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This prospectus supplement and the accompanying prospectus relate to an effective registration statement under the Securities Act of 1933, but are not complete and may be changed. This prospectus supplement and the accompanying prospectus are not an offer to sell these securities and they are not soliciting an offer to buy these securities in any state where the offer or sale is not permitted.

				Initial												Underwriting				Proceeds				Scheduled				Final
				Principal				Interest				Price to				Discounts and				to the				Final Payment				Maturity
Tranche*				Balance*				Rate				Public				Commissions				Issuer				Date*				Date*
	A-1			$	166,250,000				%			$				$				$					2/1/09				2/1/11
	A-2			$	253,750,000				%			$				$				$					8/1/12				8/1/14
	A-3			$	166,250,000				%			$				$				$					2/1/14				8/1/15
	A-4			$	351,250,000				%			$				$				$					8/1/17				8/1/19
	A-5			$	312,500,000				%			$				$				$					8/1/19				8/1/20

Lehman Brothers		Credit Suisse First Boston				RBS Greenwich Capital
Barclays Capital		Deutsche Bank Securities				Goldman, Sachs & Co.
First Albany Capital		Loop Capital Markets, LLC				M.R. Beal & Company
Siebert Brandford Shank & Co., L.L.C.		Ramirez & Co., Inc.				Suntrust Robinson Humphrey

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					Page
About This Prospectus Supplement And The Prospectus						S-1
Summary of Terms						S-2
Risk Factors						S-8
The Bonds						S-9
	The Collateral					S-9
	The Transition Property					S-10
	The Financing Order					S-11
	Payment and Record Dates and Payment Sources					S-12
	Principal Payments					S-12
	Weighted Average Life Sensitivity					S-15
	Distribution Following Acceleration					S-16
	Interest Payments Generally					S-16
	Interest Payments on Floating Rate Transition Bonds					S-17
	Floating Rate Interest Determination					S-17
	Interest Rate Swap Agreements					S-18
Credit Enhancement						S-22
	Statutorily Guaranteed True-Up Mechanism for Payment of Scheduled Principal and Interest					S-22
	Collection Account and Subaccounts					S-22
	How Funds in the Collection Account Will Be Allocated					S-24
		Retail Electric Provider Deposits and Other Credit Support				S-26
The Transition Charges						S-26
Material Federal Income Tax Consequences for Holders of Floating Rate Bonds						S-28
Underwriting The Bonds						S-29
			The Underwriters’ Sales Price for the Bonds			S-29
			No Assurance as to Resale Price or Resale Liquidity for the Bonds			S-29
			Various Types of Underwriter Transactions That May Affect the Price of the Bonds			S-30
Risk Weighting of the Bonds Under Certain International Capital Guidelines						S-30
Ratings for the Bonds						S-31
Where You Can Find More Information						S-32
Legal Matters						S-32
Offering Restrictions In Certain Jurisdictions						S-32

About This Prospectus			1
Cautionary Statement regarding Forward-Looking Information			2
Prospectus Summary			3
Risk Factors			14
The Restructuring Act			26
CenterPoint Houston’s Financing Order			31
Retail Electric Providers			35
The Servicer of the Transition Property			39
The Issuer			46
Use of Proceeds			49
Relationship to the series 2001-1 transition bonds			49
The Transition Bonds			49
Weighted Average Life and Yield Considerations for the Transition Bonds			78
The Sale Agreements			78
The Servicing Agreements			87
How A Bankruptcy May Affect Your Investment			97
Material Federal Income Tax Consequences for the Transition Bondholders			101
ERISA Considerations			104
Plan of Distribution for the Transition Bonds			106
Risk Weighting Under Certain International Capital Guidelines			107
Ratings for the Transition Bonds			107
Where You Can Find More Information			107
Legal Matters			108
Experts			108
Appendix A — Glossary of Defined Terms			A-1
Financial Statements of CenterPoint Energy Transition Bond Company II, LLC.			F-1

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				Expected
				Average Life				Initial Principal				Scheduled Final				Final Maturity				Interest
Tranche*				(Years)*				Balance*				Payment Date*				Date*				Rate
	A-1				2.0			$	166,250,000				2/1/09				2/1/11				%
	A-2				5.0			$	253,750,000				8/1/12				8/1/14				%
	A-3				7.5			$	166,250,000				2/1/14				8/1/15				%
	A-4				10.0			$	351,250,000				8/1/17				8/1/19				%
	A-5				12.7			$	312,500,000				8/1/19				8/1/20				%

	•	our rights under the sale agreement pursuant to which we will acquire the transition property relating to the Bonds, under the administration agreement and under all bills of sale delivered by CenterPoint Houston pursuant to the sale agreement,

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	•	our rights under the servicing agreement and any subservicing, agency, intercreditor or collection agreements executed in connection with the servicing agreement,
	•	the collection account and all subaccounts of the collection account,
	•	our rights under any interest rate swap agreement entered into with respect to the tranche           floating rate Bonds,
	•	our rights in the deposits of retail electric providers required under the financing order,
	•	all of our other property, 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 payments on or under and all proceeds in respect of any or all of the foregoing.

	•	CenterPoint Houston’s stranded cost balance as of August 31, 2004, which is an amount associated with the transition to competitive retail electric markets in Texas determined by the Texas commission to be recoverable under the Restructuring Act, plus:

	•	“excess mitigation” credits provided on the bills of retail electric customers (as required by prior order of the Texas commission) from August 31, 2004 through the date the Bonds are issued or the date of the termination of such excess mitigation credits, whichever is earlier,
	•	interest on stranded costs accrued from August 31, 2004 through the date the Bonds are issued,

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	•	costs of issuing, supporting and servicing the Bonds, and
	•	any costs of retiring and refunding CenterPoint Houston’s existing debt and equity securities in connection with the issuance of the Bonds (excluding costs of retiring or refunding debt or equity securities held by an affiliate of CenterPoint Houston).

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

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

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	2.	to the holders of the tranche A-2 Bonds, until the principal balance of that tranche has been reduced to zero,
	3.	to the holders of the tranche A-3 Bonds, until the principal balance of that tranche has been reduced to zero,
	4.	to the holders of the tranche A-4 Bonds, until the principal balance of that tranche has been reduced to zero, and
	5.	to the holders of the tranche A-5 Bonds, until the principal balance of that tranche has been reduced to zero.

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Semi-Annual		Tranche				Tranche				Tranche				Tranche				Tranche
Payment Date		A-1 Balance				A-2 Balance				A-3 Balance				A-4 Balance				A-5 Balance
Issuance Date		$	166,250,000			$	253,750,000			$	166,250,000			$	351,250,000			$	312,500,000
8/1/06		$	153,653,884			$	253,750,000			$	166,250,000			$	351,250,000			$	312,500,000
2/1/07		$	118,828,792			$	253,750,000			$	166,250,000			$	351,250,000			$	312,500,000
8/1/07		$	94,993,210			$	253,750,000			$	166,250,000			$	351,250,000			$	312,500,000
2/1/08		$	58,025,356			$	253,750,000			$	166,250,000			$	351,250,000			$	312,500,000
8/1/08		$	31,692,972			$	253,750,000			$	166,250,000			$	351,250,000			$	312,500,000
2/1/09			-			$	245,674,318			$	166,250,000			$	351,250,000			$	312,500,000
8/1/09						$	216,697,898			$	166,250,000			$	351,250,000			$	312,500,000
2/1/10						$	173,969,770			$	166,250,000			$	351,250,000			$	312,500,000
8/1/10						$	142,353,883			$	166,250,000			$	351,250,000			$	312,500,000
2/1/11						$	96,726,448			$	166,250,000			$	351,250,000			$	312,500,000
8/1/11						$	62,313,795			$	166,250,000			$	351,250,000			$	312,500,000
2/1/12						$	13,618,322			$	166,250,000			$	351,250,000			$	312,500,000
8/1/12							-			$	142,504,333			$	351,250,000			$	312,500,000
2/1/13										$	90,567,530			$	351,250,000			$	312,500,000
8/1/13										$	50,048,942			$	351,250,000			$	312,500,000
2/1/14											-			$	345,913,824			$	312,500,000
8/1/14														$	302,050,145			$	312,500,000
2/1/15														$	243,003,072			$	312,500,000
8/1/15														$	195,547,255			$	312,500,000
2/1/16														$	132,601,200			$	312,500,000
8/1/16														$	81,321,898			$	312,500,000
2/1/17														$	14,231,674			$	312,500,000
8/1/17															-			$	271,413,769
2/1/18																		$	199,936,866
8/1/18																		$	140,293,068
2/1/19																		$	64,140,785
8/1/19																			-

*	Subject to change, based on market conditions.

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Semi-Annual
Payment Date		Tranche A-1				Tranche A-2				Tranche A-3				Tranche A-4				Tranche A-5
Tranche Size		$	166,250,000			$	253,750,000			$	166,250,000			$	351,250,000			$	312,500,000
8/1/06		$	12,596,116				-				-				-				-
2/1/07		$	34,825,091				-				-				-				-
8/1/07		$	23,835,583				-				-				-				-
2/1/08		$	36,967,854				-				-				-				-
8/1/08		$	26,332,384				-				-				-				-
2/1/09		$	31,692,972			$	8,075,682				-				-				-
8/1/09						$	28,976,419				-				-				-
2/1/10						$	42,728,128				-				-				-
8/1/10						$	31,615,887				-				-				-
2/1/11						$	45,627,435				-				-				-
8/1/11						$	34,412,653				-				-				-
2/1/12						$	48,695,473				-				-				-
8/1/12						$	13,618,323			$	23,745,667				-				-
2/1/13										$	51,936,804				-				-
8/1/13										$	40,518,588				-				-
2/1/14										$	50,048,941			$	5,336,176				-
8/1/14														$	43,863,679				-
2/1/15														$	59,047,073				-
8/1/15														$	47,455,817				-
2/1/16														$	62,946,055				-
8/1/16														$	51,279,303				-
2/1/17														$	67,090,223				-
8/1/17														$	14,231,674			$	41,086,231
2/1/18																		$	71,476,904
8/1/18																		$	59,643,798
2/1/19																		$	76,152,282
8/1/19																		$	64,140,785
Total Payments		$	166,250,000			$	253,750,000			$	166,250,000			$	351,250,000			$	312,500,000

*	Subject to change, based on market conditions.

