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ONCOR ELECTRIC DELIVERY JULY 25, 2003
TRANSITION BOND COMPANY LLC PRELIMINARY
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PRELIMINARY TERM SHEET
AND COMPUTATIONAL MATERIALS
ONCOR ELECTRIC DELIVERY
TRANSITION BOND COMPANY LLC,
ISSUER
$500,000,000
TRANSITION BONDS, SERIES 2003-1
ONCOR ELECTRIC DELIVERY COMPANY, SERVICER
[ONCOR LOGO] [MAP ONCOR SERVICE TERRITORY]
[GRAPHIC][OMITTED] [GRAPHIC][OMITTED]
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & Co. Incorporated ▇▇▇▇▇▇ Brothers Inc.
▇▇▇▇▇▇▇, ▇▇▇▇▇ & Co. ▇▇▇▇▇▇▇ ▇▇▇▇▇ & Co.
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ONCOR ELECTRIC DELIVERY JULY 25, 2003
TRANSITION BOND COMPANY LLC PRELIMINARY
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$500,000,000
ONCOR ELECTRIC DELIVERY TRANSITION BOND COMPANY LLC
TRANSITION BONDS ("BONDS"), SERIES 2003-1
SUMMARY OF TERMS
TRANSACTION OVERVIEW
Oncor Electric Delivery Company ("Oncor") has established a
bankruptcy-remote special purpose subsidiary company that will issue taxable
debt securities secured by the right to receive revenues arising from transition
charges from all retail electric customers in Oncor's service territory. This is
in accordance with a financing order issued by the Public Utility Commission of
Texas ("PUCT") on August 5, 2002 (the "Financing Order"), which became final and
non-appealable on January 30, 2003. This transaction is part of the Texas
Electric Utility Restructuring Act, which implemented competitive electric
generation and retail markets in the State of Texas, and authorized Texas
electric utilities to finance their generation-related regulatory assets and
certain qualified costs. The proceeds of the Bonds will be paid to the parent
company, Oncor, and will be used by Oncor to repurchase or retire its debt or
equity.
ANTICIPATED BOND STRUCTURE
---------------------------------------------------------------------------------------------------------------------------------
EXPECTED
EXPECTED AVERAGE PAYMENT PAYMENT
SIZE TRANCHE RATINGS FIXED/ LIFE WINDOW WINDOW EXPECTED LEGAL
CLASS ($MM) TYPE (MDY/S&P/FITCH) FLOATING (YEARS) (YEARS) (MONTHS) MATURITY MATURITY
---------------------------------------------------------------------------------------------------------------------------------
[A-1] [105] Sequential [Aaa/AAA/AAA] [ ] [2.00] [3.0 yrs; [37] [2/07] [2/09]
(2/04-2/07)]
---------------------------------------------------------------------------------------------------------------------------------
[A-2] [124] Sequential [Aaa/AAA/AAA] [ ] [5.00] [3.0 yrs; [37] [2/10] [2/12]
(2/07-2/10)]
---------------------------------------------------------------------------------------------------------------------------------
[A-3] [128] Sequential [Aaa/AAA/AAA] [ ] [8.00] [3.0 yrs; [37] [2/13] [2/15]
(2/10-2/13)]
---------------------------------------------------------------------------------------------------------------------------------
[A-4] [143] Sequential [Aaa/AAA/AAA] [ ] [10.83] [2.5 yrs; [31] [8/15] [8/17]
(2/13-8/15)]
---------------------------------------------------------------------------------------------------------------------------------
ISSUER............................ Oncor Electric Delivery Transition Bond
Company LLC, a bankruptcy-remote,
Delaware limited liability company,
wholly-owned by Oncor.
PARENT/SELLER/SERVICER............ Oncor, a regulated electric transmission
and distribution ("T&D") utility wholly-
owned by TXU US Holdings.
Oncor provides delivery services to
retail electric providers in its service
territory, which sell electricity to
over 2.9 million points of delivery in
north-central, eastern and western
Texas.
PUCT
FINANCIAL ADVISOR................. Saber Partners, LLC ("Saber") (co-equal
decision maker with Issuer)
EXPECTED RATINGS
(▇▇▇▇▇'▇/S&P/FITCH)............... [Aaa/AAA/AAA]
STRUCTURE......................... Sequential pay amortizing bonds
WEIGHTED AVERAGE LIFE PROFILE..... Principal cannot be repaid earlier than
expected unless the Bonds are accelera-
▇▇▇ due to an event of default. Exten-
sion risk is negligible, ranging from
The information herein has been prepared solely for informational purposes and
is not an offer to buy or sell or a solicitation of an offer to buy or sell any
security or instrument or to participate in any trading strategy. No
representation or warranty can be given with respect to the accuracy or
completeness of the information herein, or that any future offer of securities,
instruments or transactions will conform to the terms hereof. Please refer to
the important information and qualifications on the last page hereof when
reviewing this information.
