLUSIONS OF LAW	61
V.	ORDERING PARAGRAPHS	69
	A.Approval	69
	B.Transition Charges	72
	C.Transition Bonds	74
	D.Servicing	78
	E.Retail Electric Providers	81
	F.Structure of the Securitization	83
	G.Use of Proceeds	83
	H.Miscellaneous Provisions	83

Appendix A: Form of Issuance Advice Letter

Appendix B: Form of Tariff (Schedule SRC [System Restoration Costs])

Appendix C: Projected Up-front & Ongoing Qualified Costs

Appendix D: Threshold Billing Determinants for Determining the Non-Standard True-up

Appendix E: ADFIT Credit Tariff (Schedule SCO [Storm Cost Offset])

Appendix F: ADFIT Rate Base Benefit

This Financing Order addresses the application of Entergy Texas, Inc. (ETI or the Company) under Subchapter I of Chapter 36 and Subchapter G of Chapter 39 of the Public Utility Regulatory Act¹ (PURA): (1) to securitize the sum of system restoration costs as determined by the Commission in Docket No. 36931², carrying costs as applicable on the system restoration costs through the issuance of the transition bonds, and other qualified costs; (2) for approval of the proposed securitization financing structure and issuance of transition bonds; (3) for approval of transition charges sufficient to recover qualified costs; and (4) for approval of a tariff to implement the transition charges.

In August 21, 2009, ETI filed a unanimous settlement agreement (Agreement) resolving all issues in this proceeding. As discussed in this Financing Order, the Commission finds that the Agreement and ETI's application for approval of the securitization transaction, as modified by the Agreement and this Financing Order, should be approved. The Commission also finds that the securitization approved in this Financing Order meets all applicable requirements of PURA. Accordingly, in accordance with the terms of this Financing Order, the Commission: (1) approves the securitization requested by ETI; (2) authorizes the issuance of transition bonds in one or more series in an aggregate principal amount of (a) $539,881,826 of system restoration costs pursuant to the Commission's Order in Docket No. 36931 (36931 Order) (which amount includes carrying costs in the amount of $43,525,261 through the projected issuance date of the transition bonds of October 26, 2009, calculated at a rate of 10.86% per annum pursuant to the 36931 Order), plus (b) up-front qualified costs of issuing the transition bonds and of retiring some existing debt at ETI, which are capped, and are not to exceed $5 million plus (i) the cost of original issue discount, credit enhancements and other arrangements to enhance marketability (provided that the Commission's designated representative and ETI agree in advance that such enhancements and arrangements provide benefits greater than their tangible and intangible costs), (ii) the cost of the Commission's financial advisor, if any, and (iii ) any costs incurred by ETI if this Financing Order is appealed, minus (c) insurance proceeds (in excess of $70 million) or governmental grant proceeds received prior to the issuance of the financing order, plus or minus (d) any adjustment to the $43,525,261 in carrying costs necessary to account for (i) the receipt of insurance or grant proceeds, and (ii) the number of days, as applicable, either greater than or less than assumed in the $43,525,261 carrying cost calculation based on the projected issuance date for the transition bonds of October 26, 2009; (3) approves the structure of the proposed securitization financing; (4) approves transition charges in an amount to be calculated as provided in this Financing Order; (5) approves the form of tariff, as provided in this Financing Order, to implement those transition charges; (6) approves the form of tariff, as provided in this Financing Order, to implement the accumulated deferred federal income tax credit (ADFIT Credit); and (7) finds that the potential benefits of an interest-rate swap within the bond structure will not outweigh the costs of preparing such a swap and the incremental risks to customers, and that an interest-rate swap should not occur within the transition bond structure.

In the issuance advice letter discussed herein, ETI shall update the amount of the up-front qualified costs to reflect the actual issuance date of the transition bonds and other relevant current information in accordance with the terms of this Financing Order. In addition, if ETI receives insurance or governmental grant proceeds that affect the carrying costs to be securitized, the resulting adjustment to the amount to be securitized shall be included in the issuance advice letter. If the transition bonds are issued on a date other than October 26, 2009, ETI shall include in the issuance advice letter a revision to the carrying costs to account for the difference in the number of days either less than or greater than assumed in the calculation based on the projected issuance date for the transition bonds of October 26, 2009, and the amount securitized shall be adjusted upwards or downwards, as applicable, based on such difference. ETI is authorized to issue transition bonds to securitiz e the updated aggregate principal amount reflected in the issuance advice letter in accordance with the terms of this Financing Order.

In order to approve the securitization of the system restoration costs, the Commission must consider whether the proposed securitization meets the financial tests set out in PURA Chapter 36, Subchapter I³, and Chapter 39, Subchapter G. The three financial tests require that the total revenues collected under the financing order are less than the revenues collected using conventional financing methods (total revenues test)⁴, that the securitization of the system restoration costs provides greater tangible and quantifiable benefits to ratepayers than would have been achieved without the issuance of the transition bonds (tangible and quantifiable benefits test)⁵, and that the amount securitized may not exceed the present value of the revenue requirement over the life of the proposed transition bond associated with the regulatory assets or stranded costs sought to be securitized (present value test)⁶.

ETI submitted evidence demonstrating that the proposed securitization met each of the financial tests set forth above. All of the calculations performed by ETI demonstrated that the transaction would pass these tests by a significant margin. Considering the magnitude of the margin by which the proposed securitization passes the various tests, the Commission declines to determine a particular number for each benefit conferred by the securitization. Accordingly, in quantifying the benefit to ratepayers as a result of this securitization, the Commission refers to the ranges of benefits calculated under ETI's base case scenario, in which the transition bonds bear a 5.91% weighted-average annual interest rate, and a worst-case scenario, in which the bonds are subject to a 7.75% weighted-average annual interest rate.

As a result of the securitization approved by this Financing Order, consumers in ETI's service area will realize benefits. Based on the amount that ETI initially sought to securitize, ETI's financial analysis indicated that, for the tangible and quantifiable benefits test, consumers will realize benefits estimated to be $59 million on a present value basis in the worst case scenario⁷. At the base case weighted-average interest rate as of March 31, 2009, securitization confers benefits of $132 million on a present-value basis⁸. In addition, under the worst-case scenario for the total revenue test, securitization of the amount ETI initially sought to securitize will result in a reduction in the amount of revenues collected by ETI of $123 million, on a nominal basis, when compared to the amount that would have been collected under conventional financing methods.⁹ In the base case, the securitization will result in a reduction in the amount of revenues collected by ETI of $206 million.¹⁰ Finally, under the present value test, the present value of the amount ETI initially sought to securitize is $569 million. This amount does not exceed the present value of revenue requirements under conventional recovery of $628 million and $701 million in the worst case and base cases, respectively.¹¹ Accordingly, the Commission concludes that the benefits for consumers set forth in ETI's evidence are fully indicative of the benefits that consumers will realize from the securitization approved hereby. Also in the issuance advice letter, ETI will be required to update the benefit analyses to verify that the final amount securitized satisfies the statutory financial tests.

On August 18, 2009, the Commission issued the 36931 Order determining that ETI is entitled pursuant to PURA Sections 36.401-.406 to recover $566,356,566 of system restoration costs, plus carrying costs on the system restoration costs through the issuance date of transition bonds, minus a $70 million credit of projected insurance proceeds, plus all other qualified costs, to be determined by the Commission in this proceeding. Pursuant to the terms of the 36931 Order, the amount of carrying costs included in the securitization amount is subject to adjustment based on ETI's possible receipt of insurance or governmental grant proceeds. The amount of carrying costs to be securitized is unaffected, however, by the receipt of insurance or governmental grant proceeds after the bonds are priced. In its application filed on July 16, 2009, ETI requested authority to securitize the sum of: (a) $627,846,626 of system restoration costs pursuant to the 36931 Order (which amount includes carrying costs in the amount of $50,340,060 through the projected issuance date of the transition bonds of November 16, 2009, calculated at a rate of 10.86% per annum pursuant to the 36931 Order), plus (b) up-front qualified costs of issuing the transition bonds and of retiring some existing debt at ETI, which are estimated to be $6,153,374 but which are subject to change and update pursuant to the issuance advice letter, minus (c) governmental grant proceeds received prior to the issuance of the financing order, if reduction of the amount to be securitized is required by the 36931 Order, plus or minus (d) any adjustment to the $50,340,060 in carrying costs necessary to account for (i) the receipt of insurance or grant proceeds as provided in the 36931 Order, and (ii) the number of days, as applicable, either greater than or less than assumed in the $50,340,060 carrying cost calculation based on the projected issuance date for the transition bonds of November 16, 2009.

ETI provided a general description of the proposed transaction structure in its application and in the testimony and exhibits submitted in support of its application. The proposed transaction structure does not contain every relevant detail and, in certain places, uses only approximations of certain costs and requirements. The final transaction structure will depend, in part, upon the requirements of the nationally-recognized credit rating agencies that will rate the transition bonds and, in part, upon the market conditions that exist at the time the transition bonds are taken to the market.

While the Commission recognizes the need for some degree of flexibility with regard to the final details of the securitization transaction approved in this Financing Order, its primary focus is upon the statutory requirements-not the least of which is to ensure that securitization results in tangible and quantifiable benefits to ratepayers-that must be met prior to issuing a financing order.

In view of these obligations, the Commission has established certain criteria in this Financing Order that must be met in order for the approvals and authorizations granted in this Financing Order to become effective. This Financing Order grants authority to issue transition bonds and to impose and collect transition charges only if the final structure of the securitization transaction complies in all material respects with these criteria. Finally, the authority and approval granted in this Financing Order are effective only upon ETI filing with the Commission an issuance advice letter demonstrating compliance with the provisions of this Financing Order.

1.     DISCUSSION AND STATUTORY OVERVIEW

   The Texas Legislature amended PURA in 1999 to provide for competition in the provision of retail electric service.¹² To facilitate the transition to a competitive environment, electric utilities are authorized under Subchapter G of Chapter 39 of PURA to undertake securitization financing of qualified costs.¹³ The Legislature provided this option for recovering qualified costs based on the conclusion that securitized financing will result in lower carrying costs for utility assets relative to the costs that would be incurred using conventional utility financing methods. As a precondition to the use of securitization, the Legislature required that the utility demonstrate that ratepayers would receive tangible and quantifiable benefits as a result of securitization and that the Commission make a specific finding that such benefits exist before issuing a financing order. Consequently, a basic purpose of securitized financing-the recovery of an electric utility's qualified costs-is conditioned upon the other basic purpose-providing economic benefits to consumers of electricity in this state.

   On September 13, 2008, ETI's service territory was struck by Hurricane Ike, which caused widespread damage to infrastructure and power outages throughout the service territory. Previously, on September 1, 2008, Hurricane Gustav made landfall in Cocodrie, Louisiana, which also affected Texas utilities. In response to the damage to utility infrastructure, the Texas Legislature passed Senate Bill 769 in April 2009, which added Subchapter I to Chapter 36 of PURA to be codified at Sections 36.401-.406. Senate Bill 769 enables an electric utility subject to Subchapter I of Chapter 36, including ETI, to obtain timely recovery of system restoration costs and to use securitization financing to recover these costs because that type of debt will lower the carrying costs associated with the recovery of system restoration costs relative to the costs that would be incurred using conventional financing methods.¹⁴ The Legislature intends that securitization of system restoration costs be subject to the same procedures, standards, and protections for the securitization of stranded costs and regulatory assets under Subchapter G of Chapter 39, except as provided in Subchapter I of Chapter 36.

   To securitize an electric utility's qualified costs, the Commission authorizes the issuance of securities known as "transition bonds."¹⁵ Transition bonds are generally defined as evidences of indebtedness or ownership that are issued under a financing order, are limited to a term of not longer than 15 years, and are secured by or payable from transition property.¹⁶  The net proceeds from the sale of the transition bonds must be used to reduce the amount of a utility's recoverable system restoration costs. If transition bonds are approved and issued, retail electric consumers must pay the principal, interest, and related charges of the transition bonds through transition charges. Transition charges are nonbypassable charges that will be paid as a component of the monthly charge for electric service. Transition charges must be approved by the Commission pursuant to a finan cing order.¹⁷

   The Commission may adopt a financing order only if it finds that the total amount of revenues to be collected under the financing order is less than the revenue requirement that would be recovered using conventional financing methods and that the financing order is consistent with the standards of PURA Section 39.301.¹⁸ The Commission must ensure that the net proceeds of transition bonds may be used only for the purpose of reducing the amount of recoverable system restoration costs.¹⁹ In addition, the Commission must ensure that  (1) securitization provides tangible and quantifiable benefits to ratepayers greater than would have been achieved absent the issuance of the transition bonds,²⁰ and (2) the structuring and pricing of the transition bonds result in the lowest transition bond charges consistent with market conditions and the terms of a financing order.²¹ Finally, the amount securitized may not exceed the present value of the revenue requirement over the life of the proposed transition bonds associated with the amounts sought to be securitized, and the present value calculation must use a discount rate equal to the proposed interest rate on the transition bonds.²² All of these statutory requirements go to ensure that securitization will provide real benefits to retail consumers.

   The essential finding by the Commission that is needed to issue a financing order is that ratepayers will receive tangible and quantifiable benefits as a result of securitization. This finding can only be made upon a showing of economic benefits to ratepayers through an economic analysis. An economic analysis is necessary to recognize the time value of money in evaluating whether and the extent to which benefits accrue from securitization. Moreover, an economic analysis recognizes the concept that the timing of a payment can be as important as the magnitude of a payment in determining the value of the payment. Thus, an analysis showing an economic benefit is necessary to quantify a tangible benefit to ratepayers.

   Economic benefits also depend upon a favorable financial market-one in which transition bonds may be sold at an interest rate lower than the carrying costs of the assets being securitized. The precise interest rate at which transition bonds can be sold in a future market, however, is not known today. Nevertheless, benefits can be calculated based upon certain known facts (e.g., the amount of assets to be securitized and the cost of the alternative to securitization) and assumptions (e.g., the interest rate of the transition bonds, the term of the transition bonds and the amount of other qualified costs). By analyzing the proposed securitization based upon those facts and assumptions, a determination can be made as to whether tangible and quantifiable benefits result. To ensure that benefits are realized, the securitization transaction must be structured in a manner consistent with the assumptions of the cost-benefit economic analysis and conform to the structu re ordered by the Commission, and an issuance advice letter must be presented to the Commission immediately prior to issuance of the bonds demonstrating that the actual structure and costs of the bonds will provide tangible and quantifiable benefits. The cost-benefit analysis contained in the issuance advice letter shall reflect the actual structure of the bonds.

   In this proceeding, ETI's financial analysis shows that securitizing the amount initially requested by ETI will produce an economic benefit to ratepayers in an amount between $59 million and $132 million on a present value basis.²³ This benefit will result even if the bond market is unfavorable and transition bonds have to be issued at the maximum weighted-average interest rate allowed by this Financing Order. Assuming that the transition bonds are consistent with the base case presented by ETI, subject to a 5.91% weighted-average annual interest rate (calculated using the amount requested to be securitized by ETI), the benefit is $132 million on a present-value basis.²⁴ The economic benefit to ratepayers will be larger if a more favorable market allows the transition bonds to be issued at a lower interest rate. Also in the issuance advice letter, ETI will be required to update the benefit analyses to verify that the final amount securitized satisfies the statutory financial tests.

   To issue a financing order, PURA also requires that the Commission find that the total amount of revenues collected under the financing order will be less than would otherwise have been collected under conventional financing methods. In this proceeding, ETI's financial analysis of the amount initially sought to be securitized using worst-case market conditions demonstrates that, under the total revenue test, revenues will be reduced by $123 million on a nominal basis under this Financing Order compared to the amount that would be recovered under conventional financing methods, assuming the bonds are issued at a 7.75% weighted-average annual interest rate.²⁵ Under the base case scenario in which the bonds are issued at a 5.91% weighted-average annual interest rate, securitization saves ratepayers $206 million in nominal revenue.²⁶ If transition bonds are issued in a more favorable market, this reduction in revenues will be larger. For the reasons previously stated, the Commission finds that the foregoing benefits are indicative of the benefits to consumers of the securitization of the amount authorized hereby.

   Before the transition bonds may be issued, ETI must submit to the Commission an issuance advice letter in which it demonstrates, based upon the actual market conditions at the time of pricing, that the proposed structure and pricing of the transition bonds will provide real economic benefits to retail consumers and comply with this Financing Order. As part of this submission, ETI must also certify to the Commission that the structure and pricing of the transition bonds result in the lowest transition bond charges consistent with market conditions at the time of pricing and the terms of this Financing Order. The form of certification that must be submitted by ETI is set out in Appendix A to this Financing Order. The Commission, by order, may stop the issuance of the transition bonds authorized by this Financing Order if ETI fails to make this demonstration or certification.

   PURA requires that transition charges be charged for the use of electric services to recover all qualified costs.²⁷ Transition charges can be recovered over a period that does not exceed 15 years.²⁸ The Commission concludes that this prevents the collection of transition charges from retail consumers for services rendered after the 15-year period but does not prohibit recovery of transition charges for service rendered during the 15-year period but not actually collected until after the 15-year period.

   Transition charges will be collected by an electric utility, its successors, an assignee, or other collection agents as provided for in this Financing Order.²⁹ The right to impose, collect and receive transition charges (including all other rights of an electric utility under the financing order) are only contract rights until they are first transferred to an assignee or pledged in connection with the issuance of transition bonds. Upon the transfer or pledge of those rights, they become transition property and, as such, are afforded certain statutory protections to ensure that the charges are available for bond retirement.³⁰

   This Financing Order contains terms, as permitted under PURA Section 36.404, ensuring that the imposition and collection of transition charges authorized herein shall be nonbypassable.³¹ It also includes a mechanism requiring that transition charges be reviewed and adjusted at least annually, within 45 days of the anniversary date of the issuance of the transition bonds, to correct any overcollections or undercollections during the preceding 12 months and to ensure the expected recovery of amounts sufficient to timely provide all payments of debt service and other required amounts and charges in connection with the transition bonds.³² In addition to the required annual reviews, more frequent reviews are allowed and under certain circumstances required to ensure that the amount of the transition charges matches the funding requirements approved in this Financing Order. These provisions will help to ensure that the amount of transition charges paid by retail consumers does not exceed the amount necessary to cover the costs of this securitization. To encourage utilities to undertake securitization financing, other benefits and assurances are provided.

   The State of Texas has pledged, for the benefit and protection of financing parties and electric utilities, that it will not take or permit any action that would impair the value of transition property, or, except for the true-up expressly allowed by law, reduce, alter, or impair the transition charges to be imposed, collected and remitted to financing parties, until the principal, interest and premium, and any other charges incurred and contracts to be performed in connection with the related transition bonds have been paid and performed in full.³³

   Transition property constitutes a present property right for purposes of contracts concerning the sale or pledge of property, and the property will continue to exist for the duration of the pledge of the State of Texas as described in the preceding paragraph.³⁴ In addition, the interests of an assignee or pledgee in transition property (as well as the revenues and collections arising from the property) are not subject to setoff, counterclaim, surcharge, or defense by the electric utility or any other person or in connection with the bankruptcy of the electric utility or any other entity.³⁵ Further, transactions involving the transfer and ownership of transition property and the receipt of transition charges are exempt from state and local income, sales, franchise, gross receipts, and other taxes or similar charges.³⁶ The creation, granting, perfection, and enforcement of liens and security interests in transition property are governed by PURA Section 39.309 and not by the Texas Business and Commerce Code.³⁷

   The Commission may adopt a financing order providing for the retiring and refunding of transition bonds only upon making a finding that the future transition charges required to service the new transition bonds, including transaction costs, will be less than the future transition charges required to service the bonds being retired or refunded.38 ETI has not requested and this Financing Order does not grant any authority to refinance transition bonds authorized by this Financing Order. This Financing Order does not preclude ETI from filing a request for a financing order to retire or refund the transition bonds approved in this Financing Order upon a showing that the statutory criteria in PURA Section 39.303(g) are met.39

   To facilitate compliance and consistency with applicable statutory provisions, this Financing Order adopts the definitions in PURA Sections 36.401-.406 and PURA Section 39.302.

2.     DESCRIPTION OF PROPOSED TRANSACTION

   A description of the transaction proposed by ETI is contained in its application and the filing package submitted as part of the application. A brief summary of the proposed transaction is provided in this section. A more detailed description is included in Section III.C, titled "Structure of the Proposed Securitization" and in the application and filing package submitted as part of the application.

   To facilitate the proposed securitization, ETI proposed that a special purpose transition funding entity ("BondCo") be created to which will be transferred the rights to impose, collect, and receive transition charges along with the other rights arising pursuant to this Financing Order. Upon transfer, these rights will become transition property as provided by PURA Section 39.304. BondCo will issue transition bonds and will transfer the net proceeds from the sale of the transition bonds to ETI in consideration for the transfer of the transition property. BondCo will be organized and managed in a manner designed to achieve the objective of maintaining BondCo as a bankruptcy-remote entity that would not be affected by the bankruptcy of ETI or any other affiliates of ETI or any of their respective successors. In addition, BondCo will have at least one independent manager whose approval will be required for certain major actions or organizational changes by Bond Co.

   The transition bonds will be issued pursuant to an indenture and administered by an indenture trustee. The transition bonds will be secured by and payable solely out of the transition property created pursuant to this Financing Order and other collateral described in ETI's application. That collateral will be pledged to the indenture trustee for the benefit of the holders of the transition bonds and to secure payment of certain qualified costs.

   The servicer of the transition bonds will collect the transition charges and remit those amounts to the indenture trustee on behalf of BondCo. The servicer will be responsible for making any required or allowed true-ups of the transition charges. If the servicer defaults on its obligations under the servicing agreement, the indenture trustee may appoint a successor servicer. ETI will act as the initial servicer for the transition bonds.

   When, and if, ETI's service territory becomes subject to retail competition, ETI, as servicer, will collect the applicable transition charges from retail electric providers (REPs). REPs will be required to meet certain financial standards to collect transition charges under this Financing Order. If the REP qualifies to collect transition charges, the servicer will bill to and collect from the REP the transition charges attributable to the REP's customers. The REP in turn will bill to and collect from its retail customers the transition charges attributable to them. If any REP fails to qualify to collect transition charges or defaults in the remittance of those charges to the servicer of the transition bonds, another entity can assume responsibility for collection of the transition charges from the REP's retail customers.

   Transition charges will be calculated to ensure the collection of an amount sufficient to service the principal, interest, and related charges for the transition bonds and in a manner that allocates this amount to the various classes of retail consumers in the same manner as the facility costs and related expenses represented by the system restoration costs are functionalized and allocated in ETI's current base rates. The transition charges will be calculated pursuant to the method described in Schedule SRC (System Restoration Costs), a pro forma copy of which is contained in Appendix B to this Financing Order. In addition to the annual true-up required by PURA Section 39.307, interim true-ups may be required and performed as necessary to ensure that the amount collected from transition charges is sufficient to service the transition bonds. A non-standard true-up will be allowed for other circumstances as provided in this Financing Order. The methodology for making true-ups and allocation adjustments and the circumstances under which each shall be made are described in Schedule SRC.

   The Commission determines that ETI's proposed structure for the transition charges should be utilized. This structure is designed to provide substantially level annual debt service and revenue requirements over the life of the bond issue, which will not exceed 15 years. The structure uses consistent allocation factors across rate classes as approved by the Commission in Docket No. 36931.

   In an application, filed on July 16, 2009, ETI requested authority to securitize and to cause the issuance of transition bonds in the aggregate principal amount of: (a) $627,846,626 of system restoration costs pursuant to the 36931 Order (which amount includes carrying costs in the amount of $50,340,060 through the projected issuance date of the transition bonds of November 16, 2009, calculated at a rate of 10.86% per annum pursuant to the 36931 Order), plus (b) up-front qualified costs of issuing the transition bonds and of retiring some existing debt at ETI, which are estimated to be $6,153,374, minus (c) governmental grant proceeds received prior to the issuance of the financing order, if reduction of the amount to be securitized is required by the 36931 Order, plus or minus (d) any adjustment to the $50,340,060 in carrying costs necessary to account for (i) the receipt of insurance or grant proceeds as provided in the 36931 Order, and (ii) the number of days, as applicable, either grea ter than or less than assumed in the $50,340,060 carrying cost calculation based on the projected issuance date for the transition bonds of November 16, 2009. The Commission determines that the up-front qualified costs of issuing the transition bonds and retiring some existing debt at ETI should be capped at $5 million plus (i) the cost of original issue discount, credit enhancements and other arrangements to enhance marketability (provided that the Commission's designated representative and ETI agree in advance that such enhancements and arrangements provide benefits greater than their tangible and intangible costs), (ii) the cost of the Commission's financial advisor, if any, and (iii) any costs incurred by ETI if this Financing Order is appealed.

   ETI did not request the ability to perform interest-rate swaps within the transition bond structure. PURA Sections 39.301 and 39.303 give the Commission the flexibility to address or not address different financial options if, based on the record evidence submitted, the Commission determines that the potential costs would outweigh the benefits. The Commission acknowledges that interest-rate swaps may under certain market conditions have the potential to lower the transition bonds charges. However, the Commission finds that this result is not guaranteed, and an interest-rate swap may result in greater transition bonds charges. Based on the evidence, the Commission finds that the potential benefits of an interest-rate swap would not outweigh the costs of researching and preparing the swap and the potential risks to consumers, and would not produce the lowest transition bond charges. Accordingly, the Commission prohibits the use of interest-rate swaps within the transition bond stru cture.

   The amount of carrying costs in ETI's Direct Testimony was calculated in accordance with the 36931 Order, premised on a transition bond issuance date of November 16, 2009.⁴⁰ Accordingly, the Commission determines that it is appropriate to update the carrying cost amount in the issuance advice letter to reflect the actual issuance date of the transition bonds and other relevant current information (including an adjustment to the carrying costs to be securitized to account for the possible receipt of insurance proceeds and governmental grants) and that ETI be authorized to securitize the updated aggregate principal balance reflected in the issuance advice letter.⁴¹

   ETI requested approval of transition charges sufficient to recover the principal and interest on the transition bonds plus ongoing qualified costs as described in Appendix C to this Financing Order. ETI requested that the transition charges be recovered from retail customers by ETI, as servicer, or when, and if, ETI's service territory becomes subject to retail competition, that transition charges be recovered from retail customers through REPs and other entities which, under PURA and this Financing Order, are obligated to pay or collect transition charges. ETI requested that the amount of the transition charges be calculated based upon the allocation methodology and billing determinants specified in Schedule SRC. ETI also requested that certain standards related to the billing and collection of transition charges be applied to REPs, as specified in Schedule SRC.

   ETI requested in its application that its up-front and ongoing costs of issuing and maintaining the transition bonds be recovered through the transition charges authorized in this proceeding. ETI estimated that its up-front qualified costs would total approximately $6.2 million, and proposed that those costs not be subject to a cap. Pursuant to the Agreement, the aggregate up-front qualified costs are capped at $5 million. However, the aggregate cap does not apply to: (1) the up-front costs of credit enhancements and arrangements to enhance marketability, including original issue discount, provided that the Commission's designated representative and ETI agree in advance that such enhancements and arrangements provide benefits greater than their tangible and intangible costs; (2) the costs of the Commission's financial advisor, if the Commission hires a financial advisor to assist it with issuance of the bonds; and (3) any costs incurred by ETI to defend the Financing Order, if the Fina ncing Order is appealed. The Commission agrees with this approach. All up-front qualified costs other than those enumerated above will be subject to the aggregate cap; however, there will be no individual cap applicable to any component of up-front qualified costs.

   ETI proposed that its ongoing costs of servicing the bonds would be capped at $290,000 per year for each year of the term of the bonds, if ETI is the servicer.⁴² The Commission agrees that the ongoing servicer fees should be capped at $290,000 per year for each year of the term of the bonds, if ETI is the servicer. In the event that ETI is no longer the servicer, and a substitute, third-party servicer is appointed, ETI is required to seek Commission approval for the ongoing costs of servicing the bonds if the annual substitute servicer fees will exceed 0.60% of the original principal amount securitized. The Commission also finds it appropriate to establish a cap on the administrative fees of $100,000 for each BondCo plus reimbursable third party costs. Ongoing qualified costs include a return of 10.86% on the amount, if any, of invested capital in excess of 0.5% of the principal amount of each series of bonds as discussed in Finding of Fact 62. The Commission finds that ETI should be permitted to securitize its up-front costs of issuance in accordance with the terms of this Financing Order. Other than the servicer and administrative fees, ongoing costs are not capped and are estimated in Appendix C to this Financing Order.

   In capping ETI's up-front qualified costs, the Commission is mindful of the fact that several of the components of these total cost balances will vary depending on the size of the final issuance of the transition bonds. Specifically, the Commission realizes that the SEC registration fee, rating agency fees, and underwriters' fees are proportional to the amount of qualified costs actually securitized. In addition, the SEC formula for calculating registration fees changes from time to time. Although the aggregate up-front qualified costs are capped at $5 million, in the issuance advice letter ETI should update the SEC registration fee, rating agency fees, and underwriters' fees proportionately to reflect the actual qualified costs securitized. The issuance advice letter should also update the costs of any original issue discount or other forms of credit enhancement. Likewise, ETI is authorized to recover its actual ongoing qualified costs of servicing directly through the transition cha rges, subject to the cap of $290,000 annually on the servicing fee set forth in Appendix C to this Financing Order. Additionally, the administrative fees are capped at $100,000 for each BondCo plus reimbursable third party costs. The amount of ongoing costs reflected in Appendix C should be updated in the issuance advice letter to reflect more current information available to ETI prior to the issuance of the transition bonds. Further, in accordance with the terms of this Financing Order, the Commission will authorize a successor servicer to ETI to recover a higher servicer fee if ETI ceases to service these bonds.

3. FINDINGS OF FACT

1. Identification and Procedure

1. Identification of Applicant and Application

1. ETI is an electric utility that owns and operates for compensation an extensive generation, transmission and distribution network to provide electric service in the southeast portion of this state. ETI is a direct wholly-owned subsidiary of Entergy Corporation, which, prior to February 8, 2006, was a registered public utility holding company under the Public Utility Holding Company Act of 1935 and is now a public utility holding company under the Public Utility Holding Company Act of 2005.
2. On April 21, 2009, in Docket No. 36931, ETI filed an application to determine the system restoration costs ETI is entitled to recover under Subchapter I of Chapter 36 of PURA. In the Order issued on August 18, 2009 in Docket No. 36931, the Commission determined that the total dollar amount of ETI's system restoration costs eligible for recovery and securitization is $566,356,566, plus carrying costs at the rate of 10.86% per annum from the date incurred until the issuance of securitization bonds, minus $70 million of projected insurance proceeds, plus all other qualified costs. The 36931 Order further provides for adjustments to the carrying costs balance based upon the receipt of insurance or governmental grant proceeds.

    2.    Procedural History

3. On July 16, 2009, ETI filed its application for a financing order under Subchapter I of Chapter 36 and Subchapter G of Chapter 39 of PURA to securitize and to cause the issuance of transition bonds in an aggregate principal amount of: (a) $627,846,626 of system restoration costs pursuant to the 36931 Order (which amount includes carrying costs in the amount of $50,340,060 through the projected issuance date of the transition bonds of November 16, 2009, calculated at a rate of 10.86% per annum pursuant to the 36931 Order), plus (b) up-front qualified costs of issuing the transition bonds and of retiring some existing debt at ETI, which are estimated to be $6,153,374, minus (c) governmental grant proceeds received prior to the issuance of the financing order, if reduction of the amount to be securitized is required by the 36931 Order, plus or minus (d) any adjustment to the $50,340,060 in carrying costs necessary to account fo r (i) the receipt of insurance or grant proceeds as provided in the 36931 Order, and (ii) the number of days, as applicable, either greater than or less than assumed in the $50,340,060 carrying cost calculation based on the projected issuance date for the transition bonds of November 16, 2009. ETI proposed that these amounts be updated in the issuance advice letter to reflect the actual issuance date of the transition bonds and other relevant current information available at that time (including, if required by the 36931 Order, an adjustment to the carrying cost amount to account for the possible receipt of certain insurance proceeds and governmental grants) as permitted by the draft financing order submitted by ETI, and that ETI be authorized to securitize the updated aggregate principal amount reflected in the issuance advice letter. ETI also proposed to include as qualified costs the costs of possible hedge agreements entered into under the circumstances described in the testimon y accompanying the application and the costs of credit enhancements relating to marketability of the transition bonds. The application includes the exhibits, schedules, attachments, and testimony.
4. On July 20, 2009, the Commission's administrative law judge (ALJ) issued Order No. 1 scheduling a prehearing conference, adopting a protective order, addressing discovery deadlines and requesting the parties' comments on ETI's notice and proposed procedural schedule.
5. In Order No. 3, issued on July 30, 2009, the ALJ approved ETI's notice and established the intervention deadline.
6. In Order No. 4, issued on July 31, 2009, the ALJ admitted the following parties as intervenors: Texas Industrial Energy Consumers, the State of Texas, and the Cities of Beaumont, Bridge City, Conroe, Groves, Huntsville, Montgomery, Navasota, Nederland, Orange, Pine Forest, Pinehurst, Port Neches, Rose City, Shenandoah, Silsbee, and Willis.
7. In Order No. 5, issued on August 5, 2009, the ALJ approved the procedural schedule for this proceeding.
8. On August 21, 2009, ETI filed the Agreement resolving all issues in this proceeding.
9. The Agreement includes the following:

   a.     Amount to Be Securitized

   ETI should be authorized to cause transition bonds to be issued in an aggregate principal amount of: (a) $539,881,826 of system restoration costs pursuant to the 36931 Order (which amount includes carrying costs in the amount of $43,525,261 through the projected issuance date of the transition bonds of October 26, 2009, calculated at a rate of 10.86% per annum (with no compounding) pursuant to the 36931 Order), plus
   (b) up-front qualified costs of issuing the transition bonds and of retiring some existing debt at ETI, which are capped and not to exceed $5 million plus (i) the cost of original issue discount, credit enhancements and other arrangements to enhance marketability (provided that the Commission's designated representative and ETI agree in advance that such enhancements and arrangements provide benefits greater than their tangible and intangible costs), (ii) the cost of the Commission's financial advisor, if any, and (iii) any costs incurred by ETI if the financing order is appealed, minus (c) insurance proceeds (in excess of $70 million) and governmental grant proceeds received prior to the issuance of the financing order, plus or minus (d) any adjustment to the $43,525,261 in carrying costs necessary to account for (i) the receipt of insurance or grant proceeds, and (ii) the number of days, as applicable, either greater than or less than assumed in the $43,525,261 carrying cost calculation based on the projec ted issuance date for the transition bonds of October 26, 2009.

   b.     Up-Front Qualified Costs

   The Signatories agree that ETI may securitize all up-front qualified costs it incurs in connection with the securitization of the system restoration costs up to an aggregate amount of $5 million. The Signatories agree that this cap is based on the following assumptions: (a) ETI does not incur any costs of credit enhancement and arrangements to enhance marketability; (b) as was the case in ETI's last securitization, the Commission will not elect to hire a financial advisor for this securitization; and (c) as was the case in ETI's last securitization, there will be no appeal of the Financing Order. The Signatories recognize that the foregoing assumptions may not be correct and agree that, notwithstanding the foregoing limitation, ETI may also securitize the up-front costs of credit enhancements and arrangements to enhance marketability, including original issue discount, provided that the Commission's designated representative and ETI agree in advance that such enhancements and arrang ements provide benefits greater than their tangible and intangible costs. The cost of such credit enhancements and arrangements to enhance marketability shall not count against or be subject to the $5 million cap on up-front qualified costs. Similarly, if the Commission hires a financial advisor to assist it with issuance of the bonds, the fees of such advisor reimbursed or paid by ETI and additional costs incurred by ETI to comply with requests and recommendations of the advisor shall be included in the securitizable up-front qualified costs and shall not count against or be subject to the $5 million cap on up-front qualified costs. In addition, if the financing order is appealed, any costs incurred by ETI to defend the financing order shall be included in the securitizable up-front qualified costs and shall not count against or be subject to the $5 million cap on up-front qualified costs. All other up-front qualified costs will be subject to the aggregate cap; however, there will be no individual cap a pplicable to any component of up-front qualified costs.

   c.     Accumulated Deferred Federal Income Tax

   The Signatories agree that ETI shall calculate and place into effect, on the same date that the system restoration charges become effective, a separate credit ("ADFIT Credit") calculated as set out in this paragraph. The ADFIT Credit shall be reflected in a tariff sheet which shall be attached to the proposed financing order and approved as part of the Financing Order. The ADFIT Credit shall be a negative charge to provide customers subject to the system restoration charges an amount equal to a return on the remaining balance of accumulated deferred federal income taxes ("ADFIT") related to the system restoration costs being securitized. The Signatories agree that, subject to adjustment to reflect ADFIT related to any insurance proceeds above the $70 million reflected in Finding of Fact 9.a. above, government grants or other sources of funding that compensate ETI for system restoration costs as discussed below, the ADFIT related to the system restoration costs being securitized shal l be as reflected in the attached schedule. The Signatories recognize that PURA requires and the Financing Order will provide that any insurance proceeds, government grants or other sources of funding that compensate ETI for system restoration charges be taken into account either through a reduction of the amount to be securitized (if the timing of the receipt of those amounts permits their inclusion as a reduction to the amount to be securitized) or through adjustments to ETI's rates (if the timing of the receipt of those amounts prevents their inclusion as a reduction to the amount to be securitized). The ADFIT balances reflected on the attached schedule have been calculated assuming insurance proceeds of $70 million. The Signatories recognize, however, that receipt of any amounts above or below $70 million would give rise to a change to the ADFIT balance used to compute the ADFIT Credit in an amount calculated by multiplying the amount of the proceeds, grants and other compensation by the then effectiv e maximum federal income tax rate for corporations and further agree that this change in the ADFIT balance shall be made effective as of the date the insurance proceeds, government grants or other sources of funding are received by ETI. The unamortized ADFIT balance shall earn a return at an annual rate of 10.86%. The initial ADFIT Credit will be $11,413,928 as listed for period 1 on the schedule attached as Appendix F, which represents the return on the ADFIT balance. The ADFIT Credit shall thereafter be adjusted on each annual date that the system restoration charges are trued up to (i) correct any over-credit or under-credit of the amounts previously scheduled to be provided to customers, (ii) reflect the amounts scheduled to be provided to customers during the period the adjusted ADFIT Credit is to be effective, and (iii) account for the effects, if any, on ADFIT of any insurance proceeds, government grants or other source of funding that compensate ETI for system restoration costs incurred. The annu al adjustment shall be made through a separate filing submitted by ETI at the same time as it submits the system restoration charge true-up adjustment filing and using the same allocation factors and billing determinants as the system restoration charge true-up adjustment filing. The ADFIT Credits to be provided through this paragraph are a full and complete settlement of all issues and all potential issues regarding treatment of the ADFIT associated with the system restoration costs being securitized. The Signatories agree that ADFIT benefits associated with such system restoration costs shall not be applied to reduce the securitizable balance and that the ADFIT balance shall not be used to reduce rate base in future proceedings. The Signatories further agree that the ADFIT Credit and obligation to provide the ADFIT Credit shall not be transferred to the special purpose entity being created to issue the bonds, shall not be or become "transition property" as defined in PURA Section 39.302(8), but sha ll be and remain a separate unsecuritized rate credit of ETI.