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				WAL
		Expected		-5%				-15%
		Weighted		(4.8 Standard Deviations from Mean)				(11.6 Standard Deviations from Mean)
		Avg. Life
		(“WAL”)		WAL		Change		WAL		Change
Tranche		(yrs)		(yrs)		(days)		(yrs)		(days)
A-1		2.0		2.0		0		2.1		29
A-2		5.0		5.0		0		5.1		40
A-3		7.5		7.5		0		7.6		29
A-4		10.0		10.0		0		10.1		29
A-5		12.7		12.7		0		12.8		26

	•	the forecast error stays constant over the life of the Bonds and is equal to an overestimate of electricity consumption of 5% (4.8 Standard Deviations From Mean) or 15% (11.6 Standard Deviations From Mean) as stated in the chart above;
	•	the servicer makes timely and accurate filings to true-up the transition charges semi-annually in years one through thirteen and quarterly in the fourteenth and fifteenth years;
	•	retail electric providers remit all transition charges 35 days after such charges are billed; and
	•	if floating rate Bonds are issued, each interest rate swap counterparty makes timely payments of any amount owed by it under the related interest rate swap agreement.

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	•	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 Bonds as of the close of business on the preceding semi-annual payment date, or the date of the original issuance of the Bonds, after giving effect to all payments of principal made on the preceding semi-annual payment date, if any.

	(1)	On each interest determination date subsequent to the first, the trustee will determine LIBOR based on the offered rate for three-month deposits in United States dollars, referred to as “three-month

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		LIBOR,” that appears on the Moneyline Telerate Service page 3750 as of 11:00 a.m., London time, on that interest determination date. That display page is referred to as the “Telerate page.” If no offered rate appears on that Telerate page, LIBOR for that period will be determined as described in paragraph (2) below.
	(2)	With respect to an interest determination date on which no offered rate appears on the Telerate page, the trustee will request each of four major banks in the London interbank market, selected by the trustee, to provide the trustee with that bank’s offered quotation for deposits in United States dollars for the applicable period, commencing on the second London banking day immediately following that interest determination date, to prime banks in the London interbank market at approximately 11:00 a.m., London time, on that interest determination date and in a principal amount that is representative for a single transaction in United States dollars in that market at that time. The applicable period is three months. If at least two such quotations are provided, LIBOR will be the arithmetic mean of those quotations. If fewer than two quotations are provided, LIBOR for that period will be the arithmetic mean of the rates quoted at approximately 11:00 a.m. in The City of New York on that interest determination date by major banks in The City of New York selected by the trustee for loans in United States dollars to leading European banks, for the period commencing on the second London banking day immediately following that interest determination date and in a principal amount that is representative for a single transaction in United States dollars in that market at that time.
	(3)	On the first interest determination date, the trustee will determine three-month LIBOR as described above and will also determine LIBOR based on the offered rate for six-month deposits in United States dollars, referred to as a “six-month LIBOR,” that appears on the Telerate page or, if no such offered rate appears on the Telerate page, in the manner described in paragraph (2) above (except that the “applicable period” will be six months). The interpolated LIBOR applicable to the first interest accrual period will be equal to the sum of (a) three-month LIBOR and (b) the LIBOR increment. The LIBOR increment will be equal to the product of (x) a fraction, the numerator of which is the actual number of days from and including the three-month anniversary of the closing date to but excluding the first payment date and the denominator of which is 90, and (y) the excess, if any, of six-month LIBOR over three-month LIBOR.

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	1.	re-establish the required ratings,
	2.	post collateral in accordance with the swap agreement or arrange for a guarantee from an entity meeting the required ratings, or
	3.	assign its rights and obligations under the interest rate swap agreement to a replacement swap counterparty that meets the swap counterparty minimum ratings (unless waived by the Texas commission, as described above) and allows us to satisfy the rating agency condition (which we describe below) with respect to the tranche [     ] Bonds. We refer to a swap counterparty that meets these criteria as a “qualified replacement swap counterparty.”

	•	the failure of us or the swap counterparty to pay any amount when due under the interest rate swap agreement if that failure is not remedied on or before the fifth business day after that failure,
	•	certain events of bankruptcy of us or the swap counterparty or a credit support provider of the swap counterparty, or
	•	a merger of us or the swap counterparty without an assumption of its obligations under the interest rate swap agreement.

	•	illegality of the interest rate swap agreement,
	•	acceleration of the related floating rate Bonds,
	•	a swap counterparty downgrade event below the required ratings, as described above, that is not cured within the applicable time periods, as discussed above,

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	•	any change in any applicable laws or in the interpretation of any applicable laws which revokes or renders unenforceable any of the swap counterparty’s obligations under the interest rate swap agreement,
	•	our failure to maintain, or the termination of, the security interest created under the indenture in favor of the trustee on behalf of the bondholders, or
	•	a “tax event” or a “tax event upon merger,” each as defined in the interest rate swap agreement.

	(i)	an event of default under the interest rate swap agreement caused by our failure to make payments when due (if not remedied on or before the fifth business day) as a result of insufficient collection of transition charges;
	(ii)	an event of default under the interest rate swap agreement caused by a breach of such agreement by us or the trustee where the swap counterparty is not the defaulting counterparty or the sole affected party;
	(iii)	our bankruptcy event of default under the interest rate swap agreement;
	(iv)	our “merger without assumption” event of default under the interest rate swap agreement, which will occur if, following our merger or consolidation, the resulting entity fails to assume all obligations under the interest rate swap agreement;
	(v)	a failure or termination of the security interest of the trustee under the indenture; or
	(vi)	termination of the interest rate swap agreement due to (1) illegality, (2) a tax event, (3) a tax event upon merger, (4) acceleration of the Bonds (due to an event of default) or (5) a change in laws that makes the interest rate swap agreement unenforceable (each as described in the related interest rate swap agreement).

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

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	•	the tranche subaccount for the tranche            floating rate Bonds.

	•	fees and expenses, including any indemnity payments, of the trustee, our independent managers, the servicer and the administrator and other fees, expenses, costs and charges,
	•	principal and interest payments on the Bonds, which in the case of interest on the tranche                     floating rate Bonds will be the gross fixed amount for that tranche on that payment date, 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.

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	1.	payment of the trustee’s fees, expenses and any outstanding indemnity amounts relating to the Bonds, the total amount of which will be fixed as specified in the indenture,
	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 a pro rata portion of the administration fee, which will be a fixed amount specified in the administration agreement between us and CenterPoint Houston, and a pro rata portion of the fees of our independent managers, which will be in an amount specified in an agreement between us and our independent managers,
	4.	payment of all of our other ordinary periodic operating expenses relating to the 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 Bonds, amounts payable in respect of interest to the swap counterparty under any interest rate swap agreement and any deferred interest on any floating rate Bonds,
	6.	payment of (a) the principal then required to be paid on the Bonds at final maturity or upon redemption or acceleration, (b) principal then scheduled to be paid on the Bonds and (c) any swap termination payments payable as a result of a senior termination event, as described under “—Interest Rate Swap Agreements— Interest Rate Swap Agreement Events of Default and Termination Events,”
	7.	payment of any amounts payable to any other credit enhancement providers with respect to the Bonds,
	8.	payment of any of our remaining unpaid operating expenses and any remaining amounts owed pursuant to the basic documents relating to the Bonds, including all remaining indemnity amounts owed to the trustee, and any other amounts owed pursuant to any interest rate swap agreement, other than swap termination payments,
	9.	replenishment of any amounts drawn from the capital subaccount,

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	10.	any swap termination payments (other than those payments resulting from a senior termination event described in clause 6 above), which will be payable only after all of the Bonds have been paid in full,
	11.	release to us of an amount equal to investment earnings on amounts in the capital subaccount, so long as no event of default has occurred and is continuing, and
	12.	allocation of the remainder, if any, to the excess funds subaccount.

	1.	from the excess funds subaccount for allocations and payments contemplated in clauses 1 through 10, and
	2.	from the capital subaccount for allocations and payments contemplated by clauses 1 through 8.

	1.	payment of the trustee’s expenses and any outstanding indemnity amounts relating to the Bonds, the total amount of which will be fixed as specified in the indenture,
	2.	payment of any unpaid servicing fees from prior payment dates,

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	3.	payment of all of our other ordinary periodic operating expenses relating to the Bonds, such as accounting and audit fees, rating agency fees, legal fees and certain reimbursable costs of the servicer under the servicing agreement,
	4.	payment of the interest then payable on the floating rate Bonds, amounts payable in respect of interest to the swap counterparty under any interest rate swap agreement and any deferred interest on any floating rate Bonds, and
	5.	allocation of the remainder, if any, to the general subaccount.

	•	a cash deposit of two months’ maximum expected transition charge collections,
	•	an affiliate guarantee, surety bond or letter of credit from an entity with a long-term, unsecured credit rating of not less than “BBB-” and “Baa3” (or the equivalent) from S&P and Moody’s, respectively, 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.

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		Initial Transition
Transition Charge Customer Class		Charge Rate
Residential			per kWh
MGS (miscellaneous general service)			per kW/per kWh
LGS (large general service)			per kVa/per kW
LOS-A (large overhead service – A)			per kW
LOS-B (large overhead service – B)			per kW
Non-Metered Lighting			per kWh
Standby Electric Service – Distribution			per kW
Interruptible Service Supplemental – Distribution			per kW
Interruptible Service – 30 Minute Notice			per kW
Interruptible Service – 10 Minute Notice			per kW
Interruptible Service – Instantaneous			per kW
Interruptible Service Supplemental – Transmission			per kW
Standby Electric Service – Transmission			per kW
Standby Interruptible Service			per kW
SCP (special contract pricing)			per kW

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Underwriter

Tranche A-1

Tranche A-2

Tranche A-3

Tranche A-4

Tranche A-5

Lehman Brothers Inc.