Page 2 of 11
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ONCOR ELECTRIC DELIVERY JULY 25, 2003
TRANSITION BOND COMPANY LLC PRELIMINARY
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[0.6-1.3] months in weighted average life
under a severe stress scenario. The
legislatively mandated true-up mechanism
is intended to provide for the recovery
of transition charge amounts sufficient
to pay interest, scheduled principal and
other required amounts on a timely basis.
Please see "Weighted Average Life
Sensitivity" for a weighted average life
sensitivity analysis from forecasted
levels in energy consumption.
PAYMENT DATES AND INTEREST
ACCRUAL .......................... Semi-annually, [February 15] and [August
15]. Interest will be calculated on a
[30/360] basis.
USE OF PROCEEDS................... Paid to the parent company, Oncor, and
used by Oncor to repurchase or retire its
debt or equity.
COLLATERAL........................ The irrevocable right to bill and
collect non-bypassable (cent)/kWh(1) and
(cent)/kW(2) charges from all retail
electric customers ("Transition
Property").
CREDIT ENHANCEMENT................ Transition charges will be adjusted
through a true-up mechanism no less than
annually to ensure timely payment of
principal and interest. The expected
ratings on the Bonds are [Aaa/AAA/AAA].
This true-up mechanism is legislatively
mandated. In addition, there is an
overcollateralization subaccount
(building up to 0.5% of the initial
principal balance of the Bonds), capital
subaccount (0.5% of the Bonds' initial
principal balance), and reserve
subaccount to further support timely
payment of principal and interest.
OPTIONAL REDEMPTION............... None. Only a 5% de minimus principal
outstanding call ("cleanup call") after
the last scheduled payment date of the
Bonds.
TAX TREATMENT..................... Fully taxable
TYPE OF OFFERING ................. SEC registered
EXCHANGE LISTING.................. DTC, Clearstream and Euroclear
ERISA ELIGIBLE ................... Yes
EXPECTED SETTLEMENT............... [August [ ], 2003]
UNDERWRITERS...................... ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & Co. Incorporated, ▇▇▇▇▇▇
Brothers Inc., ▇▇▇▇▇▇▇, ▇▇▇▇▇ & Co. and
▇▇▇▇▇▇▇ ▇▇▇▇▇ & Co.
INDENTURE TRUSTEE................. The Bank of New York
Notes:
(1) Cents per kilowatt hour.
(2) Cents per kilowatt.
The information herein has been prepared solely for informational purposes and
is not an offer to buy or sell or a solicitation of an offer to buy or sell any
security or instrument or to participate in any trading strategy. No
representation or warranty can be given with respect to the accuracy or
completeness of the information herein, or that any future offer of securities,
instruments or transactions will conform to the terms hereof. Please refer to
the important information and qualifications on the last page hereof when
reviewing this information.
Page 3 of 11
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ONCOR ELECTRIC DELIVERY JULY 25, 2003
TRANSITION BOND COMPANY LLC PRELIMINARY
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[FLOATING RATE BENCHMARK]......... [6-month LIBOR, for floating rate
tranches, if any]
[INTEREST RATE SWAPS]............. [For those classes of Bonds that are
issued as floating rate securities, if
any, the Issuer will enter into a
corresponding Interest Rate Swap with a
qualified swap counterparty.]
[The Interest Rate Swaps, if any, will be
"balance guaranty", amortizing interest
rate swaps. A separate Interest Rate Swap
Agreement would apply to each such
floating rate class. The characteristics
of each Interest Rate Swap will
correspond to the related floating rate
class.]
[SWAP COUNTERPARTY, IF ANY, MINIMUM
RATINGS (▇▇▇▇▇'▇/S&P/FITCH)]...... [▇▇▇▇▇'▇:
(1) Both short-term credit rating and
long-term credit rating of at least
"P-1" and "Aa3", respectively; or (2) to
the extent a short-term credit rating is
not available, a long-term credit rating
of at least "Aa2".]
[S&P:
(1) Both short-term credit rating and
long-term credit rating of at least
"A-1" and "A-", respectively; or (2) to
the extent a short-term credit rating is
not available, a long-term credit rating
of at least "A+".]