10. In filing the Settlement Agreement, ETI indicated that none of the parties in Docket No. 37247 oppose the Settlement Agreement. No party filed an opposition to the Settlement Agreement.
11. ETI's application and accompanying testimony and schedules, proof of publication, and the Affidavits of Darryl Tietjen and J. David Wright in Support of Settlement should be incorporated into the record consistent with this Financing Order.

    3.   Notice of Application

12. Notice of ETI's application was provided through publication once a week for two consecutive weeks in newspapers having general circulation in ETI's service area and was completed on August 14, 2009. In addition, upon the filing of its application on July 16, 2009, ETI provided notice by furnishing a copy of its filing package to each party to Docket No. 36931.
13. On July 29, 2009, ETI provided individual notice to: (1) the governing bodies of all Texas incorporated municipalities that have retained original jurisdiction over ETI; (2) all municipally owned electric utilities and electric cooperatives in Texas with multiply certificated service areas with ETI; and (3) each retail electric provider listed on the Commission website.
14. Proof of publication was submitted in the form of publishers' affidavits, and verification of the mailing of individual notices to the municipalities, to the municipally owned electric utilities and electric cooperatives in Texas with multiply certificated service areas with ETI, and to the REPs, and of the furnishing of a copy of ETI's filing package on each of the parties to Docket No. 36931 was made by affidavit.

B.        Qualified Costs and Amount to be Securitized

1. Identification and Amounts

15. Qualified costs are defined in PURA, Subchapter I of Chapter 36, to include system restoration costs, which include carrying costs from the date on which the system restoration costs were incurred to the date that transition bonds are issued, together with the costs of issuing, supporting, and servicing transition bonds and any costs of retiring and refunding the electric utility's existing debt and equity securities in connection with the issuance of transition bonds. Qualified costs also include the costs to the Commission of acquiring professional services for the purpose of evaluating proposed securitization transactions.⁴³
16. Other qualified costs include the costs of issuing, supporting, and servicing the transition bonds and any transaction costs associated with retiring and refunding existing debt and equity securities with the proceeds from the transition bonds,⁴⁴ provided, however, to the extent the proceeds of transition bonds are used to retire or refund any debt owed by ETI to an affiliate or pay down any equity held by an affiliate, any transaction costs associated with retiring or refunding such affiliate debt or equity shall not be included in other qualified costs. The actual costs of issuing and supporting the transition bonds will not be known until the transition bonds are issued, and certain ongoing costs relating to the transition bonds may not be known until such costs are incurred. However, to satisfy its statutory obligations to ensure quantifiable and tangible benefits to ratepayers, it is appropriate to limit the maximum amount of up-front qualified costs approved in this Financing Order tha t may be included in the principal amount of the transition bonds to an amount that shall not exceed $5 million plus (i) the cost of original issue discount, credit enhancements and other arrangements to enhance marketability (provided that the Commission's designated representative and ETI agree in advance that such enhancements and arrangements provide benefits greater than their tangible and intangible costs), (ii) the cost of the Commission's financial advisor, if any, and (iii) any costs incurred by ETI if this Financing Order is appealed. No component of up-front qualified costs will be subject to an individual cap. This Financing Order contains an estimate of the amount of these costs as shown in Appendix C and provides for recovery of the actual amounts subject to the cap of $5 million on up-front qualified costs. The amount of the costs identified in Appendix C to this Financing Order must be updated in the issuance advice letter to the extent they deviate from this estimate to ensure compliance with all statutory requirements. It is appropriate to recover the annual ongoing servicing fees and the annual fixed operating costs directly through transition charges and not included in the principal amount of the transition bonds. It is also appropriate to impose additional limits to ensure that the ongoing servicing fees do not exceed the maximum amount of $290,000 per year as shown in Appendix C; however, ongoing costs other than the servicer and administrative fees shall not be capped, and are estimated in Appendix C to this Financing Order.

    2.   Carrying Costs Included in the Securitized Amount

17. The balance to be securitized properly includes carrying costs on system restoration costs through the date of issuance of the transition bonds. In its testimony, exhibits, and schedules, ETI reasonably calculated the amount of carrying costs in accordance with the 36931 Order, based on an assumed date for issuance of the transition bonds of November 16, 2009. In the issuance advice letter, ETI should update the amount of carrying costs to reflect the actual date of issuance of the transition bonds, if it differs from the projected issuance date of October 26, 2009. ETI shall also update in the issuance advice letter any necessary adjustments to carrying costs required by the 36931 Order, including to account for ETI's receipt of insurance proceeds and governmental grants, if those proceeds are received before the bonds are priced.

    3.   Accumulated Deferred Federal Income Taxes

18. ADFIT associated with system restoration costs occurs because of the difference in the regulatory and tax treatment of the system restoration costs.
19. The Commission considered two approaches for recognizing the ADFIT benefit.
20. Under the first approach, the ADFIT associated with the system restoration costs would be reflected by reducing the securitizable amount to reflect the benefits associated with ADFIT. Under the second approach, the ADFIT associated with the system restoration costs would be reflected by using the ADFIT balance in the same manner as other ADFIT amounts to reduce rate base in ETI's next rate case. The Agreement, described in Finding of Fact 9, has elements that provide the advantages of each of these approaches. It maximizes the amount of lower-cost financing that can be provided through securitization while assuring that the ADFIT benefits are immediately provided to customers.
21. The Commission finds that the method of providing the ADFIT benefit described in the Agreement provides benefits to ratepayers and is reasonable.

    4.   Balance to be Securitized

22. ETI should be authorized to cause transition bonds to be issued in an aggregate principal amount of: (a) $539,881,826 of system restoration costs pursuant to the 36931 Order (which amount includes carrying costs in the amount of $43,525,261 through the projected issuance date of the transition bonds of October 26, 2009, calculated at a rate of 10.86% per annum pursuant to the 36931 Order), plus (b) up-front qualified costs of issuing the transition bonds and of retiring some existing debt at ETI, which are capped and not to exceed $5 million plus (i) the cost of original issue discount, credit enhancements and other arrangements to enhance marketability (provided that the Commission's designated representative and ETI agree in advance that such enhancements and arrangements provide benefits greater than their tangible and intangible costs), (ii) the cost of the Commission's financial advisor, if any, and (iii) any costs inc urred by ETI if this Financing Order is appealed, minus (c) insurance proceeds (in excess of $70 million) and governmental grant proceeds received prior to the issuance of the financing order, plus or minus (d) any adjustment to the $43,525,261 in carrying costs necessary to account for (i) the receipt of insurance or grant proceeds, and (ii) the number of days, as applicable, either greater than or less than assumed in the $43,525,261 carrying cost calculation based on the projected issuance date for the transition bonds of October 26, 2009. In the issuance advice letter, ETI should update the amounts for the up-front qualified costs to reflect the actual issuance date of the transition bonds and other relevant current information in accordance with the terms of this Financing Order. In addition, ETI shall include in the issuance advice letter a revision to the carrying costs calculation to account for (i) the receipt of insurance proceeds and governmental grants, and (ii) if the transition bonds are actu ally issued on a date other than October 26, 2009, the difference in the number of days either less than or greater than assumed in the calculation based on the projected issuance date of October 26, 2009, and the securitized amount shall be adjusted upwards or downwards, as applicable, based on such difference. ETI should be authorized to securitize the updated aggregate principal amount reflected in the issuance advice letter. ETI should be authorized to recover the remaining qualified costs, composed of the ongoing support and servicing costs, directly through transition charges, subject to the cap on the servicing fees set forth in Appendix C to this Financing Order. The servicing and administrative fees collected by ETI, or any affiliate of ETI, acting as either servicer or administrator under the servicing agreement or administration agreement, shall be included as a revenue credit and reduce revenue requirements in each subsequent ETI base rate case. The expenses incurred by ETI or such affiliate to perform obligations under the servicing agreement and administration agreement should be included as a cost of service in each ETI base rate case. The administrative fees are capped at $100,000 for each BondCo plus reimbursable third party costs.
23. The proposed recovery of the sum described in Finding of Fact No. 22 through issuance of transition bonds as provided in this Financing Order should be approved because ratepayers will receive tangible and quantifiable benefits as a result of the securitization.

    5.   Issuance Advice Letter

24. Because the actual structure and pricing of the transition bonds will not be known at the time this Financing Order is issued, following determination of the final terms of the transition bonds and prior to issuance of the transition bonds, ETI will file with the Commission for each series of transition bonds issued, and no later than 24 hours after the pricing of that series of transition bonds, an issuance advice letter. The up-front qualified costs in the issuance advice letter may be included in the principal amount securitized, subject to the caps as provided by this Financing Order. Within 60 days of issuance of the transition bonds, ETI shall submit to the Commission a final accounting of the total up-front qualified costs. If the actual up-front qualified costs are less than the up-front qualified costs included in the principal amount securitized, the periodic billing requirement for the first annual true-up adjustment shall be reduced by the amount of such unus ed funds (together with interest earned thereon through investment by the trustee in eligible investments) and such unused funds (together with interest earned thereon through investment by the trustee in eligible investments) shall be available for payment of debt service on the bond payment date next succeeding such true-up adjustment. The excess shall bear interest from the date of issuance of the transition bonds through the date the amounts are refunded, at the interest rate(s) applicable to refunds under the Commission's rules. The issuance advice letter will be completed to report the actual dollar amount of the initial transition charges and other information specific to the transition bonds to be issued. All amounts that require computation will be computed by using the mathematical formulas contained in the form of the issuance advice letter in Appendix A to this Financing Order and Schedule SRC found in Appendix B. The initial transition charges and the final terms of the transition bonds set forth in the issuance advice letter shall become effective on the date of issuance of the transition bonds unless prior to noon on the fourth business day after pricing the Commission issues an order finding that the proposed issuance does not comply with the requirements of PURA and this Financing Order.
25. ETI will submit a draft issuance advice letter to the Commission Staff for review not later than two weeks prior to the expected date of the commencement of marketing of the transition bonds. Within one week after receipt of the draft issuance advice letter, Commission Staff will provide ETI comments and recommendations regarding the adequacy of the information provided.
26. The issuance advice letter shall be submitted to the Commission within 24 hours after the pricing of the transition bonds. Commission Staff may request such revisions of the issuance advice letter as may be necessary to ensure the accuracy of the calculations and that the requirements of PURA and of this Financing Order have been met. The initial transition charges and the final terms of the transition bonds set forth in the issuance advice letter shall become effective on the date of issuance of the transition bonds (which shall not occur prior to the fifth business day after pricing) unless prior to noon on the fourth business day after pricing the Commission issues an order finding that the proposed issuance does not comply with the requirements of PURA and the Financing Order.
27. The completion and filing of an issuance advice letter in the form of the issuance advice letter attached as Appendix A, including the certification from ETI discussed in Finding of Fact No. 28, is necessary to ensure that any securitization actually undertaken by ETI complies with the terms of this Financing Order.
28. The certification statement contained in ETI's certification letter shall be worded precisely as the statement in the form of the issuance advice letter approved by the Commission. Other aspects of the certification letter may be modified to describe the particulars of the transition bonds' facts and the actions that were taken during the transaction.

    6.   Tangible and Quantifiable Benefit

29. The statutory requirement in PURA Sections 39.301 and 36.401(b)(2) that directs the Commission to ensure that securitization provides tangible and quantifiable benefits to ratepayers greater than would be achieved absent the issuance of transition bonds can only be determined using an economic analysis to account for the time value of money. An analysis that compares in the aggregate over a 14-year period the present value of the revenue requirement associated with the method that is reflective of conventional utility financing, with the present value of the revenue required under securitization is an appropriate economic analysis to demonstrate whether securitization provides economic benefits to ratepayers. The benefits for consumers set forth in ETI's evidence are fully indicative of the benefits that consumers will realize from the securitization approved hereby. Also in the issuance advice letter, ETI will be requi red to update the benefit analyses to verify that the final amount securitized satisfies the statutory financial tests.
30. The financial analysis presented by ETI indicates that securitization financing of the balance initially requested to be securitized by ETI is expected to result in $59 million of tangible and quantifiable economic benefits to ratepayers on a present-value basis if the transition bonds are issued at the maximum weighted-average annual interest rate of 7.75% allowed by this Financing Order. Using the base case weighted-average annual interest rate for the transition bonds of 5.91%, the benefits would be even larger or $132 million. The actual benefit to ratepayers will depend upon market conditions at the time the transition bonds are issued and the amount actually securitized. This range of quantifications uses a maximum expected life of 14 years and reflects the present value of ETI's estimated up-front and ongoing qualified costs, as included in its application. The benefits for consumers set forth in ETI's evidence are fully indicative of the benefits that consumers will realize from the securitiz ation approved hereby. Also in the issuance advice letter, ETI will be required to update the benefit analyses to verify that the final amount securitized satisfies the statutory financial tests.

    7.   Present Value Cap

31. The amount securitized may not exceed the present value of the revenue requirement over the life of the proposed transition bonds associated with conventional (i.e., non-securitized) recovery of the authorized amounts where the present value analysis uses a discount rate equal to the proposed interest rate on the transition bonds.⁴⁵ The analysis presented by ETI to calculate economic benefits also demonstrates that the amount ETI initially sought to securitize does not exceed the present value of the revenue requirement associated with the securitized amount over the maximum expected 14-year life of the transition bonds. Using either the base case weighted-average annual interest rate of 5.91% or the worst case weighted average annual interest rate of 7.75%, the present value of the amount ETI initially sought to securitize is $569 million. This amount compares to present value rev enue requirements under conventional recovery of $628 million and $701 million in the worst case and base cases, respectively. The benefits for consumers set forth in ETI's evidence are fully indicative of the benefits that consumers will realize from the securitization approved hereby. Also in the issuance advice letter, ETI will be required to update the benefit analyses to verify that the final amount securitized satisfies the statutory financial tests.
32. The amount of qualified costs to be securitized does not exceed the present value of the revenue requirement over the maximum expected 14-year life of the transition bonds associated with the amount approved to be securitized in this Financing Order. The present value analysis uses a discount rate equal to the maximum allowed weighted average interest rate on the transition bonds on an annual basis.

    8.   Total Amount of Revenue to be Recovered

33. The Commission is required to find that the total amount of revenues to be collected under this Financing Order will be less than the revenue requirement that would be recovered over the remaining life of the amounts that are securitized under this Financing Order, using conventional financing methods.⁴⁶ Under the worst-case scenario in which the bonds bear a 7.75% weighted-average annual interest rate, ETI's financial analysis indicates that the total amount of revenues to be collected under this Financing Order is expected to be $123 million less than the revenue requirement that would be recovered using conventional utility financing methods over the period under which they would be recovered through a transition charge. Using the base case weighted-average annual interest rate of 5.91%, the benefits of securitization would be even larger or approximately $206 million. The benefit s for consumers set forth in ETI's evidence are fully indicative of the benefits that consumers will realize from the securitization approved hereby. Also in the issuance advice letter, ETI will be required to update the benefit analyses to verify that the final amount securitized satisfies the statutory financial tests.

C.        Structure of the Proposed Securitization

    1.   BondCo

34. For purposes of this securitization, ETI will create BondCo, a special purpose transition funding entity which will be a Delaware limited liability company with ETI as its sole member. BondCo will be formed for the limited purpose of acquiring transition property (including any transition property authorized by the Commission in a subsequent financing order), issuing transition bonds in one or more series and in one or more tranches for each series (which could include transition bonds authorized by the Commission in a subsequent financing order), and performing other activities relating thereto or otherwise authorized by this Financing Order. BondCo will not be permitted to engage in any other activities and will have no assets other than transition property and related assets to support its obligations under the transition bonds. Obligations relating to the transition bonds will be BondCo's only significant liabilities. These restrictions on the ac tivities of BondCo and restrictions on the ability of ETI to take action on BondCo's behalf are imposed to achieve the objective of ensuring that BondCo will be bankruptcy remote and not affected by a bankruptcy of ETI. BondCo will be managed by a board of managers with rights and duties similar to those of a board of directors of a corporation. As long as the transition bonds remain outstanding, BondCo will have at least one independent manager with no organizational affiliation with ETI other than acting as independent managers for any other bankruptcy-remote subsidiary of ETI or its affiliates. BondCo will not be permitted to amend the provisions of the organizational documents that ensure bankruptcy-remoteness of BondCo without the consent of the independent managers. Similarly, BondCo will not be permitted to institute bankruptcy or insolvency proceedings or to consent to the institution of bankruptcy or insolvency proceedings against it, or to dissolve, liquidate, consolidate, convert, or merge wit hout the consent of the independent managers. Other restrictions to ensure bankruptcy-remoteness may also be included in the organizational documents of BondCo as required by the rating agencies. ETI may create more than one BondCo, in which event the rights, structure and restrictions described in this Financing Order with respect to BondCo would be applicable to each such issuer of transition property to the extent of the transition property sold to it and the transition bonds issued by it.
35. The initial capital of BondCo will be a nominal amount of $100. Concurrently with the issuance of the bonds, 0.5% of the original principal amount of each series of transition bonds will be deposited. Adequate funding of BondCo will minimize the possibility that ETI would have to extend funds to BondCo in a manner that could jeopardize the bankruptcy remoteness of BondCo, and is a factor in treating the financing as a borrowing by ETI for federal income tax purposes. A sufficient level of capital is necessary to minimize the risk that BondCo would not be treated as bankruptcy remote from ETI and, therefore, assist in achieving the lowest transition-bond charges possible. The United States Treasury Department has recently proposed sweeping changes to the regulation of financial markets including securitizations.⁵⁷ It is not known how any changes resulting from that proposal will affect the level of capital which must be invested in BondCo, or other costs of issuing, supporting, and servicing the system restoration bonds. If ETI is required to invest in BondCo more than 0.5% of the original principal amount of each series of bonds, it should be permitted to earn a return of 10.86% on such additional investment.
36. BondCo will issue transition bonds in one or more series, and in one or more tranches for each series, in an aggregate amount not to exceed the principal amount approved by this Financing Order and will pledge to the indenture trustee, as collateral for payment of the transition bonds, the transition property, including BondCo's right to receive the transition charges as and when collected, and certain other collateral described in ETI's application.
37. Concurrent with the issuance of any of the transition bonds, ETI will transfer to BondCo all of ETI's rights under this Financing Order, including rights to impose, collect, and receive transition charges approved in this Financing Order. This transfer will be structured so that it will qualify as a true sale within the meaning of PURA Section 39.308. By virtue of the transfer, BondCo will acquire all of the right, title, and interest of ETI in the transition property arising under this Financing Order.
38. The use and proposed structure of BondCo and the limitations related to its organization and management are necessary to minimize risks related to the proposed securitization transactions and to minimize the transition charges. Therefore, the use and proposed structure of BondCo should be approved.

    2.   Credit Enhancement and Arrangements to Reduce Interest Rate Risk or Enhance Marketability

39. ETI requested approval to use additional forms of credit enhancement (including letters of credit, reserve accounts, surety bonds, or guarantees), various arrangements to reduce interest rate risks (including hedges) and other mechanisms designed to promote the credit quality and marketability of the transition bonds if the benefits of such arrangements exceeded their cost. ETI also asked that the costs of any credit enhancements as well as the costs of arrangements to reduce interest rate risk or enhance marketability be included in the amount of qualified costs to be securitized. ETI is permitted to recover the up-front and ongoing costs of credit enhancements and arrangements to reduce interest rate risk or enhance marketability pursuant to PURA Section 36.403(d)(2), provided that the Commission's designated representative and ETI agree in advance that such enhancements and arrangements provide benefits greater than their tangible and intangible costs. If the use of credit enhancements or other arrangements is proposed by ETI, ETI shall provide the Commission's designated representative copies of all cost/benefit analyses performed by or for ETI that support the request to use such arrangements. This finding does not apply to the collection account or its subaccounts approved in this Financing Order.
40. ETI's proposed use of credit enhancements and arrangements to reduce interest rate risk or enhance marketability is reasonable and should be approved, provided that: (1) ETI certifies that the enhancements or arrangements provide benefits greater than their costs and (2) the Commission's designated representative agree to such certifications.
41. In current market conditions, it is uncertain whether the benefits of an interest-rate swap within the transition bond structure will outweigh the costs of researching and preparing the swap and result in the lowest transition bond charges.
42. An interest-rate swap within the transition bond structure could expose ratepayers to higher risks in relation to the transition bond charges and the ability of the swap counterparty to meet its obligations.

    3.   Transition Property

43. Under PURA Section 39.304(a), the rights and interest of an electric utility or successor under a financing order, including the right to impose, collect, and receive the transition charges authorized in the order, are only contract rights until they are first transferred to an assignee or pledged in connection with the issuance of transition bonds, at which time they will become transition property.
44. The rights to impose, collect, and receive the transition charges approved in this Financing Order along with the other rights arising pursuant to this Financing Order will become transition property upon the transfer of such rights by ETI to BondCo pursuant to PURA Section 39.304.
45. Transition property and all other collateral will be held and administered by the indenture trustee pursuant to the indenture, as described in ETI's application. This proposal will help ensure the lowest transition-bond charges and should be approved.
46. Under PURA Section 39.304(b), transition property constitutes a present property right for purposes of contracts concerning the sale or pledge of property, even though the imposition and collection of transition charges depends on further acts of the utility or others that have not yet occurred.

    4.   Servicer and the Servicing Agreement

47. ETI will execute a servicing agreement with BondCo. The servicing agreement may be amended, renewed or replaced by another servicing agreement. The entity responsible for carrying out the servicing obligations under any servicing agreement is the servicer. ETI will be the initial servicer but may be succeeded as servicer by another entity under certain circumstances detailed in the servicing agreement and as authorized by the Commission pursuant to this Financing Order. The replacement servicer should not begin providing service until the date the Commission approves the appointment and the servicing fee of such replacement servicer; provided, however, that approval of the servicing fee is only required if, annually, it will exceed 0.60% of the original principal amount securitized. Pursuant to the servicing agreement, the servicer is required, among other things, to impose and collect the applicable transition charges for the benefit and account of Bon dCo, to make the periodic true-up adjustments of transition charges required or allowed by this Financing Order, and to account for and remit the applicable transition charges to or for the account of BondCo in accordance with the remittance procedures contained in the servicing agreement without any charge, deduction or surcharge of any kind (other than the servicing fee specified in the servicing agreement). Under the terms of the servicing agreement, if any servicer fails to perform its servicing obligations in any material respect, the indenture trustee acting under the indenture to be entered into in connection with the issuance of the transition bonds, or the indenture trustee's designee, may, or, upon the instruction of the requisite percentage of holders of the outstanding amount of transition bonds, shall appoint an alternate party to replace the defaulting servicer, in which case the replacement servicer will perform the obligations of the servicer under the servicing agreement. The obligations o f the servicer under the servicing agreement and the circumstances under which an alternate servicer may be appointed are more fully described in the servicing agreement. The rights of BondCo under the servicing agreement will be included in the collateral pledged to the indenture trustee under the indenture for the benefit of holders of the transition bonds.
48. The servicing agreement negotiated as part of this securitization shall contain a recital clause that the Commission, or its attorney, will enforce the servicing agreement for the benefit of Texas ratepayers to the extent permitted by law.
49. The servicing agreement negotiated as part of this securitization shall include a provision that ETI shall indemnify the Commission (for the benefit of consumers) in connection with any increase in servicing fees that become payable pursuant to Section 6.02(g) of the servicing agreement as a result of a default resulting from ETI's negligence in performance of its duties or observance of its covenants under the servicing agreement. The indemnity will be enforced by the Commission but will not be enforceable by any REP or consumer.
50. The obligations to continue to provide service and to collect and account for transition charges will be binding upon ETI and any other entity that provides transmission and distribution services or, in the event that transmission and distribution services are not provided by a single entity, any other entity providing distribution services to a person that was a retail consumer located within ETI's service area as it existed on the date this Financing Order is issued, or that became a retail consumer for electric services within such area after the date this Financing Order is issued, and is still located within ETI's service area. Further, and to the extent REPs are responsible for imposing and billing transition charges on behalf of BondCo, billing and credit standards approved in this Financing Order will be binding on all REPs that bill and collect transition charges from such retail consumers, together with their successors and assigns. The Commission will enforce the obligations imposed by this Financing Order, its applicable substantive rules, and statutory provisions.
51. To the extent that any interest in the transition property created by this Financing Order is assigned, sold or transferred to an assignee,⁴⁷ ETI will enter into a contract with that assignee that will require ETI (or its successor under such contract) to continue to operate ETI's transmission and distribution system (or, if by law, ETI or its successor is no longer required to own and/or operate both the transmission and distribution systems, then ETI's distribution system) in order to provide electric services to ETI's customers within its service area. This provision does not prohibit ETI from selling, assigning or otherwise divesting any of its properties or assets; provided that in the event that ETI sells, assigns or otherwise divests of all or any portion of its transmission and distribution system required to provide electric service to ETI's customers (or, if by law, ETI or its successor is no longer required to own and/or opera te both the transmission and distribution systems, then ETI sells, assigns or otherwise divests all or any portion of its distribution system required to provide electric service to ETI's customers), then the entity acquiring such distribution (and if applicable, transmission) facilities is either required by law or agrees by contract to continue operating the facilities to provide electric services to ETI's customers, subject to any further restrictions provided in any bond financing document to assure obtaining the AAA ratings on the transition bonds.
52. The proposals described in Findings of Fact Nos. 47 through 51 are reasonable, will reduce risk associated with the proposed securitization and will, therefore, result in lower transition bond charges and greater benefits to ratepayers and should be approved.

    5.    Retail Electric Providers

53. ETI, acting as the initial servicer, will bill the transition charges to each retail consumer. When, and if, ETI's service territory becomes subject to retail competition, ETI, as servicer, will bill the transition charges to each retail consumer's REP, and the REP will collect the transition charges from its retail customers.
54. Schedule SRC sets forth minimum billing and collection standards to apply to REPs that collect transition charges approved by this Financing Order from retail electric consumers. The Commission finds that the REP standards set forth in Schedule SRC are appropriate and should be adopted.
55. The REP standards set forth in Schedule SRC relate only to the billing and collection of transition charges authorized under this Financing Order, and do not apply to collection of any other nonbypassable charges or other charges. The standards apply to all REPs other than REPs that have contracted with ETI to have ETI bill and collect transition charges from the REP's retail consumers. REPs may contract with parties other than ETI to bill and collect transition charges from retail consumers, but such parties shall remain subject to these standards. Upon adoption of any amendment to P.U.C. Subst. R. 25.108, the Commission Staff will open a proceeding to investigate the need to modify the standards in Schedule SRC to conform to that rule, provided that such modifications may not be implemented absent prior written confirmation from each of the rating agencies that have rated the transition bonds that such modifications will not cause a suspension, withdrawal, or downgrade of the ratings on the transition bonds.
56. The REP standards are as follows:

    (a)     Rating, Deposit, and Related Requirements

    Each REP must (1) have a long-term, unsecured credit rating of not less than "BBB-" and "Baa3" (or the equivalent) from Standard & Poor's and Moody's Investors Service, respectively, or (2) provide (a) a deposit of two months' maximum expected transition charge collections in the form of cash, (b) an affiliate guarantee, surety bond, or letter of credit providing for payment of such amount of transition charge collections in the event that the REP defaults in its payment obligations, or (c) a combination of any of the foregoing. A REP that does not have or maintain the requisite long-term, unsecured credit rating may select which alternate form of deposit, credit support, or combination thereof it will utilize, in its sole discretion. The indenture trustee shall be a beneficiary of any affiliate guarantee, surety bond or letter of credit. The provider of any affiliate guarantee, surety bond, or letter of credit must have and maintain a long-term, unsecured credit rating of not l ess than "BBB-" and "Baa3" (or the equivalent) from Standard & Poor's and Moody's Investors Service, respectively.

    (b)     Loss of Rating

    If the long-term, unsecured credit rating from either Standard & Poor's or Moody's Investors Service of a REP that did not previously provide the alternate form of deposit, credit support, or combination thereof or of any provider of an affiliate guarantee, surety bond, or letter of credit is suspended, withdrawn, or downgraded below "BBB-" or "Baa3" (or the equivalent), the REP must provide the alternate form of deposit, credit support, or combination thereof, or new forms thereof, in each case from providers with the requisite ratings, within 10 business days following such suspension, withdrawal, or downgrade. A REP failing to make such provision must comply with the provisions set forth in Paragraph (e).

    (c)     Computation of Deposit, etc.

    The computation of the size of a deposit required under Paragraph (a) shall be agreed upon by the servicer and the REP, and reviewed no more frequently than quarterly to ensure that the deposit accurately reflects two months' maximum expected transition charge collections. Within 10 business days following such review, (1) the REP shall remit to the indenture trustee the amount of any shortfall in such required deposit or (2) the servicer shall instruct the indenture trustee to remit to the REP any amount in excess of such required deposit. A REP failing to so remit any such shortfall must comply with the provisions set forth in Paragraph (e). REP cash deposits shall be held by the indenture trustee, maintained in a segregated account, and invested in short-term high quality investments, as permitted by the rating agencies rating the transition bonds. Investment earnings on REP cash deposits shall be considered part of such cash deposits so long as they remain on deposit with the i ndenture trustee. At the instruction of the servicer, cash deposits will be remitted with investment earnings to the REP at the end of the term of the transition bonds unless otherwise utilized for the payment of the REP's obligations for transition charges. Once the deposit is no longer required, the servicer shall promptly (but not later than 30 calendar days) instruct the indenture trustee to remit the amounts in the segregated accounts to the REP.

    (d)     Payment of Transition Charges

    Payments of transition charges are due 35 calendar days following each billing by the servicer to the REP, without regard to whether or when the REP receives payment from its retail customers. The servicer shall accept payment by electronic funds transfer, wire transfer, and/or check. Payment will be considered received the date the electronic funds transfer or wire transfer is received by the servicer, or the date the check clears. A 5% penalty is to be charged on amounts received after 35 calendar days; however, a 10 calendar-day grace period will be allowed before the REP is considered to be in default. A REP in default must comply with the provisions set forth in Paragraph (e). The 5% penalty will be a one-time assessment measured against the current amount overdue from the REP to the servicer. The "current amount" consists of the total unpaid transition charges existing on the 36th calendar day after billing by the servicer. Any and all such penalty payments will be made to the indenture trustee to be applied against transition charge obligations. A REP shall not be obligated to pay the overdue transition charges of another REP. If a REP agrees to assume the responsibility for the payment of overdue transition charges as a condition of receiving the customers of another REP that has decided to terminate service to those customers for any reason, the new REP shall not be assessed the 5% penalty upon such transition charges; however, the prior REP shall not be relieved of the previously-assessed penalties.

    (e)     Remedies upon Default

    After the 10 calendar-day grace period (the 45th calendar day after the billing date) referred to in Paragraph (d), the servicer shall have the option to seek recourse against any cash deposit, affiliate guarantee, surety bond, letter of credit, or combination thereof provided by the REP, and avail itself of such legal remedies as may be appropriate to collect any remaining unpaid transition charges and associated penalties due the servicer after the application of the REP's deposit or alternate form of credit support. In addition, a REP that is in default with respect to the requirements set forth in Paragraphs (b), (c), or (d) shall select and implement one of the following options:

    (1)     Allow the Provider of Last Resort ("POLR") or a qualified REP of the consumer's choosing to immediately assume the responsibility for the billing and collection of transition charges.

    (2)     Immediately implement other mutually suitable and agreeable arrangements with the servicer. It is expressly understood that the servicer's ability to agree to any other arrangements will be limited by the terms of the servicing agreement and requirements of each of the rating agencies that have rated the transition bonds necessary to avoid a suspension, withdrawal, or downgrade of the ratings on the transition bonds.

    (3)     Arrange that all amounts owed by retail consumers for services rendered be timely billed and immediately paid directly into a lock-box controlled by the servicer with such amounts to be applied first to pay transition charges before the remaining amounts are released to the REP. All costs associated with this mechanism will be borne solely by the REP.

    If a REP that is in default fails to immediately select and implement one of the foregoing options or, after so selecting one of the foregoing options, fails to adequately meet its responsibilities thereunder, then the servicer shall immediately implement option (1). Upon re-establishment of compliance with the requirements set forth in Paragraphs (b), (c) and (d) and the payment of all past-due amounts and associated penalties, the REP will no longer be required to comply with this paragraph.

    (f)     Interest of REPs (including the POLR) in Funds Held by Servicer.

    Any interest that a REP (including the POLR) may have in any funds in the hands of the servicer shall be junior and subordinate to any and all rights of the indenture trustee or the issuer to such funds.

    (g)     Billing by Providers of Last Resort, etc.

    The POLR appointed by the Commission must meet the minimum credit rating or deposit/credit support requirements described in Paragraph (a) in addition to any other standards that may be adopted by the Commission. If the POLR defaults or is not eligible to provide such services, responsibility for billing and collection of transition charges will immediately be transferred to and assumed by the servicer until a new POLR can be named by the Commission or the consumer requests the services of a certified REP. Retail consumers may never be re-billed by the successor REP, the POLR, or the servicer for any amount of transition charges they have paid their REP (although future transition charges shall reflect REP and other system-wide charge-offs). Additionally, if the amount of the penalty detailed in Paragraph (d) is the sole remaining past-due amount after the 45th calendar day, the REP shall not be required to comply with clauses (1), (2), or (3) of Paragraph (e), unless the penalty is not paid within an additional 30 calendar days.

    (h)     Disputes

    In the event that a REP disputes any amount of billed transition charges, the REP shall pay the disputed amount under protest according to the timelines detailed in Paragraph (d). The REP and servicer shall first attempt to informally resolve the dispute, but if they fail to do so within 30 calendar days, either party may file a complaint with the Commission. If the REP is successful in the dispute process (informal or formal), the REP shall be entitled to interest on the disputed amount paid to the servicer at the Commission-approved interest rate. Disputes about the date of receipt of transition charge payments (and penalties arising thereon) or the size of a required REP deposit will be handled in a like manner. It is expressly intended that any interest paid by the servicer on disputed amounts shall not be recovered through transition charges if it is determined that the servicer's claim to the funds is clearly unfounded. No interest shall be paid by the servicer if it is dete rmined that the servicer has received inaccurate metering data from another entity providing competitive metering services pursuant to PURA Section 39.107.

    (i)     Metering Data

    If the servicer is providing the metering, metering data will be provided to the REP at the same time as the billing. If the servicer is not providing the metering, the entity providing the metering services will be responsible for complying with Commission rules and ensuring that the servicer and the REP receive timely and accurate metering data in order for the servicer to meet its obligations under the servicing agreement and this Financing Order with respect to billing and true-ups.