Credit Suisse First Boston LLC

Greenwich Capital Markets, Inc.

Barclays Capital Inc.

Deutsche Bank Securities Inc.

Goldman, Sachs & Co.

First Albany Capital Inc.

Loop Capital Markets, LLC

M.R. Beal & Company

Siebert Brandford Shank & Co., L.L.C.

Samuel A. Ramirez & Co., Inc

SunTrust Capital Markets, Inc.

Total

$

$

$

$

$

		Selling				Reallowance
Tranche		Concession				Discount

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	•	the issuance of transition bonds has been set up by the State of Texas under the Restructuring Act to finance the transition to a deregulated electricity market in the State of Texas;
	•	under the Restructuring Act and the financing order, CenterPoint Houston is authorized to establish us as a special purpose entity, responsible to the State of Texas and the Texas commission, to issue transition bonds;
	•	we are not owned by the Texas commission or the State of Texas;

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	•	transition bonds are payable through transition charges, which are a financial charge on ratepayers (i.e., retail electric customers who, with certain exceptions, continue to use electricity in CenterPoint Houston’s service territory even if these customers elect to purchase electricity from another supplier or choose to operate new on-site generation);
	•	the amount of transition charges in respect of each series of transition bonds will be set by the Texas commission at a level designed to ensure repayment of that series of transition bonds;
	•	should ratepayers not pay the transition charges, then there is a true-up mechanism which allows us to recalculate the transition charges such that those ratepayers who do pay will make up the difference; this increase has to be approved by the Texas commission, and the State of Texas, as long as it consumes electricity, is one of these ratepayers and therefore would be a payer of last resort;
	•	the Texas commission guaranteed that it will take action to ensure that the true-up mechanism is used;
	•	pursuant to the Restructuring Act, the State of Texas pledges not to take any action that would impair our right to impose, collect and receive transition charges, or the operation of the true-up mechanism;
	•	the indenture trustee has a first priority lien on transition property and associated transition charge payments;
	•	transition charges are directly and expressly linked to payments of principal and interest on transition bonds;
	•	ratepayers’ (including the State of Texas’ and local governments’) obligation to pay transition charges is unaffected by:

	•	the entity from which they purchase electricity,
	•	the quality of electricity service provided, so that ratepayers cannot refuse to pay transition charges because of poor service, or
	•	other ratepayers finding some entitlement not to pay or initiating court actions, including actions against the State of Texas, over the transition charges.

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	•	Our Quarterly Report on Form 10-Q for the quarterly period ended September 30, 2005 filed with the Securities and Exchange Commission on November 30, 2005
	•	Our Current Reports on Form 8-K dated September 15, 2005, October 30, 2005 and November 14, 2005, filed with the Securities and Exchange Commission on September 15, 2005, November 1, 2005 and November 16, 2005, respectively

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	(1) A CORPORATION (WHICH IS NOT AN ACCREDITED INVESTOR) 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
	(2) A TRUST (WHERE THE TRUSTEE IS NOT AN ACCREDITED INVESTOR) WHOSE SOLE PURPOSE IS TO HOLD INVESTMENTS AND EACH BENEFICIARY IS AN ACCREDITED INVESTOR.

	(3) TO AN INSTITUTIONAL INVESTOR UNDER SECTION 274 OF THE SFA OR TO A RELEVANT PERSON, OR ANY PERSON PURSUANT TO SECTION 275 OF THE SFA;
	(4) WHERE NO CONSIDERATION IS GIVEN FOR THE TRANSFER; OR
	(5) BY OPERATION OF LAW.

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	•	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 PERSONS WHOSE ORDINARY BUSINESS IS TO BUY OR SELL BONDS, WHETHER AS PRINCIPAL OR AGENT, OR TO “PROFESSIONAL INVESTORS” AS DEFINED IN THE SECURITIES AND FUTURES ORDINANCE (CAP. 571) OF HONG KONG AND ANY RULES MADE UNDER THAT ORDINANCE; OR (B) IN OTHER CIRCUMSTANCES WHICH DO NOT RESULT IN THE DOCUMENT BEING A “PROSPECTUS” AS DEFINED IN THE COMPANIES ORDINANCE (CAP. 32) OF HONG KONG OR WHICH DO NOT CONSTITUTE AN OFFER TO THE PUBLIC WITHIN THE MEANING OF THAT ORDINANCE; AND
	•	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 PURPOSES 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 SECURITIES LAWS OF HONG KONG) OTHER THAN WITH RESPECT TO BONDS WHICH ARE OR ARE INTENDED TO BE DISPOSED OF ONLY TO PERSONS OUTSIDE HONG KONG OR ONLY TO “PROFESSIONAL INVESTORS” AS DEFINED IN THE SECURITIES AND FUTURES ORDINANCE (CAP. 571) OF HONG KONG AND ANY RULES MADE UNDER THAT ORDINANCE.

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About This Prospectus				1
Cautionary Statement regarding Forward-Looking Information				2
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			10
	Floating Rate Transition Bonds			11
	Credit Enhancement			11
	State Pledge			12
	Optional Redemption			12
	Payment and Record Dates			12
	Scheduled Final Payment Dates and Final Maturity Dates			12
	Ratings for the Transition Bonds			12
	Reports to Transition Bondholders			12
	Servicing Compensation			13
	Federal Income Tax Status			13
	ERISA Considerations			13
Risk Factors				14
	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			14
Risks Associated with Potential Judicial, Legislative or Regulatory Actions				14
	Future judicial action could reduce the value of your investment in the transition bonds			14
	The federal government might preempt the Restructuring Act without full compensation			15
	Future state legislative action could reduce the value of your investment in the transition bonds			15
	The Texas commission might take actions that could reduce the value of your investment in the transition bonds			15
Servicing Risks				16
	Inaccurate consumption forecasting or unanticipated delinquencies or charge-offs might reduce scheduled payments on the transition bonds			16
	Your investment in the transition bonds depends on CenterPoint Houston or its successor or assignee, acting as servicer of the transition property			16
	If we replace CenterPoint Houston as the servicer, we may experience difficulties finding and using a replacement servicer			17
	It might be difficult to collect transition charges from retail electric providers			17
	Competitive metering services might result in unexpected problems in receiving accurate metering data			18
	Changes to billing and collection practices might reduce the value of your investment in the transition bonds			18
	Limits on rights to terminate service might make it more difficult to collect the transition charges			18
	Future adjustments to transition charges by customer class might result in insufficient collections			18
Risks Associated with the Unusual Nature of the Transition Property				19
	We will not receive transition charges for any series of transition bonds in respect of electric service provided more than 15 years from the date of issuance of that series of transition bonds			19
	Foreclosure of the trustee’s lien on the transition property for a series of transition bonds might not be practical, and acceleration of the transition bonds of such series before maturity might have little practical effect			19
Risks Associated with Potential Bankruptcy Proceedings of the Seller or the Servicer				19
	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			19
	The bankruptcy of CenterPoint Houston or any successor seller might result in losses or delays in payments on the transition bonds			20
	The sale of the transition property might be construed as a financing and not a sale in a case of CenterPoint Houston’s bankruptcy which might delay or limit payments on the transition bonds			21

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	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			22
	Claims against CenterPoint Houston or any successor seller might be limited in the event of a bankruptcy of the seller			22
	The bankruptcy of CenterPoint Houston or any successor seller might limit the remedies available to the trustee			22
Risks Associated with Potential Bankruptcy Proceedings of Retail Electric Providers				23
	Retail electric providers may commingle the transition 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			23
	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			23
	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			23
Other Risks Associated with an Investment in the Transition Bonds				24
	We may incur expenses in excess of caps on such expenses provided in the financing order			24
	CenterPoint Houston’s indemnification obligations under the sale and servicing agreements are limited and might not be sufficient to protect your investment in the transition bonds			24
	CenterPoint Houston’s ratings might affect the market value of the transition bonds			24
	Technological change might make alternative energy sources more attractive in the future			25
	The absence of a secondary market for a series of transition bonds might limit your ability to resell your transition bonds of such series			25
	You might receive principal payments for a series of transition bonds later than you expect			25
	We may issue additional series of transition bonds			25
The Restructuring Act				26
	The Restructuring Act’s General Effect on the Electric Utility Industry in Texas			26
	Recovery of Qualified Costs for CenterPoint Houston and Other Texas Utilities			28
	CenterPoint Houston and Other Utilities May Securitize Qualified Costs			28
CenterPoint Houston’s Financing Order				31
Retail Electric Providers				35
The Servicer of the Transition Property				39
	About CenterPoint Houston			39
	Customer Classes			41
	Percentage Concentration of Large End-Use Retail Customers Served by CenterPoint Houston			43
	How CenterPoint Houston Forecasts the Number of Retail Electric Customers and the Amount of Electricity Usage			43
	The Billing Process			45
	The Collection Process			45
The Issuer				46
	General			46
	Our Purpose			46
	Our Relationship With CenterPoint Houston			47
	Our Relationship With the State of Texas and the Texas Commission			47
	Our Managers			47
	Manager Fees and Limitation on Liabilities			48
	We Are a Separate and Distinct Legal Entity from CenterPoint Houston			48
	Administration Agreement			48
Use of Proceeds				49
Relationship to the series 2001-1 transition bonds				49
The Transition Bonds				49
	General Terms of the Transition Bonds			49
	Payments of Interest and Principal on the Transition Bonds			50
	Floating Rate Transition Bonds			52
	Redemption of the Transition Bonds			53
	Credit Enhancement for the Transition Bonds			53
	Transition Bonds Will Be Issued in Book-Entry Form			54