[Fitch:
(1) A short-term credit rating of at
least "F-1"; or
(2) to the extent a short-term credit
rating is not available, a long-term
credit rating of at least "A".]
The information herein has been prepared solely for informational purposes and
is not an offer to buy or sell or a solicitation of an offer to buy or sell any
security or instrument or to participate in any trading strategy. No
representation or warranty can be given with respect to the accuracy or
completeness of the information herein, or that any future offer of securities,
instruments or transactions will conform to the terms hereof. Please refer to
the important information and qualifications on the last page hereof when
reviewing this information.
Page 4 of 11
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ONCOR ELECTRIC DELIVERY JULY 25, 2003
TRANSITION BOND COMPANY LLC PRELIMINARY
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PARTIES TO TRANSACTION
The following chart represents a summary of the parties
to the transactions underlying the offering of the Bonds, their roles and their
various relationships to the other parties:
[Chart summarizing the parties to the transactions underlying the offering of
the transition bonds, their roles and their various relationships to the other
parties. The PUCT issued the financing order and will approve adjustments to the
transition charges. US Holdings applied to the PUCT for the Financing Order, and
Oncor will apply, as servicer, for transition charge adjustments. As the seller,
Oncor will sell transition property and rights under the Financing Order to
Oncor Electric Delivery Transition Bond Company LLC, for cash pursuant to the
sale agreements. As the servicer, Oncor will service the transition property of
the issuer and receive a servicing fee pursuant to the servicing agreement(s).
As the administrator, Oncor will provide administrative support to its issuer
and receive an administration fee pursuant to the administration agreement. As
the issuer, Oncor Electric Delivery Transition Bond Company LLC, will sell the
transition bonds for cash, pursuant to the underwriting agreement(s). The Bank
of New York, the indenture trustee, acts for and on behalf of the holders of
transition bonds pursuant to the indenture. The underwriters will sell the
transition bonds for cash to the holders of transition bonds.]
Note:
(1) The application for the Financing Order was filed by TXU U.S. Holdings.
The information herein has been prepared solely for informational purposes and
is not an offer to buy or sell or a solicitation of an offer to buy or sell any
security or instrument or to participate in any trading strategy. No
representation or warranty can be given with respect to the accuracy or
completeness of the information herein, or that any future offer of securities,
instruments or transactions will conform to the terms hereof. Please refer to
the important information and qualifications on the last page hereof when
reviewing this information.
Page 5 of 11
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ONCOR ELECTRIC DELIVERY JULY 25, 2003
TRANSITION BOND COMPANY LLC PRELIMINARY
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SCHEDULED AMORTIZATION
Expected Bond Amortization Schedule
--------------------------------------------------------------------------------------------------------------------------
DATE CLASS A-1 ($) CLASS A-2 ($) CLASS A-3 ($) CLASS A-4 ($)
--------------------------------------------------------------------------------------------------------------------------
[8/15/2003] [105,000,000] [124,000,000] [128,000,000] [143,000,000]
[2/15/2004] [96,892,480] [124,000,000] [128,000,000] [143,000,000]
[8/15/2004] [81,483,371] [124,000,000] [128,000,000] [143,000,000]
[2/15/2005] [60,589,196] [124,000,000] [128,000,000] [143,000,000]
[8/15/2005] [44,845,597] [124,000,000] [128,000,000] [143,000,000]
[2/15/2006] [23,593,028] [124,000,000] [128,000,000] [143,000,000]
[8/15/2006] [7,519,956] [124,000,000] [128,000,000] [143,000,000]
[2/15/2007] - [109,936,768] [128,000,000] [143,000,000]
[8/15/2007] [93,391,986] [128,000,000] [143,000,000]
[2/15/2008] [71,071,310] [128,000,000] [143,000,000]
[8/15/2008] [53,926,546] [128,000,000] [143,000,000]
[2/15/2009] [30,965,607] [128,000,000] [143,000,000]
[8/15/2009] [13,115,465] [128,000,000] [143,000,000]
[2/15/2010] - [117,447,640] [143,000,000]
[8/15/2010] [98,817,384] [143,000,000]
[2/15/2011] [74,271,644] [143,000,000]
[8/15/2011] [54,693,847] [143,000,000]
[2/15/2012] [29,184,250] [143,000,000]
[8/15/2012] [8,610,762] [143,000,000]
[2/15/2013] - [125,099,318]
[8/15/2013] [103,435,697]
[2/15/2014] [75,764,936]
[8/15/2014] [52,889,459]
[2/15/2015] [24,053,987]
[8/15/2015] -
The information herein has been prepared solely for informational purposes and
is not an offer to buy or sell or a solicitation of an offer to buy or sell any
security or instrument or to participate in any trading strategy. No
representation or warranty can be given with respect to the accuracy or
completeness of the information herein, or that any future offer of securities,
instruments or transactions will conform to the terms hereof. Please refer to
the important information and qualifications on the last page hereof when
reviewing this information.