    (j)     Charge-Off Allowance

    The REP will be allowed to hold back an allowance for charge-offs in its payments to the servicer. Such charge-off rate will be recalculated each year in connection with the annual true-up procedure. On an annual basis in connection with the true-up process, the REP and the servicer will be responsible for reconciling the amounts held back with amounts actually written off as uncollectible in accordance with the terms agreed to by the REP and the servicer, provided that:

    (1) The REP's right to reconciliation for write-offs will be limited to customers whose service has been permanently terminated and whose entire accounts (i.e., all amounts due the REP for its own account as well as the portion representing transition charges) have been written off.

    (2) The REP's recourse will be limited to a credit against future transition charge payments unless the REP and the servicer agree to alternative arrangements, but in no event will the REP have recourse to the indenture trustee, BondCo or BondCo's funds for such payments.

    (3) The REP shall provide information on a timely basis to the servicer so that the servicer can include the REP's default experience and any subsequent credits into its calculation of the adjusted transition-charge rates for the next transition-charge billing period, and the REP's rights to credits will not take effect until after such adjusted transition-charge rates have been implemented.

    (k)     Service Termination

    In the event that the servicer is billing consumers for transition charges, the servicer shall have the right to terminate transmission and distribution service to the end-use consumer for non-payment by the end-use consumer pursuant to applicable Commission rules. In the event that a REP or the POLR is billing consumers for transition charges, the REP or POLR shall have the right to transfer the customer to the POLR (or to another certified REP) or to direct the servicer to terminate transmission and distribution service to the end-use consumer for non-payment in accordance with the applicable Commission rules.

57. The proposed billing and collection standards for REPs and the applicability of those standards are appropriate for the collection of transition charges resulting from this Financing Order, are reasonable, will lower risks associated with the collection of transition charges, and will result in lower transition bond charges and greater benefits to ratepayers. In addition, adoption of these standards will provide uniformity of standards for the billing and collection of transition charges for which ETI acts as servicer. Therefore, the proposed billing and collection standards for REPs and the applicability of those standards described in Findings of Fact Nos. 55 and 56 should be approved.

    6.    Transition Bonds

58. BondCo will issue and sell transition bonds in one or more series, and each series may be issued in one or more tranches. The legal final maturity date of any series of transition bonds will not exceed 15 years from the date of issuance of such series. The legal final maturity date of each series and tranche within a series and amounts in each series will be finally determined by ETI and the Commission's designated representative, consistent with market conditions and indications of the rating agencies, at the time the transition bonds are priced, but subject to ultimate Commission review through the issuance advice letter process. ETI will retain sole discretion regarding whether or when to assign, sell, or otherwise transfer any rights concerning transition property arising under this Financing Order, or to cause the issuance of any transition bonds authorized in this Financing Order, subject to the right of the Commissi on to find that the proposed issuance does not comply with the requirements of PURA and this Financing Order. BondCo will issue the transition bonds on or after the fifth business day after pricing of the transition bonds unless, prior to noon on the fourth business day following pricing of the bonds, the Commission issues an order finding that the proposed issuance does not comply with the requirements of PURA and this Financing Order.
59. The Commission finds that the proposed structure-providing substantially level annual debt service and revenue requirements over the life of the bond issue, which will not exceed 15 years-is in the public interest and should be used. The approved structure is reasonable and should be approved, provided that the weighted average annual interest rate for the bonds does not exceed 7.75%. This restriction is necessary to ensure that the stated economic benefits to ratepayers materialize. To further ensure benefits to ratepayers, the Commission's designated representative should be charged with the obligation to ensure on behalf of the Commission that the structure and pricing of the transition bonds results in the lowest transition bond charges consistent with market conditions and this Financing Order.

    7.    Security for Transition Bonds

60. The payment of the transition bonds and related charges authorized by this Financing Order is to be secured by the transition property created by this Financing Order and by certain other collateral as described in the application. The transition bonds will be issued pursuant to the indenture administered by the indenture trustee. The indenture will include provisions for a collection account for each series and subaccounts for the collection and administration of the transition charges and payment or funding of the principal and interest on the transition bonds and other costs, including fees and expenses, in connection with the transition bonds, as described in ETI's application. Pursuant to the indenture, BondCo will establish a collection account as a trust account to be held by the indenture trustee as collateral to ensure the payment of the principal, interest, and other costs approved in th is Financing Order related to the transition bonds in full and on a timely basis. The collection account will include the general subaccount, the capital subaccount, and the excess funds subaccount, and may include other subaccounts.

    (a)     The General Subaccount

61. The indenture trustee will deposit the transition charge remittances that the servicer remits to the indenture trustee for the account of BondCo into one or more segregated trust accounts and allocate the amount of those remittances to the general subaccount. The indenture trustee will on a periodic basis apply moneys in this subaccount to pay expenses of BondCo, to pay principal and interest on the transition bonds, and to meet the funding requirements of the other subaccounts. The funds in the general subaccount will be invested by the indenture trustee in short-term high-quality investments, and such funds (including, to the extent necessary, investment earnings) will be applied by the indenture trustee to pay principal and interest on the transition bonds and all other components of the Periodic Payment Requirement ("PPR") (as defined in Finding of Fact No. 77), and otherwise in accordance with the terms of the indenture.< /P>

    (b)     The Capital Subaccount

62. When a series of transition bonds is issued, ETI will make a capital contribution to BondCo for that series, which BondCo will deposit into the capital subaccount. The amount of the capital contribution will be 0.5% of the original principal amount of each series of transition bonds, although the actual amount will depend on tax and rating agency requirements and possible regulatory changes resulting from the Treasury Department's recent proposal to reform financial regulation. The capital subaccount will serve as collateral to ensure timely payment of principal and interest on the transition bonds and all other components of the PPR. Any funds drawn from the capital account to pay these amounts because of a shortfall in the transition charge remittances will be replenished through future transition charge remittances. The funds in this subaccount will be invested by the indenture trustee in short-term high-quality investment s, and such funds (including investment earnings) will be used by the indenture trustee to pay principal and interest on the transition bonds and all other components of the PPR. If ETI is required to make a capital contribution in excess of 0.5% of the original principal amount of each series of bonds, ETI will be authorized to receive an aggregate amount equal to the sum of (i) the actual amounts earned by the trustee from investment of the capital contribution (up to 0.5% of the original principal amount of each series) and (ii) 10.86% on the remainder of the capital contribution. The required revenue, if any, to provide the return of 10.86% on any such additional capital is an ongoing qualified cost. Upon payment of the principal amount of all transition bonds and the discharge of all obligations that may be paid by use of transition charges, all amounts in the capital subaccount, including any investment earnings, will be released to BondCo for payment to ETI. Investment earnings in this subaccount may be released earlier in accordance with the indenture.
63. The capital contribution to BondCo should be funded by ETI. To ensure that ratepayers receive the appropriate benefit from the securitization approved in this Financing Order, the proceeds from the sale of the transition bonds that are used to retire or refund ETI's debt securities should not be offset by the amount of this capital contribution. Because ETI funds the capital subaccount, ETI should receive the investment earnings on that capital from time to time and should receive return of that capital after all transition bonds have been paid.

    (c)    The Excess Funds Subaccount

64. The excess funds subaccount will hold any transition charge remittances and investment earnings on the collection account (other than earnings attributable to the capital subaccount and released under the terms of the indenture) in excess of the amounts needed to pay current principal and interest on the transition bonds and to pay other PPRs (including, but not limited to, replenishing the capital subaccount). Any balance in or allocated to the excess funds subaccount on a true-up adjustment date will be subtracted from the Periodic Billing Requirement, ("PBR") (as defined in Finding of Fact No. 78) for purposes of the true-up adjustment. The money in this subaccount will be invested by the indenture trustee in short-term high-quality investments, and such money (including investment earnings thereon) will be used by the indenture trustee to pay principal and interest on the transition bonds and other PPRs.

    (d)     Other Subaccounts

65. Other credit enhancements in the form of subaccounts may be utilized for the transaction provided that the Commission's designated representative and ETI agree in advance that such enhancements provide benefits greater than their tangible and intangible costs. The costs of any such credit enhancements are not included in the cap on up-front qualified costs and would be included in the principal amount securitized.

    8.   General Provisions

66. The collection account and the subaccounts described above are intended to provide for full and timely payment of scheduled principal and interest on the transition bonds and all other components of the PPR. If the amount of transition charges remitted to the general subaccount is insufficient to make all scheduled payments of principal and interest on the transition bonds and to make payment on all of the other components of the PPR, the excess funds subaccount and the capital subaccount will be drawn down, in that order, to make those payments. Any deficiency in the capital subaccount because of such withdrawals must be replenished to the capital subaccount on a periodic basis through the true-up process. In addition to the foregoing, there may be such additional accounts and subaccounts as are necessary to segregate amounts received from various sources (e.g., amounts received from REPs), or to be used for specified purposes. Such accounts will be administered and utilized as set forth in the servicing agreement and the indenture. Upon the maturity of the transition bonds and the discharge of all obligations in respect thereof, remaining amounts in the collection account, other than amounts that were in the capital subaccount, will be released to BondCo and equivalent amounts will be credited by ETI to customers consistent with Ordering Paragraph No. 21.
67. The use of a collection account and its subaccounts in the manner proposed by ETI is reasonable, will lower risks associated with the securitization and thus lower the costs to ratepayers, and should, therefore, be approved.

    9.   Transition Charges: Imposition and Collection, Nonbypassability and Self-Generation

68. ETI seeks authorization to impose on and collect from its retail customers, and when and if ETI's service territory becomes subject to retail competition, from REPs and from other entities which are authorized to bill, pay or collect transition charges within ETI's service territory, in the manner provided in this Financing Order or the tariffs approved hereby, transition charges in an amount sufficient to provide for the timely recovery of its qualified costs approved in this Financing Order (including payment of principal and interest on the transition bonds and ongoing costs related to the transition bonds).
69. Transition charges may be separately identified on bills presented to retail customers, or if applicable, REPs and other entities obligated to pay or collect transition charges. If such charges are not separately identified, customers will be notified at least annually that the Transition Property is owned by BondCo and not ETI.
70. Prior to the date when retail competition is introduced into ETI's service area, if any retail customer does not pay the full amount of any bill to ETI, the amount paid by the customer will be applied in the following order of priority: first, to any amounts due with respect to customer deposits; second, to all electric service charges of ETI and to all transition charges on the bill, pari passu, based upon the total amount billed, and third, to tax and charges billed to the customer. If there is more than one owner of transition property, or if the sole or any owner of transition property (or pledgee or pledgees) has issued multiple series of bonds, such partial collections representing transition charges shall be allocated among such owners (or pledgee or pledgees), and among such series of transition bonds, pro-rata based upon the amounts billed with respect to each series of transition bonds, provided that late fees and charges may be allocated to the servicer as provided in the tariff. Whe n and if ETI's service area becomes subject to retail competition and if a REP or other entity does not pay the full amount it has been billed, the amount paid by the REP or such other entity will first be apportioned between the transition charges and other fees and charges (including amounts billed and due in respect of transition charges associated with transition bonds issued under other financing orders), other than late fees, and second, any remaining portion of the payment will be allocated to late fees. The amount allocated to transition charges shall be further allocated in the same manner as the second preceding sentence. The foregoing allocations will facilitate a proper balance between the competing claims to this source of revenue in an equitable manner.
71. The transition bonds have a scheduled final payment date of not longer than 14 years. However, amounts may still need to be recovered after the expiration of the 14-year period. ETI proposed that the transition charges related to a series of transition bonds will be recovered over a period of not more than 15 years from the date of issuance of that series of the transition bonds but that amounts due at or before the end of that period for services rendered during the 15-year period may be collected after the conclusion of the 15-year period.
72. PURA Section 39.303(b) prohibits the recovery of transition charges for a period of time that exceeds 15 years. Transition charges related to a series of transition bonds may not be collected after 15 years from the date of issuance of that series of bonds. This restriction does not, however, prevent the recovery of amounts due at the end of such 15-year period for services rendered during such 15-year period.
73. ETI, acting as servicer, and any subsequent servicer, will collect transition charges from all retail customers, or, if applicable, REPs serving retail customers, located within ETI's certificated service area as it existed on the date this Financing Order is issued and from other entities which are required to bill, pay or collect transition charges under this Financing Order or the tariffs approved hereby. A retail customer within such area may not avoid transition charges by switching to another electric utility, electric cooperative or municipally-owned utility after the date this Financing Order is issued. However, a customer in a multiply-certificated service area that requested to switch providers on or before the date this Financing Order is issued, or was not taking service from ETI on the date this Financing Order is issued, and does not do so after such date, will not be responsible for paying transition charges.
74. A retail consumer may not avoid the payment of transition charges by switching to new on-site generation. "New on-site generation" means electric generation capacity greater than 10 megawatts capable of being lawfully delivered to the site without use of utility distribution or transmission facilities and which was not, on or before the date this Financing Order is issued, either (A) a fully operational facility, or (B) a project supported by substantially complete filings for all necessary site-specific environmental permits under the rules of the Texas Commission on Environmental Quality. If a consumer commences taking energy from new on-site generation that materially reduces the consumer's use of energy delivered through ETI's facilities, the consumer will pay an amount each month computed by multiplying the output of the on-site generation utilized to meet the internal electrical requirements of the consumer by the applicable transition charges in effect for that month. Any reduction equivalent t o more than 12.5% of the consumer's annual average use of energy delivered through ETI's facilities will be considered material for this purpose. Payments of the transition charges owed by such consumers will be made to the servicer and will be collected in addition to any other charges applicable to services provided to the consumer through ETI's facilities and any other competition transition charges applicable to self-generation.
75. Pursuant to Senate Bill 1492,⁴⁸ which amended PURA Section 39.452, the Company is required to propose a competitive generation tariff to allow eligible customers the ability to contract for competitive generation not later than September 1, 2010. If a competitive generation tariff is approved, transition charges would also be applied to usage from those customers.
76. ETI's proposal related to imposition and collection of transition charges is reasonable and is necessary to ensure collection of transition charges sufficient to support recovery of the qualified costs approved in this Financing Order and should be approved. Approving the form of ETI's Schedule SRC found in Appendix B to this Financing Order and requiring filing of these tariff provisions before issuance of any transition bonds pursuant to this Financing Order is reasonable.

    10. Allocation of Qualified Costs Among Texas Retail Consumers

77. The Periodic Payment Requirement ("PPR") is the required periodic payment for a given period (i.e., annually, semi-annually, or such other applicable period) due under the transition bonds. Each PPR includes: (a) the principal amortization of the transition bonds in accordance with the expected amortization schedule (including deficiencies of previously scheduled principal for any reason); (b) periodic interest on the transition bonds (including any accrued and unpaid interest); and (c) ongoing qualified costs consisting of the servicing fee, rating agencies' fees, trustee fees, legal and accounting fees, other ongoing fees and expenses, and the costs, if any, of maintaining any credit enhancement. The PPR for the transition bonds issued pursuant to this Financing Order should be updated in the issuance advice letter.
78. The Periodic Billing Requirement ("PBR") represents the aggregate dollar amount of transition charges that must be billed during a given period (i.e., annually, semi-annually, or such other applicable period) so that the transition charge collections will be sufficient to meet the sum of all PPR for that period, given: (i) forecast usage data for the period; (ii) forecast uncollectibles for the period; and (iii) forecast lags in collection of billed transition charges for the period.
79. ETI derived a blended Periodic Billing Requirement Allocation Factor ("PBRAF") for each transition charge rate class based on the allocation methodologies approved by the Commission in Docket No. 36931.
80. The Commission adopts the PBRAFs approved in Docket No. 36931.

    11. True-Up of Transition Charges

81. Pursuant to PURA Section 39.307, the servicer of the transition bonds will make annual adjustments to the transition charges to:

    (a) correct any undercollections or overcollections, for any reason, including if applicable and without limitation any caused by REP defaults, during the preceding 12 months; and

    (b) ensure the billing of transition charges necessary to generate the collection of amounts sufficient to timely provide all scheduled payments of principal and interest (or deposits to sinking funds in respect of principal and interest) and any other amounts due in connection with the transition bonds (including ongoing fees and expenses and amounts required to be deposited in or allocated to any collection account or subaccount, trustee indemnities, payments due in connection with any expenses incurred by the indenture trustee or the servicer to enforce bondholder rights and all other payments that may be required pursuant to the waterfall of payments described in the application) during the period for which such adjusted transition charges are to be in effect.

    With respect to any series of transition bonds, the servicer will make true-up adjustment filings with the Commission at least annually, within 45 days of the anniversary of the date of the original issuance of the transition bonds of that series. The Commission will have 15 days after the date of the true-up filing in which to confirm the accuracy of the servicer's adjustment.

82. True-up filings will be based upon the cumulative differences, regardless of the reason, between the PPR (including scheduled principal and interest payments on the transition bonds) and the amount of transition charge remittances to the indenture trustee. True-up procedures are necessary to ensure full recovery of amounts sufficient to meet on a timely basis the PPR over the expected life of the transition bonds. In order to assure adequate transition charge revenues to fund the PPR and to avoid large overcollections and undercollections over time, the servicer will reconcile the transition charges using ETI's most recent forecast of electricity deliveries (i.e., forecasted billing units) and estimates of transaction-related expenses. The calculation of the transition charges will also reflect both a projection of uncollectible transition charges and a projection of payment lags between the billing and collection of transition charges based upon ETI's and the REPs' most recent expe rience regarding collection of transition charges.
83. The servicer will make true-up adjustments in the following manner, known as the standard true-up procedure:

(a) allocate the upcoming period's PBR based on the PBRAFs approved in this Financing Order;

(b) calculate undercollections or overcollections, including without limitation any caused by REP defaults, from the preceding period in each class by subtracting the previous period's transition charge revenues collected from each class from the PBR determined for that class for the same period;

(c) sum the amounts allocated to each customer class in steps (a) and (b) to determine an adjusted PBR for each transition charge customer class; and

(d) divide the amount assigned to each customer class in step (c) above by the appropriate forecasted billing units to determine the transition charge rate by class for the upcoming period.

   12.  Interim True-Up

84. The servicer is also required to make mandatory interim true-up adjustments
    semi-annually (or quarterly during the period between the expected final maturity and the legal final maturity of the last bond tranche or class) using the methodology identified in Findings of Fact Nos. 77 to 83 applicable to the annual true-up, (i) if the servicer forecasts that transition charge collections will be insufficient to make all scheduled payments of principal, interest and other amounts in respect of the transition bonds during the current or next succeeding payment period and/or (ii) to replenish any draws upon the capital subaccount.
85. In the event an interim true-up is necessary, the interim true-up adjustment should be filed not less than 15 days prior to the first billing cycle of the month in which the revised transition charges will be in effect. In no event would such interim true-up adjustments occur more frequently than every three months if quarterly transition bond payments are required or every six months if semi-annual transition bond payments are required; provided, however, that interim true-up adjustments for any transition bonds remaining outstanding after the expected final maturity date of the last bond tranche or class shall occur quarterly.

   13.  Non-Standard True-Up

86. A non-standard true-up procedure will be applied if the forecasted billing units for one or more of the transition charge customer classes for an upcoming period decreases by more than 10% compared to the billing units (known as the threshold billing units), shown in Appendix D to this Financing Order.
87. In conducting the non-standard true-up the servicer will:

    (a) allocate the upcoming period's PBR based on the PBRAFs approved in Docket No. 36931;

    (b) calculate undercollections or overcollections, including without limitation any caused by REP defaults, if applicable, from the preceding period in each class by subtracting the previous period's transition charge revenues collected from each class from the PBR determined for that class for the same period;

    (c) sum the amounts allocated to each customer class in steps (a) and (b) to determine an adjusted PBR for each transition charge customer class;

    (d) divide the PBR for each customer class by the maximum of the forecasted billing units or the threshold billing units for that class, to determine the "threshold rate";

    (e) multiply the threshold rate by the forecasted billing units for each class to determine the expected collections under the threshold rate;

    (f) allocate the difference in the adjusted PBR and the expected collections calculated in step (e) among the transition charge customer classes by using the PBRAFs approved in Docket No. 36931;

    (g) add the amount allocated to each class in step (f) above to the expected collection amount by class calculated in step (e) above to determine the final Periodic Billing Requirement for each class; and

    (h) divide the final PBR for each class by the forecasted billing units to determine the transition charge rate by class for the upcoming period.

88. A proceeding for the purpose of approving a non-standard true-up should be conducted in the following manner:

(a) The servicer will make a "non-standard true-up filing" with the Commission at least 90 days before the date of the proposed true-up adjustment. The filing will contain the proposed changes to the transition charge rates, justification for such changes as necessary to specifically address the cause(s) of the proposed non-standard true-up, and a statement of the proposed effective date.

(b) Concurrently with the filing of the non-standard true-up with the Commission, the servicer will notify all parties in this docket of the filing of the proposal for a non-standard true-up.

(c) The servicer will issue appropriate notice and the Commission will conduct a contested case proceeding on the non-standard true-up proposal pursuant to PURA Section 39.003.

The scope of the proceeding will be limited to determining whether the proposed adjustment complies with this Financing Order. The Commission will issue a final order by the proposed true-up adjustment date stated in the non-standard true-up filing. In the event that the Commission cannot issue an order by that date, the servicer will be permitted to implement its proposed changes. Any modifications subsequently ordered by the Commission will be made by the servicer in the next true-up filing.

  14.   Additional True-Up Provisions

89. The true-up adjustment filing will set forth the servicer's calculation of the true-up adjustment to the transition charges. Except for the non-standard true-up in Findings of Fact Nos. 86 through 88, the Commission will have 15 days after the date of a true-up adjustment filing in which to confirm the mathematical accuracy of the servicer's adjustment. Except for the non-standard true-up adjustment described above, any true-up adjustment filed with the Commission should be effective on its proposed effective date, which shall be not less than 15 days after filing. Any necessary corrections to the true-up adjustment, because of mathematical errors in the calculation of such adjustment or otherwise, will be made in future true-up adjustment filings. Any interim true-up may take into account the PPR for the next succeeding 12 months if required by the servicing agreement.
90. The true-up procedures contained in Schedule SRC found in Appendix B to this Financing Order are reasonable and will reduce risks related to the transition bonds, resulting in lower transition bond charges and greater benefits to ratepayers and should be approved.
91. The broad-based true-up mechanism and the State pledge described above, along with the special purpose entity's bankruptcy remoteness from ETI and the collection account, will serve to minimize if not effectively eliminate, for all practical purposes and circumstances, any credit risk to the payment of the transition bonds (i.e., that sufficient transition charges will be assessed and collected to discharge all principal and interest obligations when due).

  15.   Commission Participation and Designated Representative

92. In order to ensure, as required by PURA Section 39.301, that the structuring and pricing of the transition bonds result in the lowest transition bond charges consistent with market conditions and the terms of this Financing Order, the Commission finds that it is necessary for the Commission or its designated representative to have a decision-making role co-equal with ETI with respect to the structuring and pricing of the transition bonds and that all matters related to the structuring and pricing of the transition bonds shall be determined through a joint decision of ETI and the Commission or its designated representative. The Commission's primary goal is to ensure that the structuring and pricing of the transition bonds result in the lowest transition bond charges consistent with market conditions and the terms of this Financing Order.
93. The Commission or its designated representative must participate fully and in advance in all plans and decisions relating to the structuring, marketing, and pricing of the transition bonds and be provided timely information as necessary to allow it to participate in the financial transactions in a timely manner (including, but not limited to, information prepared for the benefit of rating agencies and information prepared for use in marketing the transition bonds to investors).
94. The Commission or its designated representative shall require a certificate from the bookrunning underwriter(s) confirming that the structuring, marketing, and pricing of the transition bonds resulted in the lowest transition bond yields to investors consistent with market conditions and the terms of this Financing Order.
95. ETI submitted draft transaction documents with its application, specifically drafts of the Prospectus, the Indenture, the Limited Liability Company Agreement, the Transition Property Purchase and Sale Agreement, the Transition Property Servicing Agreement, the Administration Agreement, and the Term Sheet (Attachments 3A, 3B, 3C, 3D, 3E, 3F, and Attachment 4, respectively). These draft documents have not been reviewed or approved by the Commission. The Commission or its designated representative shall review and comment on these documents before they are finalized.

  16.   Lowest Transition Bond Charges

96. ETI has proposed a transaction structure that is expected to include (but is not limited to):

    (a) the use of BondCo as issuer of the transition bonds, limiting the risks to transition bond holders of any adverse impact resulting from a bankruptcy proceeding of its parent or any affiliate;

    (b) the right to impose and collect transition charges that are nonbypassable and which must be trued-up at least annually, but may be required to be trued-up more frequently under certain circumstances, in order to assure the timely payment of the debt service and other ongoing transaction costs;

    (c) additional collateral in the form of a collection account which includes a capital subaccount funded in cash in an amount equal to not less than 0.5% of the original principal amount of the transition bonds and other subaccounts resulting in greater certainty of payment of interest and principal to investors and that are consistent with the IRS requirements that must be met to receive the desired federal income tax treatment for the transition bond transaction;

    (d) the protection of transition bondholders against potential defaults by a servicer or REPs that are responsible for billing and collecting the transition charges from existing or future retail consumers;

    (e) the treatment for federal income tax purposes to include: (i) the transfer of the rights under this Financing Order to BondCo not resulting in gross income to ETI and the future revenues under the transition charges being included in ETI's gross income under its usual method of accounting, (ii) the issuance of the transition bonds and the transfer of the proceeds of the transition bonds to ETI not resulting in gross income to ETI, and (iii) the transition bonds constituting borrowings of ETI;

    (f) the marketing of the transition bonds using proven underwriting and marketing processes, through which market conditions and investors' preferences, with regard to the timing of the issuance, the terms and conditions, related maturities, type of interest and other aspects of the structuring and pricing will be determined, evaluated and factored into the structuring and pricing of the transition bonds;

    (g) the furnishing of timely information to the Commission's designated representative to allow the Commission through the issuance advice letter process to ensure that the structuring and pricing of the transition bonds result in the lowest transition bond charges consistent with market conditions and the terms of this Financing Order; and

    (h) the use of hedging agreements to mitigate the risk of future rate increases if ETI and the Commission's designated representative jointly determine that it is prudent to enter into these types of agreements.

97. ETI's proposed transaction structure is necessary to enable the transition bonds to obtain the highest possible bond credit rating, ensures that the structuring and pricing of the transition bonds will result in the lowest transition bond charges consistent with market conditions and the terms of this Financing Order, ensures the greatest benefit to ratepayers consistent with market conditions and the terms of this Financing Order, and protects the competitiveness of the retail electric market.
98. To ensure that ratepayers receive the tangible and quantifiable economic benefits due from the proposed securitization and so that the proposed transition bond transaction will be consistent with the standards set forth in PURA Sections 39.301 and 39.303, it is necessary that (i) the effective annual weighted average interest rate of the transition bonds, excluding up-front qualified and ongoing qualified costs, does not exceed 7.75%, (ii) the expected final maturity of the last tranche of transition bonds does not exceed 14 years (although the legal final maturity of the transition bonds may extend to 15 years), (iii) the amortization of the transition bonds is structured to be consistent with Finding of Fact No. 59, and (iv) ETI otherwise satisfies the requirements of this Financing Order.
99. To allow the Commission to fulfill its obligations under PURA related to the securitization approved in this Financing Order, it is necessary for ETI, for each series of transition bonds issued, to certify to the Commission that the structure and pricing of that series results in the lowest transition bond charges consistent with market conditions at the time that the transition bonds are priced and the terms (including the specified amortization pattern) of this Financing Order and, if additional credit enhancements or arrangements to enhance marketability or reduce interest rate risks were used, to certify that they are expected to provide benefits in excess of their cost as required by Findings of Fact Nos. 29 through 33 of this Financing Order.

D.        Use of Proceeds

100. Upon the issuance of transition bonds, BondCo will use the net proceeds from the sale of the transition bonds (after payment of transaction costs) to pay to ETI the purchase price of the transition property.
101. The net proceeds from the sale of the transition property (after payment of transaction costs) will be applied to reduce the debt on the regulatory books of ETI.
102. Through the steps described in Findings of Fact Nos. 100 and 101, the net proceeds from the sale of transition bonds will be used solely to retire existing debt of ETI and will result in a reduction in ETI's recoverable system restoration costs as determined in Docket No. 36931.

E.        Waiver of P.U.C. Proc. R. 22.35(b)(2)

103. Pursuant to P.U.C. Proc. R. 22.5(b), good cause exists to waive the requirements of P.U.C. Proc. R. 22.35(b)(2), so that this proceeding may be considered at the Commission's Open Meeting scheduled for September 10, 2009.

  E.        CONCLUSIONS OF LAW

1. ETI is a public utility, as defined in PURA Section 11.004, and an electric utility, as defined in PURA Section 31.002(6).
2. ETI is authorized to file an application for a financing order under PURA Sections 39.301 and 36.401-36.406.
3. The Commission has jurisdiction and authority over ETI's application pursuant to PURA Sections 14.001, 32.001, 36.401-36.406 and 39.301-39.313.
4. The Commission has authority to approve this Financing Order under Subchapter I of Chapter 36 and Subchapter G of Chapter 39 of PURA, subject to the standards, procedures, and tests contained in Subchapter I, Chapter 36 and Subchapter G, Chapter 39.
5. Notice of ETI's application was provided in compliance with the Administrative Procedure Act (Tex. Gov't Code Ann. Sections 2001.001-902 (Vernon 2008)) and P.U.C. Proc. R. 22.54 and 22.55.
6. This application does not constitute a major rate proceeding as defined by P.U.C. Proc. R. 22.2.
7. The Agreement, as modified by this Financing Order, is in the public interest and complies with Commission rules.
8. BondCo will be an assignee as defined in PURA Section 39.302(1) when an interest in transition property is transferred, other than as security, to BondCo.
9. The holders of the transition bonds and the indenture trustee will each be a financing party as defined in PURA Section 39.302(3).
10. BondCo may issue transition bonds in accordance with this Financing Order.
11. The securitization approved in this Financing Order satisfies the requirements of PURA Sections 36.401 and 39.301 dictating that the proceeds of the transition bonds (net of transaction costs) shall be used solely for the purposes of reducing the amount of recoverable system restoration costs through the refinancing or retirement of utility debt and/or equity.
12. The securitization approved in this Financing Order satisfies the requirement of PURA Sections 36.401(b)(2) and 39.301 mandating that the securitization provides tangible and quantifiable benefits to ratepayers greater than would have been achieved absent the issuance of transition bonds. Consistent with fundamental financial principles, this requirement in PURA Sections 36.401(b)(2) and 39.301 can only be determined using an economic analysis to account for the time value of money. An analysis that compares in the aggregate over a 14-year period the present value of the revenue requirement associated with use of a customer surcharge (which is the alternative recovery method permitted under PURA to recover system restoration costs and reflects conventional utility financing) with the present value of the revenue required under securitization is an appropriate economic analysis to demonstrate whether securitization provides economic benefits to ratepayers.
13. BondCo's issuance of the transition bonds approved in this Financing Order in compliance with the criteria established by this Financing Order satisfies the requirement of PURA Sections 39.301 prescribing that the structuring and pricing of the transition bonds will result in the lowest transition bond charges consistent with market conditions and the terms of this Financing Order.
14. The amount approved in this Financing Order for securitization does not exceed the present value of the revenue requirement over the life of the transition bonds approved in this Financing Order that are associated with the costs sought to be securitized, as required by PURA Section 39.301.
15. The securitization approved in this Financing Order satisfies the requirements of PURA Section 39.303(a) directing that the total amount of revenues to be collected under this Financing Order be less than the revenue requirement that would be recovered using conventional financing methods (which, in the case of the balance at issue in this proceeding, is a customer surcharge) and that this Financing Order be consistent with the standards of PURA Section 39.301.
16. Under PURA Sections 39.301 and 39.303, the Commission has the ability to prohibit different financial options relating to the transition bonds if the evidence supports the finding that the financial option will not or is unlikely to result in the lowest transition bonds charges consistent with market conditions.
17. The system restoration cost balance as determined in Docket No. 36931 includes carrying costs from the date incurred through October 26, 2009, the estimated date of issuance of the transition bonds. ETI may securitize carrying costs accrued on the system restoration costs during this period, as adjusted for the actual issuance date.
18. This Financing Order adequately details the amount to be recovered and the period over which ETI will be permitted to recover nonbypassable transition charges in accordance with the requirements of PURA Section 39.303(b). Transition charges related to a series of transition bonds may not be collected after 15 years from the date of issuance of that series of bonds. This provision does not preclude the servicer from recovering transition charges attributable to service rendered during the 15-year period but remaining unpaid at the end of the 15-year period.
19. The method approved in this Financing Order for collecting and allocating the transition charges satisfies the requirements of PURA Section 36.403(g).
20. As provided in PURA Section 39.303(d), this Financing Order, together with the transition charges authorized by this Financing Order, is irrevocable and not subject to reduction, impairment, or adjustment by further act of the Commission, except for the true-up procedures approved in this Financing Order, as required by PURA Section 39.307; provided, however, that such irrevocability shall not preclude the Commission from extending the deadline for issuance of transition bonds if requested to do so by ETI.
21. As provided in PURA Section 39.304(a), the rights and interests of ETI or its successor under this Financing Order, including the right to impose, collect and receive the transition charges authorized in this Financing Order, are assignable and shall become transition property when they are first transferred to BondCo.
22. The rights, interests and property conveyed to BondCo in the Transition Property Purchase and Sale Agreement and the related Bill of Sale, including the irrevocable right to impose, collect and receive transition charges and the revenues and collections from transition charges, are "transition property" within the meaning of PURA Sections 39.302(8) and 39.304.
23. Transition property will constitute a present property right for purposes of contracts concerning the sale or pledge of property, even though the imposition and collection of the transition charges depend on further acts by ETI or others that have not yet occurred, as provided by PURA Section 39.304(b).
24. All revenues and collections resulting from the transition charges will constitute proceeds only of the transition property arising from this Financing Order, as provided by PURA Section 39.304(c).
25. Upon the transfer by ETI of the transition property to BondCo, BondCo will have all of the rights, title and interest of ETI with respect to such transition property including the right to impose, collect and receive the transition charges authorized by the Financing Order.
26. The transition bonds issued pursuant to this Financing Order will be "transition bonds" within the meaning of PURA Sections 36.403(e) and 39.302(6), and the transition bonds and holders thereof are entitled to all of the protections provided under Subchapter I of Chapter 36 and Subchapter G of Chapter 39 of PURA.
27. Amounts that are required to be paid to the servicer as transition charges under this Financing Order or the tariffs approved hereby are "transition charges" as defined in PURA Sections 36.403(f) and 39.302(7), and the amounts collected from retail consumers with respect to such transition charges are "transition charges" as defined in PURA Sections 36.403(f) and 39.302(7), whether or not such charges are set out as a separate line item on the retail consumer's bill.
28. Any payment of transition charges by a retail consumer to ETI, as servicer, or if applicable, to its REP, or to another entity responsible for collecting transition charges from retail consumers under this Financing Order or the tariffs approved hereunder, will discharge the retail consumer's obligations in respect of that payment, but, in the case of a REP or an entity (other than ETI), will not discharge the obligations of any REP or other entity responsible for collecting transition charges from retail consumers under this Financing Order to remit such payments to the servicer of the transition bonds on behalf of BondCo or an assignee or its obligations to pay amounts determined through subsequent true-up adjustments.
29. As provided in PURA Section 39.305, the interests of an assignee, the holders of transition bonds, and the indenture trustee in transition property and in the revenues and collections arising from that property are not subject to setoff, counterclaim, surcharge, or defense by ETI or any other person or in connection with the bankruptcy of ETI or any other entity.
30. The methodology approved in this Financing Order to true-up the transition charges satisfies the requirements of PURA Section 39.307.
31. If and when ETI transfers to BondCo the right to impose, collect, and receive the transition charges and to issue the transition bonds, the servicer will be able to recover the transition charges associated with such transition property only for the benefit of BondCo and the holders of the transition bonds in accordance with the servicing agreement.
32. If and when ETI transfers its rights under this Financing Order to BondCo under an agreement that expressly states that the transfer is a sale or other absolute transfer in accordance with the true-sale provisions of PURA Section 39.308, then, pursuant to that statutory provision, that transfer will be a true sale of an interest in transition property and not a secured transaction or other financing arrangement and title, legal and equitable, to the transition property will pass to BondCo. As provided by PURA Section 39.308, this true sale shall apply regardless of whether the purchaser has any recourse against the seller, or any other term of the parties' agreement, including the seller's retention of an equity interest in the transition property, ETI's role as the collector of transition charges relating to the transition property, or the treatment of the transfer as a financing for tax, financial reporting, or other purposes.
33. As provided in PURA Section 39.309(b), a valid and enforceable lien and security interest in the transition property in favor of the holders of the transition bonds or a trustee on their behalf will be created by this Financing Order and the execution and delivery of a security agreement with the holders of the transition bonds or a trustee on their behalf in connection with the issuance of the transition bonds. The lien and security interest will attach automatically from the time that value is received for the transition bonds and, on perfection through the filing of notice with the Secretary of State in accordance with the rules prescribed by the Secretary of State under PURA Section 39.309(d), will be a continuously perfected lien and security interest in the transition property, and all proceeds of the transition property, whether accrued or not, will have priority in the order of filing and will take precedence over any subsequent judicial or other lien creditor.
34. As provided in PURA Section 39.309(c), the transfer of an interest in transition property to an assignee will be perfected against all third parties, including subsequent judicial or other lien creditors, when this Financing Order becomes effective, transfer documents have been delivered to that assignee, and a notice of that transfer has been filed in accordance with the rules prescribed by the Secretary of State under PURA Section 39.309(d); provided, however, that if notice of the transfer has not been filed in accordance with this process within 10 days after the delivery of transfer documentation, the transfer of the interest will not be perfected against third parties until the notice is filed. The transfer to BondCo of ETI's rights under this Financing Order will be a transfer of an interest in transition property for purposes of PURA Section 39.309(c).
35. As provided in PURA Section 39.309(e), the priority of a lien and security interest perfected in accordance with PURA Section 39.309 will not be impaired by any later change in the transition charges pursuant to PURA Section 39.307 or by the commingling of funds arising from transition charges with other funds, and any other security interest that may apply to those funds will be terminated when they are transferred to a segregated account for an assignee or a financing party. To the extent that transition charges are not collected separately from other funds owed by REPs, the amounts to be remitted to such segregated account for an assignee or a financing party may be determined according to system-wide (or if provided in the servicing agreement, revenue or rate class) charge off percentages, collection curves or such other reasonable methods of estimation, as are set forth in the servicing agreement.
36. As provided in PURA Section 39.309(e), if transition property is transferred to an assignee, any proceeds of the transition property will be treated as held in trust for the assignee.
37. As provided in PURA Section 39.309(f), if a default or termination occurs under the transition bonds, the financing parties or their representatives may foreclose on or otherwise enforce their lien and security interest in any transition property as if they were secured parties under Chapter 9, Texas Business and Commerce Code, and, upon application by or on behalf of the financing parties, the Commission may order that amounts arising from the transition charges be transferred to a separate account for the financing parties' benefit, to which their lien and security interest shall apply.
38. As provided in PURA Section 39.309(f), if a default or termination occurs under the transition bonds, on application by or on behalf of the financing parties, a district court of Travis County, Texas shall order the sequestration and payment to those parties of revenues arising from the transition charges.
39. As provided by PURA Section 39.310, the transition bonds authorized by this Financing Order are not a debt or obligation of the State of Texas and are not a charge on its full faith and credit or taxing power.
40. Pursuant to PURA Section 39.310, the State of Texas has pledged for the benefit and protection of all financing parties and ETI, that it (including the Commission) will not take or permit any action that would impair the value of transition property, or, except as permitted by PURA Section 39.307, reduce, alter or impair the transition charges to be imposed, collected, and remitted to any financing parties, until the principal, interest and premium, and any other charges incurred and contracts to be performed in connection with the transition bonds have been paid and performed in full. BondCo, in issuing transition bonds, is authorized pursuant to PURA Section 39.310 and this Financing Order to include this pledge in any documentation relating to the transition bonds.
41. As provided in PURA Section 39.311, transactions involving the transfer and ownership of the transition property and the receipt of transition charges are exempt from state and local income, sales, franchise, gross receipts, and other taxes or similar charges.
42. This Financing Order will remain in full force and effect and unabated notwithstanding the bankruptcy of ETI, its successors, or assignees.
43. ETI retains sole discretion regarding whether or when to assign, sell or otherwise transfer the rights and interests created by this Financing Order or any interest therein, or to cause the issuance of any transition bonds authorized by this Financing Order, subject to the right of the Commission, acting through its designated representative to have a
    decision-making role co-equal with ETI to approve or disapprove the proposed structuring, pricing, and marketing of the transition bonds as set out in Ordering Paragraph 28, and subject to the Commission's authority through the issuance advice letter process to find that the proposed issuance does not comply with the requirements of PURA and this Financing Order.
44. This Financing Order is final, is not subject to rehearing by this Commission, and is not subject to review or appeal except as expressly provided in PURA Section 39.303(f). The finality of this Financing Order is not impaired in any manner by the participation of the Commission through its designated representative in any decisions related to issuance of the transition bonds or by the Commission's review of or issuance of an order related to the issuance advice letter required to be filed with the Commission by this Financing Order.
45. This Financing Order meets the requirements for a financing order under Subchapter I of Chapter 36 and Subchapter G of Chapter 39 of PURA.
46. The true-up mechanism, and all other obligations of the State of Texas and the Commission set forth in this Financing Order, are direct, explicit, irrevocable and unconditional upon issuance of the transition bonds and are legally enforceable against the State of Texas and the Commission.
47. The requirements for informal disposition pursuant to P.U.C. Proc. R. 22.35 have been met in this proceeding except for subsection (b)(2) that requires the proposed order to be served on all parties no later than 20 days before the Commission is scheduled to consider the petition in an open meeting. Pursuant to P.U.C. Proc. R. 22.5(b), good cause exists to waive the 20-day requirement of P.U.C. Proc. R. 22.35(b)(2) so that this proceeding may be considered at the Commission's Open Meeting scheduled for September 10, 2009.