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	Definitive Certificated Transition Bonds			56
	Registration and Transfer of the Transition Bonds			57
	The Transition Bonds May Be Issued in Various Series or Tranches			57
	The Security for the Transition Bonds			58
	The Collection Account for the Transition Bonds			59
	How Funds in the Collection Account Will Be Allocated			62
	Reports to Holders of the Transition Bonds			64
	Enhanced Continuing Disclosure			65
	We and the Trustee May Modify the Indenture			66
	What Constitutes an Event of Default on the Transition Bonds			69
	Our Covenants			72
	Access to the List of Transition Bondholders			74
	We Must File an Annual Compliance Statement			74
	The Trustee Must Provide an Annual Report to All Transition Bondholders			74
	What Will Trigger Satisfaction and Discharge of the Indenture			74
	Our Legal Defeasance and Covenant Defeasance Options			75
	The Trustee			77
	Governing Law			77
Weighted Average Life and Yield Considerations for the Transition Bonds				78
The Sale Agreements				78
	CenterPoint Houston’s Sale and Assignment of the Transition Property			78
	CenterPoint Houston’s Representations and Warranties			79
	CenterPoint Houston’s Covenants			83
	CenterPoint Houston’s Obligation to Indemnify Us and the Trustee and to Take Legal Action			86
	Successors to CenterPoint Houston			87
	Amendment			87
The Servicing Agreements				87
	Servicing Procedures			87
	The Statutorily Guaranteed Transition Charge Adjustment Process			90
	Servicer Compensation			91
	CenterPoint Houston’s Representations and Warranties as Servicer			91
	The Servicer Will Indemnify Us, Other Entities and the Texas Commission in Limited Circumstances			93
	The Servicer Will Provide Statements to Us, the Texas Commission and the Trustee			93
	The Servicer Will Provide Compliance Reports Concerning the Servicing Agreement			94
	Matters Regarding CenterPoint Houston as the Servicer			94
	Events Constituting a Default by the Servicer			95
	The Trustee’s Rights if the Servicer Defaults			96
	The Obligations of a Successor Servicer			96
	Amendment			97
	Intercreditor Agreement			97
How A Bankruptcy May Affect Your Investment				97
Material Federal Income Tax Consequences for the Transition Bondholders				101
	General			101
	Income Tax Status of the Transition Bonds and the Issuer			101
	Taxation of Transition Bondholders			102
	Definition of United States Person			102
	Tax Consequences to U.S. Holders			102
	Tax Consequences to Non-U.S. Holders			103
ERISA Considerations				104
	Plan Asset Issues for an Investment in the Transition Bonds			104
	Prohibited Transaction Exemptions			105
	General Investment Considerations for Prospective Plan Investors in the Transition Bonds			105
Plan of Distribution for the Transition Bonds				106
	Distribution			106
	Compensation to Underwriters			106
	Other Distribution Matters			106
Risk Weighting Under Certain International Capital Guidelines				107

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Ratings for the Transition Bonds			107
Where You Can Find More Information			107
Legal Matters			108
Experts			108
Appendix A — Glossary of Defined Terms			A-1
Financial Statements of CenterPoint Energy Transition Bond Company II, LLC.			F-1

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	•	state and federal legislative and regulatory actions or developments, including deregulation, re-regulation and restructuring of the electric utility industry, changes in or application of laws or regulations applicable to other aspects of our business;
	•	non-payment of transition charges due to financial distress of 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 CenterPoint Houston’s service territory;
	•	changes in market demand and demographic patterns;
	•	weather variations and other natural phenomena affecting retail electric customer energy usage;
	•	the operating performance of CenterPoint Houston’s facilities and the facilities of third-party suppliers of electric energy in CenterPoint Houston’s 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 CenterPoint Houston’s service territory, including the systems owned and operated by the independent system operator in the Electric Reliability Council of Texas, Inc.; and
	•	other factors we discuss in this prospectus, any prospectus supplement and our other Securities and Exchange Commission filings.

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	•	the right to impose, collect and receive related transition charges;
	•	the funds on deposit in the accounts held by the trustee;
	•	our rights under various contracts we describe in this prospectus; and
	•	any credit enhancement as set forth in the related prospectus supplement.

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	•	the rights and interests of a selling utility under a 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 a 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 that expressly states the transfer is a sale or other absolute transfer is a true sale of the transition property, not a pledge of the transition property to secure a financing by the seller.

	•	without permission from the bankruptcy court, the trustee might be prevented from taking actions against CenterPoint Houston or recovering or using funds on your behalf or replacing CenterPoint Houston as the servicer,
	•	the bankruptcy court might order the trustee to exchange the transition property for other property, of lower value,

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	•	tax or other government liens on CenterPoint Houston’s property might have priority over the trustee’s lien and might be paid from collected transition charges before payments on the related series of 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 CenterPoint Houston’s bankruptcy, with the result that the transition bonds would represent only general unsecured claims against CenterPoint Houston,
	•	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 CenterPoint Houston’s bankruptcy case, with the result that the related series of transition bonds would represent only general unsecured claims against CenterPoint Houston,
	•	we and CenterPoint Houston 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,
	•	CenterPoint Houston might be able to alter the terms of each series of 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 applicable sale agreement are unenforceable, leaving us with an unsecured claim for actual damages against CenterPoint Houston that may be difficult to prove or, if proven, to collect in full.

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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 electric customers until January 2002, and access to certain reduced rates for residential and small commercial retail electric customers through the so-called “price to beat” mechanism for up to five years thereafter,
	•	permitted electric utilities to recover certain stranded investments and other balances 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, including the State of Texas and other governmental entities, within a utility’s certificated service territory as it existed on May 1, 1999, for payment of transition bonds, and
	•	provided for a proceeding in 2004 to determine the recoverable stranded cost and other true-up balances.

	•	a power generation company,
	•	a retail electric provider, and
	•	a transmission and distribution utility or separate transmission and distribution utilities.

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	•	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 such series of transition bonds.

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

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	•	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,
	•	we must respond to representatives of the Texas commission throughout the process of offering the transition bonds provided for therein, with the financing order directing the Texas commission’s financial advisor to veto any proposal that does not comply with all criteria established in the financing order, and
	•	the servicer will file periodic adjustments to transition charges with the Texas commission on our behalf.

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

		Allocation
Transition Charge Customer Class		Factor
Residential			40.04	%
MGS (miscellaneous general service)			29.03	%
LGS (large general service)			16.12	%
LOS-A (large overhead service—A)			4.79	%
LOS-B (large overhead service—B)			2.76	%
Non-Metered Lighting			0.66	%
Standby Electric Service—Distribution			0.03	%
Interruptible Service Supplemental—Distribution			0.16	%
Interruptible Service—30 Minute Notice			1.04	%
Interruptible Service—10 Minute Notice			1.88	%
Interruptible Service—Instantaneous			0.25	%
Interruptible Service Supplemental—Transmission			0.07	%
Standby Electric Service—Transmission			0.24	%
Standby Interruptible Service			0.21	%
SCP (special contract pricing)			2.73	%

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	•	First, pursuant to the Restructuring Act, the servicer is required to make a filing with the Texas commission for an adjustment at least annually

	•	to correct any undercollection or overcollection of transition charges relating to a series of transition bonds and
	•	to provide for the billing of transition charges relating to such series of transition bonds 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 such series of transition bonds (including ongoing fees and expenses, amounts required to be deposited in or allocated to any collection account or subaccount relating to such series of transition bonds, trustee indemnities, payments due in connection with any swap agreements relating to such series of transition bonds and any expenses incurred by the trustee to enforce bondholder rights and all other payments pursuant to the waterfall of payments described under “The Transition Bonds—How Funds in the Collection Account Will Be Allocated” or otherwise in the waterfall of payments set forth in a prospectus supplement applicable to such series of transition bonds) during the period for which such adjusted transition charges are to be in effect.

	•	Second, the servicer will be required under each servicing agreement to seek an interim true-up adjustment with respect to a series of transition bonds once every six months, or quarterly in the fourteenth and fifteenth years:

	•	if the servicer expects, at the next payment date, more than a 5% variation between (a) the actual principal balance of the transition bonds of that series, taking into account amounts on deposit in the excess collections subaccount for that series, and (b) the expected principal balance on the expected amortization schedule,
	•	as needed to meet any rating agency requirement that the transition bonds of that series be paid in full at scheduled maturity, or
	•	to correct any undercollection of transition charges, regardless of cause, in order to assure timely payment of the transition bonds of that series based on rating agency and transition

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		bondholder considerations, including a mandatory interim true-up in connection with each semi-annual payment date if the servicer forecasts that collections of transition charges during the next semi-annual payment period will be insufficient to make all scheduled payments of interest, principal and other amounts in respect of the transition bonds of that series and to replenish the capital subaccount for that series to its required level.

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

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	•	allow its billing and collection responsibilities to be immediately assumed by another retail electric provider of the retail electric customer’s choosing or by the applicable provider of last resort,
	•	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 remaining amounts are released to the retail electric provider and with all costs associated with the lock-box to be borne solely by the retail electric provider, or
	•	immediately implement other mutually suitable and agreeable arrangements with the servicer consistent with the terms of the servicing agreement and rating agency requirements to avoid a suspension, withdrawal or downgrade of the ratings of the transition bonds.

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

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	•	residential,
	•	commercial,
	•	industrial, and
	•	other, which includes government and municipal street lighting.