Page 6 of 11
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ONCOR ELECTRIC DELIVERY JULY 25, 2003
TRANSITION BOND COMPANY LLC PRELIMINARY
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WEIGHTED AVERAGE LIFE SENSITIVITY
The following table highlights the sensitivity of the weighted average lives of
the various Bond classes to energy consumption levels (retail electric sales)
below forecasted levels. There can be no assurance that the weighted average
lives of the various classes of the Bonds will be as shown below.
-----------------------------------------------------------------------------------------------------
EXPECTED AVERAGE LIVES (YRS.) ASSUMING UNIFORM ANNUAL DECLINE FROM
CLASS WEIGHTED FORECASTED ENERGY CONSUMPTION
AVG. LIFE [-5%] [CHANGE] [-15%] [CHANGE]
-----------------------------------------------------------------------------------------------------
[A-1] [2.00] [2.00] [0.00] [2.11] [+0.11]
-----------------------------------------------------------------------------------------------------
[A-2] [5.00] [5.00] [0.00] [5.10] [+0.10]
-----------------------------------------------------------------------------------------------------
[A-3] [8.00] [8.00] [0.00] [8.08] [+0.08]
-----------------------------------------------------------------------------------------------------
[A-4] [10.83] [10.83] [0.00] [10.88] [+0.05]
-----------------------------------------------------------------------------------------------------
THIS MEANS UNDER THIS EXAMPLE, IF RETAIL ELECTRIC SALES ARE 15% LESS THAN THE
FORECASTED ENERGY CONSUMPTION EACH YEAR, THE [10.83]-YEAR WEIGHTED AVERAGE LIFE
OF THE A-4 CLASS WOULD BECOME [10.88] YEARS. PLEASE NOTE THAT OVER THE LAST TEN
YEARS, ONCOR'S ANNUAL FORECAST ERROR HAS NOT EXCEEDED 6%, AND ITS TEN-YEAR
AVERAGE FORECAST ERROR IS LESS THAN 1% (0.77%).
For the purposes of preparing the table above, in addition to those assumptions
in deriving the Scheduled Amortization, the following assumptions, among other
things, have been made:
o The forecast error stays constant over the life of the Bonds and is equal
to 5% or 15% as stated in the table above. The servicer will true-up
transition charges ("TCs" or "Transition Charges") so as to ensure the
billing of TCs necessary to generate the collection of amounts sufficient
to (a) pay ongoing fees and expenses (b) timely provide for all scheduled
payments of principal and interest, (c) fund the capital and
overcollateralization subaccounts to their required levels, and (d) return,
if necessary, the reserve subaccount to a zero balance by the related
payment date;
o Periodic annual standard true-ups on a transaction year basis;
o Interim true-ups have been modeled to be implemented only after a 5%
variance from the expected amortization schedule (taking into account
amounts in the reserve subaccount) has occurred;
o No non-standard true-ups have been modeled; and
o No optional redemption has been exercised.
The information herein has been prepared solely for informational purposes and
is not an offer to buy or sell or a solicitation of an offer to buy or sell any
security or instrument or to participate in any trading strategy. No
representation or warranty can be given with respect to the accuracy or
completeness of the information herein, or that any future offer of securities,
instruments or transactions will conform to the terms hereof. Please refer to
the important information and qualifications on the last page hereof when
reviewing this information.