V.        ORDERING PARAGRAPHS

Based upon the record, the Findings of Fact and Conclusions of Law set forth herein, and for the reasons stated above, this Commission orders:

A.        Approval

1. Approval of Application. The Agreement and the application of ETI for the issuance of a financing order under PURA Sections 36.401-.406 and 39.303 as modified by the Agreement are approved, as provided in this Financing Order. ETI's application and accompanying testimony and schedules, proof of publication, and the Affidavits of Darryl Tietjen and
   J. David Wright in Support of Settlement are incorporated into the record pursuant to this Financing Order.
2. Authority to Securitize. ETI is authorized in accordance with this Financing Order to securitize and to cause the issuance of transition bonds with an aggregate principal amount of: (a) $539,881,826 of system restoration costs pursuant to the 36931 Order (which amount includes carrying costs in the amount of $43,525,261 through the projected issuance date of the transition bonds of October 26, 2009, calculated at a rate of 10.86% per annum pursuant to the 36931 Order), plus (b) up-front qualified costs of issuing the transition bonds and of retiring some existing debt at ETI, which are capped pursuant to this Financing Order, and are not to exceed $5 million plus (i) the cost of original issue discount, credit enhancements and other arrangements to enhance marketability (provided that the Commission's designated representative and ETI agree in advance that such enhancements and arrangements provide benefits greater than their tangible and intangible costs), (ii) the cost of the Commission's finan cial advisor, if any, and (iii) any costs incurred by ETI if this Financing Order is appealed, minus (c) insurance proceeds (in excess of $70 million) or governmental grant proceeds received prior to the issuance of the financing order, plus or minus (d) any adjustment to the $43,525,261 in carrying costs necessary to account for (i) the receipt of insurance or grant proceeds, and (ii) the number of days, as applicable, either greater than or less than assumed in the $43,525,261 carrying cost calculation based on the projected issuance date for the transition bonds of October 26, 2009. ETI is authorized to securitize the updated aggregate principal amount in the issuance advice letter. If the actual up-front qualified costs are less than the up-front qualified costs included in the principal amount securitized, the periodic billing requirement for the first annual true-up adjustment shall be reduced by the amount of such unused funds (together with income earned thereon through investment by the trustee in eligible investments) and such unused funds (together with income earned thereon through investment by the trustee in eligible investments) shall be available for payment of debt service on the bond payment date next succeeding such true-up adjustment.
3. Accumulated Deferred Federal Income Tax. ETI shall calculate annually and place into effect, on the same date that the system restoration charges become effective, the ADFIT Credit. Any adjustment to the ADFIT Credit, if any, shall be made through a separate filing submitted by ETI at the same time it submits the system restoration charge true-up adjustment filing and using the same allocation factors and billing determinants as the annual system restoration charge true-up adjustment filing. ADFIT benefits associated with such system restoration costs shall not be applied to reduce the securitizable balance or used to reduce rate base in future proceedings. The ADFIT Credit and obligation to provide the ADFIT Credit shall not be transferred to the special purpose entity being created to issue the bonds, shall not be or become "transition property" as defined in PURA Section 39.302(8) but shall be and remain a separate unsecuritized rate credit of ETI.
4. Recovery of Transition Charges. ETI shall impose on, and the servicer shall collect from all existing and future retail consumers located within ETI's service area as it existed on the date this Financing Order is issued, and other entities which, under the terms of this Financing Order or the tariffs approved hereby, are required to bill, pay or collect transition charges, as provided in this Financing Order, transition charges in an amount sufficient to provide for the timely recovery of its aggregate qualified costs detailed in this Financing Order (including payment of principal and interest on the transition bonds). When, and if, ETI's service territory becomes subject to retail competition, REPs and other entities responsible for collecting transition charges from retail consumers under this Financing Order shall pay the transition charges billed to them whether or not they collect the transition charges from their retail consumers.
5. Provision of Information. ETI shall take all necessary steps to ensure that the Commission or its designated representative is provided sufficient and timely information to allow the Commission or its designated representative to fully participate in and exercise its decision making authority over the proposed securitization as provided in this Financing Order.
6. Issuance Advice Letter. ETI shall submit a draft issuance advice letter to the Commission Staff for review not later than two weeks prior to the expected date of the commencement of marketing of the transition bonds. Within one week after receipt of the draft issuance advice letter, Commission Staff shall provide ETI comments and recommendations regarding the adequacy of the information provided. Within 24 hours after pricing of the transition bonds and prior to issuance of the transition bonds, ETI, in consultation with the Commission acting through its designated representative, shall file with the Commission an issuance advice letter in substantially the form of the issuance advice letter attached as Appendix A to this Financing Order. As part of the issuance advice letter, ETI, through an officer of ETI, shall provide a certification worded precisely as the statement in the form of issuance advice letter approved by the Commission. The issuance advice letter shall be completed, shall evid ence the actual dollar amount of the initial transition charges and other information specific to the transition bonds to be issued, and shall certify to the Commission that the structure and pricing of that series results in the lowest transition bond charges consistent with market conditions at the time that the transition bonds are priced, and the terms set out in this Financing Order. At the time the issuance advice letter is filed, ETI shall submit a calculation of the ADFIT Credit using the form of Schedule SCO (Storm Cost Offset) approved in this Financing Order pursuant to the Agreement and the terms of this Financing Order. In addition, if additional credit enhancements or arrangements to reduce interest rate risks or enhance marketability are used, the issuance advice letter shall include certification that the additional credit enhancements or other arrangements are reasonably expected to provide benefits as required by this Financing Order. All amounts that require comput ation shall be computed using the mathematical formulas contained in the form of the issuance advice letter in Appendix A to this Financing Order and Schedule SRC approved in this Financing Order. Electronic spreadsheets with the formulas supporting the schedules contained in the issuance advice letter shall be included with such letter. The Commission's review of the issuance advice letter shall be limited to the arithmetic accuracy of the calculations and to compliance with the specific requirements that are contained in the issuance advice letter. The initial transition charges and the final terms of the transition bonds set forth in the issuance advice letter shall become effective on the date of issuance of the transition bonds (which shall not occur prior to the fifth business day after pricing) unless prior to noon on the fourth business day after pricing the Commission issues an order finding that the proposed issuance does not comply with the requirements set forth above in this Ordering Paragrap h.
7. Approval of Tariffs. The form of Schedule SRC, attached as Appendix B to this Financing Order, and the form of the ADFIT Credit Schedule SCO, attached as Appendix E to this Financing Order, are approved. Prior to the issuance of any transition bonds under this Financing Order, ETI shall file tariffs that conform to the form of the Schedule SRC tariff and the Schedule SCO tariff attached to this Financing Order.

B.        Transition Charges

8. Imposition and Collection. ETI is authorized to impose on, and the servicer is authorized to collect from, all existing and future retail consumers located within ETI's service area as it existed on the date this Financing Order is issued (and, if retail competition is introduced into such service area, from REPs and other entities which, under the terms of this Financing Order or the tariffs approved hereby are required to bill, pay or collect transition charges) transition charges in an amount sufficient to provide for the timely recovery of the aggregate Periodic Payment Requirements (including payment of principal and interest on the transition bonds), as approved in this Financing Order.
9. BondCo's Rights and Remedies. Upon the transfer by ETI of the transition property to BondCo, BondCo shall have all of the rights, title and interest of ETI with respect to such transition property, including, without limitation, the right to exercise any and all rights and remedies with respect thereto, including the right to authorize disconnection of electric service and to assess and collect any amounts payable by any retail consumer in respect of the transition property.
10. Collector of Transition Charges. ETI or any subsequent servicer of the transition bonds shall bill a consumer or other entity which, under the terms of this Financing Order or the tariffs approved hereby, is required to bill, or collect transition charges, for the transition charges attributable to that consumer.
11. Collection Period. The transition charges related to a series of transition bonds shall be designed to be collected over the expected 14-year life of the transition bonds. However, to the extent that any amounts are not recovered at the end of this 14-year period, ETI may continue to recover them over a period ending not more than 15 years from the date of issuance of that series of transition bonds. Amounts remaining unpaid after this 15-year period may be recovered but only to the extent that the charges are attributable to services rendered during the 15-year period.
12. Allocation. ETI shall allocate the transition charges among consumer classes in the manner described in this Financing Order.
13. Nonbypassability. ETI and any other entity providing electric transmission or distribution services and any REP providing services to any retail consumer within ETI's certificated service area as it existed on the date this Financing Order is issued are entitled to collect and must remit, consistent with this Financing Order, the transition charges from such retail consumers including certain retail consumers that switch to certain new on-site generation, and such retail consumers are required to pay such transition charges. The Commission will ensure that such obligations are undertaken and performed by ETI, any other entity providing electric transmission or distribution services within ETI's certificated service area as of the date this Financing Order is issued and any REP providing services to any retail consumer within such certificated service area.
14. True-Ups. True-ups of the transition charges, including standard, interim and
    non-standard true-ups, should be undertaken and conducted as described in Schedule SRC. The servicer shall file the true-up adjustments in a compliance docket and shall give notice of the filing to all parties in this docket.
15. Ownership Notification. Any entity that bills transition charges to retail consumers shall, at least annually, provide written notification to each retail consumer for which the entity bills transition charges that the transition charges are the property of BondCo and not of the entity issuing such bill.

C.        Transition Bonds

16. Issuance. BondCo is authorized to issue transition bonds as specified in this Financing Order. The ongoing qualified costs described in Appendix C may be recovered directly through the transition charges.
17. ETI may securitize up-front qualified costs in accordance with this Financing Order, subject to the cap on ETI's securitizable up-front qualified costs as shown in this Financing Order. In the issuance advice letter, ETI will update the SEC registration fee, rating agency fees, and underwriters' fees. The cap on up-front qualified costs does not apply to costs associated with: (1) credit enhancements and arrangements to enhance marketability, including original issue discount, provided that the Commission's designated representative and ETI agree in advance that such enhancements and arrangements provide benefits greater than their tangible and intangible costs; (2) the costs of the Commission's financial advisor, if the Commission hires a financial advisor to assist it with issuance of the bonds; and (3) any costs incurred by ETI to defend this Financing Order, if this Financing Order is appealed.
18. ETI may recover its actual ongoing qualified costs (including amounts required to provide a return on the portion, if any, of capital contributions in excess of 0.5% of the original principal amount of each series of bonds, as described in Finding of Fact 62) through its transition charges. The amount of ongoing qualified costs is subject to updating in the issuance advice letter to reflect a change in the size of the transition bond issuance and other information available at the time of submission of the issuance advice letter. Costs other than the servicing and administrative fees are not capped by this Financing Order. As provided in Ordering Paragraph No. 30, a servicer, other than ETI, may collect a higher servicing fee than that set forth in Appendix C to this Financing Order. If the higher rate will annually exceed 0.60% of the principal amount securitized, approval by the Commission is required.
19. Refinancing. ETI or any assignee may apply for one or more new financing orders pursuant to PURA Section 39.303(g).
20. Collateral. All transition property and other collateral shall be held and administered by the indenture trustee pursuant to the indenture as described in ETI's application. BondCo shall establish a collection account with the indenture trustee as described in the application and Findings of Fact Nos. 60 through 65. Upon payment of the principal amount of all transition bonds authorized in this Financing Order and the discharge of all obligations in respect thereof, all amounts in the collection account, including investment earnings, other than amounts in the capital subaccount, shall be released by the indenture trustee to BondCo for distribution in accordance with Ordering Paragraph No. 21. ETI shall notify the Commission within 30 days after the date that these funds are eligible to be released of the amount of such funds available for crediting to the benefit of ratepayers.
21. Distribution Following Repayment. Following repayment of the transition bonds authorized in this Financing Order and release of the funds held by the trustee, the servicer, on behalf of BondCo, shall distribute to current retail consumers (or, if applicable because of the existence of retail competition, REPs and other entities responsible for collection of transition charges from retail ratepayers) the final balance of the general, excess funds, and all other subaccounts (except the capital subaccount), whether such balance is attributable to principal amounts deposited in such subaccounts or to interest thereon, remaining after all other qualified costs have been paid. The amounts shall be distributed to each retail rate class (or, if applicable, REP and other entity) that paid Schedule SRC transition charges during the last 12 months that the Schedule SRC transition charges were in effect. BondCo or its successor in interest to the Transition Property shall, to the ex tent the capital subaccount is not depleted below its original amount, also distribute to retail consumers (or, if applicable, REPs and other entities responsible for collection of transition charges from retail ratepayers) any subsequently collected transition charges. The amount paid to each retail consumer (or, if applicable, REP or other entity) shall be determined by allocating the total amount available for distribution by a fraction, the numerator of which is the total Schedule SRC transition charges paid by the retail rate class (or, if applicable, REP or other entity) during the last 12 months Schedule SRC charges were in effect and the denominator of which is the total Schedule SRC transition charges paid by all retail rate classes (or, if applicable, REPs and other entities responsible for collection of transition charges from retail ratepayers) during the last 12 months the Schedule SRC transition charges were in effect. The amount allocated by each class shall be divided by the forecasted billing units for the month in which the refund will take place in order to arrive at a per customer refund amount per kWh or kW, as applicable.
22. Funding of Capital Subaccount. The capital contribution by ETI to BondCo to be deposited into the capital subaccount shall, with respect to each series of transition bonds, be funded by ETI and not from the proceeds of the sale of transition bonds. Upon payment of the principal amount of all transition bonds and the discharge of all obligations in respect thereof, all amounts in the capital subaccount, including investment earnings, shall be released to BondCo for payment to ETI. Investment earnings in this subaccount may be released earlier in accordance with the indenture to BondCo for payment to ETI.
23. Credit Enhancement. ETI may provide for various forms of credit enhancement including letters of credit, other reserve accounts, surety bonds, and other mechanisms designed to promote the credit quality or marketability of the transition bonds and may enter into hedging or other arrangements to mitigate the risk of an increase in interest rates to the extent not prohibited by this Financing Order. The decision to use such arrangements to enhance credit, promote marketability or reduce interest rate risks shall be made in conjunction with the Commission acting through its designated representative. BondCo may not enter into an interest-rate swap arrangement. ETI may include the costs of credit enhancements or other arrangements to promote credit quality, marketability or mitigate interest rate risks as qualified costs only if ETI certifies that such arrangements are reasonably expected to provide benefits greater than their cost and such certifications are agreed with by the Commission's designated representative. ETI shall not be required to enter any arrangements to promote credit quality, marketability or mitigate interest rate risks unless all related costs and liabilities can be included in qualified costs. ETI and the Commission's designated representative shall evaluate the relative benefits of the arrangements in the same way that benefits are quantified under the quantifiable benefits test. This Ordering Paragraph does not apply to the collection account or its subaccounts approved in this Financing Order.
24. Original Issue Discount. Consistent with its obligation to achieve the lowest cost of funds, BondCo may determine to provide for original issue discount in connection with the issuance and pricing of the transition bonds.
25. Weighted Average Annual Interest Rate of Bonds. The effective weighted-average annual interest rate of the transition bonds, excluding up-front and ongoing costs, shall not exceed 7.75%.
26. Life of Bonds. The legal final maturity of the transition bonds authorized by this Financing Order shall not exceed 15 years.
27. Amortization Schedule. The Commission approves, and the transition bonds shall be structured to provide, a transition charge that is designed to produce substantially level annual debt service over the expected life of the transition bonds.
28. Commission Participation in Bond Issuance. The Commission, acting through its designated representative, shall participate directly with ETI in negotiations regarding the structuring, pricing, and marketing, and shall have equal rights with ETI to approve or disapprove the proposed structuring, pricing, and marketing of the transition bonds. The Commission's designated representative shall have the right to participate fully and in advance regarding all aspects of the structuring, pricing, and marketing of the transition bonds, and shall be provided timely information that is necessary to fulfill its obligation to the Commission. The Commission directs its designated representative to advise the Commission of any proposal that does not comply in any material respect with the criteria established in this Financing Order. The Commission's designated representative shall promptly inform ETI and the Commission of any items that, in the designated representative's opinion, are not reasonable. The Commission's designated representative shall notify ETI and the Commission no later than 12:00 p.m. CST on the business day after the Commission's receipt of the issuance advice letter for each series of transition bonds whether the structuring, marketing, and pricing of that series of transition bonds comply with the criteria established in this Financing Order.
29. Use of BondCo. ETI shall use BondCo, a special purpose transition funding entity as proposed in its application, in conjunction with the issuance of any transition bonds authorized under this Financing Order. BondCo shall be funded with an amount of capital that is sufficient for BondCo to carry out its intended functions and to avoid the possibility that ETI would have to extend funds to BondCo in a manner that could jeopardize the bankruptcy remoteness of BondCo, as well as to assure that the transition bonds will be treated as a borrowing of ETI and as debt, both for federal income tax purposes. The administrative fees are capped at $100,000 for each BondCo plus reimbursable third party costs.

D.        Servicing

30. Servicing Agreement. The Commission authorizes ETI to enter into the servicing agreement with BondCo and to perform the servicing duties approved in this Financing Order. Without limiting the foregoing, in its capacity as initial servicer of the transition property, ETI is authorized to calculate, bill and collect for the account of BondCo, the transition charges initially authorized in this Financing Order, as adjusted from time to time to meet the Periodic Payment Requirements as provided in this Financing Order; and to make such filings and take such other actions as are required or permitted by this Financing Order in connection with the periodic true-ups described in this Financing Order. The servicer shall be entitled to collect servicing fees in accordance with the provisions of the servicing agreement, provided that, as set forth in Appendix C, (i) the annual servicing fee payable to ETI while it is serving as servicer (or to any other servicer a ffiliated with ETI) shall not at any time exceed $290,000. The annual servicing fee payable to any other servicer not affiliated with ETI shall be subject to approval by the Commission pursuant to Ordering Paragraph No. 31. The revenues collected by ETI, or by any affiliate of ETI acting as either the servicer or administrator, under the servicing agreement and the administration agreement shall be included as an identified revenue credit and reduce revenue requirements for the ratepayers' benefit in any ETI base rate case. The expenses of acting as the servicer or administrator shall likewise be included as a cost of service in any ETI base rate case. The servicing agreement negotiated as part of this securitization shall contain a recital clause that the Commission, or its attorney, will enforce the servicing agreement for the benefit of Texas ratepayers to the extent permitted by law. The servicing agreement negotiated as part of this securitization shall also include a provision that ETI shall i ndemnify the Commission (for the benefit of consumers) in connection with any increase in servicing fees that become payable pursuant to Section 6.02(g) of the servicing agreement as a result of a default resulting from ETI's negligence in performance of its duties or observance of its covenants under the servicing agreement. The indemnity will be enforced by the Commission but will not be enforceable by any REP or consumer.
31. Replacement of ETI as Servicer. Upon the occurrence of an event of default under the servicing agreement relating to servicer's performance of its servicing functions with respect to the transition charges, the financing parties may replace ETI as the servicer in accordance with the terms of the servicing agreement. The replacement servicer shall not begin providing service until the date the Commission approves the appointment and the servicing fee of such replacement servicer; provided, however, that approval of the servicing fee is only required if, annually, it will exceed 0.60% of the original principal amount securitized. No entity may replace ETI as the servicer in any of its servicing functions with respect to the transition charges and the transition property authorized by this Financing Order, if the replacement would cause any of the then current credit ratings of the transition bonds to be suspended, withdrawn, or downgraded.
32. Amendment of Agreements. The parties to the servicing agreement, indenture, and sale agreement may amend the terms of such agreements; provided, however, that no amendment to any such agreement shall increase the ongoing qualified costs without the approval of the Commission. Any amendment that does not increase the ongoing qualified costs shall be effective without prior Commission authorization. Any amendment to any such agreement that may have the effect of increasing ongoing qualified costs shall be provided by BondCo to the Commission along with a statement as to the possible effect of the amendment on the ongoing qualified costs. The amendment shall become effective on the later of (i) the date proposed by the parties to the amendment or (ii) 31 days after such submission to the Commission unless the Commission issues an order disapproving the amendment within a 30-day period.
33. Collection Terms. The servicer shall remit collections of the transition charges to BondCo or the indenture trustee for BondCo's account in accordance with the terms of the servicing agreement.
34. Contract to Provide Service. To the extent that any interest in the transition property created by this Financing Order is assigned, sold or transferred to an assignee, ETI shall enter into a contract with that assignee that requires ETI (or its successor) to continue to operate its transmission and distribution system (or, if by law, ETI or its successor is no longer required to own and/or operate both the transmission and distribution systems, then ETI's distribution system) in order to provide electric services to ETI's customers within its service territory. This order shall not prohibit ETI from selling, assigning, or otherwise divesting any of its properties or assets; provided that in the event that ETI sells, assigns or otherwise divests of all or any portion of its transmission and distribution system required to provide electric service to ETI's customers in the service area (or, if by law, ETI or its successor is no longer required to own and/or operate both the transmission and d istribution systems, then ETI sells, assigns or otherwise divests all or any portion of its distribution system required to provide electric service to ETI's customers in the service area), then the entity acquiring such distribution (and, if applicable, transmission) facilities is either required by law or agrees by contract to continue operating the facilities to provide electric service to ETI's customers in its service territory, subject to any further restrictions provided in any bond financing document to assure obtaining the AAA ratings on the transition bonds.
35. SEC Requirements. Each REP or other entity responsible for collecting transition charges from retail consumers shall furnish to BondCo or ETI or to any successor servicer information and documents necessary to enable BondCo or ETI or any successor servicer to comply with their respective disclosure and reporting requirements, if any, with respect to the transition bonds under federal securities laws.

E.        Retail Electric Providers

36. REP Billing and Credit Standards. The Commission approves the REP standards detailed in Findings of Fact Nos. 55 and 56. These proposed REP standards relate only to the billing and collection of transition charges authorized under this Financing Order when and if retail competition is introduced into ETI's service territory, and do not apply to collection of any other nonbypassable charges or other charges. The standards apply to all future REPs other than REPs that have contracted with ETI to have ETI bill and collect transition charges from retail consumers. REPs may contract with parties other than ETI to bill and collect transition charges from retail consumers, but such REPs shall remain subject to these standards. Upon adoption of any amendment to the rules governing REP standards as set out in P.U.C. Subst. R. 25.108, the Commission Staff shall initiate a proceeding to investigate the need to modify the standards adopted in this Financing Order to conform to that rule a nd to address whether each of the rating agencies that have rated the transition bonds will determine that such modifications will not cause a suspension, withdrawal, or downgrade of the ratings on the transition bonds. Modifications to the REP standards adopted in this Financing Order may not be implemented absent prior written confirmation from each of the rating agencies that have rated the transition bonds that such modifications will not cause a suspension, withdrawal, or downgrade of the ratings on the transition bonds. The servicer of the transition bonds shall also comply with the provisions of the REP standards adopted by this Financing Order that are applicable to the servicer.
37. Transition Charge Remittance Procedures. When, and if, ETI's service territory becomes subject to retail competition, transition charges shall be billed and collected in accordance with the REP standards adopted by this Financing Order. REPs shall be subject to penalties as provided in these standards. A REP shall not be obligated to pay the overdue transition charges of another REP whose customers it agrees to serve.
38. Remedies Upon REP Default. A servicer of transition bonds shall have the remedies provided in the REP standards adopted by this Financing Order. If a REP that is in default fails to immediately select and implement one of the options provided in the REP standards or, after making its selection, fails to adequately meet its responsibilities under the selected option, then the servicer shall immediately cause the POLR or a qualified REP to assume the responsibility for the billing and collection of transition charges in the manner and for the time provided in the REP standards.
39. Billing by POLRs. Every POLR appointed by the Commission shall comply with the minimum credit rating or deposit/credit support requirements described in the REP standards in addition to any other standard that may be adopted by the Commission. If the POLR defaults or is not eligible to provide billing and collection services, the servicer shall immediately assume responsibility for billing and collection of transition charges and continue to meet this obligation until a new POLR can be named by the Commission or the consumer requests the services of a REP in good standing. Retail consumers may never be directly re-billed by the successor REP, the POLR, or the servicer for any amount of transition charges the consumers have paid their REP.
40. Disputes. Disputes between a REP and a servicer regarding any amount of billed transition charges shall be resolved in the manner provided by the REP standards adopted by this Financing Order.
41. Metering Data. If the servicer is providing metering services to a REP's retail consumers, then metering data shall be provided to the REP at the same time as the billing. If the servicer is not providing metering services, the entity providing metering services shall comply with Commission rules and ensure that the servicer and the REP receive timely and accurate metering data in order for the servicer to meet its obligations under the servicing agreement and this Financing Order.
42. Charge-Off Allowance. The REP may retain an allowance for charge-offs from its payments to the servicer as provided in the REP standards adopted by this Financing Order.
43. Service Termination. So long as the servicer is billing consumers for transition charges, the servicer shall have the right to terminate transmission and distribution service to the end-use consumer for non-payment by the end-use consumer pursuant to applicable Commission rules. In the event that a REP or the POLR is billing consumers for transition charges, the REP or POLR shall have the right to transfer the consumer to the POLR or to another certified REP or to direct the servicer to terminate transmission and distribution service to the end-use consumer for non-payment by the end-use consumer to the extent permitted by and pursuant to terms and limitations of the applicable Commission rules.

F.        Structure of the Securitization

44. Structure. ETI shall structure the securitization as proposed in ETI's application. This structure shall be consistent with Findings of Fact Nos. 34 through 99.

G.        Use of Proceeds

45. Use of Proceeds. Upon the issuance of transition bonds, BondCo shall pay the proceeds from the sale of the transition bonds (after payment of transaction costs) to ETI for the purchase price of the transition property. ETI will apply these net proceeds to reduce the debt on its regulatory books.

H.        Miscellaneous Provisions

46. Continuing Issuance Right. ETI has the continuing irrevocable right to cause the issuance of transition bonds in one or more series in accordance with this Financing Order for a period commencing with the date of this Financing Order and extending 24 months following the latest of (i) the date on which this Financing Order becomes final and no longer subject to any appeal; (ii) the date on which the 36931 Order becomes final and no longer subject to any appeal; or (iii) the date on which any other regulatory approvals necessary to issue the transition bonds are obtained and no longer subject to any appeal. If at any time during the effective period of this Financing Order there is a severe disruption in the financial markets of the United States, the effective period shall automatically be extended to a date which is not less than 90 days after the date such disruption ends.
47. Internal Revenue Service Private Letter or Other Rulings. ETI is not required by this Financing Order to obtain a ruling from the IRS. ETI is precluded from seeking a ruling from the IRS by IRS Revenue Procedure 2009-3, which states that the IRS will no longer issue any letter rulings or determination letters on questions of whether investor-owned utilities realize income upon certain occurrences, which includes the circumstance in which the utility obtains the right to "recover certain costs pursuant to State specified cost recovery legislation." ETI shall obtain an opinion of tax counsel sufficient to support the issuance of the bonds.
48. Binding on Successors. This Financing Order, together with the transition charges authorized in it, shall be binding on ETI and any successor to ETI that provides transmission and distribution service directly to retail consumers in ETI's service area, any other entity that provides transmission or distribution services to retail consumers within that service area, and any successor to such other entity, provided that if by law, ETI or its successor is no longer required to own and/or operate both the transmission and distribution systems, then any entity that provides distribution service to customers in the service territory shall be bound by this Financing Order. This Financing Order is also binding on each REP, and any successor, that sells electric energy to retail consumers located within that service area, any other entity responsible for billing and collecting transition charges on behalf of BondCo, and any successor to the Commission. In this paragraph, a "successor" means any entity t hat succeeds by any means whatsoever to any interest or obligation of its predecessor or transferor, including by way of bankruptcy, reorganization or other insolvency proceeding, merger, division, consolidation, conversion, assignment, sale, transfer, lease, management contract, pledge or other security, by operation of law or otherwise.
49. Flexibility. Subject to compliance with the requirements of this Financing Order, ETI and BondCo shall be afforded flexibility in establishing the terms and conditions of the transition bonds, including the final structure of BondCo, repayment schedules, term, payment dates, collateral, credit enhancement, required debt service, reserves, interest rates, use of original issue discount, hedges, indices and other financing costs and the ability of ETI, at its option, to cause one or more series of transition bonds to be issued or to create more than one BondCo for purposes of issuing such transition bonds.
50. Effectiveness of Order. This Financing Order is effective upon issuance and is not subject to rehearing by the Commission. Notwithstanding the foregoing, no transition property shall be created hereunder, and ETI shall not be authorized to impose, collect, and receive transition charges, until concurrently with the transfer of ETI's rights hereunder to BondCo in conjunction with the issuance of the transition bonds.
51. Appeal of the 36931 Order. If the amount of system restoration costs approved in the 36931 Order is reduced following final completion of the appeals process provided in PURA Section 36.405(g), including Commission decisions on remand and any subsequent appeals thereof, and the timing of that reduction prevents inclusion as a reduction to the system restoration costs that are securitized, in no event shall such reduction affect or reduce in any way transition charges being collected from customers.
52. Regulatory Approvals. All regulatory approvals within the jurisdiction of the Commission that are necessary for the securitization of the transition charges associated with the costs that are the subject of the application, and all related transactions contemplated in the application, are granted.
53. Effect. This Financing Order constitutes a legal financing order for ETI under Subchapter I of Chapter 36 and Subchapter G of Chapter 39 of PURA. The Commission finds this Financing Order complies with the provisions of Subchapter I of Chapter 36 and Subchapter G of Chapter 39 of PURA. A financing order gives rise to rights, interests, obligations and duties as expressed in Subchapter I of Chapter 36 and Subchapter G of Chapter 39 of PURA. It is the Commission's express intent to give rise to those rights, interests, obligations and duties by issuing this Financing Order. ETI and the servicer are directed to take all actions as are required to effectuate the transactions approved in this Financing Order, subject to compliance with the criteria established in this Financing Order.
54. Further Commission Action. The Commission guarantees that it will act pursuant to this Financing Order as expressly authorized by PURA to ensure that expected transition charge revenues are sufficient to pay on a timely basis scheduled principal and interest on the transition bonds issued pursuant to this Financing Order and other costs, including fees and expenses, in connection with the transition bonds.
55. Not Binding Precedent. Entry of this Financing Order does not indicate the Commission's endorsement or approval of any principle or methodology that may underlie the Agreement. Entry of this Financing Order shall not be regarded as a binding holding or precedent as to the appropriateness of any principle underlying the Agreement.
56. All Other Motions Denied. All motions, requests for entry of specific findings of fact and conclusions of law, and any other requests for general or specific relief not expressly granted herein, are denied for want of merit.

        SIGNED AT AUSTIN, TEXAS the 11th day of September 2009.