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		Retail Electric Usage (As Measured by Billed MWH Sales) by Customer Class and Percentage Composition
																																										Nine Months
Customer																																										Ended
Class		2000								2001								2002								2003								2004								9/30/05
Residential			22,415,359				30.7%				21,764,703				30.6%				22,867,470				32.9%				23,588,983				33.4%				23,583,782				32.1%				18,464,051				33.1%
Commercial			17,489,472				24.0%				17,809,507				25.0%				18,289,012				26.3%				18,777,800				26.6%				19,052,995				26.0%				14,689,549				26.4%
Industrial			32,915,840				45.1%				31,398,075				44.2%				28,201,753				40.6%				28,103,027				39.8%				30,598,650				41.7%				22,426,913				40.3%
Other			145,184				0.2%				141,758				0.2%				150,544				0.2%				153,075				0.2%				156,433				0.2%				118,509				0.2%
Total Retail			72,965,855				100.0%				71,114,043				100.0%				69,508,779				100.0%				70,622,885				100.0%				73,391,860				100%				55,699,022				100.0%

		Transmission and Distribution Revenue by Customer Class and Percentage Composition (Dollars in thousands)
																										Nine Months
																										Ended
Customer Class		2002								2003								2004								9/30/05
Residential		$	608,778				51.8%			$	632,612				52.1%			$	643,818				51.6%			$	505,880				51.8%
Commercial			355,605				30.2%				375,528				30.9%				389,789				31.2%				300,381				30.7%
Industrial			185,854				15.8%				180,967				14.9%				187,958				15.1%				150,682				15.4%
Other			25,496				2.2%				25,712				2.1%				26,473				2.1%				20,194				2.1%
Total Retail		$	1,175,733				100.0%			$	1,214,819				100.0%			$	1,248,038				100.0%			$	977,137				100.0%

		Service Territory Number of Metered Retail Electric Customers and Percentage Composition
		December 31,
																																										September 30,
Customer Class		2000								2001								2002								2003								2004								2005
Residential			1,501,148				87.9%				1,529,103				87.9%				1,569,230				87.7%				1,615,921				88.0%				1,658,076				88.0%				1,698,320				88.0%
Commercial			204,069				12.0%				209,689				12.0%				218,720				12.2%				218,739				11.9%				223,174				11.9%				229,223				11.9%
Industrial			1,729				0.1%				1,824				0.1%				1,863				0.1%				1,981				0.1%				2,038				0.1%				2,057				0.1%
Total Retail			1,706,946				100.0%				1,740,616				100.0%				1,789,813				100.0%				1,836,641				100.0%				1,883,288				100.0%				1,929,600				100.0%

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																						Nine Months
		2000				2001				2002				2003				2004				ended 9/30/05
Residential
Forecast (MWH)			20,710,864				21,338,085				22,177,812				23,591,423				23,990,031				18,683,221
Actual (MWH)			22,415,359				21,764,703				22,867,470				23,588,983				23,583,782				18,464,051
Variance			8.2%				2.0%				3.1%				0.0%				-1.7%				-1.2%
Commercial
Forecast (MWH)			16,728,189				17,209,406				17,645,969				18,768,660				18,978,028				14,524,242
Actual (MWH)			17,489,472				17,809,507				18,289,012				18,777,800				19,052,995				14,689,549
Variance			4.6%				3.5%				3.6%				0.0%				0.4%				1.1%
Industrial
Forecast (MWH)			32,351,426				32,100,649				29,861,371				28,617,844				28,036,906				21,799,428
Actual (MWH)			32,915,840				31,398,075				28,201,753				28,103,027				30,598,650				22,426,913
Variance			1.7%				-2.2%				-5.6%				-1.8%				9.1%				2.9%
Other
Forecast (MWH)			130,214				131,575				132,936				157,891				155,172				119,114
Actual (MWH)			145,184				141,758				150,544				153,075				156,433				118,509
Variance			11.5%				7.7%				13.2%				-3.1%				0.8%				-0.5%
Total
Forecast (MWH)			69,920,693				70,779,715				69,818,088				71,135,818				71,160,137				55,126,005
Actual (MWH)			72,965,855				71,114,043				69,508,779				70,622,885				73,391,861				55,699,022
Variance			4.4%				0.5%				-0.4%				-0.7%				3.1%				1.0%

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																						Nine months
		2000				2001				2002				2003				2004				ended 9/30/05
Residential
Forecast			1,487,206				1,520,206				1,554,206				1,602,916				1,640,280				1,684,700
Actual			1,501,148				1,529,103				1,569,230				1,615,921				1,658,076				1,698,320
Variance			0.9%				0.6%				1.0%				0.8%				1.1%				0.8%
Commercial
Forecast			196,917				202,619				207,712				223,415				224,265				227,102
Actual			204,069				209,689				218,720				218,739				223,174				229,223
Variance			3.6%				3.5%				5.3%				-2.1%				-0.5%				0.9%
Industrial
Forecast			1,773				1,820				1,853				1,903				1,930				1,999
Actual			1,729				1,824				1,863				1,981				2,038				2,057
Variance			-2.5%				0.2%				0.5%				4.1%				5.6%				2.9%
Total
Forecast			1,685,896				1,724,645				1,763,771				1,828,234				1,866,475				1,913,801
Actual			1,706,946				1,740,616				1,789,813				1,836,641				1,883,288				1,929,600
Variance			1.2%				0.9%				1.5%				0.5%				0.9%				0.8%

		Net write-off for 12 months ended May 31,
		2003				2004				2005
Residential customers			2.7%				3.4%				1.9%
Non-residential customers			0.5%				0.6%				0.4%

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	•	the related transition property,
	•	our rights under the applicable sale agreement, under the administration agreement and under all bills of sale delivered by CenterPoint Houston pursuant to such sale agreement,
	•	our rights under the applicable servicing agreement and any subservicing, agency, administration, intercreditor or collection agreements executed in connection with such servicing agreement,
	•	the applicable collection account and all subaccounts of such collection account,
	•	our rights under any interest rate swap agreement or hedging agreement entered into with respect to the issuance of a tranche series of floating rate bonds within such series,
	•	our rights in the deposits of retail electric providers required under the applicable financing order,
	•	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.

	•	purchasing and owning transition property and other transition bond collateral,
	•	issuing and registering one or more series of transition bonds,
	•	pledging our interest in transition property and other transition bond collateral to the trustee pursuant to the terms of the indenture in order to secure the related series of transition bonds,
	•	making payments on the transition bonds,
	•	distributing amounts released to us, and

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	•	performing other activities that are necessary, suitable or convenient to accomplish these purposes, including the execution of any interest rate swap or hedging agreement related to the issuance of a series of 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 that financing order,
	•	we must respond to representatives of the Texas commission throughout the process of offering the transition bonds provided for therein, with the financing order directing the Texas commission’s financial advisor to veto any proposal that does not comply with all criteria established in the financing order, and
	•	the servicer will file periodic adjustments to transition charges with the Texas commission on our behalf.

	•	a direct or indirect legal or beneficial owner of us, CenterPoint Houston, any of our affiliates or any of CenterPoint Houston’s affiliates,
	•	a relative, supplier, employee, officer, director or manager (other than as an independent director or manager of us, CenterPoint Houston or any of its affiliates, as the case may be), contractor or material creditor of us, CenterPoint Houston or any of its affiliates, or
	•	a person who controls CenterPoint Houston or any of its affiliates.

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	•	liabilities arising from their own willful misconduct or gross negligence,
	•	liabilities arising from the failure by any manager to perform obligations expressly undertaken in the amended and restated limited liability company agreement, or
	•	taxes, fees or other charges, based on or measured by any fees, commissions or compensation received by our managers in connection with the transactions described in this prospectus.

	•	take all reasonable steps to continue our identity as a separate legal entity,
	•	make it apparent to third persons that we are an entity with assets and liabilities distinct from those of CenterPoint Houston, other affiliates of CenterPoint Houston, our managers or any other person, and
	•	make it apparent to third persons that we are not a division of CenterPoint Houston or any of its affiliates or any other person.

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	•	the designation of the series and, if applicable, the tranches of that series,
	•	the principal amount of the series and, if applicable, the tranches of that series,
	•	the annual rate at which interest accrues or the method or methods of determining such annual rate,
	•	the payment dates,
	•	the scheduled final payment date and the final maturity date of the series and, if applicable, the tranches of that series,
	•	the issuance date of the series,
	•	the collateral for the series,
	•	the authorized denominations,
	•	any provisions for optional redemption of the series or tranche,
	•	the expected amortization schedule for principal of the series and, if applicable, the tranches of that series,
	•	any other material terms of the tranche that are not inconsistent with the provisions of the indenture and that will not result in any rating agency’s reducing or withdrawing its rating of any outstanding tranche of transition bonds,
	•	the identity of the trustee, and
	•	only if a series includes floating rate transition bonds, the terms of any swap agreement executed to permit such issuance and the identity of any swap counterparty related thereto.

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	•	fees and expenses of the servicer (including the servicing fee), the independent managers and the trustee,
	•	payments of interest and principal on the transition bonds for that series,
	•	allocations to the capital subaccount for that series, and
	•	investment earnings on amounts in the capital subaccount released to us.

	•	the unpaid principal amount of each series due on the final maturity date of that series, plus
	•	the unpaid principal amount of each series upon acceleration following an event of default, plus
	•	the unpaid principal amount of any transition bonds of each series called for redemption, plus
	•	the overdue payments of principal, plus
	•	the unpaid and previously scheduled payments of principal, plus
	•	the principal scheduled to be paid on each series on that payment date.

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	•	on the final maturity date of that series,
	•	on the date of redemption, if any, and
	•	if an event of default under the indenture occurs and is continuing and the trustee or the holders of a majority in principal amount of that series of transition bonds have declared that series of transition bonds to be immediately due and payable.

	•	the material terms of any interest rate swap transaction,
	•	the identity of any interest rate swap counterparty,

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	•	any payments due to be paid by or to us or the trustee under any interest rate swap transaction,
	•	scheduled deposits in and withdrawals from any tranche subaccount of the collection account with respect to any interest rate swap transaction,
	•	the formula for calculating the floating rate of interest of any floating interest rate tranche, and
	•	the rights of transition bondholders with respect to any interest rate swap transaction, including any right of termination of or amendment to the interest rate swap agreement.

	•	an additional excess funds subaccount,
	•	subordination,
	•	a financial guaranty insurance policy,
	•	a letter of credit,
	•	a credit or liquidity facility,
	•	a repurchase obligation for certain obligations and warranties,
	•	a third-party payment or other support,
	•	a cash deposit or other credit enhancement, or
	•	any combination of the foregoing, as we may describe in the applicable prospectus supplement.