Page 7 of 11
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ONCOR ELECTRIC DELIVERY JULY 25, 2003
TRANSITION BOND COMPANY LLC PRELIMINARY
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SOURCE OF REVENUES: HISTORICAL CUSTOMER CLASS COMPOSITION(1)
Number of Retail Electric Customers/Points of Delivery(2) by Customer Class
------------------------------------------------------------------------------------------------------------------------------
QUARTER
FOR THE YEAR ENDED ENDED
-----------------------------------------------------------------------------------------------------------------
12/31/93 12/31/94 12/31/95 12/31/96 12/31/97 12/31/98 12/31/99 12/31/00 12/31/01 12/31/02 3/31/03
-----------------------------------------------------------------------------------------------------------------
NUMBER NUMBER NUMBER NUMBER NUMBER NUMBER NUMBER NUMBER NUMBER POINTS POINTS
OF OF OF OF OF OF OF OF OF OF OF
CUSTOMERS CUSTOMERS CUSTOMERS CUSTOMERS CUSTOMERS CUSTOMERS CUSTOMERS CUSTOMERS CUSTOMERS DELIVERY DELIVERY
------------------------------------------------------------------------------------------------------------------------------
Residential 1,941,934 1,973,570 2,015,189 2,061,837 2,104,151 2,156,431 2,215,752 2,266,373 2,312,553 2,398,671 2,389,580
Commercial 294,190 298,391 305,240 312,304 320,690 329,570 338,514 346,195 347,643 373,182 372,380
Industrial 6,430 6,340 6,217 6,184 6,235 6,148 6,155 6,686 6,580 6,304 6,256
Other 10,283 10,721 10,491 10,334 10,229 9,544 9,292 9,059 9,400 107,302 107,844
==============================================================================================================================
Total 2,252,837 2,289,022 2,337,137 2,390,659 2,441,305 2,501,693 2,569,713 2,628,313 2,676,176 2,885,459 2,876,060
------------------------------------------------------------------------------------------------------------------------------
% of Total
------------------------------------------------------------------------------------------------------------------------------
Residential 86.20% 86.22% 86.22% 86.25% 86.19% 86.20% 86.23% 86.23% 86.41% 83.13% 83.09%
Commercial 13.06% 13.03% 13.06% 13.06% 13.14% 13.17% 13.17% 13.17% 12.99% 12.93% 12.95%
Industrial 0.28% 0.28% 0.27% 0.26% 0.25% 0.25% 0.24% 0.25% 0.25% 0.22% 0.21%
Other 0.46% 0.47% 0.45% 0.43% 0.42% 0.38% 0.36% 0.35% 0.35% 3.72% 3.75%
==============================================================================================================================
Total 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00%
------------------------------------------------------------------------------------------------------------------------------
Actual Retail Electric Usage in Megawatt-hours ("MWh") by Customer Class(3)
----------------------------------------------------------------------------------------------------------
FOR THE YEAR ENDED
---------------------------------------------------------------------------------------------
12/31/93 12/31/94 12/31/95 12/31/96 2/31/97 12/31/98
----------------------------------------------------------------------------------------------------------
Residential 27,825,397 28,079,706 28,635,593 30,785,860 31,410,509 34,536,687
Commercial 32,027,871 33,447,747 34,209,316 35,407,543 36,178,973 38,407,000
Industrial 17,096,695 17,999,463 18,158,130 19,017,045 19,672,579 20,384,865
Other 436,872 445,945 452,983 465,089 476,296 485,052
==========================================================================================================
Total 77,386,835 79,972,861 81,456,022 85,675,537 87,738,357 93,813,604
----------------------------------------------------------------------------------------------------------
% of Total
----------------------------------------------------------------------------------------------------------
Residential 35.96% 35.11% 35.15% 35.93% 35.80% 36.81%
Commercial 41.39% 41.82% 42.00% 41.33% 41.24% 40.94%
Industrial 22.09% 22.51% 22.29% 22.20% 22.42% 21.73%
Other 0.56% 0.56% 0.56% 0.54% 0.54% 0.52%
==========================================================================================================
Total 100.00% 100.00% 100.00% 100.00% 100.00% 100.00%
----------------------------------------------------------------------------------------------------------
Actual Retail Electric Usage in Megawatt-hours ("MWh") by Customer Class(3) (CONTD)
------------------------------------------------------------------------------------------
QUARTER
FOR THE YEAR ENDED ENDED
-----------------------------------------------------------------------------
12/31/99 12/31/00 12/31/01 12/31/02 3/31/03
------------------------------------------------------------------------------------------
Residential 32,976,791 35,487,517 36,435,662 35,858,862 9,431,325
Commercial 38,671,072 39,833,924 38,738,356 41,562,864 9,357,287
Industrial 19,943,454 22,130,391 23,158,622 19,279,420 5,495,502
Other 491,455 495,323 500,878 431,412 130,774
==========================================================================================
Total 92,082,772 97,947,155 98,833,518 97,132,558 24,414,888
------------------------------------------------------------------------------------------
% of Total
------------------------------------------------------------------------------------------
Residential 35.81% 36.23% 36.87% 36.92% 38.63%
Commercial 42.00% 40.67% 39.19% 42.79% 38.33%
Industrial 21.66% 22.59% 23.43% 19.85% 22.51%
Other 0.53% 0.51% 0.51% 0.44% 0.53%
