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CenterPoint Energy Transition Bond Company II, LLC issued $1,851,000,000 of Senior Secured Transition Bonds, Series A, or the “Bonds,” in multiple tranches in December 2005. The Bonds are senior secured obligations of the issuer and will be supported by transition charges paid by all retail electric customers in CenterPoint Energy Houston Electric, LLC’s service territory as discussed in the prospectus supplement and accompanying prospectus described below. Transition charges are required to be adjusted annually, and semi-annually as necessary, to ensure the expected recovery of amounts sufficient to timely provide all scheduled payments of principal, interest and other required amounts and charges in connection with the Bonds.
The Bonds represent obligations only of the issuer, CenterPoint Energy Transition Bond Company II, LLC, and are secured only by the assets of the issuer, consisting principally of the transition property and funds on deposit in the collection account for the Bonds and related subaccounts. The transition property includes the right to impose, collect and receive from retail electric customers, including the State of Texas and other governmental entities, through a transition charge, amounts sufficient to make payments on the Bonds. CenterPoint Energy Houston Electric, LLC and its affiliates, other than the issuer, are not liable for any payments on the Bonds. The Bonds are not a debt or 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. However, the State of Texas and other governmental entities, as retail electric customers, are obligated to pay transition charges securing the Bonds. Except in their capacity as retail electric customers, neither the State of Texas nor any political subdivision, agency, authority or instrumentality of the State of Texas, nor any other entity, is obligated to provide funds for the payment of the Bonds.
The Public Utility Commission of Texas guaranteed that it will take specific actions pursuant to its irrevocable financing order, dated March 16, 2005, as expressly authorized by the utility restructuring provisions of the Public Utility Regulatory Act to ensure that expected transition charge revenues are sufficient to timely pay scheduled principal and interest on the Bonds. The Public Utility Commission of Texas’ obligations relating to the Bonds, including the specific actions that it has guaranteed to take, are direct, explicit, irrevocable and unconditional, and are legally enforceable against the Public Utility Commission of Texas, a United States public sector entity.
All matters relating to the structuring and pricing of the Bonds have been considered jointly by CenterPoint Energy Houston Electric, LLC and the Public Utility Commission of Texas, acting through Saber Partners, LLC, its financial advisor.
Additional information is contained in the prospectus supplement relating to the bonds dated Dec. 9, 2005 and the accompanying prospectus dated Dec. 6, 2005. You should read the prospectus supplement and the accompanying prospectus carefully before you decide to invest in the Bonds. A copy of the prospectus supplement and accompanying prospectus is available by clicking here.