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	•	DTC or we advise the trustee in writing that DTC is no longer willing or able to discharge properly its responsibilities as nominee and depository with respect to the book-entry certificates for the transition bonds and we are unable to locate a qualified successor,
	•	we advise the trustee in writing that we elect to discontinue use of book-entry-only transfers through DTC and deliver certificated transition bonds to DTC, or
	•	after the occurrence of an event of default under the indenture, transition bondholders representing at least a majority of the outstanding principal balance of the transition bonds of all affected series advise us, the trustee and DTC through the financial intermediaries and the DTC participants in writing that the continuation of a book-entry system through DTC, or a successor to DTC, is no longer in the transition bondholders’ best interest.

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	•	all parties required to do so by the terms of the relevant documents must have authorized, executed and delivered appropriate documentation required by the indenture and our limited liability company agreement, as amended or restated,
	•	the seller must have irrevocably assigned all of its right, title and interest in the applicable transition property to us and made the filing required by Section 39.309 of the Restructuring Act with respect to the assignment,
	•	the trustee must have received written confirmation from each rating agency that the new series of transition bonds will be rated as set forth in the related prospectus supplement,
	•	the seller must receive and deliver to us and the trustee:

	•	an opinion of outside tax counsel (as selected by the seller, and in form and substance reasonably satisfactory to us and the trustee) to the effect that we will not be subject to United States federal income tax as an entity separate from CenterPoint Energy and that the new series of transition bonds will be treated as debt of CenterPoint Energy for United States federal income tax purposes,

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	•	an opinion of outside tax counsel (as selected by the seller, and in form and substance reasonably satisfactory to us and the trustee) or, if the seller so chooses, a ruling from the IRS, in either case to the effect that, for United States federal income tax purposes, the issuance of the new series of transition bonds will not result in gross income to the seller, and
	•	an opinion of outside tax counsel (as selected by the seller, and in form and substance reasonably satisfactory to us and the trustee) to the effect that such issuance of the additional series of transition bonds will not adversely affect the characterization of any then outstanding transition bonds as obligations of CenterPoint Energy.

	•	we must deliver certain certificates and opinions specified in the indenture to the trustee and, in certain instances, to the Texas commission.

	•	the transition property related to that series,
	•	our rights under the statutorily guaranteed true-up mechanism,
	•	our rights under the applicable sale agreement,
	•	all bills of sale delivered by CenterPoint Houston pursuant to the applicable sale agreement,
	•	our rights under the applicable servicing agreement and any subservicing, agency, intercreditor or collection agreements executed in connection with the servicing agreement,
	•	our rights under the administration agreement,
	•	our rights in the applicable collection account and all subaccounts of the collection account, including the general subaccount, the capital subaccount and the excess funds subaccount and all cash, securities, instruments, investment property or other assets credited to or deposited in the collection account or any subaccount of the collection account from time to time or purchased with funds from the collection account, and all financial assets and securities entitlements carried therein or credited thereto,
	•	our rights under any interest rate swap agreement or hedging agreement entered into with respect to the issuance of a floating rate tranche of a particular series of transition bonds,
	•	our rights in the deposits of retail electric providers required under the applicable financing order,
	•	all of our other property related to the series of transition bonds, other than any cash released to us by the trustee semi-annually 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

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	•	all payments on or under and all proceeds in respect of any or all of the foregoing, including all proceeds of the conversion, voluntary or involuntary, into cash or other liquid property of any or all of the foregoing, all cash proceeds, accounts, accounts receivable, general intangibles, notes, drafts, acceptances, chattel paper, checks, deposit accounts, insurance proceeds, condemnation awards, payment intangibles, letter-of-credit rights, investment property, commercial tort claims, documents, rights to payment of any and every kind, and other forms of obligations and receivables, instruments and other property which at any time constitute all or part of or are included in the proceeds of any of the foregoing.

	•	amounts (including net investment earnings) on deposit in a retail electric provider security deposit subaccount that have been released to the servicer or a retail electric provider,
	•	amounts representing investment earnings on the capital subaccount released to us,
	•	amounts deposited in the capital subaccount for that series that have been released to us or as we direct following retirement of that series of transition bonds,
	•	amounts deposited with us on any series issuance date for payment of costs of issuance with respect to the related series of transition bonds (together with any interest earnings thereon), and
	•	amounts in the segregated trust account held for the benefit of the trustee to pay certain expenses of the trustee.

	•	the general subaccount,
	•	the capital subaccount,
	•	the excess funds subaccount, and
	•	one or more tranche subaccounts with respect to floating rate transition bonds, if any.

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	•	the corporate trust department of the trustee so long as any of the securities of the trustee are rated investment grade by each rating agency, or
	•	the trust department of a depository institution organized under the laws of the United States of America or any state or domestic branch of a foreign bank, which:

	•	has deposits insured by the Federal Deposit Insurance Corporation, and has either:

	•	a long-term unsecured debt rating of “AA-” by S&P and “A2” by Moody’s and, if applicable, the equivalent of the lower of those two ratings by Fitch, or
	•	a certificate of deposit rating of “A-1+” by S&P and “P-1” by Moody’s and, if applicable, the equivalent of the lower of those two ratings by Fitch, or any other long-term, short-term or certificate of deposit rating acceptable to the rating agencies.

	1.	direct obligations of, and obligations fully guaranteed as to timely payment by, the United States of America,
	2.	demand deposits, time deposits or certificates of deposit of any depository institution or trust company incorporated under the laws of the United States of America or any state thereof, or any domestic branch of a foreign bank, and subject to supervision and examination by federal or state banking or depository institution authorities; provided, however, that at the time of the investment or contractual commitment to invest therein, the commercial paper or other short-term unsecured debt obligations, other than any obligations thereof where the rating is based on the credit of a person other than such depository institution or trust company, shall have either (A) a long-term unsecured debt rating from Moody’s and S&P of at least “Aa3” and “AA”, respectively, or (B) a certificate of deposit rating by Moody’s and S&P of at least “P-1” and “A-1+”, respectively,
	3.	commercial paper or other short-term obligations of any corporation (other than CenterPoint Houston, Reliant Energy, Inc. or any of their affiliates), whose ratings, at the time of the investment or contractual commitment to invest therein, from Moody’s and S&P of at least “P-1” and “A-1+”, respectively,
	4.	investments in money market funds having a rating from Moody’s and S&P of “Aaa” and “AAA”, respectively, including funds for which the trustee or any of its affiliates act as investment manager or advisor,
	5.	bankers’ acceptances issued by any depository institution or trust company referred to in clause 2 above,
	6.	repurchase obligations with respect to any security that is a direct obligation of, or fully guaranteed by, the United States of America or any agency or instrumentality thereof the obligations of which are backed by the full faith and credit of the United States of America, in either case entered into with a depository institution or trust company, acting as principal, described in clause 2 above,

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	7.	repurchase obligations with respect to any security or whole loan entered into with:

	a.	depository institution or trust company, acting as principal, described in clause 2 above,
	b.	broker/ dealer, acting as principal, registered as a broker or dealer under Section 15 of the Securities Exchange Act of 1934 the unsecured short-term debt obligations of which are rated at least “P-1” by Moody’s and at least “A-1+” by S&P at the time of entering into this repurchase obligation, or
	c.	an unrated broker/ dealer, acting as principal, that is a wholly owned subsidiary of a nonbank or bank holding company the unsecured short-term debt obligations of which are rated at least “P-1” by Moody’s and at least “A-1+” by S&P at the time of purchase, or

	8.	any other investment permitted by each of the rating agencies;

	a.	any book-entry security, instrument or security having a maturity of one month or less that would be an eligible investment but for its failure, or the failure of the obligor thereon, to have the rating specified above shall be an eligible investment if such book-entry security, instrument or security, or the obligor thereon, has an unsecured short-term debt rating of at least “P-1” by Moody’s, and at least “A-1+” by S&P, and
	b.	any book-entry security, instrument or security having a maturity of greater than one month that would be an eligible investment but for its failure, or the failure of the obligor thereon, to have the rating specified above shall be an eligible investment if such book-entry security, instrument or security, or the obligor thereon, has an unsecured long-term debt rating of at least “AA-” by S&P or “Aa3” by Moody’s and an unsecured short-term debt rating of at least “P-1” by Moody’s or the equivalent thereof by S&P,

	•	unless otherwise provided in the prospectus supplement, mature later than the next payment date, or
	•	be sold, liquidated or otherwise disposed of at a loss prior to the maturity thereof.

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	1.	payment of the trustee’s fees, expenses and any outstanding indemnity amounts relating to that series, the total amount of which will be fixed as specified in the indenture,
	2.	payment of the servicing fee, which will be a fixed amount specified in the servicing agreement for that series, plus any unpaid servicing fees from prior payment dates,
	3.	payment of a pro rata portion of the administration fee, which will be a fixed amount specified in the administration agreement between us and CenterPoint Houston, and a pro rata portion of the fees of

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		our independent managers, which will be in an amount specified in an agreement between us and our independent managers,
	4.	payment of all of our other ordinary periodic operating expenses relating to that series, such as accounting and audit fees, rating agency fees, legal fees and certain reimbursable costs of the servicer under the applicable servicing agreement,
	5.	payment of the interest then due on that series of transition bonds, and payment of amounts, if any, specified in the prospectus supplement that are payable in respect of interest to the swap counterparty under any interest rate swap agreement,
	6.	payment of the principal then required to be paid on that series of transition bonds at final maturity or upon redemption or acceleration,
	7.	payment of the principal then scheduled to be paid on that series of transition bonds,
	8.	payment of any amounts payable to any other credit enhancement providers with respect to that series,
	9.	payment of any of our remaining unpaid operating expenses and any remaining amounts owed pursuant to the basic documents relating to that series, including all remaining indemnity amounts owed to the trustee, and any other amounts owed pursuant to any interest rate swap agreement, other than swap termination payments,
	10.	replenishment of any amounts drawn from the capital subaccount for that series,
	11.	any swap termination payments, which will be payable only after all of the transition bonds have been paid in full unless the swap termination payments are payable as a result of (i) failure to pay as a result of insufficient collection of transition charges (up to a cap specified in the prospectus supplement), (ii) breach of the swap agreement by us or the indenture trustee (up to a cap specified in the prospectus supplement), (iii) our bankruptcy, (iv) our merger without assumption or (v) failure or termination of the security interest of the trustee under the indenture,
	12.	release to us of an amount equal to investment earnings on amounts in the capital subaccount for that series, so long as no event of default has occurred and is continuing, and
	13.	allocation of the remainder, if any, to the excess funds subaccount.