==========================================================================================
Total 100.00% 100.00% 100.00% 100.00% 100.00%
------------------------------------------------------------------------------------------
Retail Electric Revenues by Customer Class ($000s)
-------------------------------------------------------------------------------------------------------------------------------
QUARTER
FOR THE YEAR ENDED ENDED
-----------------------------------------------------------------------------------------------------------------
12/31/93 12/31/94 12/31/95 12/31/96 12/31/97 12/31/98 12/31/99 12/31/00 12/31/01 12/31/02(4) 3/31/03(4)
-------------------------------------------------------------------------------------------------------------------------------
Residential 1,622,792 1,668,260 1,767,123 1,878,441 1,884,572 2,042,790 1,928,275 2,057,494 2,081,498 795,145 212,298
Commercial 1,468,837 1,525,183 1,626,348 1,677,445 1,678,988 1,763,283 1,791,908 1,826,964 1,801,432 725,991 189,122
Industrial 404,476 427,941 443,691 445,779 446,442 456,649 450,384 508,666 540,563 133,254 39,429
Other 43,904 46,493 49,330 50,675 51,035 52,790 53,637 54,189 55,277 45,992 12,590
==============================================================================================================================
Total 3,540,009 3,667,877 3,886,492 4,052,340 4,061,037 4,315,512 4,224,204 4,447,313 4,478,770 1,700,382 453,439
------------------------------------------------------------------------------------------------------------------------------
% of Total
------------------------------------------------------------------------------------------------------------------------------
Residential 45.84% 45.48% 45.47% 46.35% 46.41% 47.34% 45.65% 46.26% 46.48% 46.76% 46.82%
Commercial 41.49% 41.58% 41.85% 41.40% 41.34% 40.86% 42.42% 41.08% 40.22% 42.70% 41.71%
Industrial 11.43% 11.67% 11.41% 11.00% 10.99% 10.58% 10.66% 11.44% 12.07% 7.84% 8.69%
Other 1.24% 1.27% 1.27% 1.25% 1.26% 1.22% 1.27% 1.22% 1.23% 2.70% 2.78%
==============================================================================================================================
Total 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00%
------------------------------------------------------------------------------------------------------------------------------
Notes:
(1) "Residential" grouping corresponds to the residential service regulatory
asset recovery class, "Commercial" grouping corresponds to the general
service secondary regulatory asset recovery class, "Industrial" grouping
corresponds to the general service primary, high voltage service,
instantaneous interruptible and noticed interruptible regulatory asset
recovery classes, and "Other" corresponds to the lighting service regulatory
asset recovery class.
(2) Due to the Texas Electric Utility Restructuring Act, Oncor was required to
change its method of accounting for some customers. Prior to January 1,
2002, some points of delivery were combined into a single point of delivery
and accounted for as a single customer. Oncor is now required to account for
those points of delivery separately and can no longer combine them into one
point of delivery.
(3) Actual usage fluctuations are highly dependent on weather and economic
conditions. See "THE SERVICER OF THE TRANSITION PROPERTY -- How Oncor
Forecasts the Number of Customers and the Amount of Electricity Usage" in
the prospectus. There can be no assurance that future usage rates will be
similar to historical experience. See "RISK FACTORS -- Servicing Risks" in
the prospectus.
(4) The data for the year ended 12/31/02 and quarter ended 3/31/03 represents
only transmission and distribution revenues and are, therefore, not directly
comparable to prior years due to the separation of the retail business from
the transmission and distribution business, pursuant to the Texas Electric
Utility Restructuring Act.
The information herein has been prepared solely for informational purposes and
is not an offer to buy or sell or a solicitation of an offer to buy or sell any
security or instrument or to participate in any trading strategy. No
representation or warranty can be given with respect to the accuracy or
completeness of the information herein, or that any future offer of securities,
instruments or transactions will conform to the terms hereof. Please refer to
the important information and qualifications on the last page hereof when
reviewing this information.
Page 8 of 11
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ONCOR ELECTRIC DELIVERY JULY 25, 2003
TRANSITION BOND COMPANY LLC PRELIMINARY
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ALLOCATIONS AND DISTRIBUTIONS OF TRANSITION BOND COMPANY REVENUES
Please see below for a general summary of the flow of collected Transition
Charges:
[CHART ILLUSTRATING THE ALLOCATIONS AND DISTRIBUTIONS OF TRANSITION BOND COMPANY
REVENUES APPEARS HERE][Chart describing the flow of transition charges as
follows: Retail customer pays electric utility bill, including transition
charges to REPs, who remit the billed transition charges to the servicer
(whether collected or not from the customer); the servicer remits the transition
charges to the indenture trustee for deposit to the collection account for the
series of Bonds, which is then applied to the general subaccount to be
distributed in accordance with the payment "waterfall" described in the
prospectus.]