PUBLIC UTILITY COMMISSION OF TEXAS

/s/ Barry T. Smitherman                                      

BARRY T. SMITHERMAN, CHAIRMAN

/s/ Donna L. Nelson                                            

DONNA L. NELSON, COMMISSIONER

_____________________________________

¹ TEX. UTIL. CODE ANN.  Sections 11.001-66.016 (Vernon 2007 & Supp. 2008).
² Application of Entergy Texas, Inc. for Determination of 2008 System Restoration Costs, Docket No. 36931 (Aug. 18, 2009).
³ Added by Act of April 8, 2009, S.B. 769, 81st Leg., R.S. (to be codified at TEX. UTIL. CODE ANN.  Sections 36.401-.406).
⁴ PURA Section 39.303(a).
⁵ PURA Section 36.401(b)(2).
⁶ PURA Section 39.301.
⁷ Direct Testimony of J. David Wright, at 13-14.
⁸ Id.
⁹ Direct Testimony of J. David Wright, at 9.
^{10 I}d.
¹¹ Id. at 15.
¹² See Act of May 27, 1999, 76th Leg., R.S., ch. 440, 1999 Tex. Gen. Laws 1111 (codified at TEX. UTIL. CODE ch. 39, 40 and 41).
¹³ See PURA Section 39.201, .301-.303.
¹⁴ Act of April 8, 2009, S.B. 769, 81st Leg., R.S. (to be codified at TEX. UTIL. CODE ANN.  Sections 36.401-.406).
¹⁵ Under PURA Section 36.403(e), transition bonds may also be called "system restoration bonds."
¹⁶ PURA Section 39.302(6).
¹⁷ PURA Section 39.302(7).
¹⁸ PURA Section 39.303(a).
¹⁹ PURA Sections 39.301 and 36.401(a).
²⁰ PURA Sections 39.301 and 36.401(b)(2).
²¹ PURA Section 39.301.
²² PURA Section 39.301.
²³ Direct Testimony of J. David Wright at 3-4, 13-14.
²⁴ Id.
²⁵ Id. at 9.
^{26 I}d.
²⁷ PURA Section 39.302(7).
²⁸ PURA Section 39.303(b).
²⁹ PURA Section 39.302(7).
³⁰ PURA Section 39.304(b).
³¹ PURA Section 36.404.
³² PURA Section 39.307.
³³ PURA Section 39.310.>
³⁴ PURA Section 39.304(b).
³⁵ PURA Section 39.305.
³⁶ PURA Section 39.311.
³⁷ PURA Section 39.309(a).
³⁸ PURA Section 39.303(g).
^{39 I}d.
⁴⁰ Direct Testimony of J. David Wright at 5-6.
⁴¹ Direct Testimony of Steven C. McNeal at 8-9; Direct Testimony of J. David Wright at 5-6.
⁴² Direct Testimony of Steven C. McNeal at 32; Schedule 5.
⁴³ PURA Section 36.403(d).
⁴⁴ Id.
⁴⁵ PURA Section 39.301.
⁴⁶ PURA Section 39.303(a).
⁵⁷ See U.S. Dept. of Treasury, Financial Regulatory Reform: A New Foundation (2009).
⁴⁷ The term "assignee" means "any individual, corporation, or other legally recognized entity to which an interest in transition property is transferred, other than as security, including any assignee of that party."  PURA Section 39.302(1).
⁴⁸ Act of June 3, 2009, S.B. 1492, 81st Leg., R.S. (to be codified at TEX. UTIL. CODE ANN.   Sections 36.209(a), 38.073, 39.452).

EX-99

SIDLEY AUSTIN LLP 787 Seventh Avenue New York, NY 10019 (212) 839 5300 (212) 839 5599 fax	BEIJING BRUSSELS CHICAGO DALLAS FRANKFURT GENEVA HONG KONG LONDON	LOS ANGELES NEW YORK SAN FRANCISCO SHANGHAI SINGAPORE SYDNEY TOKYO WASHINGTON, D.C.
	FOUNDED 1866

Exhibit 99.5 Opinion

________ ___, 2009

To Each of the Persons Listed

on Schedule A Attached Hereto

Re: Entergy Texas Restoration Funding, LLC
Senior Secured Transition Bonds - Federal Constitution Issues

Ladies and Gentlemen:

We have served as special counsel to Entergy Texas, Inc., a Texas corporation ("ETI"), in connection with the issuance and sale on the date hereof by Entergy Texas Restoration Funding, LLC, a Delaware limited liability company (the "Issuer"), of $__________ aggregate principal amount of the Issuer's Senior Secured Transition Bonds (the "Bonds"), which are more fully described in the Prospectus Supplement dated ______ __, 2009. The Bonds are being sold pursuant to the provisions of the Underwriting Agreement dated ______ __, 2009 (the "Underwriting Agreement") among ETI, the Issuer and the underwriters named in Schedule I to such Underwriting Agreement. The Bonds are being issued pursuant to the provisions of the Indenture dated as of ______ __, 2009 (the "Indenture"), as supplemented by the Series Supplement dated as of ______ __, 2009 (together with the Indenture, the "Indenture"), between the Issuer and The Bank of New York Mellon, a New York banking corporation, as indenture trustee (the "Indenture Trustee"). Under the Indenture, the Indenture Trustee holds, among other things, transition property as described below (the "Transition Property") as collateral security for the payment of the Bonds. This opinion is being delivered pursuant to Section 9(m) of the Underwriting Agreement.

"Transition property" is defined in the applicable provisions of Chapter 36, Subchapter I of the Texas Utility Code and Chapter 39, Subchapter G of the Texas Utility Code (collectively, the "Securitization Law") each being part of the Texas Public Utility Regulatory Act ("PURA")¹ The Transition Property was created in favor of ETI, pursuant to a financing order issued by the Public Utility Commission of Texas (the "PUCT") on September 11, 2009, in Docket No. 37247 (the "Order"); and the Transition Property was assigned to the Issuer pursuant to the provisions of the Transition Property Purchase and Sale Agreement dated as of ______ __, 2009 between ETI and the Issuer in consideration for the payment by the Issuer to ETI of the proceeds of the sale of the Bonds, net of certain issuance costs. The Transition Property includes the right to impose and receive certain "non-bypassable" charges described in the O rder (the "Charges"). The Charges constitute "transition charges" as defined in the Securitization Law and may be periodically adjusted, in the manner authorized in the Order, in order to enhance the probability that the revenues received by the Issuer from the Charges are sufficient to (i) amortize the Bonds pursuant to the amortization schedule to be followed in accordance with the provisions of the Bonds and the Indenture, (ii) pay interest thereon and related fees and expenses and (iii) maintain the required reserves for the payment of the Bonds.

The Order was issued in response to an application for its issuance that was filed by ETI with the PUCT pursuant to the provisions of PURA. The Order became final and not subject to further appeal on ______ __, 2009. ETI filed its Issuance Advice Letter with the PUCT on ______ __, 2009, as required by the Order, and its Schedule HRC- Tariff relating to the Charges on ______ __, 2009.

Questions Presented and Opinions

Legislative Repeal, Amendment or Revocation

You have requested our opinion as to:

(a) whether the State Pledge creates a contractual relationship between the State of Texas (the "State") and the holders of the Bonds (the "Bondholders");

(b) whether the Bondholders could challenge successfully under the "contract clause" of the United States Constitution (Article I, Section 10 (the "Federal Contract Clause")) the constitutionality of any legislation passed by the Texas legislature (the "Legislature") which becomes law or any action of the PUCT exercising legislative powers ("Legislative Action") that in either case limits, alters, impairs or reduces the value of the Transition Property or the Charges so as to impair (i) the terms of the Indenture or the Bonds or (ii) the rights and remedies of the Bondholders (or the Indenture Trustee acting on their behalf) (any impairment described in clause (i) or (ii) being referred to herein as an "Impairment") prior to the time that the Bonds are fully paid and discharged; ²

(c) whether preliminary injunctive relief would be available under federal law to delay implementation of Legislative Action that limits, alters, impairs or reduces the value of the Transition Property or the Charges so as to cause an Impairment pending final adjudication of a claim challenging such Legislative Action under the Federal Contract Clause and, assuming a favorable final adjudication of such claim, whether relief would be available to prevent permanently the implementation of the challenged Legislative Action; and

(d) whether, under the Fifth Amendment to the United States Constitution (made applicable to the State by the Fourteenth Amendment to the United States Constitution), which provides in part "nor shall private property be taken for public use, without just compensation" (the "Federal Takings Clause"), the State could repeal or amend PURA or take any other action in contravention of the State Pledge without paying just compensation to the Bondholders, as determined by a court of competent jurisdiction, if doing so (a) constituted a permanent appropriation of a substantial property interest of the Bondholders in the Transition Property or denied all economically productive use of the Transition Property; (b) destroyed the Transition Property other than in response to emergency conditions; or (c) substantially reduced, altered or impaired the value of the Transition Property so as to unduly interfere with the reasonable expectations of the Bondholders arising from their investments in the Bonds (a "Taking").

Based upon our review of relevant judicial authority, as set forth in this letter, but subject to the qualifications, limitations and assumptions (including the assumption that any Impairment would be "substantial") set forth in this letter, it is our opinion that a reviewing court of competent jurisdiction, in a properly prepared and presented case:

(i) would conclude that the State Pledge constitutes a contractual relationship between the Bondholders and the State;

(ii) would conclude that, absent a demonstration by the State that an Impairment is necessary to further a significant and legitimate public purpose, the Bondholders (or the Indenture Trustee acting on their behalf) could successfully challenge under the Federal Contract Clause the constitutionality of any Legislative Action determined by such court to limit, alter, impair or reduce the value of the Transition Property or the Charges so as to cause an Impairment prior to the time that the Bonds are fully paid and discharged;

(iii) should conclude that permanent injunctive relief is available under federal law to prevent implementation of Legislative Action hereafter taken and determined by such court to limit, alter, impair or reduce the value of the Transition Property or the Charges so as to cause an Impairment in violation of the Federal Contract Clause; and although sound and substantial arguments support the granting of preliminary injunctive relief, the decision to do so will be in the discretion of the court requested to take such action, which will be exercised on the basis of the considerations discussed in subpart B of Part II below; and

(iv) would conclude that the State would be required to pay just compensation to Bondholders if the State's repeal or amendment of the Securitization Law or taking of any other action in contravention of the State Pledge (a) constituted a permanent appropriation of a substantial property interest of the Bondholders in the Transition Property or denied all economically productive use of the Transition Property; (b) destroyed the Transition Property other than in response to emergency conditions; or (c) substantially reduced, altered or impaired the value of the Transition Property so as to unduly interfere with the reasonable expectations of the Bondholders arising from their investments in the Bonds.

Our opinion in the immediately preceding paragraph (i) is based upon our evaluation of existing judicial decisions and arguments related to the factual circumstances likely to exist at the time of a Federal Contract Clause challenge to Legislative Action; such precedents and such circumstances could change materially from those discussed below in this letter. Accordingly, such opinion is intended to express our belief as to the result that should be obtainable through the proper application of existing judicial decisions in a properly prepared and presented case.

We also note, with respect to such opinion, that existing case law indicates that the State would have to establish that any Impairment is necessary and reasonably tailored to address a significant public purpose, such as remedying or providing relief for a broad, widespread economic or social problem. The cases also indicate that the State's justification would be subjected to a higher degree of scrutiny, and that the State would bear a more substantial burden, if the Legislative Action impairs a contract to which the State is a party (which we believe to be the case here), as contrasted to a contract solely between private parties.

We note that our work in connection with the preparation of this opinion and the issuance of the Bonds did not bring to our attention any reported judicial decision which we believe would provide a basis on which a court would declare the provisions of the Securitization Law to be invalid under the United States Constitution and it is our opinion that the Securitization Law is constitutional in all material respects under the United States Constitution. As discussed in our opinion delivered to you of even date herewith concerning certain bankruptcy matters, however, there is some judicial authority providing a basis for an argument that certain provisions of the Securitization Law with respect to the commingling of funds may be preempted by the United States Bankruptcy Code under the Supremacy Clause (Article VI) of the United States Constitution. Our analysis as to the merits of such an argument is set forth in that other opinion. If such provisions of the Securitization Law were so preempted by the Bankruptcy Code and declared invalid, such preemption would not, in our view, provide a grounds for changing the opinions otherwise set forth herein,

Discussion

I. Protection of State Pledge Under the Federal Contract Clause

Section 39.310 of PURA provides:

Transition bonds are not a debt or obligation of the state and are not a charge on its full faith and credit or taxing power. The state pledges, however, for the benefit and protection of financing parties and the electric utility, that it will not take or permit any action that would impair the value of transition property, or, except as permitted by Section 39.307 [regarding true-ups], reduce, alter, or impair the transition charges to be imposed, collected, and remitted to financing parties, until the principal, interest and premium, and any other charges incurred and contracts to be performed in connection with the related transition bonds have been paid and performed in full. Any party issuing transition bonds is authorized to include this pledge in any documentation relating to those bonds.

PURA  39.310. As authorized by the foregoing statutory provision and the Order, the language of the State Pledge has been included in the Indenture and in the Bonds. Based on our analysis of relevant judicial authority, as set forth below, it is our opinion, subject to all of the qualifications, limitations and assumptions (including the assumption that any Impairment would be "substantial") set forth in this letter, that, absent a demonstration by the State that an Impairment is necessary to further a significant and legitimate public purpose, a reviewing court would conclude that the State Pledge provides a basis upon which the Bondholders (or the Indenture Trustee acting on their behalf) could challenge successfully, under the Federal Contract Clause, the constitutionality of any Legislative Action determined by such court to reduce, alter, or impair the value of the Transition Property or the Charges so as to cause an Impairment prior to the time that the Bonds are fully paid and disc harged.

Article I, Section 10 of the United States Constitution prohibits any state from impairing the "obligation of contracts," whether among private parties or among such state and private parties.³ The general purpose of the Federal Contract Clause is "to encourage trade and credit by promoting confidence in the stability of contractual obligations."⁴ The law is well-settled that "the [Federal] Contract Clause limits the power of the States to modify their own contracts as well as to regulate those between private parties."⁵ Although the Federal Contract Clause appears literally to proscribe any impairment, the United States Supreme Court has made it clear that the proscription is not absolute: "Although the language of the Federal Contract Clause is facially absolute, its prohibition must be accommodated to the inherent police power of the State 'to safeguard the vital interests of its people.'"⁶

In recent cases, the United States Supreme Court has applied a three-part analysis to determine whether a particular legislative action violates the Federal Contract Clause:⁷

(1) whether the legislative action operates as a substantial impairment of a contractual relationship;

(2) assuming such an impairment, whether the legislative action is justified by a significant and legitimate public purpose; and

(3) whether the adjustment of the rights and responsibilities of the contracting parties is reasonable and appropriate given the public purpose behind the legislative action.

The first inquiry contains three components:⁸

(1) does a contractual relationship exist;

(2) does the change in law impair that contractual relationship; and

(3) is the impairment substantial.

In addition, to succeed with a claim under the Federal Contract Clause, a party must show that the contractual relationship is not an invalid attempt to restrict or limit a state's "reserved powers."⁹

The following three subparts address: (i) whether a contract exists between the State and the holders of the Bonds; (ii) if so, whether such contract violates the "reserved powers" doctrine, which would render such contract unenforceable; and (iii) the State's burden in justifying an impairment. The determination of whether particular Legislative Action constitutes a substantial impairment of a particular contract is a fact-specific analysis, and nothing in this letter expresses any opinion as to how a court would resolve the issue of "substantial impairment" with respect to the Order, the Transition Property or the Bonds vis-a-vis a particular Legislative Action. Therefore, we have assumed for purposes of this letter that any Impairment resulting from the Legislative Action being challenged under the Federal Contract Clause would be substantial.¹⁰ In the final subpart of this Part I, we address what relief would be likely to be granted if a Federal Contract Clause chall enge were successfully asserted.

A. Existence of a Contractual Relationship

The courts have recognized the general presumption that, absent some clear indication that a legislature intends to bind itself contractually, "a law is not intended to create private contractual or vested rights but merely declares a policy to be pursued until the legislature shall ordain otherwise."¹¹ This presumption is based on the fact that the legislature's principal function is not to make contracts, but to make laws that establish the policy of the state. Thus, a person asserting the creation of a contract with the State must overcome this presumption.

This general presumption can be overcome where the language of the statute indicates an intention to create contractual rights. In determining whether a contract has been created by statute, "it is of first importance to examine the language of the statute."¹² The courts have ruled that a statute creates a contractual relationship between a state and private parties if the statutory language contains sufficient words of contractual undertaking.¹³ The United States Supreme Court has stated that a contract is created "when the language and circumstances evince a legislative intent to create private rights of a contractual nature enforceable against the State."¹⁴

In U.S. Trust, the United States Supreme Court affirmed the trial court's finding, which was not contested on appeal, that a statutory covenant of two states for the benefit of the holders of certain bonds gave rise to a contractual obligation between such states and the bondholders.¹⁵ The covenant at issue limited the ability of the Port Authority of New York and New Jersey to subsidize rail passenger transportation from revenues and reserves pledged as security for such bonds. In finding the existence of a contract between such states and bondholders, the Court stated "[t]he intent to make a contract is clear from the statutory language: 'The two States covenant and agree with each other and with the holders of any affected bonds. .. .  '"¹⁶ Later, in Nat'l R.R., the Court discussed the U.S. Trust covenant and noted: "[r]esort need not be had to a dictionary or case law to recognize the language of contract" in such covenant.¹⁷

Similarly, in Brand, the United States Supreme Court determined that the Indiana Teachers' Tenure Act created a contract between the state and specified teachers because the statutory language demonstrated a clear legislative intent to contract. The Court based its decision, in part, on the legislature's use of the word "contract" throughout the statute to describe the legal relationship between the state and such teachers.¹⁸

Like the language of the covenant considered in U.S. Trust, the language of the State Pledge plainly manifests the Legislature's intent to bind the State.¹⁹ Indeed, the biggest difference between such language and the U.S. Trust statute is the use of the verb "pledge," rather than "covenant," but that difference is not, in our view, material. The definition of the Legislature's term -- "pledge" -- is "to bind by a promise."²⁰ Accordingly, this slight variation between the State Pledge and the language contained in the U.S. Trust statute appears inconsequential and not to provide a basis for distinguishing the wording of the two statutes. Unlike the statute construed in Nat'l R.R., PURA expressly includes language indicating the State's obligation with respect to transition bond transactions. See PURA  39.310 ("The State pledges . . . that it will not take or permit any action that would im pair the value of transition property . . . until the principal, interest and premium . . . and contracts to be performed in connection with the related transition bonds have been paid and performed in full."). Id. (emphasis added). Moreover, it is important to note that the State also authorizes an issuer of transition bonds to include the State Pledge in contracts with the holders of transition bonds (such as the Bonds). Id.

In summary, the language of the State Pledge supports the conclusion that it constitutes a contractual relationship between the State and the Bondholders. We are not aware of any circumstances surrounding enactment of the Securitization Law that suggests that the Legislature did not intend to bind the State contractually by the State Pledge.²¹

B. Reserved Powers Doctrine

The "reserved powers" doctrine limits the State's ability to bind itself contractually in a manner which surrenders an essential attribute of its sovereignty.²² Under this doctrine, if a contract limits a state's "reserved powers" -- powers that cannot be contracted away -- such contract is void.²³ Although the scope of these "reserved powers" has not been precisely defined by the courts, case law has established that a state cannot contract away its police powers²⁴ or its power of eminent domain.²⁵ In contrast, the United States Supreme Court has stated that a state's "power to enter into effective financial contracts cannot be questioned."²⁶

Under existing case law, the State Pledge does not, in our view, limit any "reserved powers" of the State. The State Pledge does not purport to contract away, or constitute a waiver of, the State's power of eminent domain or otherwise restrict the State's ability to legislate for the public welfare or to exercise its police powers. Through "financing orders" (such as the Order), the State will authorize electric utilities to issue "transition bonds" (such as the Bonds) and pledges not to impair the value of the "transition property" (such as the Transition Property) securing such instruments. In other words, the State Pledge constitutes an agreement made by the State not to impair the financial security for transition bonds in order to foster the capital markets' acceptance of such bonds, which are expressly authorized and will be issued as part of the transition to a new electric utility industry structure. The State Pledge is clearly an inducement offered by t he State to investors to purchase the Bonds. As such, we believe that the State Pledge is akin to the type of "financial contract" involved in U.S. Trust, a promise that revenues and reserves securing the bonds at issue there would not be depleted beyond a certain level.²⁷

C. State's Burden to Justify an Impairment

Any substantial impairment by a state of contractual rights which cannot be upheld under the "reserved powers" doctrine must be justified as a legitimate exercise of the state's police powers in order to be successfully defended against a challenge pursuant to the Federal Contract Clause.²⁸ In Blaisdell,²⁹ referred to by the United States Supreme Court in U.S. Trust as "the leading case in the modern era of [Federal] Contract Clause interpretation,"³⁰ the Court found that the economic exigencies of the time (the Depression) justified a Minnesota law which (i) authorized county courts to extend the period of redemption from foreclosure sales on mortgages previously made "for such additional time as the court may deem to be just and equitable," subject to certain limitations, and (ii) limited actions for deficiency judgments.³¹ The Court stated that the "reserved powers" doctrine could not be construed " to permit the state to adopt as its policy the repudiation of debts or the destruction of contracts or the denial of means to enforce them." On the other hand, the Court also indicated that the Federal Contract Clause could not be construed³²

to prevent limited and temporary interpositions with respect to the enforcements [of contracts] if made necessary by a great public calamity such as fire, flood, or earthquake. [citation omitted] The reservation of state power appropriate to such extraordinary conditions may be deemed to be as much a part of all contracts, as is the reservation of state power to protect the public interest in other situations to which we have referred. And if state power exists to give temporary relief from the enforcement of contracts in the presence of disasters due to physical causes such as fire, flood or earthquake, that power cannot be said to be non-existent when the urgent public need demanding such relief is produced by other and economic causes.

In upholding the Minnesota law, the Court relied on the following: (1) an economic emergency existed which threatened the loss of homes and lands which furnish those persons in possession with necessary shelter and means of subsistence; (2) the law was not enacted for the benefit of particular individuals but for the protection of a basic interest of society; (3) the relief provided by the law was appropriate to the emergency, and could only be granted upon reasonable conditions; (4) the conditions on which the period of redemption was extended by the law did not appear to be unreasonable; and (5) the law was temporary in operation and limited to the emergency on which it was based.³³ In 1983, the United States Supreme Court stated in its Energy Reserves opinion that "a significant and legitimate public purpose" is required to justify a substantial impairment of contract.³⁴ Similarly, the Court had earlier stated that, to be justifiable, an impairment must deal wi th "a broad, generalized economic or social problem." ³⁵

The deference to be given by a court to a legislature's determination of the need for a particular impairment depends on whether the contract is purely private or the state is a contracting party. In a 1987 decision evaluating a state statute under the Federal Contract Clause, the United States Supreme Court noted that it has repeatedly held that, unless a state is a contracting party (which we believe to be the case here), courts should defer to legislative judgment as to the necessity and reasonableness of a particular action.³⁶ Both the Energy Reserves and Spannaus opinions noted, however, that when a state is a contracting party the "stricter standard" of justification set forth in the U.S. Trust opinion is applicable.³⁷ The Energy Reserves Court also noted that "[i]n almost every case, the Court has held a governmental unit to its contractual obligations when it enters financial or other markets." ³⁸

In U.S. Trust, the United States Supreme Court stated that an impairment of a contract with a state "may be constitutional if it is reasonable and necessary to serve an important public purpose."³⁹ The Court further stated, however, that "complete deference to a legislative assessment of reasonableness and necessity is not appropriate."⁴⁰ The "public purposes" advanced as justifications for the contractual impairment were the promotion of mass transportation, energy conservation and environmental protection, and encouragement of the use of public transportation rather than private automobiles.⁴¹ The Court rejected those justifications because repeal of the covenant was "neither necessary to achievement of the plan nor reasonable in light of the circumstances."⁴² The Court stated that a modification less drastic than total repeal would have permitted the states to achieve their plan to improve commuter rail servi ce, and, in fact, the states could have achieved that goal without modifying the covenant at all.⁴³ For example, the states "could discourage automobile use through taxes on gasoline or parking . . . and use the revenues to subsidize mass transit projects."⁴⁴

The U.S. Trust Court contrasted the legislation under consideration with the statute challenged in El Paso v. Simmons,⁴⁵ which limited to five years the reinstatement rights of defaulting purchasers of land from the state. For many years prior to the enactment of this statute, defaulting purchasers had been allowed to reinstate their claims upon written request and payment of delinquent interest, unless the rights of third parties had intervened. In the judgment of the U.S. Trust Court, this older (19th century) statute "had effects that were unforeseen and unintended by the legislature when originally adopted," i.e., "speculators were placed in a position to obtain windfall benefits," and therefore adoption of a statute of limitations was reasonable to restrict parties to gains reasonably expected from the contract when the original statute was adopted.⁴⁶ In contrast, the U.S. Trust Court stated that the need for mass transpo rtation was not a new development and the likelihood that publicly owned commuter railroads would produce substantial deficits was well known when the covenant was adopted.⁴⁷ Although, the Court noted, public perception of the importance of mass transit undoubtedly grew between 1962, when the covenant was adopted, and 1974, when it was repealed, "these concerns were not unknown in 1962, and the subsequent changes were of degree and not of kind . . . . and [did not] cause the covenant to have a substantially different impact in 1974 than when it was adopted in 1962."⁴⁸

The U.S. Trust Court also distinguished its earlier decision in Faitoute Iron & Steel Co. v. City of Asbury Park,⁴⁹ which, according to the Court, was the "only time in this century that alteration of a municipal bond contract has been sustained."⁵⁰ Faitoute involved a state municipal reorganization act under which bankrupt local governments could be placed in receivership by a state agency. Pursuant to that act, the holders of certain municipal revenue bonds received new securities bearing lower interest rates and later maturities. According to the Court in U.S. Trust, the earlier decision rejected the dissenting bondholders' Federal Contract Clause claims on the theory that the "old bonds represented only theoretical rights; as a practical matter the city could not raise its taxes enough to pay off its creditors under the old contract terms," and thus the plan "enabled the city to meet its financial obligations more effect ively."⁵¹ The U.S. Trust Court further quoted Faitoute to the effect that the obligation in that case was "discharged, not impaired" by the plan.⁵²

The Court's opinion in Winstar, even though not a Federal Contract Clause case, is consistent with U.S. Trust in imposing a more rigorous standard of justification where the government is a contracting party. One issue in Winstar was whether the contract claim was barred by the "sovereign acts" doctrine, i.e., the government's "public and general" acts cannot amount to a breach of contract. Although the legislation alleged to constitute a contractual breach had as its purposes "preventing the collapse of the [thrift] industry, attacking the root causes of the crisis, and restoring public confidence",⁵³ the Court held a "sovereign acts" defense was unavailable: "[w]hile our limited enquiry into the background and evolution of the thrift crisis leaves us with the understanding that Congress acted to protect the public in the FIRREA legislation, the extent to which this reform relieved the Government of its own contractual obligations precludes a finding that the statute is a 'public and general' act for purposes of the sovereign acts defense."⁵⁴

Thus, the relevant case law demonstrates that a state bears a substantial burden when attempting to justify an impairment of a contract to which it is a party. A mere recitation that the impairment is in the public interest is insufficient. Instead, a specific and significant state interest must be established, and the impairment must be necessary to further that interest. Furthermore, "a state is not free to impose a drastic impairment when an evident and more moderate course would serve its purposes equally well."⁵⁵

II. Relief Granted in a Federal Contract Clause Challenge

A. Permanent Injunctive Relief

In a Federal Contract Clause challenge to Legislative Action alleged to cause an Impairment, the remedies which the plaintiff would be expected to seek are (i) a declaration of the invalidity of such Legislative Action and (ii) an order permanently enjoining State officials from enforcing the provisions of such Legislative Action; a claim for money damages against the State would appear less likely. Whether such a declaration of invalidity could be obtained will depend on application of the principles discussed in Part I, as well as a demonstration that such law effected a substantial impairment. If such a declaration were obtained, the plaintiff would then have to meet several requirements in order to obtain a permanent injunction. Texas law would govern the requirements for issuance of a permanent injunction if the case were brought in State court,⁵⁶ while federal law would govern those requirements if the case were brought in federal court.⁵⁷ The following discussion relates to federal law only.

Federal case law applies the following test in determining whether to grant permanent injunctive relief: (i) success on the merits of the claim;⁵⁸ (ii) a demonstration of irreparable harm; (iii) a showing of the inadequacy of legal remedies; and (iv) a determination that granting the injunction will not disserve the public interest.⁵⁹ The first requirement, a showing of likely success on the merits of the claim, will have been satisfied by obtaining the aforementioned declaration of the invalidity of such Legislative Action.⁶⁰ The party seeking a permanent injunction must also establish that it has no adequate remedy at law, for example, money damages. It seems doubtful that the Bondholders (or the Indenture Trustee acting on their behalf) could obtain adequate money damages from the State or its officials.⁶¹ Such party must further show that without permanent injunctive relief, it would suffer irreparable harm. The "irreparable harm" and "i nadequate legal remedies" tests are closely related. However, one way to distinguish the two tests is to interpret the "irreparable harm" requirement to mean that the wrongful act be of a continuing nature, as opposed to a one-time denial of rights.⁶² It appears to us that any substantial Impairment would, in all likelihood, constitute a transgression of a continuing nature supporting the grant of permanent injunctive relief. For example, the Fifth Circuit has acknowledged that a federal court may enjoin state officials from enforcing an unconstitutional statute under certain "unusual" circumstances that require equitable relief. In Let's Help Florida v. McCrary,⁶³ the Fifth Circuit upheld the issuance of an injunction against enforcement of two statutes limiting political contributions because the timing of the next election, which was to be held a few weeks later, meant that the plaintiffs would suffer an irreparable loss of their First Amendment ri ghts if they were barred from making contributions that they were constitutionally permitted to make. Had the court refused to provide equitable relief while awaiting a trial on the merits, the plaintiffs would have permanently lost their opportunity to affect the outcome of that election through their contributions. The court ruled that such a situation constituted the necessary unusual circumstances that could justify equitable relief. For the reasons stated above, we believe that a substantial Impairment in this case would constitute the unusual circumstances that are required for the grant of permanent injunctive relief from a court sitting in the Fifth Circuit.

B. Preliminary Injunctive Relief

Whether a preliminary injunction delaying implementation of Legislative Action being challenged under the Federal Contract Clause as a substantial Impairment could be obtained by the Bondholders (or the Indenture Trustee acting on their behalf) pending an adjudication on the merits of such claim will depend on several considerations. As noted in subpart B of this Part II with respect to the availability of permanent injunctive relief, an action challenging such Legislative Action, and therefore an accompanying request for preliminary injunctive relief, could be brought in either a Texas court or a federal court, and Texas law or federal law, respectively, would provide the basis for determining whether such relief should be granted.⁶⁴ The following discussion relates to federal law only.

The function of preliminary injunctive relief is to preserve the latest uncontested status quo prior to the action which is the subject of the legal challenge.⁶⁵ The latest uncontested status quo with respect to the Bonds prior to the challenged Legislative Action would appear to be the continued effectiveness of the Order and the validity of the Transition Property and Charges. The factors considered by federal courts in ruling on a request for preliminary injunctive relief are: (i) the party seeking relief must show a substantial likelihood of success on the merits; (ii) such party will suffer a substantial threat of irreparable injury if the preliminary injunction is not granted; (iii) the threatened injury to the plaintiff outweighs the injury the injunction would cause to the defendant; and (iv) the injunction must not be adverse to the public interest.⁶⁶ The third part of the test, the balancing of hardships, is often done on a "sliding scale" basis: the showing o f hardship required by a party seeking relief is inversely related to the strength on the merits of such party's claims.⁶⁷

Assuming that the injunction is not adverse to the public interest, that the Federal Contract Clause claim appears to the court to be meritorious (based on the application of the principles discussed in Part I), and further assuming that the challenged Legislative Action effects a substantial Impairment, the requirement of likelihood of success on the merits should be met. However, decisions in several federal courts have found that a delay in the scheduled receipt of payments until final judgment is not the type of "irreparable harm" which a preliminary injunction seeks to prevent, absent countervailing circumstances -- such as the possibility that such delay could result in the insolvency or the destruction of the business of the party seeking the preliminary injunction or could result in the other party's insolvency (thereby rendering a judgment worthless).⁶⁸ Notwithstanding these decisions, there are arguments why payment delays on the Bonds should be accepted as "irreparab le harm," and why the Bondholders would experience greater harm if preliminary injunctive relief were denied than any other party would suffer if it were granted. For example, if imposition and collection of the Charges, and accordingly payments to the Issuer, were stopped or reduced, the ratings on the Bonds would likely be downgraded, causing a loss of value in the Bonds and possibly causing institutional Bondholders to sell their Bonds at depressed market prices, and Bondholders could experience delays or omissions in the receipt of payments of interest or principal on their Bonds. In addition, any such loss on sale or additional interest due the Bondholders as the result of the payment interruption probably could not be recovered from the likely defendant (the State) in the proceeding on the merits.

III. Federal Takings Clause

A. Analysis

The Federal Takings Clause --- "nor shall private property be taken for public use, without just compensation." --- is made applicable to state action via the Fourteenth Amendment.⁶⁹ The Federal Takings Clause covers both tangible and intangible property.⁷⁰ Rights under contracts can be property for purposes of the Federal Takings Clause,⁷¹ but legislation that "disregards or destroys" contract rights does not always constitute a taking.⁷² Where intangible property is at issue, state law will determine whether a property right exists. Based on the opinion of Clark, Thomas & Winters, a Professional Corporation of even date herewith with respect to constitutional issues under the "takings" clause of the Texas State Constitution, it is our understanding that the Transition Property would be treated as a property interest under Texas law, and it is therefore our belief that the Transition Property would constitute a cognizable property interest for purposes of the Federal Takings Clause. If a court determines that an intangible asset is property, a court will next look to whether the owner of the property interest had a "reasonable investment-backed expectation" that the property right would be protected.⁷³

The United States Supreme Court has suggested that the Federal Takings Clause may be implicated by a diverse range of government actions, including when the government (a) permanently appropriates or denies all economically productive use of property;⁷⁴ (b) destroys property other than in response to emergency conditions;⁷⁵ or (c) reduces, alters or impairs the value of property so as to unduly interfere with reasonable investment-backed expectations.⁷⁶ In determining what is an undue interference, a court would consider the nature of the governmental action and weigh the public purpose served thereby against the degree to which it interferes with legitimate property interests and distinct investment-backed expectations of the Bondholders.

In Lingle,⁷⁷ the Supreme Court identified two categories where regulatory action constitutes per se takings - - regulations that involve a permanent physical invasion of property and regulations that deprive the owner of all economically beneficial use of the property - - plus a third category of other regulatory takings. In cases in this third category, the Supreme Court has eschewed any set formula and has relied instead on "ad hoc, factual inquiries into the circumstances of each particular case."⁷⁸ According to the Connolly decision, a regulation constitutes a taking if it denies a property owner "economically viable use" of that property, which is determined by three factors: (i) the character of the governmental action; (ii) the economic impact of the regulation on the claimant; and (iii) the extent to which the regulation has interfered with distinct investment-backed expectations. ⁷⁹

The first factor described above requires the court to examine "the purpose and importance of the public interest reflected in the regulatory imposition" and "to balance the liberty interest of the private property owner against the Government's need to protect the public interest through imposition of the restraint." ⁸⁰

The second factor described above incorporates the principle enunciated by Justice Holmes: "Government hardly could go on if to some extent values incident to property could not be diminished without paying for every such change in the general law."⁸¹ "Not every destruction of injury to property by governmental action has been held to be a 'taking' in the constitutional sense."⁸² Diminution in property value alone, thus, does not constitute a taking; there must be serious economic harm.

The third factor described above is "a way of limiting recovery under the Federal Takings Clause to owners who could demonstrate that they bought their property in reliance on a state of affairs that did not include the challenged regulatory regime."⁸³ The burden of showing such interference is a heavy one.⁸⁴ Thus, a reasonable investment-backed expectation "must be more than a 'unilateral expectation or an abstract need."⁸⁵ Further, "[l]egislation adjusting rights and burdens is not unlawful solely because it upsets otherwise settled expectations."⁸⁶ "[T]he fact that legislation disregards or destroys existing contractual rights does not always transform the regulation into an illegal taking. .. .. This is not to say that contractual rights are never property rights or that the Government may always take them for its own benefit without compensation."⁸⁷ In order to sustain a claim under the Federal Takings Clause, the private party must show that it had a "reasonable expectation" at the time the contract was entered that it "would proceed without possible hindrance" arising from changes in government policy.⁸⁸ With respect to this third factor, we note that the Securitization Law expressly provides for the creation of transition property in connection with the issuance of the Bonds, and further provides that the Order, once final, is irrevocable. Moreover, through the State Pledge, the State has pledged, "for the benefit and protection of financing parties" not to impair the value of such Transition Property. Given the foregoing, we believe it would be hard to dispute that Bondholders have reasonable investment expectations with resp ect to their investments in the Bonds.

We are not aware of any case law which addresses the applicability of the Federal Takings Clause in the context of the proper exercise by a state of its police power to abrogate or impair contracts otherwise binding on the state. The outcome of any claim that interference by the State with the value of the Transition Property without compensation is unconstitutional, would likely depend on factors such as the State interest furthered by that interference and the extent of financial loss to Bondholders caused by that interference, as well as the extent to which courts would consider that Bondholders had a reasonable expectation that changes in government policy and regulation would not interfere with their investment.