	•	an amount equal to the interest accrued on that series or tranche at the applicable interest rate from the prior payment date or, with respect to the first payment date, the amount of interest accrued since the issuance date, with respect to that series or tranche,
	•	any unpaid interest plus, to the fullest extent permitted by law, any interest accrued on this unpaid interest,
	•	if the transition bonds have been declared due and payable, all accrued and unpaid interest thereon, and

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	•	with respect to a series or tranche to be redeemed prior to the next payment date, the amount of interest that will be payable as interest on such series or tranche upon such redemption.

	•	the amount of principal due as a result of the occurrence and continuance of an event of default and acceleration of the transition bonds,
	•	the amount of principal due on the final maturity date of any series or tranche,
	•	the amount of principal and premium, if any, due as a result of a redemption of the transition bonds prior to such payment date pursuant to the indenture,
	•	any overdue payments of principal, and
	•	the amount of principal scheduled to be paid on such payment date in accordance with the expected amortization schedule.

	1.	from the excess funds subaccount for allocations and payments contemplated in clauses 1 through 11, and
	2.	from the capital subaccount for allocations and payments contemplated by clauses 1 through 9.

	•	the amount to be paid to transition bondholders of that series and the related tranches in respect of principal,
	•	the amount to be paid to transition bondholders of that series and the related tranches in respect of interest,

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	•	the transition bond balance and the projected transition bond balance of that series and the related tranches as of that payment date,
	•	the amount on deposit in the capital subaccount for that series as of that payment date,
	•	the amount, if any, on deposit in the excess funds subaccount for that series as of that payment date,
	•	the amount to be paid to and by any counterparty under any interest rate swap agreement or hedge agreement relating to that series,
	•	the amount to be paid to the trustee relating to that series on that payment date,
	•	the amount to be paid to the servicer relating to that series on that payment date, and
	•	any other transfers and payments relating to that series made pursuant to the indenture.

	•	statements of transition charge remittances made to the trustee (to be included in a Form 10-Q or Form 10-K),
	•	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-Q or Form 10-K),
	•	a statement showing the balance of outstanding transition bonds that reflects the actual periodic payments made on each series of the transition bonds versus the expected periodic payments (to be included in the next Form 10-Q or Form 10-K filed),
	•	the semi-annual servicer’s certificate which is required to be submitted pursuant to the servicing agreement (to be filed with a Form 10-Q, 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 series of transition bonds (to be included in either a Form 10-Q, Form 10-K or Form 8-K),
	•	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 (to be included in each Form 10-Q and Form 10-K) either affirming that, to our knowledge, in all material respects, for each materially significant retail electric provider, (a) each such retail electric provider has been billed in compliance with the requirements outlined in the applicable financing order; (b) each such retail electric provider has made payments in compliance with the requirements outlined in the applicable financing order, and (c) each such retail electric provider satisfies the creditworthiness requirements of the applicable financing order or describing the servicer’s actions if (a), (b) or (c) has not occurred.

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	•	the final prospectus for each series of outstanding transition bonds,
	•	the semi-annual servicer’s certificate delivered for each series of transition bonds pursuant to the servicing agreements,
	•	the periodic reports described above, and
	•	a current organization chart for the issuer 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.

	•	to correct or amplify the description of the collateral, or to better assure, convey and confirm unto the trustee the collateral, or to subject additional property to the lien of the indenture,
	•	to evidence the succession, in compliance with the applicable provisions of the indenture, of another entity to us, and the assumption by any applicable successor of our covenants contained in the indenture and in the transition bonds,
	•	to add to our covenants, for the benefit of the holders of the transition bonds, or to surrender any right or power therein conferred upon us,
	•	to convey, transfer, assign, mortgage or pledge any property to the trustee,
	•	to cure any ambiguity, to correct or supplement any provision of the indenture or in any supplemental indenture which may be inconsistent with any other provision of the indenture or in any supplemental indenture, to make any other provisions with respect to matters or questions arising under the indenture or in any supplemental indenture, to change in any manner or eliminate any provisions of the indenture or to modify in any manner the rights of the transition bondholders under the indenture; provided, however, that:

	•	this action shall not adversely affect in any material respect the interests of any transition bondholder, and
	•	the rating agency condition shall have been satisfied with respect thereto,

	•	to evidence and provide for the acceptance of the appointment under the indenture by a successor trustee with respect to the transition bonds and to add to or change any of the provisions of the indenture as shall be necessary to facilitate the administration of the trust estate under the indenture by more than one trustee, pursuant to the requirements specified in the indenture,
	•	to qualify the transition bonds for registration with a clearing agency,
	•	to modify, eliminate or add to the provisions of the indenture to the extent necessary to effect the qualification of the indenture under the Trust Indenture Act or under any similar federal statute hereafter enacted and to add to the indenture any other provisions as may be expressly required by the Trust Indenture Act,

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	•	to set forth the terms of any series that has not theretofore been authorized by a supplemental indenture, or
	•	to satisfy any rating agency requirements.

	•	the supplemental agreement does not adversely affect in any material respect the interests of any transition bondholder, and
	•	the rating agency condition shall have been satisfied with respect thereto.

	•	change the date of payment of any installment of principal of or premium, if any, or interest on any transition bond of such series or tranche, or reduce the principal amount thereof, the interest rate thereon or the redemption price or the premium, if any, with respect thereto,
	•	change the provisions of the indenture and the related 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 series or 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 series or 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 series or tranche required to direct the trustee to direct us to sell or liquidate the collateral,
	•	modify any provision of the section of the indenture relating to the consent of transition bondholders of such series or tranche with respect to supplemental indentures, except to increase any percentage specified therein or to provide that those provisions of the indenture or the basic documents specified in the indenture cannot be modified or waived without the consent of each outstanding transition bondholder affected thereby,
	•	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 series or tranche on any payment date or change the redemption dates, expected amortization schedules, series final maturity dates or tranche final maturity dates of any transition bonds of such series or tranche,
	•	decrease the required capital amount with respect to such series, modify or alter the provisions of the indenture regarding the voting of the transition bonds held by us, CenterPoint Houston, an affiliate of either of them or any obligor on the transition bonds of such series,

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	•	decrease the percentage of the aggregate principal amount of the transition bonds of such series or tranche required to amend the sections of the indenture which specify the applicable percentage of the aggregate principal amount of the transition bonds necessary to amend the indenture or other related agreements specified therein, or
	•	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 series or 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.

	•	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

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	•	waives timely performance or observance by CenterPoint Houston or the servicer under the sale agreement, the intercreditor agreement or the servicing agreement,

	1.	a default in the payment of any interest on any transition bond of that series when the same becomes due and payable and the continuation of this default for five business days,
	2.	a default in the payment of the then unpaid principal of any transition bond of that series on the final maturity date for that series or, if applicable, any tranche on the final maturity date for that tranche,
	3.	a default in the payment of the redemption price for any transition bond of that series on the redemption date therefor,
	4.	a default in the observance or performance of any of our covenants or agreements made in the indenture, other than those specifically dealt with in clause 1, 2 or 3 above, or any of our covenants or agreements made in any interest rate swap agreement, hedge agreement or credit enhancement agreement permitted under the indenture or any supplemental indenture or any of our representations or warranties made in the indenture or in any certificate or other writing delivered pursuant to the indenture or in connection with the indenture proving to have been incorrect in any material respect as of the time when made (other than a covenant, agreement or representation or warranty expressly included in the indenture solely for the benefit of a different series of transition bonds), and this default continues or is not cured for a period of 30 days after the earlier of (a) 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% of the outstanding principal amount of the transition bonds of the affected series or (b) the date we have actual notice of the default,
	5.	the filing of a decree or order for relief by a court having jurisdiction in respect of us or any substantial part of the collateral securing that series in an involuntary case 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 us or our property or for any substantial part of the collateral securing that series, or ordering the winding- up or liquidation of our affairs, and such decree or order remains unstayed and in effect for a period of 90 consecutive days,
	6.	the commencement by us 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 us to the entry of an order for relief in an involuntary case under any such law, or the consent by us to the appointment or taking possession by a receiver, liquidator, assignee, custodian, trustee, sequestrator or similar official of us or our property for any substantial part of the collateral securing that series, or the making by us of any general assignment for the benefit of creditors, or the failure by us generally to pay our debts as such debts become due, or the taking of action by us in furtherance of any of the foregoing,
	7.	any act or failure to act 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 pledge of the State

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		of Texas in Section 39.310 of the Restructuring Act including, without limitation, the failure of the Texas Commission to implement the statutorily guaranteed true-up mechanism, or
	8.	any other event designated as an event of default in the related series supplement.

	•	the trustee may 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 the indenture with respect to the transition bonds, whether by declaration or otherwise, enforce any judgment obtained, and collect from us or the servicer moneys adjudged due,
	•	the trustee may institute proceedings from time to time for the complete or partial foreclosure of the indenture with respect to the collateral securing that series,
	•	the trustee may exercise any remedies of a secured party under the Uniform Commercial Code or the Restructuring Act or any other applicable law and take any other appropriate action to protect and enforce the rights and remedies of the trustee and the transition bondholders,
	•	the trustee may sell the collateral securing that series 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 provided that certain conditions set forth in the indenture are met, and
	•	the trustee may exercise all of our rights, remedies, powers, privileges and claims against the seller, administrator and the servicer under or in connection with the administration agreement or the applicable sale agreement, intercreditor agreement or servicing agreement or against any swap counterparty under or in connection with, and pursuant to the terms of, any applicable swap agreement.