Note:
(1) Indenture trustee and independent manager fees and expenses not to exceed
$30,000 annually for all series of outstanding Bonds.
The information herein has been prepared solely for informational purposes and
is not an offer to buy or sell or a solicitation of an offer to buy or sell any
security or instrument or to participate in any trading strategy. No
representation or warranty can be given with respect to the accuracy or
completeness of the information herein, or that any future offer of securities,
instruments or transactions will conform to the terms hereof. Please refer to
the important information and qualifications on the last page hereof when
reviewing this information.
Page 9 of 11
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ONCOR ELECTRIC DELIVERY JULY 25, 2003
TRANSITION BOND COMPANY LLC PRELIMINARY
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GLOSSARY
"COLLATERAL" All assets held by the indenture trustee for
the benefit of the holders of the Bonds. Most
assets of the Issuer will be held by the
indenture trustee in a segregated account
established pursuant to an indenture (the
"Collection Account").
The Issuer's principal asset will be Transition
Property. Transition Property is a present
property right created pursuant to the Texas
Electric Utility Restructuring Act and the
Financing Order, which became final and
non-appealable in January 30, 2003. It consists
primarily of the irrevocable right to impose,
collect and receive non-bypassable TCs.
"PRINCIPAL PAYMENTS" Principal will be paid sequentially.
No class will receive principal payments until
all classes of a higher numerical designation
have been paid in full unless there is an
acceleration of the Bonds following an event of
default in which case principal will be paid to
all classes on a pro-rata basis.
Please see "Scheduled Amortization."
"STATE PLEDGE" The State of Texas (including the PUCT)
has pledged that it will not take or permit any
action that would impair the value of the
Transition Property or reduce, alter or impair
the TCs until the related Bonds are fully
repaid or discharged, other than periodic
true-up adjustments to correct any
overcollections or undercollections.
No voter initiative or referendum process
currently exists in Texas.
"TRANSITION CHARGES OR TCS" TCs are statutorily-created,
non-bypassable, usage-based per kilowatt hour
and per kilowatt charges. TCs are irrevocable
and payable, through REPs, by retail electric
customers within Oncor's historic service
territory.
TCs are calculated to ensure collection of
revenues sufficient to (a) pay periodic
expenses associated with the Bonds; (b) make
scheduled payments of principal and interest
(including required payments to the swap
counterparty, if any) on the Bonds; (c) fund
scheduled deposits to an overcollateralization
subaccount; and (d) replenish any amounts
previously withdrawn from the
overcollateralization subaccount or the capital
subaccount. For summary historical information
regarding Oncor's retail electric sales,
customers and revenues, please refer to "Source
of Revenues: Historical Customer Class
Composition."
"TRUE-UP MECHANISM True-ups correct any undercollections or over-
AND CREDIT collections of TCs during the preceding year
ENHANCEMENT" (for standard true-ups) or the preceding six
months (for interim true-ups). These are
legislatively mandated by PUCT's irrevocable
Financing Order.
o Standard: Annually.
o Interim: Semi-annually, if (a)
anticipated principal balance (taking
into account amounts in the reserve
subaccount) is 5% greater or less than
expected principal balance, or (b) such
measure is necessary to meet certain
rating agency requirements that a
series of Bonds be paid in full by the
expected maturity date.
o Non-Standard: If forecasted billing
units for any classes decreases by more
than 10% compared to the threshold
billing units recorded during the 12
months ending April 30, 1999.
Capital Subaccount: upfront cash deposit of
0.5% of initial principal balance.
Overcollateralization Subaccount: funded in
equal installments on each payment date to
reach 0.5% of initial principal balance.
Reserve Subaccount: holds any excess
collections of TCs.
REP Security Deposit Subaccounts: may be
drawn upon in the event of a REP payment
default.
The information herein has been prepared solely for informational purposes and
is not an offer to buy or sell or a solicitation of an offer to buy or sell any
security or instrument or to participate in any trading strategy. No
representation or warranty can be given with respect to the accuracy or
completeness of the information herein, or that any future offer of securities,
instruments or transactions will conform to the terms hereof. Please refer to
the important information and qualifications on the last page hereof when
reviewing this information.