B. Conclusion

Based on our analysis of relevant judicial authority, as set forth above, it is our opinion, subject to all of the qualifications, limitations and assumptions set forth in this letter, that, under the Federal Takings Clause, a reviewing court would hold that the State would be required to pay just compensation to Bondholders if the State's repeal or amendment of the Securitization Law or taking of any other action by the State in contravention of the State Pledge (a) constituted a permanent appropriation of a substantial property interest of the Bondholders in the Transition Property or denied all economically productive use of the Transition Property; (b) destroyed the Transition Property other than in response to emergency conditions; or (c) substantially reduced, altered or impaired the value of the Transition Property so as to unduly interfere with the reasonable expectations of the Bondholders arising from their investments in the Bonds. As noted earlier, in determining what is an undue inte rference, a court would consider the nature of the governmental action and weigh the public purpose served thereby against the degree to which it interferes with the legitimate property interests and distinct investment-backed expectations of the Bondholders. There can be no assurance, however, that any such award of just compensation would be sufficient to pay the full amount of principal of and interest on the Bonds. ⁸⁹

* * * * *

We note that judicial analysis of issues relating to the Federal Contract Clause and the retroactive effect to be given to judicial decisions has typically proceeded on a case-by-case basis and that the court's determination, in most instances, is usually strongly influenced by the facts and circumstances of the particular case. We further note that there are no reported controlling judicial precedents of which we are aware directly on point. Our analysis is necessarily a reasoned application of judicial decisions involving similar or analogous circumstances. Moreover, the application of equitable principles (including the availability of injunctive relief or the issuance of a stay pending appeal) is subject to the discretion of the court which is asked to apply them. We cannot predict the facts and circumstances which will be present in the future and may be relevant to the exercise of such discretion. Consequently, there can be no assurance that a court will follow our reasoning or reach the conclus ions which we believe current judicial precedent supports. It is our and your understanding that none of the foregoing opinions is intended to be a guaranty as to what a particular court would actually hold; rather each such opinion is only an expression as to the decision a court ought to reach if the issue were properly prepared and presented to it and the court followed what we believe to be the applicable legal principles under existing judicial precedent. The recipients of this letter should take these considerations into account in analyzing the risks associated with the subject transaction.

Any opinion expressed herein with respect to enforceability is subject to the qualifications, limitations and assumptions set forth in the Bankruptcy Opinion.

This letter is limited to the federal laws of the United States of America.

This letter is being delivered solely for the benefit of the persons to whom it is addressed; accordingly, it may not be quoted, filed with any governmental authority or other regulatory agency or otherwise circulated or utilized for any other purpose without our prior written consent. We hereby consent to the filing of this letter as an exhibit to the Form 8-K filed on ______ __, 2009 with respect to the above-referenced Registration Statement filed on Form S-3 with the Securities and Exchange Commission (the "Commission") under the Securities Act of 1933, as amended (the "Securities Act"), relating to the registration of the Bonds and to all references to our firm included in or made a part of the Registration Statement. In giving the foregoing consents, we do not thereby admit that we are within the category of persons whose consent is required under Section 7 of the Securities Act or the related rules and regulations of the Commission. We assume no obligation to update or supple ment this letter to reflect any facts or circumstances which may hereafter come to our attention with respect to the opinions or statements expressed above, including any changes in applicable law which may hereafter occur.

Very truly yours,

SCHEDULE A

The Bank of New York Mellon
101 Barclay Street, Floor 4W
New York, New York 10286

Moody's Investors Service, Inc.
7 World Trade Center at 250 Greenwich Street
New York, New York 10007

Standard & Poor's Ratings Services,
a Standard & Poor's Financial Services LLC business
55 Water Street, 41^st Floor
New York, New York 10041

Fitch Ratings
One State Street Plaza
New York, New York 10004

Morgan Stanley & Co. Incorporated
1585 Broadway
New York, New York 10036

Citigroup Global Markets Inc.
388 Greenwich Street
New York, New York 10013

Goldman, Sachs & Co.
1 New York Plaza
New York, New York 10004

RBS Securities Inc.
600 Washington Boulevard
Stamford, Connecticut 06901

Loop Capital Markets, LLC
200 West Jackson
Chicago, Illinois 60606

_______________________________________

1. Public Utility Regulatory Act, Tex. Util. Code Ann.  11.001-66.016 (Vernon 2007 & Supp. 2008).
2. As discussed in more detail in the opinion of Clark, Thomas & Winters, a Professional Corporation of even date herewith, the PUCT has acknowledged that it is bound by the State Pledge. Assuming that the PUCT is bound by the State Pledge as a matter of Texas law, a breach of the State Pledge by the PUCT exercising legislative powers would be treated the same as a breach of the State Pledge by the Legislature under the Federal Contract Clause.
3. Article I, Section 10, provides, in relevant part, "No State shall . . . pass any bill of attainder, ex post facto law, or law impairing the obligation of contracts, . . . ." U.S. Const. art. I,  10. Please see opinion of Clark, Thomas & Winters, a Professional Corporation, of even date herewith, with respect to the Contract Clause in the Texas Constitution.
4. See United States Trust Co. of New York v. New Jersey, 431 U.S. 1, 15 (1977) (cited in the text as "U.S. Trust").
5. Id. at 17 (citations omitted).
6. Energy Reserves Group, Inc. v. Kansas Power & Light Co., 459 U.S. 400, 410 (1983) (cited in the text as "Energy Reserves") (citing Home Bldg. & Loan Ass'n v. Blaisdell, 290 U.S. 398, 434 (1934) (cited in the text as "Blaisdell")).
7. Energy Reserves Group, Inc. v. Kansas Power & Light Co., 459 U.S. 400, 411-12 (1983). See also Toledo Area AFL-CIO Council v. Pizza, 154 F.3d 307, 323 (6th Cir. 1998) (stating the three-part analysis).
8. General Motors Corp. v. Romein, 503 U.S. 181, 186 (1991).
9. See discussion under subpart B of this Part I.
10. We note, however, that in U.S. Trust the United States Supreme Court found a substantial impairment where the States of New York and New Jersey repealed outright an "important security provision" securing repayment of bonds without any form of compensation to the bondholders, even in the absence of a finding of the extent of financial loss suffered by the bondholders as a result of the repeal. 431 U.S. 1, 19 (1977). See also Home Bldg. & Loan Ass'n v. Blaisdell, 290 U.S. 398, 429-35 (1934).
11. National R.R. Passenger Corp. v. Atchison, Topeka & Santa Fe Ry. Co., 470 U.S. 451, 466 (1985) (cited in the text as "Nat'l R.R.") (quoting Dodge v. Board of Educ., 302 U.S. 74, 78 (1937) (cited in the text as "Dodge")).
12. Dodge v. Board of Educ., 302 U.S. 74, 78 (1937).
13. See Indiana ex rel. Anderson v. Brand, 303 U.S. 95, 104-05 (1938) (cited in the text as "Brand") (noting "the cardinal inquiry is as to the terms of the statute supposed to create such a contract"); United States Trust Co. of New York v. New Jersey, 431 U.S. 1, 18 (1977).
14. United States Trust Co. of New York v. New Jersey, 431 U.S. 1, 17 n.14 (1977).
15. Id. at 18.
16. Id. at 17. Although the issue of whether a contract existed between such states and the bondholders was never disputed on appeal, the Court reviewed the language of the covenant and the circumstances surrounding the covenant, and stated, "We therefore have no doubt that the 1962 covenant has been properly characterized as a contractual obligation of the two States." Id. at 18.
17. See National R.R. Passenger Corp. v. Atchison, Topeka & Santa Fe Ry. Co., 470 U.S. 451, 470 (1985).
18. Indiana ex rel. Anderson v. Brand, 303 U.S. 95, 105 (1938). However, the mere use of the word "contract" in a statute will not necessarily evince the requisite legislative intent. As the Court cautioned in Nat'l R.R., the use of the word "contract" alone would not signify the existence of a contract with the government. National R.R. Passenger Corp. v. Atchison, Topeka & Santa Fe Ry. Co., 470 U.S. 451, 470 (1985). In Nat'l R.R., the Court found that use of the word "contract" in the Rail Passenger Service Act defined only the relationship between the newly-created nongovernmental corporation (Amtrak) and the railroads, not the relationship between the United States and the railroads. The Court determined that "[l]egislation outlining the terms on which private parties may execute contracts does not on its own constitute a statutory contract." Id., at 467.
19. It could be contended that the factual situation in the U.S. Trust case is distinguishable from the factual situation surrounding the issuance of the Bonds. In U.S. Trust, the bonds were issued by the Port Authority -- a governmental agency -- while the Bonds are being issued by a private entity. However, PURA dictates that a utility must obtain a financing order before any "transition bonds" such as the Bonds are issued. The authority to issue such an order rests with the State, acting through the PUCT, and therefore the issuance of the Bonds is state-sanctioned in a manner closely analogous to the situation in U.S. Trust.
20. Webster's New World Dictionary 573 (2d ed. 1982).
21. In addition to the State Pledge, the PUCT's financing order contains the following language: "The Commission guarantees that it will act pursuant to this Financing Order as expressly authorized by PURA to ensure that expected transition charge revenues are sufficient to pay on a timely basis scheduled principal and interest on the transition bonds issued pursuant to this Financing Order and other costs, including fees and expenses, in connection with the transition bonds." We refer you to the opinion with respect to constitutional law issues of Clark, Thomas & Winters, a Professional Corporation of even date herewith for a discussion of this language.
22. United States Trust Co. of New York v. New Jersey, 431 U.S. 1, 23 (1977).
23. Id. See generally United States v. Winstar Corp., 518 U.S. 839, 888-90 (1996) (cited in the text as "Winstar").
24. Stone v. Mississippi, 101 U.S. 814, 817 (1880).
25. West River Bridge Co. v. Dix, 47 U.S. 507, 525-26 (1848).
26. United States Trust Co. of New York v. New Jersey, 431 U.S. 1, 24 (1977).
27. Id. at 25.
28. Energy Reserves Group, Inc. v. Kansas Power & Light Co., 459 U.S. 400, 411-12 (1983).
29. Home Bldg. & Loan Ass'n v. Blaisdell, 290 U.S. 398 (1934).
30. United States Trust Co. of New York v. New Jersey, 431 U.S. 1, 15 (1977).
31. The mortgagor was required to continue to pay the reasonable income or rental value of the property, as determined by the court, toward payment of taxes, insurance, interest and principal. The law stated that it was to remain in effect only during the current emergency and no later than May 1, 1935; no redemption period could be extended beyond the expiration of the law. Home Bldg. & Loan Ass'n v. Blaisdell, 290 U.S. at 415-18.
32. Id. at 439-40.
33. Id. at 444-47. Contemporaneous cases in which the United States Supreme Court struck down laws passed in response to an economic emergency reinforce the notion that, to be justified, the impairment must be a reasonable and specific response to the conditions. See Treigle v. Acme Homestead Ass'n, 297 U.S. 189 (1936); W.B. Worthen Co. v. Kavanaugh, 295 U.S. 56 (1935) (cited in the text as "Worthen"); W.B. Worthen Co. v. Thomas, 292 U.S. 426 (1934).
34. Energy Reserves Group, Inc. v. Kansas Power & Light Co., 459 U.S. 400, 411 (1983).
35. Allied Structural Steel Co. v. Spannaus, 438 U.S. 234, 250 (1978) (cited in the text as "Spannaus").
36. Keystone Bituminous Coat Ass'n v. DeBenedictis, 480 U.S. 470 (1987) (cited in the text as "DeBenedictis"). The decision involved a 1966 Pennsylvania law which authorized a state agency to revoke a coal mine operator's mining permit if removal of the coal caused damage to a structure or area protected by the law and the operator had not within six months taken certain remedial action. Several mine operators claimed that the law impaired their rights to enforce contractual waivers by the owners of the affected surface rights of any claims for liability due to surface damage. While agreeing that the 1966 law operated as a substantial impairment of the operators' contracts, the Court held that the state had a strong public interest in preventing the damage caused by underground mining, "the environmental effect of which transcends any private agreement between contracting parties." 480 U.S. at 505. Since 1966, the operators had conducted mining operations under approximately 14,000 structures protected by the law. The Court noted the "devastating effects" of subsidence caused by underground mining, including substantial damage to foundations, walls and other structural members, and the integrity of houses and buildings; sinkholes which made land difficult or impossible to develop or farm; and loss of groundwater and surface ponds. Id. at 475. The Court concluded that the law "plainly survives scrutiny under our standards for evaluating impairments of private contracts." Id. at 505-06.
37. Energy Reserves Group, Inc. v. Kansas Power & Light Co., 459 U.S. 400, 412-13 n.14 (1983); Allied Structural Steel Co. v. Spannaus, 438 U.S. 234, 244 n.15 (1978). See also United States v. Winstar Corp., 518 U.S. 839, 876 (1996) (noting "heightened Contract Clause scrutiny when States abrogate their own contractual obligations").
38. Energy Reserves Group, Inc. v. Kansas Power & Light Co., 459 U.S. 400, 412 n.14 (1983) (citing United States Trust Co. of New York v. New Jersey, 431 U.S. 1 (1977); W.B. Worthen Co. v. Kavanaugh, 295 U.S. 56 (1935); and Murray v. Charleston, 96 U.S. 432 (1878) (cited in the text as "Murray")). In Worthen, the United States Supreme Court reversed a decision of the Arkansas Supreme Court upholding the validity of legislative enactments which, in the words of the former, take "from [the] mortgage [securing bonds issued by municipal improvement districts pursuant to state law] the quality of an acceptable investment for a rational investor" by making it much more difficult and time consuming to foreclose upon the collateral posted as security for the mortgage. 295 U.S. at 60. Such enactments were accompanied by a legislative "declaration of an emergency, which was stated to endanger the peace, health and safety of a multitude of citizens." In Murray, the United States Supreme Court reversed a judgment of the Supreme Court of South Carolina upholding an ordinance of the City of Charleston which permitted the City to withhold, as a tax, a portion of the interest that was otherwise payable with respect to bonds issued by the City. This "tax" was held to violate the Federal Contract Clause: "no municipality of a State can, by its own ordinances, under the guise of taxation, relieve itself from performing to the letter all that it has expressly promised to its creditors." 96 U.S. at 448.
39. United States Trust Co. of New York v. New Jersey, 431 U.S. 1, 25 (1977).
40. Id. at 26.
41. Id. at 28-29. The Court noted that when the bills to repeal the covenant were pending "a national energy crisis was developing." Id. at 13-14.
42. Id. at 29.
43. Id. at 30.
44. Id. at 30 n.29.
45. El Paso v. Simmons, 379 U.S. 497 (1965).
46. United States Trust Co. of New York v. New Jersey, 431 U.S. 1, 31 (1977).
47. Id. at 31-32.
48. Id. at 32.
49. Faitoute Iron & Steel Co. v. City of Asbury Park, 316 U.S. 502 (1942) (cited in the text as "Faitoute").
50. United States Trust Co. of New York v. New Jersey, 431 U.S. 1, 27 (1977).
51. Id. at 28.
52. Id. (quoting 316 U.S. at 511).
53. United States v. Winstar Corp., 518 U.S. 839, 856 (1996).
54. Id. at 903.
55. United States Trust Co. of New York v. New Jersey, 431 U.S. 1, 31 (1977).
56. Please see the [Clark, Thomas & Winters, a Professional Corporation] opinion, of even date herewith, for an analysis of Texas law and permanent injunctive relief.
57. However, if the case is brought to federal court via diversity jurisdiction, it is possible that the federal court would use state law in deciding whether or not to issue an injunction.
58. Sierra Club, Lone Star Chapter v. FDIC, 992 F.2d 545, 551 (5th Cir.), reh'g denied, 3 F.3d 441 (5th Cir. 1993).
59. Beacon Theatres, Inc. v. Westover, 359 U.S. 500, 506-07 (1959); Calmes v. United States, 926 F. Supp. 582, 591 (N.D. Tex. 1996); Wenner v. Texas Lottery Comm'n, 123 F.3d 321, 325 (5th Cir. 1997).
60. Calmes, 926 F. Supp. at 591.
61. Examples of hurdles to the receipt of such damages might include, but are not limited to, State sovereign immunity to suit in a particular forum, State administrative procedures for filing claims, legislative refusal to appropriate funds to pay a damages award, and the limited funds available to State officials.
62. United States v. W.T. Grant Co., 345 U.S. 629, 633 (1953); Posada v. Lamb County, Texas, 716 F.2d 1066, 1070 (5th Cir. 1983) (". . . to win [a permanent injunction], a petitioner must show a clear threat of continuing illegality portending immediate harmful consequences irreparable in any other manner") (emphasis added); Shanks v. City of Dallas, 752 F.2d 1092, 1097 (5th Cir. 1985).
63. 61 F.2d 195, 199 (5th Cir. 1980) ("A federal court may enjoin state officials from enforcing an unconstitutional statute. . . . An injunction is proper in this case because no legal remedy could correct the irreparable injury to plaintiffs' first amendment rights, important for an election only weeks away."); but see Wightman v. Texas Supreme Court, 84 F.3d 188, 191 (5th Cir. 1996) ("The possible unconstitutionality of a statute 'on its face' does not in itself justify an injunction against good faith attempts to enforce it," especially absent "any showing of bad faith, harassment, or any other unusual circumstance that would call for equitable relief.") (quoting Younger v. Harris, 401 U.S. 37, 53-54 (1971)).
64. Once again, if the case enters federal court via diversity jurisdiction, the federal court may use Texas law in deciding whether to issue an injunction.
65. Univ. of Texas v. Camenisch, 451 U.S. 390, 395 (1981) ("The purpose of a preliminary injunction is merely to preserve the relative positions of the parties until a trial on the merits can be held."); Wenner, 123 F.3d at 326 ("Preliminary injunctions commonly favor the status quo and seek to maintain things in their initial condition so far as possible until after a full hearing permits final relief to be fashioned.").
66. Sierra Club v. Fed. Deposit Ins. Corp., 992 F.2d 545, 551 (5th Cir. 1993); DFW Vending, Inc. v. Jefferson County, Texas, 991 F. Supp. 578, 587 (E.D. Tex. 1998).
67. Texas v. Seatrain Int'l, S.A., 518 F.2d 175, 180 (5th Cir. 1975) ("[the inability to prove with certainty eventual success on the merits] does not foreclose the possibility that temporary restraint may be appropriate. . . . the importance and nature of the requirement can vary significantly, depending upon the magnitude of the injury which would be suffered . . . and the relative balance of the threatened hardship faced by each of the parties. . . . [N]one of the four prerequisites has a fixed quantitative value. Rather, a sliding scale is utilized, which takes into account the intensity of each in a given calculus."); Hunt v. Commodity Futures Trading Comm'n, 93 B.R. 484, 492 (N.D. Tex 1988); Apple Barrel Productions, Inc. v. Beard, 730 F.2d 384, 398, n.11 (5th Cir. 1984).
68. See, e.g., Centurion Reinsurance Co. v. Singer, 810 F.2d 140 (7th Cir. 1987); Roland Mach. Co. v. Dresser Indus., Inc., 749 F.2d 380, 386 and n.1 (7th Cir. 1984). Federal courts with jurisdiction over Texas have similar, if less explicit, case law. See also, Federal Savings & Loan Insurance Corp. v. Dixon, 835 F.2d 554, 560 (5th Cir. 1987) (holding that while, generally, injunctions are not permissible to secure post-judgment damages, because such an injunction would be acting as a prejudgment attachment, which is subject to state law under Fed. R. Civ. P. 64, equitable powers are "extremely flexible" and an injunction may issue under some circumstances in order to prevent difficulty in collecting a damage judgment, such as an injunction preventing a corporate defendant from selling its assets in such a way that it could be impossible for a winning plaintiff to subsequently collect those assets).
69. Webb's Fabulous Pharmacies v. Beckwith, 449 U.S. 155, 160 (1980).
70. Ruckelshaus v. Monsanto Co., 467 U.S. 986, 1003 (1984). The Monsanto case involved a federal law requiring disclosure of certain data related to Monsanto products. The Supreme Court was asked to determine whether Monsanto had a property interest in this information as a trade secret and whether that property interest was protected under the Federal Takings Clause. One focus of the Supreme Court's analysis was whether Monsanto had a reasonable investment-backed expectation in the privacy of this property. The Court concluded that at most times prior to the enactment of the law and at all times after the enactment of the law, Monsanto did not have and would not have a reasonable expectation that its information would be kept private. However, the Court noted for a six year period from 1972 to 1978, federal law had provided that an entity submitting information to the government could designate such information as a trade secret and that federal law guaranteed such information would be kept a secret.  Accordingly, the Court concluded that with respect to such information designated as a trade secret from 1972 to 1978, Monsanto had a property interest that was protected by the Federal Takings Clause.
71. Lynch v. United States, 292 U.S. 571, 577 (1934).
72. Connolly v. Pension Benefit Guar. Corp., 475 U.S. 211, 224 (1986).
73. 2 Rotunda and Nowack, Treatise on Constitutional Law: Substance and Procedure 702 (3d ed. 1999).
74. Connolly v. Pension Benefit Guar. Corp., 475 U.S. 211, 225 (1986) (noting that in that case the government did not "permanently appropriate" any of the employer's assets for its own use) (cited in the text as "Connolly"); Palazzolo v. Rhode Island, 533 U.S. 606, 617 (2001)("regulation which 'denies all economically beneficial or productive use of land' will require compensation under the Takings Clause") (citing Lucas v. South Carolina Coastal Council, 505 U.S. 1003, 1015 (1992), which notes that for personal property, however, some regulations that limit use of personal property may not be compensable takings given the state's "traditionally high degree of economic control over commercial dealings"); United States v. Security Indus. Bank, 459 U.S. 70, 77 (1982) (citing Armstrong v. United States, 364 U.S. 40, 48 (1960) ("The total destruction by the Government of all values of these liens, which constitute compensable property, has every possible element of a Fifth Amendment 'taking' and is not a mere 'consequential incidence' of a valid regulatory measure")); See also Lingle v. Chevron USA, 544 U.S. 528, 538 (2005) (noting that regulatory action will be deemed a per se taking of property if it requires an owner to suffer a "permanent" physical invasion of property or completely deprives the owner of all economically beneficial use of such property) (cited in the text as "Lingle"). The Supreme Court has also held that legislation that terminates a property interest can be considered a taking for which compensation is due. Hodel v. Irving, 481 U.S. 704 (federal law escheating certain fractional interests in tribal property to an Indian tribe was a compensable taking). See also 2 Rotunda and Nowack, Treatise on Constitutional Law: Substance and Procedure 746 (3d ed. 1999).
75. The emergency exception to the just compensation requirement of the Federal Takings Clause appears in several Supreme Court decisions. See generally Rotunda and Novack Volume 2 at 738. Several of these decisions involve the government's activities during military hostilities. See, e.g., United States v. Caltex, Inc., 344 U.S. 149 (1952) (no compensable taking when Army destroys property to prevent enemy forces from obtaining it); United States v. Cent. Eureka Mining Co., 357 U.S. 155 (1958) (no compensable taking when government forces gold mines to cease operations to conserve resources for war effort); Nat'l Bd. of Young Men's Christian Ass'ns v. United States, 395 U.S. 85 (1969) (no compensable taking where private property destroyed when US troops take shelter there). Compare United States v. Pewee Coal Co., 341 U.S. 114 (1951)(compensable taking when occupation is physical rather than regulatory, emergency notwithstanding). The emergency exception is not limited to wartime activities, however. See, e.g., Miller v. Schoene, 276 U.S. 272 (1928)(no compensable taking where trees destroyed to prevent disease from spreading to other trees); Dames & Moore v. Regan, 453 U.S. 654 (1981) (no compensable taking resulting from executive order nullifying attachments on Iranian assets and permitting those assets to be transferred out of the country). The emergency exception is not limited to the physical destruction of property by the government, see Cent. Eureka Mining, 357 U.S. at 168, but the Supreme Court has suggested it does not apply to physical occupation of property, see Pewee, 341 U.S. at 116-17, or permanent appropriation, see Lingle, 544 U.S. at 538, both of which constitute a per se taking. Moreover, we believe that a permanent appropriation of property by the government would be generally inconsistent with the concept of an "emergency". See Cent. Eureka Mining, 357 U.S. at 168 (describing wartime restrictions as "temporary in character").
76. Connolly v. Pension Benefit Guar. Corp., 475 U.S. 211, 225 (1986)(nothing that one point of Federal Takings Clause analysis is "the extent to which the regulation has interfered with distinct investment-backed expectations")) (citing Penn Cent. Transp. Co. v. New York, 438 U.S. 104, 124 (1978)); United States v. Cent. Eureka Mining Co., 357 U.S. 155 (1958), rehearing denied 358 U.S. 858 (1958) (no compensable taking when government forces gold mines to cease operations to conserve resources for war effort).
77. Lingle v. Chevron USA, 544 U.S. 528 (2005).
78. Connolly v. Pension Benefit Guar. Corp., 475 U.S. 211, 224 (1986); Penn Central Transp. Co. v. City of New York, 438 U.S. 104, 124 (1978).
79. Connolly v. Pension Benefit Guar. Corp., 475 U.S. 211, 224 (1986) (citing Penn Central Transp. Co. v. New York, 438 U.S. 104, 124 (1978)).
80. Loveladies Harbor, Inc. v. United States, 28 F.3d 1171, 1176 (Fed. Cir. 1994); see Keystone Bituminous Coal Ass'n v. DeBenedictis, 480 U.S. 470 (1987).
81. Penn Coal Co. v. Mahon, 260 U.S. 393 (1922); Loveladies Harbor, Inc. v. United States, 28 F.3d 1171, 1176-77 (Fed. Cir. 1994).
82. Armstrong v. United States, 364 U.S. 40, 48 (1960)
83. Loveladies Harbor, Inc. v. United States, 28 F.3d 1171, 1177 (Fed. Cir. 1994).
84. Keystone Bituminous Coal Ass'n v. DeBenedictis, 480 U.S. 470, 493 (1987).
85. Ruckelshaus v. Monsanto Co., 467 U.S. 986, 1005 (1984) (Internal Citations Omitted)
86. Usery v. Turner Elkhorn Mining Co., 428 U.S. 1, 16 (1976).
87. Connolly v. Pension Benefit Guar. Corp., 475 U.S. 211, 224 (1986).
88. Chang v. United States, 859 F. 2d 893, 897 (Fed Cir. 1988).
89. We express no opinion as to whether any court would have or exercise jurisdiction to hear such a Federal Taking Clause challenge, when such a challenge would be ripe, or whether the State would be entitled to assert sovereign immunity in a particular forum. As to the question of sovereign immunity, to the extent that there is a taking without just compensation and just compensation is unavailable through State or federal procedures, Bondholders (or the Indenture Trustee on their behalf) or the Issuer could seek to enjoin enforcement of the State action by suing individual officers under Ex Parte Young, 209 U.S 123 (1908) and 42 U.S.C. 1983.

EX-99

Exhibit 99.6

Clark, Thomas & Winters
A PROFESSIONAL CORPORATION

TELEPHONE (512) 472-8800                                                                                                                                                                     ;                            FAX (512) 474-1129

 POST OFFICE BOX 1148
AUSTIN, TEXAS 78767

300 WEST 6^th STREET, 15^TH FLOOR
AUSTIN, TEXAS 78701

October [__], 2009

CTW DRAFT 10/16/2009
SUBJECT TO REVISION AND TO REVIEW AND
APPROVAL BY CTW OPINIONS COMMITTEE

Each of the Addressees Listed on
Schedule I Attached Hereto

            Re: Entergy Texas Restoration Funding, LLC Senior Secured Transition Bonds

            Ladies and Gentlemen:

            We have acted as local Texas counsel to Entergy Texas, Inc., a Texas corporation ("ETI"), and Entergy Texas Restoration Funding, LLC, a Delaware limited liability company (the "Issuer"), in connection with ETI's transfer of the rights and interests of ETI under the Financing Order, including the right to impose, collect, and receive transition charges, to the Issuer pursuant to that certain Transition Property Purchase and Sale Agreement, dated as of October [_], 2009 (the "Sale Agreement"), between ETI and the Issuer and the related Bill of Sale dated as of October [_], 2009 (the "Bill of Sale"). Unless the context clearly indicates otherwise, capitalized terms used herein and not otherwise defined shall have the meanings assigned to them in the Indenture dated as of October [_], 2009 as supplemented by the Series Supplement dated as of October [_], 2009 (as so supplemented, the "Indenture"), between the Issuer and The Bank of New Yo rk Mellon, as Indenture Trustee (the "Indenture Trustee"), including Appendix A attached thereto. This opinion is being delivered pursuant to Section 9(i) of the Underwriting Agreement.

            We have reviewed the following documents and any exhibits thereto for purposes of this opinion (collectively, the "Relevant Documents"):

1. the Sale Agreement and the Bill of Sale;
    

2. the Servicing Agreement;
    

3. the Indenture;
    

4. the Underwriting Agreement;
    

5. the Certificate of Formation;
    

6. the Limited Liability Company ("LLC") Agreement;
    

7. the Application;
    

8. the September 11, 2009, Financing Order of the Public Utility Commission of Texas ("PUCT") in Docket No. 37247 ("the Financing Order"); and
    

9. that certain Issuance Advice Letter (the "Issuance Advice Letter") filed with the PUCT on [ ].

            In connection with the issuance of certain "transition bonds" within the meaning of Chapter 36, Subchapter I and Chapter 39, Subchapter G of the Texas Public Utility Regulatory Act ("PURA"),¹ ETI has requested that we deliver certain opinions regarding potential challenges to PURA Chapter 36, Subchapter I and Chapter 39, Subchapter G under the Texas Constitution.

I.         STATUTORY FRAMEWORK

            The Texas Legislature ("Legislature") enacted Senate Bill 7, effective September 1, 1999, for the purpose of protecting "the public interest during the transition to and in the establishment of a fully competitive electric power industry."² This legislative effort is primarily reflected in Chapter 39 of PURA. PURA Section  39.001(b) states, in pertinent part,

            The legislature finds that it is in the public interest to:

        (1) implement on January 1, 2002, a competitive retail electric market that allows each retail customer to choose the customer's provider of electricity and that encourages full and fair competition among all providers of electricity;

        (2) allow utilities with uneconomic generation-related assets and purchased power contracts to recover the reasonable excess costs over market of those assets and purchased power contracts.

The utility assets as to which the Legislature believed the public interest requires recovery include both "stranded costs" ("the positive excess of the net book value of generation assets over the market value of the assets")³ and "regulatory assets" (as reported by the utility in its 1998 annual report on Securities and Exchange Commission Form 10-K).⁴ The Legislature provided several means for recovery of these assets, including "securitization financing" per the requirements and procedures of PURA Chapter 39, Subchapter G.

            In September 2005, Hurricane Rita struck the coastal areas of the region causing catastrophic damage to ETI's (then Entergy Gulf States, Inc.) electric utility system and leaving thousands of Texans without electricity. ETI incurred substantial costs to repair and rebuild its utility infrastructure and restore service. In response to concerns regarding the long-term stability and reliability of electric service due to the reconstruction expense ensuing from the disaster, the Legislature amended Chapter 39 of PURA during the 3rd Called Session of the 79th Legislature by enacting House Bill 163 providing for the "securitization" of hurricane reconstruction costs and their recovery through the sale of bonds per the requirements and procedures of Subchapter G. Securitization was "expected to result in significant savings to customers, compared to the rates customers would pay if the Hurricane Rita costs were recovered t hrough conventional means, such as their inclusion in a base rate proceeding."⁵

            The 81^st Legislature generalized this approach to storm cost recovery when it enacted Senate Bill 769 in 2009. Senate Bill 769 added Subchapter I to Chapter 36 of PURA to enable any electric utility "to obtain timely recovery of system restoration costs and to use securitization financing to recover these costs."⁶ In its analysis of the bill, the House Research Organization discussed the efficiencies and cost savings Senate Bill 769 was intended to provide:

The conventional method of recovering storm costs is for a utility to go through a base rate proceeding at the PUC, which takes 185 days to complete and often is costly due to litigation. Base rate proceedings cause significant delays in the recovery of storm costs and place additional costs on the affected utilities, which are passed on to customers, including both the cost of the proceeding and high interest and finance charges. Currently, a utility must receive approval from the Legislature through special legislation in order to recover system restoration costs through securitization. For example, HB 163 by P. King, enacted by 79^th Legislature during its 2006 third called session, allowed Entergy to use securitization to recover costs resulting from Hurricane Rita in 2005. CSHB 1378⁷ would authorize the PUC to approve the use of securitization without the utility having to wait for a legislative session to do so.⁸

            Thus, Senate Bill 769 declared its intent that "securitization of system restoration costs will be accomplished using the same procedures, standards, and protections for securitization authorized under Subchapter G, Chapter 39."⁹ It defined "system restoration costs" as:

reasonable and necessary costs, including costs expensed, charged to self-insurance reserves, deferred, capitalized, or otherwise financed, that are incurred by an electric utility due to any activity or activities conducted by or on behalf of the electric utility in connection with the restoration of service and infrastructure associated with electric power outages affecting customers of the electric utility as the result of any tropical storm or hurricane, ice or snow storm, flood, or other weather-related event or natural disaster that occurred in calendar year 2008 or thereafter. System restoration costs include mobilization, staging, and construction, reconstruction, replacement, or repair of electric generation, transmission, distribution, or general plant facilities. System restoration costs shall include reasonable estimates of the costs of an activity or activities conducted or expected to be conducted by or on behalf of the electric utility in connection with the restoration of service or infrastructure associated with electric power outages, but such estimates shall be subject to true-up and reconciliation after the actual costs are known.¹⁰

            Senate Bill 769 also enacted a new Section 36.403 that incorporates the procedures and standards of PURA Chapter 39, Subchapter G. Section 36.403(d) amends the definition of "qualified costs" to include "system restoration costs," as follows:

(d)  For purposes of this subchapter, "qualified costs," as defined by Section 39.302 and as used in Subchapter G, Chapter 39, includes 100 percent of the electric utility's system restoration costs, net of any insurance proceeds, governmental grants, or other source of funding that compensate the utility for system restoration costs, received by the utility at the time it files an application for a financing order. Qualified costs also include the costs of issuing, supporting, and servicing transition bonds and any costs of retiring and refunding existing debt and equity securities of an electric utility subject to this subchapter in connection with the issuance of transition bonds. For purposes of this subchapter, the term qualified costs also includes:

(1)  the costs to the commission of acquiring professional services for the purpose of evaluating proposed transactions under this subchapter; and

(2)  costs associated with ancillary agreements such as any bond insurance policy, letter of credit, reserve account, surety bond, swap arrangement, hedging arrangement, liquidity or credit support arrangement, or other financial arrangement entered into in connection with the issuance or payment of transition bonds.

            Section 36.403(e) amends the definition of "transition bonds" in PURA Section 39.302 to include "transition bonds issued in association with the recovery of system restoration costs" and states that "[t]ransition bonds issued to securitize system restoration costs may be called "system restoration bonds."

            Section 36.403(f) amends the definition of "transition charges" in PURA Section 39.302 to include:

nonbypassable amounts to be charged for the use of electric services, approved by the commission under a financing order to recover system restoration costs, that shall be collected by an electric utility, its successors, an assignee, or other collection agents as provided for in the financing order. Transition charges approved by the commission under a financing order to recover system restoration costs may be called "system restoration charges" or may be called by any other name acceptable to the issuer and the underwriters of the transition bonds.

            PURA Section  39.306 provides that "[a] financing order shall include terms ensuring that the imposition and collection of transition charges authorized in the order shall be nonbypassable." PURA Section 36.404, added by Senate Bill 769, dovetails with this requirement and states:

The commission shall include terms in the financing order to ensure that the imposition and collection of transition charges associated with the recovery of system restoration costs are nonbypassable by imposing restrictions on bypassability of the type provided for in Chapter 39 or by alternative means of ensuring nonbypassability, as the commission considers appropriate, consistent with the purposes of securitization.

            The rights and interests of a utility to receive transition charges become "transition property" when "they are first transferred to an assignee or pledged in connection with the issuance of transition bonds."¹¹ Section 39.304 further provides:

(b) Transition property shall constitute a present property right for purposes of contracts concerning the sale or pledge of property, even though the imposition and collection of transition charges depends on further acts of the utility or others that have not yet occurred. The financing order shall remain in effect and the property shall continue to exist for the same period as the pledge of the state described in Section 39.310.

(c) All revenues and collections resulting from transition charges shall constitute proceeds only of the transition property arising from the financing order.¹²

(emphasis added). The State Pledge referenced above is set forth in PURA Section  39.310 and provides as follows:

PLEDGE OF STATE. Transition bonds are not a debt or obligation of the state and are not a charge on its full faith and credit or taxing power. The state pledges, however, for the benefit and protection of financing parties and the electric utility, that it will not take or permit any action that would impair the value of transition property, or, except as permitted by Section 39.307 [relating to true-up], reduce, alter, or impair the transition charges to be imposed, collected, and remitted to financing parties, until the principal, interest and premium, and any other charges incurred and contracts to be performed in connection with the related transition bonds have been paid and performed in full. Any party issuing transition bonds is authorized to include this pledge in any documentation relating to those bonds.

As authorized by Section 39.310 and the Financing Order, the language of the State Pledge has been included in the Transition Bonds and in the Indenture. The Financing Order also explicitly provides that "the State of Texas has pledged for the benefit and protection of all financing parties and ETI, that it (including the Commission) will not take or permit any action that would impair the value of transition property, or, except as permitted by PURA Section  39.307, reduce, alter or impair the transition charges to be imposed, collected, and remitted to any financing parties, until the principal, interest and premium, and any other charges incurred and contracts to be performed in connection with the transition bonds have been paid and performed in full."¹³

            The Transition Property at issue was created in favor of ETI, pursuant to the Financing Order issued by the PUCT on September 11, 2009, in Docket No. 37247; and the Transition Property was assigned to the Bond Issuer pursuant to the provisions of the Sale Agreement in consideration for the payment by the Issuer to ETI of the proceeds of the sale of the Transition Bonds, net of certain issuance costs. The Transition Property includes the right to impose and receive certain "non-bypassable" transition charges described in the Financing Order (the "Transition Charges"). The Financing Order provides that "this Financing Order, together with the transition charges authorized by this Financing Order, is irrevocable and not subject to reduction, impairment, or adjustment by further act of the Commission, except for the true-up procedures approved in this Financing Order, as required by PURA Section  39.307." ¹⁴  It further provides that "[t]ransition property will constitute a present property right for purposes of contracts concerning the sale or pledge of property, even though the imposition and collection of the transition charges depend on further acts by ETI or others that have not yet occurred, as provided by PURA Section  39.304(b)"¹⁵ and "[u]pon the transfer by ETI of the transition property to BondCo, BondCo will have all of the rights, title and interest of ETI with respect to such transition property including the right to impose, collect and receive the transition charges authorized by the Financing Order."¹⁶ It also requires that Transition Charges be adjusted at least annually to correct any overcollections or undercollections in the preceding 12 months and that the servicer make mandatory interim true-up adjustments semi-annually (or quarterly during the period between the expected final maturity and the legal final maturity of the last bond tranche or class) if the servicer forecasts that Transition Charge collections will be insufficient to make all scheduled payments of principal, interest and other amounts in respect of the transition bonds during the current or next succeeding semi-annual or quarterly period (as applicable) and to replenish any draws upon the capital subaccount. These adjustments are intended to ensure the expected recovery of amounts sufficient to timely provide all payments of debt service and other required amounts and charges in connection with the transition bonds. Finally, the Financing Order states that "[t]he Commission guarantees that it will act pursuant to this Financing Order as expressly authorized by PURA to ensure that expected transition charge revenues are sufficient to pay on a timely basis scheduled principal and interest on the transition bonds issued pursuant to this Financing Order and other costs, including fees and expenses, in connection with the transition bonds."¹⁷

            The Financing Order was issued in response to an application for its issuance that was filed by ETI with the PUCT pursuant to the provisions of PURA. The Financing Order became final and not subject to further appeal on September 28, 2009. ETI filed its Issuance Advice Letter with the PUCT on [ ], as required by the Financing Order, and Schedule SRC relating to the Transition Charges on [ ].

II.         OPINIONS REQUESTED

            You have requested our opinion on the following issues:

1.     whether Texas courts would uphold the validity of the State Pledge;

2.     whether the Texas Constitution permits Subchapter I of Chapter 36 and Subchapter G of Chapter 39 of PURA to be amended or repealed by citizen initiative or referendum;

3.     (a) whether the holders of the Bonds (the "Bondholders") or the Indenture Trustee acting on their behalf could successfully challenge under the Texas Contract Clause (as described below) the constitutionality of any legislation passed by the Texas Legislature that repeals the State Pledge or limits, alters, impairs, or reduces the value of the Transition Property or Transition Charges so as to cause a substantial impairment of the terms of the Bond Indenture or the Bonds or the rights and remedies of the Bondholders (or the Trustee acting on their behalf) prior to the time that the Bonds are fully paid and discharged ("State Impairment Legislation"); (b) whether Texas courts would conclude that a substantial impairment of a legislative character by the PUCT ("PUCT Impairment Action") would be treated in the same manner as State Impairment Legislation under the Texas Contract Clause; and (c) whether preliminary and permanent injunctive relief would be availabl e under Texas law to the Bondholders to delay or enjoin implementation of State Impairment Legislation or PUCT Impairment Action; and

4.     whether a court applying Texas law would find a compensable taking under the Texas Takings Clause (as described below) if the State, including its agencies and instrumentalities, including the PUCT, takes action in violation of the State Pledge that, without paying just compensation to the Bondholders, (i) permanently appropriates the Transition Property or denies all economically productive use of the Transition Property; (ii) destroys the Transition Property, other than in response to emergency conditions; or (iii) substantially reduces, alters or impairs the value of the Transition Property, if the action unduly interferes with the Bondholders' reasonable investment-backed expectations.

            Based upon our review of relevant judicial authority, as set forth in this letter, but subject to the qualifications, limitations and assumptions set forth in this letter, it is our opinion that a reviewing court, in a properly-prepared and presented case:

1. would uphold the validity of the State Pledge;

2. would conclude that the Texas Constitution does not provide for the amendment or repeal of Subchapter I of Chapter 36 and Subchapter G of Chapter 39 of PURA by citizen initiative or referendum;

3.      (a) would conclude that the Bondholders (or the Indenture Trustee acting on their behalf) could successfully challenge under the Texas Contract Clause the constitutionality of State Impairment Legislation (other than a law passed by the Legislature in the valid exercise of the State's police power necessary to safeguard the public safety and welfare);

(b) would conclude that PUCT Impairment Action would be treated in the same manner as State Impairment Legislation under the Texas Takings Clause; and

(c) should conclude that Bondholders are entitled to permanent injunctive relief under state law to prevent implementation of State Impairment Legislation or PUCT Impairment Action hereafter passed by the Legislature or otherwise taken in violation of the Texas Contract Clause; and although sound and substantial arguments support the granting of preliminary injunctive relief, the decision to do so will be in the discretion of the court requested to take such action, which will be exercised on the basis of the considerations discussed in subpart (5) of Part III below; and

4.     would find a compensable taking under the Texas Takings Clause if (a) it concludes that the Transition Property is property of a type protected by the Texas Takings Clause and (b) the State takes action that, without paying just compensation to the Bondholders (i) permanently appropriates the Transition Property or denies all economically productive use of the Transition Property; (ii) destroys the Transition Property, other than in response to emergency conditions; or (iii) substantially reduces, alters or impairs the value of the Transition Property, if the action unduly interferes with the Bondholders' reasonable investment-backed expectations; provided that, the court's conclusion that a compensable taking had occurred would depend upon its resolution of the issues discussed in Part III below.

            Our opinion in the immediately preceding subparagraphs 1, 2, 3 and 4 and in our discussion below is based upon our evaluation of existing judicial decisions and arguments related to the factual circumstances likely to exist at the time of a Texas Contract Clause or Texas Takings Clause challenge to State Impairment Legislation, or to PUCT Impairment Action, or to other State action claimed to be a taking of the Bondholders' property and is intended to express our belief as to the result that should be obtainable through the proper application of existing judicial decisions in a properly-prepared and presented case. Such precedents and such circumstances could change materially from those discussed below in this letter.

            In addition, our opinion assumes that any State Impairment Legislation or PUCT Impairment Action effects a substantial impairment of (i) the terms of the Bond Indenture or the Bonds or (ii) the rights and remedies of the Bondholders (or the Indenture Trustee acting on their behalf) prior to the time that the Bonds are fully paid and discharged (or such payment is provided for), if it prevents payment of the Bonds or significantly affects the security for the Bonds. The determination of whether particular legislative action constitutes a substantial impairment of a particular contract is a fact-specific analysis, and nothing in this letter expresses any opinion as to how a court would resolve the issue of "substantial impairment" with respect to the Financing Order, the Charges, the Transition Property, the Bond Indenture or the Bonds vis-a-vis a particular legislative action.

III.         CHALLENGES TO THE CONSTITUTIONALITY OF SUBCHAPTER I OF
 CHAPTER 36 AND SUBCHAPTER G OF CHAPTER 39

A.         Validity of the State Pledge

            While the Texas Supreme Court upheld the constitutionality of Subchapter G of Chapter 39 of PURA in City of Corpus Christi v. Public Utility Commission, 51 S.W.3d 231 (Tex. 2001), against various arguments under Article I, Section 17 of the Texas Constitution (the "Texas Takings Clause") and against a challenge under Article III, Section 51 of the Texas Constitution (prohibiting grants of public money to individuals), we are not aware of any case law ruling on the validity of the State Pledge found in Subchapter G of Chapter 39 of PURA Section  39.310.

                    The Texas Supreme Court upheld the validity of a similar pledge in Lower Colorado River Authority v. McGraw, 125 Tex. 268, 83 S.W.2d 629 (1935). The court rejected several challenges directed at the constitutionality of legislation creating the Lower Colorado River Authority ("LCRA") and, more importantly, also rejected a claim that the Legislature's pledge not to impair LCRA's ability to recover revenue sufficient to pay the bondholders was an unconstitutional delegation of legislative authority. The provision at issue stated, in pertinent part:

Nothing herein shall be construed as depriving the State of Texas of its power to regulate and control fees and/or charges to be collected for the use of water, water connections, power, electric energy, or other service provided that the State of Texas does hereby pledge to and agree with the purchasers and successive holders of the bonds issued hereunder that the State will not limit or alter the power hereby vested in the District to establish and collect such fees and charges as will produce revenues sufficient to pay the items specified in subparagraphs (a), (b), (c) and (d) of this Section 8, or in any way to impair the rights or remedies of the holders of the bonds, or of any person in their behalf, until the bonds, together with the interest thereon, with interest on unpaid installments of interest and all costs and expenses in connection with any action or proceedings by or on behalf of the bondholders and all other obligations of the District in connection with such bonds are fully met and discharged.¹⁸

The court found that the Legislature had the authority to confer on the LCRA the right to establish rates for its services and "had the power to guarantee the continuation of such rates as long as the lawful obligations of the district are outstanding."¹⁹ As the court observed, "[i]f this were not so, bonds of the district, based on income, would be idle and vain things."²⁰

            In a more recent case concerning the scope of a city's regulatory authority over the LCRA, the Texas Supreme Court reaffirmed its holding in McGraw concerning the validity and efficacy of the State's pledge to not impair the rights of bondholders to full recovery.²¹ The court stated:

In our opinion the statute means precisely what it says, i.e., that the LCRA Board will establish rates and charges in the first instance, that its action in that respect is subject at all times to the power of regulation reserved to the State, and that this reserved power will not be exercised in a manner that will prejudice bondholders or prevent the collection of revenues required for the purposes designated in the four subparagraphs.²²

                    Based on these authorities, we believe that courts applying Texas law would uphold the validity of the state pledge in PURA Section 39.310.

B.         Amendment or Repeal of Legislation by Citizen Initiative or Referendum

            The Texas Constitution does not provide for citizen initiative or proposal of statewide legislation leading to a popular referendum adopting such legislation.²³ The Legislature has not provided for citizen initiative and referendum in PURA with respect to the matters governed therein.²⁴  The Texas Constitution provides that: "The Legislative power of this State shall be vested in a Senate and House of Representatives, which together shall be styled 'The Legislature of the State of Texas.'"²⁵ With the exception of the specific delegations of authority noted in the footnotes, the Texas Legislature exercises exclusive authority in the field of legislation in Texas. We are of the opinion that Texas courts would conclude that Texas law does not provide for citizen initiative or referendum with respect to Subchapter I of Chapter 36 or Subchapter G of Chapter 39 of PURA.

C.        Legislative or Regulatory Impairment of Bondholders' Rights

            It is our opinion that Bondholders or the Indenture Trustee on their behalf could successfully challenge under the Texas Contract Clause the constitutionality of any legislation passed by the Texas Legislature or PUCT action that repeals the State Pledge or limits, alters, impairs, or reduces the value of the transition property, unless the law at issue was passed by the Legislature in the valid exercise of the State's police power and is necessary to safeguard the public safety and welfare.

            (1)        Impairment Legislation

            Article I, Section 16 of the Texas Constitution (the "Texas Contract Clause") states, in pertinent part: "No . . . law impairing the obligation of contracts, shall be made." In City of Aransas Pass v. Keeling, 112 Tex. 339, 247 S.W. 818 (1923), the City of Aransas Pass sued to compel the Texas Attorney General to approve bonds that had been issued by the city pursuant to legislation that donatedto the city for twenty years eight-ninths of the net amount of the state ad valorem taxes due upon property in San Patricio County, authorized the issuance of bonds by the city to procure money to be used exclusively to construct and maintain sea walls, breakwaters, and shore protections, and declared that the eight-ninths of the state taxes donated to the city should be held in trust and applied to create a sinking fund for the redemption of the bonds and to pay the interest thereon. The Attorney Genera l argued, among other things, "that reasonable provision is wanting to redeem the bonds because the Legislature, after the sale of the bonds, can repeal the donation of state taxes for 20 years."²⁶ The court rejected this argument, stating:

State and federal authorities are uniform that, when an act of a state Legislature, authorizing a bond issue, creates, or authorizes the creation of, a certain fund for the bond's payment, such provision of the act enters into the contract between the debtor and the holders of the bonds, so that it cannot be repealed by subsequent legislation without the substitution of something of equal efficacy. The subsequent legislation would impair the obligation of the contract, and therefore come under constitutional condemnation.²⁷

            In City of Austin v. Cahill, 99 Tex. 172, 88 S.W. 542 (1905), the Texas Supreme Court had previously drawn the same conclusion under the contract clause of the U.S. Constitution. In that case, the City of Austin argued that the Legislature had amended the Charter of the City of Austin by withdrawing its taxing power to repay certain previously issued or unrefunded bonds. The court held that the adversely affected bondholders had a contractual right to compel by mandamus a tax levy which related back to the time when such taxes should have been levied in order for the city to be able to meet its financial obligations under the bonds. The court stated:

Much strength is also imparted to this view by the consideration that the Legislature must be presumed to have known that it was not within its constitutional power to impair the contract with the holders of the unrefunded bonds by withdrawing the taxing power which was a part of the obligation of the contract.²⁸

            These precedents, while quite old, have continuing vitality with respect to the principle that, when the state makes provision for and assurances of a revenue source for the repayment of bonds, such assurances enter into the contract and cannot later be impaired by legislative action.

            In a different context, the Texas Supreme Court later ruled that a Moratorium Law enacted during the Great Depression to forestall suits to foreclose liens on real property deprived lienholders "of the rights and remedies for which [they] contracted."²⁹ The court rejected the property owner's argument that the state's police power authorized the Moratorium legislation. Though it noted the similarities between the contract clauses in the Texas Constitution and the United States Constitution,³⁰ the court reasoned that Section 29 of the Texas Constitution's Bill of Rights, which excepts from the general powers of government all rights guaranteed by the Bill of Rights, "is an express limitation on the police power which . . . plainly prohibits the enactment of legislation the effect of which is to impair the obligation of contracts."³¹

            More recently, the court began to develop a more flexible approach to this analysis. In Edgewood Independent School District v. Meno, 917 S.W.2d 717 (Tex. 1995), the court affirmed the vitality of the holding in Keeling that, when the Legislature provides for the creation of a certain fund for the payment of a bond issue, the provision "cannot be repealed by subsequent legislation without the substitution of something of equal efficacy," but found that the rule "does not prohibit every act affecting a bond-issuing entity's ability to repay its obligations; rather, it proscribes the unmitigated repeal of a funding source."³² The Edgewood case challenged the school funding legislation that came to be known as Robin Hood. Under that law, when a property-rich district failed to reduce its taxable property to $280,000 per student, the Commissioner of Education was required to detach prop erty from the district and annex it to another district. The school districts that challenged the law argued that "the threat of this procedure creates a danger that insufficient funds will be available to meet the district's outstanding bonded indebtedness. . . . [and] impairs the district's ability to repay its obligations, in violation of the Texas and United States Constitutions." Citing two earlier decisions of the Texas Commission on Appeals, the court stated:

As long as the entity is clearly able to repay its obligations within statutory and constitutional limitations, legislation reducing the entity's tax base does not impair the obligation of contracts.³³

The court also noted that, in Determan v. City of Irving, 609 S.W.2d 565 (Tex. Civ. App.-Dallas 1980, no writ), the court of appeals had struck down "a six-percent limitation on a city's annual tax increases, because such a limitation increased the likelihood that the city's tax rate would be insufficient to meet its debt service requirements."³⁴ The court disapproved any suggestion in Determan inconsistent with its holding.

            The following year, in Barshop v. Medina County Underground Water Conservation District, 925 S.W.2d 618 (Tex. 1996), the court considered a facial challenge to the constitutionality of the Edwards Aquifer Act. The Act created the Edwards Aquifer Authority to regulate groundwater withdrawals by well from the aquifer. It placed certain limitations on withdrawals and, thus, clashed with the common law rule of capture that a landowner's "right to withdraw underground percolating water is not correlative, 'but is absolute.'"³⁵ The plaintiffs who brought the case, two county underground water conservation districts and three private landowners, claimed that the Act, among other constitutional violations, unconstitutionally impaired the obligation of contract.

            Noting that it had not considered the scope of the contract clause since its opinion in Travelers' Ins. Co. v. Marshall, supra, where it determined that the state's police power could never be used to justify an impairment of contract, the court summarized developments in federal and Texas case law inconsistent with the rule in Travelers'. The court observed that two years after the Travelers' decision, the U.S. Supreme Court ruled that Travelers' "only applied to statutes specifically directed against the terms of a contract."³⁶ The U.S. Supreme Court had concluded that, under Texas law, police power regulations dealing with physical things such as land or natural resources could have incidental effects on contracts if the power was exercised in the interest of the public welfare.³⁷ The Texas Supreme Court also cited several Texas cases that "have likewise concluded that the contract clause may yield to statutes which are necessary to safeguard the public safety and welfare."³⁸ Based on these authorities, the court departed from the rule of Travelers' and upheld the Edwards Aquifer Act and the restrictions it placed on groundwater withdrawals from the aquifer, stating:

Accordingly, we determine that the Act is not invalid under the contract clause because it is a valid exercise of the police power necessary to safeguard the public safety and welfare.³⁹

            There are a number of earlier Texas court of appeals decisions finding that the Legislature was justified in impairing contractual rights when it exercised the police power to protect the public safety and welfare. However, none of the cases involved bondholders.⁴⁰

            In Trail Enterprises, Inc. v. City of Houston, supra, a city ordinance restricted drilling within 100 feet of Lake Houston, a man-made lake developed on land acquired by the city subject to the mineral rights owner's pre-existing mineral leases. Although the court found that the prohibition on drilling was a valid exercise of the city's police power that justified the impairment of the contract, it also noted that "the City has not acted in derogation of its contract with Wilson or the mineral reservation in its deed. Both permitted drilling only if there was no pollution of the Lake."⁴¹

                    Both Texas State Teachers Association v. State, supra, and Dovalina v. Albert, supra, involved claims that legislation instituting testing requirements for teacher certification, in the former, and polygraph examiner licensing, in the latter, violated the contract clause. In Texas State Teachers Association v. State, the court registered its doubt "that teachers' certificates are the type of protected rights that fall within the meaning of Article I, Section 16" of the Texas Constitution but assumed that they did for purposes of the opinion.⁴² After examining the legislative duty to regulate public schools, the court upheld the statute, reasoning as follows:

Because regulation of the teaching profession and of the public education system is a valid exercise of the police power, this Court has concluded that any impairment of appellants' rights which has occurred is justified as an incident to the valid exercise of the police power.⁴³

In Dovalina v. Albert, an individual who failed a newly enacted minimum standards test required for all operators of polygraph equipment argued that the Act instituting the testing requirement violated the contract clause. The court rejected the claim, noting that "[h]ere as in Henderson [i.e., Henderson Co. v. Thompson, supra] the statute challenged is not directed against any term of any contract and its effect upon contracts is only incidental."⁴⁴

            Under these authorities, we are of the opinion that in a properly-presented and argued challenge by the Bondholders (or the Indenture Trustee acting on their behalf) a reviewing court would rule that legislation impairing the rights of the Bondholders violates the Texas Contract Clause. Legislation that repealed or significantly modified the State Pledge in Section 39.310 of PURA or directly limited, altered, impaired, or reduced the value of the Transition Property or the charges at issue would not be considered "incidental," and would be held to be an unconstitutional violation of the Texas Contract Clause unless the state could show that the impairment was justified on the basis of a legitimate exercise of its police powers necessary to safeguard the public safety and welfare.

            (2)         Impairment by PUCT

            The Texas cases cited above have addressed impairments of contractual obligations by the Legislature or a local governmental body. Nevertheless, if the PUCT were to take action that limits, alters, impairs, or reduces the value of the Transition Property or the Transition Charges, the Bondholders could also challenge the PUCT under the Texas Contract Clause. Ratemaking by a regulatory agency, such as the PUCT, has been characterized as being a legislative activity.⁴⁵ In addition, in reviewing regulatory actions by the PUCT, Texas courts have applied the constitutional prohibitions against ex post facto and retroactive laws.⁴⁶ These prohibitions, like the constitutional prohibition on impairment of contracts, are found in Article I, Section  16 of the Texas Constitution.

            Thus, if the PUCT were to exercise ratemaking or other legislative powers that substantially impaired the Transition Property or Transition Charges created under the Financing Order, such action would give rise to state claims, similar to actions of the Legislature taken in derogation of the State Pledge. Section 39.304(b) of PURA states: "The financing order shall remain in effect and the property shall continue to exist for the same period as the pledge of the state described in Section 39.310." This statutory provision and the terms of the Financing Order providing that the State of Texas and the PUCT "will not take or permit any action that would impair the value of transition property, or, except as permitted by PURA Section  39.307, reduce, alter or impair the transition charges to be imposed, collected, and remitted to any financing parties, until the principal, interest and premium, and any other charges incur red and contracts to be performed in connection with the transition bonds have been paid and performed in full"⁴⁷ support the conclusion that a reviewing Texas state court likely would treat action by the PUCT repudiating the pledge in the Financing Order not to impair the Transition Charges in a manner similar to a repeal of the State Pledge by the Legislature.⁴⁸ Texas state courts have enjoined unconstitutional action by members of a state agency, as discussed below.⁴⁹

                    In Conclusion of Law No. 40 of the Financing Order, the PUCT acknowledges that it is bound by the State Pledge:

Pursuant to PURA Section  39.310, the State of Texas has pledged for the benefit and protection of all financing parties and ETI, that it (including the Commission) will not take or permit any action that would impair the value of transition property, or, except as permitted by PURA Section  39.307, reduce, alter or impair the transition charges to be imposed, collected, and remitted to any financing parties, until the principal, interest and premium, and any other charges incurred and contracts to be performed in connection with the transition bonds have been paid and performed in full. BondCo, in issuing transition bonds, is authorized pursuant to PURA Section  39.310 and this Financing Order to include this pledge in any documentation relating to the transition bonds.

The statute and the Financing Order also contain language prohibiting the PUCT from impairing the Financing Order and the Charges. Section 39.303(d) of PURA states:

A financing order shall become effective in accordance with its terms, and the financing order, together with the transition charges authorized in the order, shall thereafter be irrevocable and not subject to reduction, impairment, or adjustment by further action of the commission, except as permitted by Section 39.307 [relating to true ups].

This statement is reiterated in Conclusion of Law No. 20 of the Financing Order. In addition, Ordering Paragraph 54 of the Financing Order states:

Further Commission Action. The Commission guarantees that it will act pursuant to this Financing Order as expressly authorized by PURA to ensure that expected transition charge revenues are sufficient to pay on a timely basis scheduled principal and interest on the transition bonds issued pursuant to this Financing Order and other costs, including fees and expenses, in connection with the transition bonds.

Therefore, we are of the opinion that in a properly-presented and argued challenge by the Bondholders (or the Indenture Trustee acting on their behalf), a reviewing court applying Texas law would treat a substantial impairment of the Financing Order or PURA by the PUCT in the same manner as, and subject to the same qualifications as, State Impairment Legislation.

            (3)         Declaratory Relief

            Texas law provides that "a person . . . whose rights . . . are affected by a statute . . . may have determined any question of construction or validity arising under the . . . statute . . . and obtain a declaration of rights . . . thereunder."⁵⁰ The constitutionality of legislation is a suitable matter for declaratory relief.⁵¹ If a statute is alleged to be unconstitutional, the attorney general of the State must also be served with a copy of the proceeding and is entitled to be heard.⁵²

            A declaration that legislation impairing the obligation of contract is unconstitutional will depend on the matters discussed previously in this opinion. It would have to be established that such legislation caused a substantive impairment that significantly affects the security for the Bonds or prevents payments of the Bonds and such impairment could not be justified by the State on the basis of a legitimate exercise of its police powers to safeguard the public safety and welfare.

            (4)         Permanent Injunctive Relief

                    Texas law provides that a "writ of injunction may be granted if: (1) the applicant is entitled to the relief demanded and all or part of the relief requires the restraint of some act prejudicial to the applicant . . . (3) the applicant is entitled to a writ of injunction under the principles of equity and the statutes of this state relating to injunctions . . . or (5) irreparable injury to real or personal property is threatened, irrespective of any remedy at law."⁵³

            Generally, a party requesting injunctive relief must show "the existence of a wrongful act, the existence of imminent harm, the existence of irreparable injury, and the absence of an adequate remedy at law."⁵⁴

            If legislation were found to unconstitutionally impair the obligation of contracts, then the Bondholders could likely obtain an injunction prohibiting state officers from enforcing such legislation.⁵⁵ This is likely also true if the PUCT were to take action found to impair the obligation of contracts in a manner inconsistent with current statutory authorization. Texas courts will grant injunctive relief when a government official acts in a way that exceeds constitutional or statutory authority.⁵⁶ "[A]n entity or person whose rights have been violated by the unlawful action of a State official, may bring suit to remedy the violation or prevent its occurrence, and such suit is not a suit against the State requiring legislative or statutory authorization."⁵⁷

                    (a)         Existence of wrongful act

            Texas courts would likely find that unconstitutional legislation or governmental action that exceeds constitutional or statutory authority would satisfy the requirement that a party seeking injunctive relief demonstrate the existence of a wrongful act.⁵⁸

(b)         Existence of imminent harm

            Texas courts would also likely find that unconstitutional legislation or governmental action, including the threat of action, that exceeds constitutional or statutory authority would satisfy the requirement that a party seeking injunctive relief demonstrate the existence of imminent harm.⁵⁹

                    (c)         Existence of irreparable harm

            A showing of irreparable harm is a prerequisite for one seeking injunctive relief.⁶⁰ "An injury is irreparable if the injured party cannot be adequately compensated in damages or if the damages cannot be measured by any certain pecuniary standard."⁶¹ There is authority for the contention that harm or injury caused by the violation of a constitutional right is, as a matter of law, irreparable.⁶² This proposition was echoed by the court in Operation Rescue-National v. Planned Parenthood of Houston and Southeast Texas, Inc., 937 S.W.2d 60 (Tex. App.-Houston [14th Dist] 1996), aff'd as modified on other grounds, 975 S.W.2d 546 (Tex. 1998), in which the court recognized that "[u]nder Texas law, a violation of a constitutionally guaranteed right inflicts irreparable injury warranting injunctive relief."⁶³ Of course, various other types of injuries may be deemed irrepar able. Disruption of business, for instance, may constitute the type of harm for which an injunction may issue.⁶⁴

            Based on these precedents, we are of the opinion that an action by the government-either by (1) legislation repealing the State pledge or (2) legislation or PUCT action reducing or eliminating the recovery of Transition Property or Transition Charges-would probably cause the type of injury required to support a finding of irreparable harm. This is buttressed by the fact that such action would produce an ongoing injury. The Transition Property at issue is limited in time, and diverted funds may not be replaced. The continued existence or enforcement of legislationor regulation that effectuates diminution of the bonds' value is not a one-time occurrence but a persistent threat to the Bondholders' rights. In State v. Texas Pet Foods, Inc., 591 S.W.2d 800, 804 (Tex. 1979), the court held that when a defendant has engaged in a settled course of conduct, a court may assume that the cond uct will continue, absent clear proof to the contrary, and exercise its equitable powers to issue an injunction, even if the defendant promises to cease and desist.⁶⁵

                    (d)         No adequate remedy

            A party requesting injunctive relief must also show that it has no adequate remedy at law."⁶⁶ It is a settled principle that an "injured party is entitled to relief by injunction when there is not clear, full and adequate relief at law."⁶⁷ "A party has no adequate remedy at law when damages are incapable of calculation or the party to be enjoined is incapable of responding in damages."⁶⁸ At least one Texas court has held that "an act in violation of a statute may be enjoined without a showing that the legal remedy is inadequate."⁶⁹

            In this instance, it may be possible that the Bondholders would not be able to quantify their losses or the diminution in value of the bonds. In a similar situation, the United States Supreme Court recognized the difficulty in assessing damages to bondholders stemming from a repeal of a statutory pledge in U.S. Trust Co. of New York v. New Jersey, 431 U.S. 1 (1977). In U.S. Trust Co., the states of New York and New Jersey entered into a legislative compact with each other and with holders of bonds that were issued by the Port Authority of New York and New Jersey to finance the construction of the World Trade Center and the acquisition of the Hudson & Manhattan Railroad.⁷⁰ This compact included a covenant that, so long as any bonds remained outstanding and unpaid, neither the states nor the Port Authority would apply any of the revenues or rese rves that were then or would be in the future pledged as security for the bonds to any railroad purposes other than certain enumerated purposes.⁷¹ The governors of both states subsequently signed legislation effectively repealing the covenant, in response to a national energy crisis.⁷² The Supreme Court held that the repeals violated the contract clause of the Federal Constitution, finding that the repeals impaired valid contracts between the states and the bondholders.⁷³

            The Supreme Court found significant evidence that the market price for the Port Authority Bonds was adversely affected immediately after the covenant was repealed.⁷⁴ After establishing that it could not ascertain with certainty that the fluctuations in market price were caused by the repeal of the covenant, the court simply determined that "no one can be sure precisely how much financial loss the bondholders suffered."⁷⁵

            Thus, U.S. Trust Co. , involving the repeal of a covenant analogous to the State Pledge, illustrates the potential difficulty of ascertaining damages in this case. Even if such damages could be assessed with certainty, the Bondholders may not have an adequate state law vehicle to effectuate recovery. As a result, there may well be no adequate remedy at law for the Bondholders, and it is likely that a substantial impairment in this case would justify the granting of permanent injunctive relief.

            (5)         Temporary Injunctive Relief

            Temporary injunctive relief is warranted when an applicant shows that it is entitled to preserve the latest uncontested status quo of the subject matter of the suit pending trial on the merits.⁷⁶ A court "may restrain the enforcement of administrative orders of State Boards and agencies for the purpose of preserving the status quo pending trial on the merits of a suit to set aside such order." ⁷⁷To be entitled to temporary injunctive relief, the Bondholders would be required to prove "(1) a cause of action against the defendant; (2) a probable right to the relief sought; and (3) a probable, imminent, and irreparable injury in the interim."⁷⁸ In the case of regulation affecting the Transition Bonds, Bondholders may be required to show that available administrative remedies, if any, would be an inadequate means of redress.⁷⁹

            The Texas Supreme Court has stated that to show entitlement to a temporary injunction, a litigant "needs only to plead a cause of action," not prove that he will prevail.⁸⁰ The requirement to show a probable right to recovery could be satisfied by demonstrating that the legislative or administrative action was unconstitutional. The Bondholders would not be required to establish that they would ultimately prevail but only that they are entitled to preservation of the status quo pending trial on the merits.⁸¹

            To satisfy the requirement to show that they will suffer imminent and irreparable harm and an absence of any adequate remedy at law in the interim period, Bondholders would need to establish the possibility of harm such as suspended payments, reduction in the market price of the Transition Bonds, and a possible default by the Issuer of the Transition Bonds. Bondholders could proffer a colorable argument that they would suffer irreparable harm if state legislative or administrative action caused delays in payment and threats of default on the Transition Bonds. For example, if the Transition Charges or payments to the Issuer were halted or reduced, this could result in a downgrade of the Transition Bond's ratings. This downgrade would likely produce a loss of value in the Transition Bonds and could cause Bondholders to sell their Transition Bonds at prices lower than they could have sold them prior to any repeal. Delays i n payment or non-payment of interest or principal on the Transition Bonds could also result. Regardless, as noted by the U.S. Supreme Court in U.S. Trust Co., it would be very difficult to place a monetary valuation on any such damages.⁸² Further, any monetary loss due the Bondholders because of a ratings downgrade and the resulting decrease in market value of the Transition Bonds could probably not be recovered from the State of Texas in a proceeding at law. "Our State does not recognize a common law cause of action for damages to enforce constitutional rights."⁸³

            Texas courts might find that a delay of payments or non-payment until final judgment is not the type of "irreparable harm" that a temporary injunction seeks to prevent pending resolution of the matter, unless the delay resulted in the insolvency of either party or in the destruction of a party's business. For instance, in LeFaucheur v. Williams, 807 S.W.2d 20 (Tex. App.-Austin 1991, no writ), the court refused to issue a temporary injunction in part because the plaintiff failed to allege or prove that the defendant could not satisfy a money judgment. A court's determination of the appropriateness of a temporary injunction in this case will depend on the facts and evidence presented to the court. If the court finds that the Bondholders have demonstrated a probable right to recovery, as well as imminent and irreparable harm for which there is no adequate remedy at law, the court will issue a temporary injuncti on, restoring the status quo immediately preceding any contested legislation or regulation.

            Assuming that the injunction is not adverse to the public interest,⁸⁴ we are of the opinion that the Bondholders would likely be entitled to temporary injunctive relief, pending the outcome of a trial for declaratory or permanent injunctive relief. As noted above, the Bondholders would not be required to prove that they would prevail. Rather, they would be held to the burden of demonstrating a meritorious, bona fide complaint and entitlement to preservation of the status quo.⁸⁵

D.         State Action and the Takings Clause

            Alternatively, impairment of bondholders' value could also be construed as a compensable taking. Article I, Section 17 of the The Texas Constitution (the "Texas Takings Clause") requires that no "person's property shall be taken, damaged or destroyed for or applied to public use without adequate compensation being made." The Texas Takings Clause does "not limit the government's power to take private property for public use but instead require[s] that a taking be compensated."⁸⁶ Governmental action or restriction that deprives the owner of "all economically viable use of the property totally destroys the value of the property" and is a taking that must be compensated.⁸⁷ Texas courts also recognize that, where governmental action falls short of a total taking or complete destruction of the value of property, a claim for a "regulatory taking" can be asserted where the government action ha s unreasonably interfered with an owner's right to use and enjoy property.⁸⁸

            Furthermore, the Texas Supreme Court has interpreted the Texas Takings Clause as providing greater protection to owners of private property than the federal takings clause because, unlike the language of the federal takings clause that refers only to "taking," the Texas Takings Clause applies more broadly to "taking, ... damaging," or "destroying" private property.⁸⁹ Thus, the language of the Texas Takings Clause would enable a court to determine that "damage" to the Transition Property, short of a complete taking resulting in non-payment of the Transition Bonds, constituted a violation of the Texas Takings Clause. In Steele v. City of Houston, 603 S.W.2d 786, 790 (Tex. 1980), the Texas Supreme Court noted:

The government's duty to compensate for damaging property for public use after 1876 was not dependent upon the transfer of property rights.... To entitle the party to compensation under our present constitution, it is not necessary that his property shall be destroyed, nor is it necessary that it shall be even taken. It is sufficient to entitle him to compensation that his property has been damaged.

                    The Texas Supreme Court stated that the purpose of the word "damage" was to prevent a narrow construction of the word "taking."⁹⁰ If a reviewing Texas state court were willing to apply the Texas Takings Clause to the Transition Property, governmental action that diminished but did not completely eliminate the value of the Transition Property might also be found to violate the Texas Takings Clause. For example, any legislation passed by the Texas Legislature or PUCT action that repeals the State Pledge or limits, alters, impairs, or reduces the value of the Transition Property or Transition Charges and affects the market value of the Transition Bonds might constitute "damaging" of property under the Texas Takings Clause, even if it does not rise to the level of a "taking" under the federal takings clause.

            To establish a takings claim under the Texas Takings Clause, the Texas Supreme Court has held that a plaintiff must demonstrate that: (i) the State intentionally performed certain acts (ii) that took, damaged or destroyed protected property (iii) for public use.⁹¹

            1.         Intentional Act

            The State will be liable to compensate a private party for a taking of property only if the State intended to perform the act that caused the taking.⁹² On the other hand, when the taking or damage is merely the unintended result of the government's act, the act does not provide any public benefit, and the property cannot be said to have been "taken or damaged for public use."⁹³ Thus, negligence on the part of the State or its agents that contributes to the destruction of private property cannot support a taking claim and would be subject to a sovereign immunity defense.⁹⁴

            The State Pledge, the related provisions of Subchapter G of Chapter 39 of PURA, and the Financing Order creating the Transition Property and Transition Charges are intended to protect the Bondholders' interests. The purpose of the statutory provisions and the Financing Order is to reduce costs to electricity consumers in Texas of recovering stranded costs and regulatory assets, because securitization financing will result in lower financing costs.⁹⁵ The Legislature intentionally enacted the State Pledge and the other provisions of Subchapter G of Chapter 39 of PURA under which the issuance of the Transition Bonds has been authorized.