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ONCOR ELECTRIC DELIVERY JULY 25, 2003
TRANSITION BOND COMPANY LLC PRELIMINARY
--------------------------------------------------------------------------------
All information in this Preliminary Term Sheet and Computational Materials,
whether regarding the assets backing any securities discussed herein or
otherwise, is preliminary and will be superseded by the information contained in
any final Prospectus and related Prospectus Supplement for any securities
actually sold to you. It has been prepared solely for information purposes and
is not an offer to buy or sell or a solicitation of an offer to buy or sell any
security or instrument or to participate in any trading strategy. This material
is based on information provided by Oncor Electric Delivery Transition Bond
Company LLC and Oncor Electric Delivery Company with respect to the expected
characteristics of the transition property securing these securities. The actual
characteristics and performance of the transition property will differ from the
assumptions used in preparing these materials, which are hypothetical in nature.
Changes in the assumptions may have a material impact on the information set
forth in these materials. Saber Partners, LLC, ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & Co.
Incorporated, ▇▇▇▇▇▇ Brothers Inc., ▇▇▇▇▇▇▇, ▇▇▇▇▇ & Co., ▇▇▇▇▇▇▇ ▇▇▇▇▇ & Co.,
and their affiliates make no representation or warranty with respect to the
appropriateness, usefulness, accuracy or completeness of the information, or
with respect to the terms of any future offer of securities conforming to the
terms hereof. Any such Offer of securities would be made pursuant to a
definitive Prospectus and Prospectus Supplement prepared by the issuer which
could contain material information not contained herein and to which the
prospective purchasers are referred. In the event of any such offering, this
information shall be deemed superseded, amended and supplemented in its entirety
by such Prospectus and Prospectus Supplement. Such Prospectus and Prospectus
Supplement will contain all material information in respect of any securities
offered thereby and any decision to invest in such securities should be made
solely in reliance upon such Prospectus and Prospectus Supplement. The
information contained in this material may be based on assumptions regarding
market conditions and other matters as reflected therein and is therefore
subject to change. We make no representations regarding the reasonableness of
such assumptions or the likelihood that any of such assumptions will coincide
with actual market conditions or events, and this material should not be relied
on for such purposes. No representation is made that any returns indicated will
be achieved. Changes to the assumptions may have a material impact on any
returns detailed. Although the analyses herein may not show a negative return on
the securities referred to herein, such securities are not principal protected
and, in certain circumstances, investors in such securities may suffer a
complete or partial loss on their investment. Saber Partners, LLC, ▇▇▇▇▇▇
▇▇▇▇▇▇▇ & Co. Incorporated, ▇▇▇▇▇▇ Brothers Inc., ▇▇▇▇▇▇▇, ▇▇▇▇▇ & Co. and
▇▇▇▇▇▇▇ ▇▇▇▇▇ & Co. disclaim any and all liability relating to this information,
including without limitation any express or implied representations or
warranties for, statements contained in, and omissions from, this information.
Additional information is available upon request. ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & Co.
Incorporated, ▇▇▇▇▇▇ Brothers Inc., ▇▇▇▇▇▇▇, ▇▇▇▇▇ & Co., ▇▇▇▇▇▇▇ ▇▇▇▇▇ & Co.,
and others associated with it may have positions in, and may effect transactions
in, securities and instruments of issuers mentioned herein and may also perform
or seek to perform investment banking services for the issuers of such
securities and instruments. Past performance is not necessarily indicative of
future results. Price and availability are subject to change without notice.
Information contained in this material is current as of the date appearing on
this material only. Information in this material regarding any assets backing
any securities discussed herein supercedes all prior information regarding such
assets. ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & Co. Incorporated, ▇▇▇▇▇▇ Brothers Inc., ▇▇▇▇▇▇▇, ▇▇▇▇▇
& Co. and ▇▇▇▇▇▇▇ ▇▇▇▇▇ & Co. are acting as underwriters and not acting as
agents for the issuer or its affiliates in connection with the proposed
transaction. To our readers worldwide: In addition, please note that this
publication has been issued by ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & Co. Incorporated, approved by
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ International Limited, a member of The Securities and Futures
Authority, and by ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Japan Ltd. We recommend that such investors
obtain the advice of their ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & Co. Incorporated, ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
International or ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Japan Ltd. representative about the investments
concerned. NOT FOR DISTRIBUTION TO PRIVATE CUSTOMERS AS DEFINED BY THE U.K.
SECURITIES AND FUTURES AUTHORITY.
The information herein has been prepared solely for informational purposes and
is not an offer to buy or sell or a solicitation of an offer to buy or sell any
security or instrument or to participate in any trading strategy. No
representation or warranty can be given with respect to the accuracy or
completeness of the information herein, or that any future offer of securities,
instruments or transactions will conform to the terms hereof. Please refer to
the important information and qualifications on the last page hereof when
reviewing this information.
Page 11 of 11