            While it is not possible to anticipate the particular form that State action might take, legislation enacted by the Legislature or an order adopted by the PUCT the purpose of which would be to specifically limit, impair, or reduce the value of the Transition Property and Transition Charges would be intentional acts of the State. Therefore, a reviewing Texas state court likely would find the element of intentional action by the State involved in connection with any State Impairment Legislation or PUCT Impairment Action.

            2.         Protected Property Interest

            A valid claim under the Texas Takings Clause requires proof of a taking, damage, or destruction of a protected property interest.⁹⁶  In this context, the issue is whether the State Pledge, the Financing Order, and/or the Indenture create a protected property interest.

            The Legislature plainly provided that the right to impose, collect, and receive transition charges is a property right when pledged or assigned in connection with the issuance of transition bonds.

(a) The rights and interests of an electric utility or successor under a financing order, including the right to impose, collect, and receive transition charges authorized in the order shall be only contract rights until they are first transferred to an assignee or pledged in connection with the issuance of transition bonds, at which time they become "transition property."

(b) Transition property shall constitute a present property right for purposes of contracts concerning the sale or pledge of property, even though the imposition and collection of transition charges depends on further acts of the utility or others that have not yet occurred.⁹⁷

Accordingly, as a matter of law, the right of the electric utility to impose, collect, and receive transition charges, as authorized in the Financing Order, that is sold by the electric utility to the Issuer becomes a property interest, as opposed to a contractual right, when it is sold.

            No Texas court has considered whether the Transition Property at issue is protected by the Takings Clause. While a few Texas court of appeals decisions have suggested that the Takings Clause is limited to takings of real property or property attendant thereto,⁹⁸ the weight of authority has recognized that the clause is not limited in application to real property.

            In a case finding that a municipality's requirement that a developer construct and pay for offsite public improvements as a condition to plat approval for subdivision development constituted a compensable taking under the Texas Constitution, the court stated:

The Fifth Amendment of the United States Constitution and article I, section 17 of the Texas Constitution prohibit the taking of private property-both real and personal, and including money-for public use without just compensation.⁹⁹

                    Texas courts have found that a lender's perfected security interest is a protected property interest under the Texas Takings Clause.¹⁰⁰ In MidFirst Bank, the Texas Workforce Commission ("TWC") attempted to use a corporation's receivables to satisfy statutory liens arising from the corporation's failure to pay former employees' wage claims and unemployment taxes.¹⁰¹ However, the Austin Court of Appeals concluded that the TWC's action, which deprived MidFirst Bank of its security interest in the receivables, constituted a taking in violation of the Texas Takings Clause. In so doing, the Austin Court of Appeals expressly rejected TWC's argument that takings claims under the Texas Constitution are confined to the taking of real property by eminent domain.¹⁰² Similarly, other courts of appeals have extended the prote ctions of the Texas Takings Clause to the rights of secured lienholders in manufactured housing,¹⁰³ to the property rights of patent holders,¹⁰⁴ and to the property rights of franchisees.¹⁰⁵

            Based on the foregoing, it is our opinion that it is likely that a Texas court would conclude that the Transition Property, if "taken, damaged or destroyed for or applied to public use" by an act of the Legislature or the PUCT, is a "cognizable property interest" entitled to protection under the Takings Clause of the Texas Constitution.

            3.         Property Taken for Public Use

            The Texas Takings Clause provides private citizens with compensation only if property is "taken... for or applied to public use."¹⁰⁶ The State is without authority to take private property except for a public use. A court will enjoin action by governmental officials to take property that benefits only private individuals.¹⁰⁷ The public use requirement serves two objectives: (1) to ensure that, when the State must compensate a private person for a taking, the public has received some benefit; and (2) to distinguish a taking, which is the act of the sovereign, from those actions, such as tortious acts or takings for a private purpose, which are the acts of individuals acting outside of their official capacities.¹⁰⁸ When faced with a takings claim, a reviewing Texas state court must therefore analyze whether or not the state action was for a public use. A reviewing Texas state court's analysis of any state action would obviously depend upon the particular facts involved.

            While it is not possible to anticipate what particular form state action might take, presumably such action would be taken to provide relief to ratepayers subject to the Transition Charges. However, the fact that the state action is likely to be directed at protecting particular consumers of electricity should not lead a reviewing Texas state court to decide the state action is not for a public use or purpose. Texas judicial decisions indicate that a state action that provides a direct benefit to only a select group of persons can nevertheless be related to furtherance of a public purpose.¹⁰⁹ In MidFirst Bank, the TWC was seeking to collect from funds being held at MidFirst Bank, receivables of a health care facility to satisfy tax liens and wage claims against the health care facility. The money recovered for the wage claims would have gone directly to individual claimants.¹¹⁰ In defending against a takings claim by MidFirst Bank (which held a superior lien on the funds and was attempting to collect the funds for itself), the TWC argued its actions in attempting to collect the wage claims were not subject to the Texas Takings Clause because those actions were not for a public purpose.¹¹¹ The Austin Court of Appeals held that the TWC, in enforcing the Texas Labor Code and obtaining funds that were rightfully the property of MidFirst, was "acting in furtherance of a public purpose" for purposes of a takings claim.¹¹² The Austin Court of Appeals stated "the fact that the benefit inures to a specific group of people does not lessen the importance of enforcement of the labor code to the public at large."¹¹³

            Assuming that the Legislature or the PUCT were to reduce the amount of Transition Charges allowed in the Financing Order or similarly impair the Transition Property, the purpose would likely be to protect the interests of electric consumers. We believe it is likely that a reviewing Texas state court would find that the public use requirement under the Texas Takings Clause would be satisfied.

            4.         Valid Exercise of Police Power

            All private property is held subject to the valid exercise of the State's police power.¹¹⁴ The government will not be required to make compensation "for losses occasioned by the proper and reasonable exercise of its police power."¹¹⁵ Nonetheless, the State may not defend its actions merely by labeling them as an exercise of its police power. As the Texas Supreme Court has stated: "Recognizing the illusory nature of the problem, we have previously refused to establish a bright line for distinguishing between an exercise of the police power which does constitute a taking and one which does not."¹¹⁶

                    In order for a governmental action to be a valid exercise of the state's police power, not considered a taking, there are two requirements:

First, the regulation must be adopted to accomplish a legitimate goal; it must be "substantially related" to the health, safety, or general welfare of the people. Second, the regulation must be reasonable; it cannot be arbitrary.¹¹⁷

                    This analysis, of necessity, is fact-intensive and each case stands on its own.¹¹⁸ As the court stated in Sheffield:

[W]hether regulation has gone "too far" and become too much like a physical taking for which the constitution requires compensation requires a careful analysis of how the regulation affects the balance between the public's interest and that of private landowners.¹¹⁹

Factors that are relevant in evaluating this balance between the public's interest and the interest of private citizens are:"(1) 'the economic impact of the regulation on the claimant'; (2) 'the extent to which the regulation has interfered with distinct investment-backed expectations'; and (3) 'the character of the governmental action.'"¹²⁰

            Unlike more typical takings cases dealing with issues such as zoning restrictions or land use exactions, a claim in this case would arise from state action that would be extraordinary and unusual. A repeal of the State Pledge or an impairment of the Transition Property that the State has vowed not to impair should trigger close scrutiny by a court of the state's justification for such action under the police power. Moreover, such action, if significant, would negatively impact a substantial investment-backed securitization financing arrangement that has been sanctioned by the Legislature and specifically found by the Legislature to provide "greater tangible and quantifiable benefits to ratepayers than would have been achieved without the issuance of transition bonds."¹²¹  Moreover, impairment of the Transition Property would ironically harm Bondholders who by their investment have, in the Legislature's view, provided "tangible and quantifiable benefits" to the public.

            Accordingly, based on the above, we are of the opinion that a reviewing Texas state court would find a compensable taking under the Texas Takings Clause if (a) it concludes that the Transition Property is property of a type protected by the Texas Takings Clause and (b) the State takes action that, without paying just compensation to the Bondholders, (i) permanently appropriates the Transition Property or denies all economically productive use of the Transition Property; or (ii) destroys the Transition Property, other than in response to emergency conditions; or (iii) substantially reduces, alters or impairs the value of the Transition Property, if the action unduly interferes with the Bondholders' reasonable investment-backed expectations.

IV.        QUALIFICATIONS

            Our opinion is subject to the qualifications set forth herein and, with respect to the claims discussed herein, to the condition that such claims are properly-presented and argued, and that the law is properly applied. We wish to note that we are not aware of any decisions interpreting PURA Chapter 39, Subchapter G concerning the vesting, creation or transfer of any transition property thereunder except for the City of Corpus Christi decision or TXU Electric Co. v. Public Utility Commission, 51 S.W.3d 275 (Tex. 2001).

                    All of the foregoing analyses and the conclusions set forth herein are premised upon, and limited to, the documents evidencing, and the law governing, the transactions described herein in effect as of the date of this letter. Furthermore, we note that a court's decision regarding matters upon which we opine herein will be based on the court's own analysis and interpretation of the factual evidence before the court and of applicable legal principles.

                    Our opinion is subject to the effect of general principles of equity, including, without limitation, limitations on the availability of equitable remedies and concepts of materiality, reasonableness, good faith and fair dealing, and other similar doctrines affecting the enforceability of agreements generally (regardless of whether considered in a proceeding in equity or at law).

                    Our opinion is limited to the specific opinion requested in Section II of this letter and is limited in all respects to laws and facts existing on the date of this letter. We express no opinions implicitly herein, and we assume no obligation to advise you with respect to any issues not specifically addressed herein. The opinion set forth above is given as of the date hereof and we disavow any undertaking or obligation to advise you of any changes in law or any facts or circumstances that may hereafter occur or come to our attention that could affect such opinion. Furthermore, it is our and your understanding that the foregoing opinion is not intended to be a guaranty as to what a particular court would actually hold, but an opinion as to the decision a court would reach if the issue were properly-presented to it and the court followed what we believe to be the appli cable legal principles.

            This opinion is solely for your benefit in connection with the transactions described above and may not be relied upon or used by, circulated, quoted or referred to, nor may copies hereof be delivered to, any other person for any purpose without our prior written approval. We hereby consent to the filing of this letter as an exhibit to the Securities and Exchange Commission Form 8-K and to all references to our firm included in or made a part of the Form 8-K.  In giving the foregoing consents, we do not thereby admit that we are within the category of persons whose consent is required under Section 7 of the Securities Act or the related rules and regulations of the Securities and Exchange Commission.           

            We have assumed throughout this opinion (i) that there has been no (and will not be any) fraud in connection with the transactions described herein, and (ii) (a) the accuracy of the representations and warranties set forth in the Relevant Documents as to factual matters and (b) that the transactions contemplated by the Relevant Documents will not be subject to avoidance as a fraudulent transfer. Our opinion is limited to the presently effective laws of the State of Texas.

Very truly yours,

Clark, Thomas & Winters,
A Professional Corporation

Schedule I: Addressees of Opinion

SCHEDULE I

Fitch Ratings
One State Street Plaza
New York, New York 10004

Moody's Investors Service, Inc.
99 Church Street
New York, New York 10007

Standard & Poor's Ratings Services
a division of The McGraw-Hill Companies, Inc.
55 Water Street, 40^th Floor
New York, New York 10041

Morgan Stanley & Co. Incorporated
1585 Broadway
New York, New York 10036

Citigroup Global Markets Inc.
388 Greenwich Street
New York, New York 10013

Goldman, Sachs & Co.
1 New York Plaza
New York, New York 10004

RBS Securities Inc.
600 Washington Boulevard
Stamford, Connecticut 06901

Loop Capital Markets, LLC
200 West Jackson
Chicago, Illinois 60606

Entergy Texas, Inc.
Capital Center
919 Congress Avenue, Suite 840
Austin, Texas 78701

Entergy Texas Restoration Funding, LLC
Capital Center
919 Congress Avenue, Suite 840
Austin, Texas 78701

The Bank of New York Mellon
101 Barclay Street, Floor 8W
New York, New York 10286

_____________________________

¹Public Utility Regulatory Act, Tex. Util. Code Ann.  Sections 11.001-66.016 (Vernon 2007 & Supp. 2009) (PURA).

²PURA Section 39.001(a).

³PURA Section 39.251(7); Section 39.252(a).

⁴PURA Section  39.301; Section  39.302(5).

⁵Senate Comm. on Business & Commerce, Bill Analysis, Tex. H.B. 163, 79th Leg., 3d C.S. (2006).

⁶PURA Section  36.401(a).

⁷CSHB 1378 was ultimately passed as Senate Bill 769.

⁸House Comm. on State Affairs, Bill Analysis, Tex. S.B. 769, 81st Leg., R.S. (2009).

⁹PURA Section  36.401(b).

¹⁰PURA Section  36.402(a).

¹¹PURA Section  39.304(a).

¹²PURA Section  39.304(b) and (c) (emphasis added).

¹³Application of Entergy Texas, Inc. for a Financing Order, Docket No. 37247, Financing Order at Conclusion of Law No. 40.

¹⁴Id. at Conclusion of Law No. 20.

¹⁵Id. at Conclusion of Law No. 23.

¹⁶Id. at Conclusion of Law No. 25.

¹⁷Id. at Ordering Paragraph No. 54.

¹⁸McGraw, 83 S.W.2d at 637 (emphasis added).

¹⁹Id. at 638.

²⁰Id.

²¹Lower Colo. River Auth. v. City of San Marcos, 523 S.W.2d 641 (Tex. 1975). 

²²Id. at 645.

²³The Constitution does provide for popular referendum in certain specific circumstances: (1) it authorizes elections on local option laws regarding the sale of alcoholic beverages, TEX. CONST. art. XVI, Section  20; (2) it requires submission to the voters of salary recommendations for certain elected officials, TEX. CONST. art. III, Section  24; (3) it requires that constitutional amendments be adopted by popular referendum, TEX. CONST. art. XVII, Section  1; and (4) it requires a statewide referendum on the question of imposing an income tax on natural persons, TEX. CONST. art. VIII, Section  24.

²⁴The Legislature has made popular referendum, but not citizen initiative, part of the adoption of certain local option laws in other instances, including: local adoption by popular referendum is required for the property tax exemption for organizations primarily engaged in charitable activities,  Tex. Tax Code Ann. Section  11.184 (Supp. 2006), and local adoption by popular referendum is required to impose municipal sales and use taxes, TEX. TAX CODE ANN.  Section  321.101 (Vernon 2008).

²⁵TEX. CONST. art. III, Section  1.

²⁶City of Aransas Pass v. Keeling, 112 Tex. 339, 347-48, 247 S.W. 818, 821 (1923).

²⁷Id. (citing City of Austin v. Cahill, 99 Tex. 172, 88 S.W. 542 (1905); Bassett v. City of El Paso, 88 Tex. 168, 30 S.W. 893 (1895); Morris & Cummings v. State, 62 Tex. 745 (1884); Fletcher v. Peck, 10 U.S. 87 (1810); and Seibert v. United States, 122 U.S. 284 (1887)).

²⁸Cahill, 88 S.W. at 546 (citing U.S. Const art. 1, Section  10).

²⁹Travelers' Ins. Co. v. Marshall, 124 Tex. 45, 76 S.W.2d 1007, 1009 (1934).

³⁰In Travelers' Ins. Co. v. Marshall, the Texas Supreme Court noted that the contract clause in the Texas Constitution adopted in 1876 was "derived from" the contract clause in the U.S. Constitution, which is nearly identical in wording.  Id. at 1012. The court reasoned that the interpretation of the Federal Contract Clause by the federal courts is of critical importance in understanding the meaning of the Texas Contract Clause at the time it was adopted. Thus, in considering challenges to State legislation or action which impairs an existing contract, Texas courts have traditionally looked to and applied federal law developed under the Federal Contract Clause, as well as applying their own analyses of the Texas Contract Clause. Lester v. First Am. Bank, Bryan, Tex., 866 S.W.2d 361, 365-66 (Tex. App.-Waco 1993, writ denied).

³¹Travelers' Ins. Co. , 76 S.W.2d at 1011.

³²Edgewood Indep. Sch. Dist v. Meno, 917 S.W.2d 717, 742 (Tex. 1995) (emphasis in original) (quoting City of Aransas Pass v. Keeling, 112 Tex. 339, 347-48, 247 S.W. 818, 821 (1923)).

³³Id. (citing Lyford Indep. Sch. Dist. v. Willamar Indep. Sch. Dist., 34 S.W.2d 854, 856 (Tex. Comm'n App. 1931, judgm't adopted) and El Dorado Indep. Sch. Dist. v. Tisdale, 3 S.W.2d 420, 422 (Tex. Comm'n App. 1928, judgm't adopted)).

³⁴Id. at 742 (citing Determan v. City of Irving, Tex, 609 S.W.2d 565, 570 (Tex. Civ. App.-Dallas 1980, no writ).

³⁵Barshop v. Medina County Underground Water Conservation Dist., 925 S.W.2d 618, 625 (Tex. 1996) (quoting Houston & T.C. Ry. Co. v. East, 98 Tex. 146, 81 S.W. 279 (1904)).

³⁶Id. at 634 (citing Henderson Co. v. Thompson, 300 U.S. 258 (1937)).

³⁷Henderson Co., 300 U.S. at 266 (1937).

³⁸Barshop, 925 S.W.2d at 635.

³⁹Id

⁴⁰See, e.g., Trail Enters., Inc. v. City of Houston, 957 S.W.2d 625 (Tex. App.-Houston [14th Dist.] 1997, pet. denied) (drilling restrictions); Tex. State Teachers Ass'n v. State, 711 S.W.2d 421, 425 (Tex. App.-Austin 1986, writ ref'd n.r.e.) (teacher testing); State Bd. of Registration for Prof'l Eng'rs v. Wichita Eng'g Co., 504 S.W.2d 606, 608 (Tex. Civ. App.-Fort Worth 1973, writ ref'd n.r.e.) (restricting use of the term "engineering" in name of Co.); Dovalina v. Albert, 409 S.W.2d 616, 619 (Tex. Civ. App.-Amarillo 1966, writ ref'd n.r.e.) (test for licensing of polygraph operators); Biddle v. Bd. of Adjustment, 316 S.W.2d 437, 440-441 (Tex. Civ. App.-Houston 1958, writ ref'd n.r.e.) (zoning ordinance).

⁴¹    Trail Enters., Inc., 957 S.W.2d at 633.

⁴²Tex. State Teachers Ass'n, 711 S.W.2d at 424.

⁴³Id. at 425.

⁴⁴Dovalina, 409 S.W.2d at 619; see also Biddle, 316 S.W.2d at 440-441 (concluding that although the zoning ordinance at issue may have incidentally affected appellants' contract, it did not unconstitutionally impair its obligation).

⁴⁵R.R. Comm'n v. Houston Natural Gas Corp., 289 S.W.2d 559, 562 (Tex. 1956); Cent. Power and Light Co. v. Pub. Util. Comm'n of Tex., 36 S.W.3d 547, 554 (Tex. App.-Austin 2001, pet. denied).

⁴⁶Southwestern Bell Tel. Co.v. Pub. Util. Comm'n, 615 S.W.2d 947, 956-57 (Tex. Civ. App.-Austin 1981), writ ref. n.r.e. per curiam 622 S.W.2d 82 (Tex. 1981); Cent. Power and Light, 36 S.W.3d at 554.

⁴⁷Financing Order at Conclusion of Law No. 40.

⁴⁸See, e.g., Lower Colo. River Auth. v. McGraw, 125 Tex. 268, 83 S.W.2d 629 (1935).

⁴⁹State Bd. of Ins. v. Prof'l & Bus. Men's Ins. Co., 359 S.W.2d 312, 315 (Tex. Civ. App.-Austin 1962, writ ref'd n.r.e.).

⁵⁰    Tex. Civ. Prac. & Rem. Code Ann. Section  37.004(a) (Vernon 2008).

⁵¹    Dodgen v. Depuglio, 146 Tex. 538, 209 S.W.2d 588, 592 (1948).

⁵²    Tex. Civ. Prac. & Rem. Code Ann. Section  37.006(b) (Vernon 2008).

⁵³    "font-size:10.0pt;font-variant:small-caps;color:black">Tex. Civ. Prac. & Rem. Code Ann. Section  65.011 (Vernon 2008).

⁵⁴See Tex. Health Care Info. Council v. Seton Health Plan, Inc.,94 S.W.3d 841, 853 (Tex. App.-Austin 2002, pet. denied).  Additionally, courts generally balance equities to determine whether granting an injunction is proper. Thus, if the public interest is involved, courts will determine whether granting a writ will cause harm to the public disproportionate to the harm to the private litigant seeking protection of the injunction. Storey v. Cent. Hide & Rendering Co., 148 Tex. 509, 226 S.W.2d 615 (1950); Hooks Tel. Co. v. Leafy, 352 S.W.2d 755 (Tex. Civ. App.-Texarkana 1961, no writ).  If damage to private individuals outweighs the benefit accruing to the public, the injunction will be granted. Mitchell v. City of Temple, 152 S.W.2d 1116, 1117 (Tex. Civ. App.-Austin 1941, writ ref'd w.o.m.) (discussing a temporary injunction).  Here, for the state officials to claim that the legislative or administrative action is warranted, they will most likely argue that there is a public interest to be protected by such action. In Mitchell, for example, the court held that the harm to the 15,000 residents of Temple by enjoining the operation of a sewage plant outweighed the harm to individual citizens claiming injury from continued operation of the plant. Conversely, in Burrow v. Davis, 226 S.W.2d 199 (Tex. Civ. App.-Amarillo 1949, writ ref'd n.r.e.), the court refused to enjoin completion of construction of a building or require that structure to be torn down even though it slightly inconvenienced the public because it encroached upon two public streets, since on balancing the equities, the harm to the individual owners of destroying their property was greater than the harm to the adjacent property owners.

⁵⁵City of Beaumont v. Bouillion, 896 S.W.2d 143, 148-149 (Tex. 1995) (equitable relief, such as injunction, is available as remedy for violation of constitutional right guaranteed in article I of the Texas Constitution.); State v. Ferguson, 133 Tex. 60, 125 S.W.2d 272 (1939) ("It is a generally accepted rule that injunctive relief may be granted to prevent the enforcement of an unconstitutional statute when its enforcement will result in irreparable injury to property rights."). 

⁵⁶Bexar County v. North East Indep. Sch. Dist., 802 S.W.2d 854, 860 (Tex. App.-San Antonio 1990, writ denied).  

⁵⁷Dir. of Dept. of Agriculture and Env't v. Printing Indus. Ass'n of Am., 600 S.W.2d 264, 265-266 (Tex. 1980) (citing Tex. Highway Comm'n v. Tex. Ass'n of Steel Importers, Inc., 372 S.W.2d 525 (Tex. 1963); Cobb v. Harrington, 144 Tex. 360, 190 S.W.2d 709 (1945); W. D. Haden Co. v. Dodgen, 158 Tex. 74, 308 S.W.2d 838 (1958); State v. Epperson, 121 Tex. 80, 42 S.W.2d 228 (1931); see also Marshall, 76 S.W.2d at 1008 (enjoining the enforcement of an unconstitutional Moratorium Law passed during the Great Depression); Tex. Workers' Comp. Comm'n v. Horton, 187 S.W.3d 282, 285 (Tex. App.-Beaumont 2006, no pet.) ("[A] suit for injunctive relief against a state agency is maintainable only if the pleadings, together with the relevant evidence, show that the agency's activity is unlawful because it lacks statutory authorization.").

⁵⁸Edwards Aquifer Auth. v. Chemical Lime, Ltd., 212 S.W.3d 683, n.12 (Tex. App.-Austin 2006) rev'd on other grounds, 291 S.W.3d 392 (Tex. 2009) ("[T]he district court's final judgment declaring the EAA Act unconstitutional . . . placed outside the powers of government (i.e., rendered void) its enforcement."); Printing Indus. Ass'n of Am., 600 S.W.2d at 265-266 (finding that printers were able to maintain their suit to enjoin state agencies from engaging in printing activities if such activities were not authorized by the Constitution).

⁵⁹Mo., K & T. Ry. Co. of Tex. v. Shannon, 100 Tex. 379, 100 S.W. 138 (1907) ("The principle . .. . is that the courts have no power to enjoin the officers of a state from taking action under a statute claimed to be unconstitutional and deemed to be prejudicial to the complainants, unless the officers are about to do some act which, if not authorized by a valid law, constitutes an unlawful interference with their rights."); State v. Morales, 869 S.W.2d 941, 946 (Tex. 1994) (holding that "an injunction will not issue unless it is shown that the respondent will engage in the activity enjoined"); see also Frey v. DeCordova Bend Estates Owners Ass'n, 647 S.W.2d 246, 248 (Tex. 1983) (holding that the fear or apprehension of the possibility of injury is not a basis for injunctive relief).

⁶⁰Town of Palm Valley v. Johnson, 87 S.W.3d 110, 111 (Tex. 2001).  

⁶¹Butnaru v. Ford Motor Co., 84 S.W.3d 198 (Tex. 2002).

⁶²See S.W. Newspapers Corp. v. Curtis, 584 S.W.2d 362, 368 (Tex. Civ. App.-Amarillo 1979, no pet.)  ("The publisher has plead [sic] and shown by nonconflicting evidence the denial of a constitutionally guaranteed right which, as a matter of law, inflicts an irreparable injury.").  

⁶³937 S.W.2d at 77 (enjoining the violent protests of anti-abortion advocates).  

⁶⁴Liberty Mut. Ins. Co. v. Mustang Tractor & Equip. Co., 812 S.W.2d 663, 666 (Tex. App.-Houston [14th Dist.] 1991, no writ).

⁶⁵An unconstitutional government action negatively affecting the value or payment of Transition Bonds would, in all likelihood, amount to the type of ongoing, irreparable harm necessary to support the issuance of a permanent injunction. In many cases, courts have concluded that injunctive relief was appropriate to prevent the improper expenditure of funds by government officials. For example, courts have held that an injunction is appropriate to enjoin government officials from diverting public funds from a statutorily-required use to an unauthorized use. See City of Dallas v. Mosely, 286 S.W. 497, 499 (Tex. Civ. App.-Dallas 1926), aff'd, 17 S.W.2d 36 (Tex. Comm'n. App. 1929) ("A writ of injunction will properly issue to restrain the diversion of public funds intrusted to public officers for special use."). Courts have also enjoined the illegal expenditure of public funds. See Osborne v. Keith, 142 Tex. 262, 177 S.W.2d 198, 200 (1944) (recognizing the right of courts to enjoin public officials to spend funds pursuant to an illegal contract); Bexar County v. Wentworth, 378 S.W.2d 126, 129 (Tex. Civ. App.-San Antonio 1964, writ ref'd. n.r.e.) (upholding the grant of a temporary injunction restraining a government official from spending money on goods for the government under a contract in which he had an interest).  Furthermore, as noted by the Texas Supreme Court in Calvert v. Hull, 475 S.W.2d 907 (Tex. 1972), private citizens may sue public officials (i.e., the comptroller) to enjoin the expenditure of appropriated funds. Id. at 908.

⁶⁶Tex. Health Care Info. Council v. Seton Health Plan, Inc., 94 S.W.3d 841, 853 (Tex. App.-Austin 2002, pet. denied).

⁶⁷Brazos River Conservation & Reclamation Dist. v. Allen, 141 Tex. 208, 171 S.W.2d 842, 846 (1943).  

⁶⁸Montfort v. Trek Res., Inc., 198 S.W.3d 344, 353 (Tex. App.-Eastland 2006, no pet.); Synergy Ctr., Ltd. v. Lone Star Franchising, Inc., 63 S.W.3d 561, 567 (Tex. App.-Austin 2001, no pet.); Recon Exploration, Inc. v. Hodges, 798 S.W.2d 848, 851 (Tex. App.-Dallas 1990, no writ); see also Wright v. Sport Supply Group, Inc., 137 S.W.3d 289, 294 (Tex. App.-Beaumont 2004, no pet.) (citing Butnaru v. Ford Motor Co., 84 S.W.3d 198, 204 (Tex. 2002)) (stating that the requirements of "irreparable injury" and "no adequate remedy" are "inextricably intertwined" under Texas law).

⁶⁹Bexar County v. North East Indep. Sch. Dist., 802 S.W.2d 854 (Tex. App.-San Antonio 1990, writ denied) (citing Furr v. Hall, 553 S.W.2d 666, 672 (Tex. Civ. App.-Amarillo 1977, writ ref'd n.r.e.)).

⁷⁰U.S. Trust Co. of N.Y. v. New Jersey, 431 U.S. 1, 8-9 (1977). 

⁷¹Id. at 9-10.

⁷²Id. at 10.

⁷³Id. at 28.

⁷⁴Id. at 19.

⁷⁵Id. (emphasis added).

⁷⁶Butnaru v. Ford Motor Co., 84 S.W.3d 198, 204 (Tex. 2002); Walling v. Metcalfe, 863 S.W.2d 56, 57 (Tex. 1993).

⁷⁷State Bd. of Ins. v. Prof'l & Business Men's Ins. Co., 359 S.W.2d 312 (Tex. Civ. App.-Austin 1962, writ ref'd n.r.e.) (citing Tex. R.R. Comm'n v. Shell Oil Co., 146 Tex. 286, 206 S.W.2d 235, 242 (1947)).  

⁷⁸Butnaru, 84 S.W.3d at 204. 

⁷⁹Tex. State Bd. of Pharmacy v. Walgreen Tex. Co., 520 S.W.2d 845 (Tex. Civ. App.-Austin 1975, writ ref'd n.r.e.).

⁸⁰    Sun Oil v. Whitaker, 424 S.W.2d 216 (Tex. 1968).

⁸¹Universal Health Servs. v. Thompson, 24 S.W.3d 570, 576 (Tex. App.-Austin 2000, no pet.); Walling, 863 S.W.2d at 58.

⁸²U.S. Trust Co., 431 U.S. at 19; Walling v. Metcalfe, 863 S.W.2d 56, 57 (Tex. 1993) (citing Roland Mach. Co. v. Dresser Indus., 749 F.2d. 380, 386 (7th Cir. 1984) where the Seventh Circuit said that temporary injunctive relief was particularly appropriate when "the nature of the plaintiff's loss may make damages very difficult to calculate").  

⁸³Beaumont, 896 S.W.2d at 150.

⁸⁴As in the case of permanent injunctions, a court considering whether to issue a temporary injunction will balance the equities between the parties to determine whether an injunction should issue.  Lower Colo. River Auth. v. McGraw, 125 Tex. 268, 83 S.W.2d 629 (1935).

⁸⁵Universal Health Servs., 24 S.W.3d at 570.

⁸⁶    Sheffield Dev. Co. v. City of Glenn Heights, 140 S.W.3d 660 (Tex. 2004). 

⁸⁷    Mayhew v. Town of Sunnyvale, 964 S.W.2d 922, 935 (Tex. 1998); Sheffield Dev. Co., 140 S.W.3d at 669. 

⁸⁸See Sheffield, 140 S.W.3d at 671-79; Mayhew, 964 S.W.2d at 933-38.

⁸⁹City of Dallas v. Jennings, 142 S.W.3d 310, 313 (Tex. 2004); Steele, 603 S.W.2d at 790-791.  

⁹⁰Steele, 603 S.W.2d at 790.  

⁹¹Gen. Servs. Comm'n v. Little-Tex Insulation Co., 39 S.W.3d 591, 598 (Tex. 2001) ("Little-Tex").

⁹²Little-Tex, 39 S.W.3d at 598; State v. Holland, 161 S.W.3d 227, 232 (Tex. App.-Corpus Christi 2005, no pet.) rev'd on other grounds, 221 S.W.3d 639 (2007).

⁹³City of Dallas v. Jennings, 142 S.W.3d at 313-14 (emphasis in original) (quoting Tex. Highway Dept. v. Weber, 219 S.W.2d 70, 71 (Tex. 1949)).

⁹⁴City of Tyler v. Likes, 962 S.W.2d 489, 505 (Tex. 1997) (no taking where city action to unclog sewer backup caused a sewage flood that damaged plaintiff's property).  The Texas Supreme Court has ruled that the State does not have the requisite intent when money or property is taken or withheld in the context of a contractual dispute with an entity that has contracted to provide a good or service to the State. Little-Tex, 39 S.W.3d at 598-99. The Court reasoned that, when the State is acting under colorable contractual rights, it does not have the requisite intent to take property under any eminent domain powers. Id. To the extent the State Pledge, the related provisions of Subchapter G of Chapter 39 of PURA, and the Financing Order creating the Transition Property and Transition Charges effectively create a contract between the State and the Bondholders, such a "contract" is distinguishable from a typical goods or services contract with the State. Accordingly, it is not apparent that in enacting State Impairment Legislation or taking PUCT Impairment Action, the State would be "acting within a color of right to take or withhold property in a contractual situation" within the meaning of Little-Tex. Id.

⁹⁵See PURA Section  39.301.

⁹⁶Hallco Tex., Inc. v. McMullen County, 221 S.W. 3d 50, 56 (Tex. 2006) ("Absent a cognizable property interest, a claimant is not entitled to compensation under article I, section 17.").

⁹⁷PURA Section  39.304 (emphasis added). 

⁹⁸DeMino v. Sheridan, 176 S.W.3d 359 (Tex. App.-Houston [lst Dist.] 2004, no pet.); City of Houston v. North Mun. Util. Dist. No. 1, 73 S.W.3d 304, 310-11 (Tex. App.-Houston [1st Dist.] 2001, pet. denied); Tex. State Technical Coll., 983 S.W.2d 821, 826 (Tex. App.-Waco 1998, pet. denied).

⁹⁹Town of Flower Mound v. Stafford Estates Ltd. P'ship, 71 S.W.3d 18, 28 (Tex. App.-Fort Worth 2002), aff'd, 135 S.W.3d 620 (Tex. 2004); see also Lone Star Gas Co. v. City of Fort Worth, 98 S.W.2d 799 (Tex. Comm. App. 1936) (recognizing that where a city acquires a gas distribution system as a going concern through eminent domain, items that enter into arriving at the compensation award include intangible property, such as contract rights).

¹⁰⁰Tex. Workforce Comm'n v. MidFirst Bank, 40 S.W.3d 690, 696 (Tex. App.-Austin 2001, pet. denied).  

¹⁰¹Id. at 692.

¹⁰²Id. at 697 ("[W]e will not limit takings-clause actions to situations involving eminent domain.").  

¹⁰³See County of Burleson v. Gen. Elec. Capital Corp., 831 S.W.2d 54, 60 (Tex. App.-Houston [14th Dist.] 1992, writ denied); Hunt County v. Green Tree Servicing Corp., No. 05-0500940-CV, 2006 WL 242349, at *2 (Tex. App.-Dallas Feb. 2, 2006, no. pet.) (mem. op., not designated for publication).

¹⁰⁴State v. Holland, 161 S.W.3d 227, 230-32 (Tex. App.-Corpus Christi 2005, no pet.).

¹⁰⁵State/Operating Contractors ABS Emissions, Inc. v. Operating Contractors/State, 985 S.W.2d 646, 653 (Tex. App.-Austin 1999, pet. denied) ("[u]nder Texas case law, a franchise impresses its owner with vested rights" and "generally take[s] the form of utilities, or other monopolies, created to further the public interest"); Brazosport Sav. & Loan Ass'n v. Am. Sav. & Loan Ass'n, 342 S.W.2d 747, 750 (Tex. 1961) ("[i]n character and nature a franchise is essentially in all respects property, and is governed by the same rules as to its enjoyment and protection and is regarded by the law precisely as other property").

¹⁰⁶Tarrant Reg'l Water Dist. v. Gragg, 151 S.W.3d 546, 554-55 (Tex. 2004); Steele v. City of Houston, 603 S.W.2d 786, 790 (Tex. 1980).

¹⁰⁷See Maher v. Lasater, 354 S.W.2d 923, 924-25 (Tex. 1962) (enjoining county commissioners court from declaring a private road across claimants' property to be a public highway); Marrs v. R.R. Comm'n, 142 Tex. 293, 177 S.W.2d 941, 948-49 (1944) (enjoining Railroad Commission proration orders where effect of orders would allow oil from petitioner's land to flow onto and accumulate on neighboring land).

¹⁰⁸See Sheffield, 140 S.W.3d at 669-70; Tex. Highway Dep't v. Weber, 219 S.W.2d at 71-72.  

¹⁰⁹See MidFirst Bank, 40 S.W.3d at 696-697.

¹¹⁰Id. at 696.

¹¹¹Id.

¹¹²Id. at 697.  

¹¹³Id. at 696.

¹¹⁴City of College Station v. Turtle Rock Corp., 680 S.W.2d 802, 803 (Tex. 1984).

¹¹⁵Turtle Rock Corp., 680 S.W.2d at 804.

¹¹⁶Id.

¹¹⁷Id. at 805.

¹¹⁸Sheffield, 140 S.W.3d at 672.

¹¹⁹ Id. at 671-672.

¹²⁰ Id. at 672 (citing Connolly v. Pension Benefits Guar. Corp., 475 U.S. 211, 225 (1986) (quoting Penn Cent. Transp. Co. v. City of New York, 438 U.S. 104, 124 (1978)).

¹²¹ PURA Section  36.401(b)(2).