	•	subject to the paragraph immediately below, sell the collateral securing such series,
	•	elect to have us maintain possession of the collateral securing such series, or
	•	take such other remedial action as the trustee, at the written direction of the holders of a majority in principal amount of the transition bonds of such series then outstanding and declared to have been

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		due and payable, may direct and continue to apply distributions on the collateral securing such series as if there had been no declaration of acceleration.

	•	the holders of 100% of the principal amount of all series of the transition bonds consent to the sale,
	•	the proceeds of the sale or liquidation are sufficient to pay in full the principal of and premium, if any, and accrued interest on the outstanding transition bonds of such series, or
	•	the trustee determines (based upon a report from an independent auditor) that funds provided by the collateral securing such series would not be sufficient on an ongoing basis to make all payments on the transition bonds of such series as these payments would have become due if the transition bonds of such series had not been declared due and payable, and the trustee obtains the written consent of the holders of 66 2/3% of the aggregate outstanding principal amount of the transition bonds of such series.

	•	this direction does not conflict with any rule of law or with the indenture,
	•	the trustee may sell the collateral securing the affected series 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 provided that certain conditions set forth in the indenture are met,
	•	so long as the conditions specified in the indenture have been satisfied and the trustee elects to retain the collateral securing the affected series pursuant to the indenture and elects not to sell or liquidate that collateral, any direction to the trustee to sell or liquidate the collateral securing the affected series is by the holders of 100% of the principal amount of the affected series of the transition bonds then outstanding, and
	•	the trustee may take any other action deemed proper by the trustee that is not inconsistent with this direction.

	•	it reasonably believes it will not be indemnified to its reasonable satisfaction against the costs, expenses and liabilities which might be incurred by it in complying with this request, or
	•	it determines that this action might materially adversely affect the rights of any transition bondholder not consenting to the action.

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	•	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 of the affected series 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 security or indemnity reasonably satisfactory to the trustee against the costs, expenses and liabilities to be incurred in complying with the request,
	•	the trustee for 60 days after its receipt of the notice, request and offer of indemnity has failed to institute the proceeding, and
	•	no direction inconsistent with this written request has been given to the trustee during the 60-day period referred to above by the holders of a majority in principal amount of the outstanding transition bonds of the affected series.

	•	the entity formed by or surviving the consolidation, merger or conversion or to whom substantially all of our assets are sold is organized under the laws of the United States or any state thereof and expressly assumes by a supplemental indenture the due and punctual payment of the principal of and premium, if any, and interest on all outstanding transition bonds and the performance of our obligations under the indenture,
	•	the entity formed by or surviving the consolidation, merger or conversion or to whom substantially all of our assets are sold expressly assumes all obligations and succeeds to all of our rights under the sale agreement, the administration agreement, the intercreditor agreement, the servicing agreement and any other basic document specified in the indenture to which we are a party or under which we have rights pursuant to an assignment and assumption agreement executed and delivered to the trustee,
	•	no default or event of default will have occurred and be continuing immediately after giving effect to the merger, consolidation, conversion or sale,
	•	prior notice will have been given to the rating agencies and the rating agency condition will have been satisfied with respect to the merger, consolidation, conversion or sale,
	•	we have received an opinion of independent counsel to the effect that the merger, consolidation, conversion or sale:

	•	will have no material adverse tax consequence to us or any transition bondholder,
	•	complies with the indenture and all conditions precedent therein provided relating to the merger, consolidation, conversion or sale, and

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	•	will result in the trustee maintaining a continuing valid first priority perfected security interest in the collateral,

	•	none of the transition property, the financing order or our rights under the Restructuring Act or the financing order are impaired thereby, and
	•	any action that is necessary to maintain the lien and security interest created by the indenture has been taken.

	•	permit the validity of the indenture to be impaired or the lien to be amended, subordinated or terminated or discharged,
	•	permit any person to be released from any covenants or obligations except as expressly permitted by the indenture,
	•	permit any lien, charge, claim, security interest, mortgage or other encumbrance, other than the lien of the indenture, 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,
	•	except as expressly permitted by the indenture, any supplemental indenture, the sale agreement or the servicing agreement, sell, transfer, exchange or otherwise dispose of any of the collateral unless directed to do so by the trustee in accordance with the indenture,
	•	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 under the Internal Revenue Code of 1986, or assert any claim against any present or former transition bondholder because of the payment of taxes levied or assessed upon us or any part of the collateral,
	•	terminate our existence, dissolve or liquidate in whole or in part, except as otherwise permitted by the indenture,
	•	enter into any swap, hedge or other similar financial arrangement except as permitted by the indenture, any supplement thereto, the sale agreement or the servicing agreement,
	•	take any action which is the subject of a rating agency condition if such action would result in a downgrade, or
	•	elect to be classified as an association taxable as a corporation for federal income tax purposes or otherwise take any action inconsistent with our treatment for federal income tax purposes as a disregarded entity not separate from our sole owner.

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	•	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,
	•	any additional issue of a series of the transition bonds not previously reported, and
	•	any action taken by it that materially affects the transition bonds of any series and that has not been previously reported.

	•	either all transition bonds of that series which have already been authenticated or delivered, with certain exceptions set forth in the indenture, have been delivered to the trustee for cancellation or we have irrevocably deposited with the trustee cash, in trust for this purpose, in an amount sufficient to

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		make payments of principal of and interest on the transition bonds of that series and to pay and discharge the entire indebtedness on those transition bonds not previously delivered to the trustee,
	•	we have paid all other sums payable by us under the indenture with respect to the transition bonds of that series, and
	•	we have delivered to the trustee an officer’s certificate, an opinion of counsel, and if required by the Trust Indenture Act or the trustee, a certificate from a firm of independent certified public accountants, each stating that there has been compliance with the conditions precedent in the indenture or relating to the satisfaction and discharge of the indenture with respect to the transition bonds of that series.

	•	all of our obligations under the indenture with respect to the transition bonds of any series, or
	•	our obligations to comply with some of the covenants in the indenture, including some of the covenants described under “—Our Covenants.”

	•	we irrevocably deposit or cause to be deposited in trust with the trustee cash or U.S. government obligations specified in the indenture for the payment of principal of and premium, if any, and interest on the transition bonds of that series to the scheduled final payment date or redemption date therefor, as applicable, the deposit to be made in the defeasance subaccount for that series,
	•	we deliver to the trustee a certificate from a nationally recognized firm of independent accountants expressing its opinion that the payments of principal and interest on the U.S. government obligations when due and without reinvestment plus any cash deposited in the defeasance subaccount will provide cash at times and in sufficient amounts to pay in respect of the transition bonds of that series:

	•	principal in accordance with the expected amortization schedule therefor, and/or if that series is to be redeemed, the redemption price on the redemption date therefor, and
	•	interest when due,

	•	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,

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	•	in the case of the legal defeasance option, we deliver to the trustee an opinion of counsel stating that:

	•	we have received from, or there has been published by, the Internal Revenue Service a ruling, or
	•	since the date of execution of the indenture, there has been a change in the applicable federal income tax law, and

	in either case confirming that the holders of the transition bonds of that series will not recognize income, gain or loss for federal income tax purposes as a result of the exercise of the legal defeasance option 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 the legal defeasance had not occurred,

	•	in the case of the covenant defeasance option, we deliver to the trustee an opinion of counsel to the effect that the holders of the transition bonds of that series will not recognize income, gain or loss for federal income tax purposes as a result of the exercise of the covenant defeasance option 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 the covenant defeasance had not occurred,
	•	we deliver to the trustee a certificate of one of our managers 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,
	•	we deliver to the trustee an opinion of counsel to the effect that (a) in a case under the bankruptcy code in which CenterPoint Houston (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 CenterPoint Houston (or any of its affiliates, other than us, that deposited the cash or U.S. government obligations); and (b) in the event CenterPoint Houston (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 CenterPoint Houston (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 CenterPoint Houston (or any of its affiliates, other than us, that deposited the cash or U.S. government obligations), and
	•	each rating agency has notified us and the trustee that the exercise of the proposed defeasance option will not result in a downgrade or withdrawal of the then current rating of any then outstanding transition bonds.

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	•	we have any recourse against CenterPoint Houston,

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

	1.	subject to clause 9 below (assumptions used in calculating the transition charges as of the applicable transfer date), all written information, as amended or supplemented from time to time, provided by CenterPoint Houston to us with respect to the transferred transition property (including the applicable financing order and the issuance advice letter) is correct in all material respects;
	2.	it is the intention of the parties to each sale agreement that, other than for specified tax purposes, each sale, transfer, assignment, setting over and conveyance contemplated by the sale agreement constitutes a sale or other absolute transfer of all right, title and interest of CenterPoint Houston related to the applicable series of transition bonds in, to and under the applicable financing order to us, whereupon (subject to the effectiveness of the related issuance advice letter) such rights and interests will become transition property; upon execution and delivery of the sale agreement and the related bill of sale and payment of the purchase price, CenterPoint Houston will have no right, title or interest in, to or under the transferred transition property; and that such transferred transition property would not be a part of the estate of CenterPoint Houston in the event of the filing of a bankruptcy petition by or against CenterPoint Houston under any bankruptcy law;

	3.     a.	CenterPoint Houston is the sole owner of the rights and interests under the financing order being sold to us on the applicable transfer date,

	b.	on the applicable transfer date, immediately upon the sale under the sale agreement, the transferred transition property will have been validly sold, assigned, transferred, set over and conveyed to us free and clear of all liens (except for any lien created in favor of the transition

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		bondholders pursuant to Section 39.309 of the Restructuring Act or any lien created by us under the basic documents), and
	c.	all actions or filings (including filings with the Secretary of State of the State of Texas in accordance with the rules prescribed under the Restructuring Act and the Uniform Commercial Code) necessary in any jurisdiction to give us a perfected ownership interest (subject to any lien created in favor of the transition bondholders pursuant to Section 39.309 of the Restructuring Act or any lien created by us under the basic documents) in the transferred transition property and to grant to the trustee a first priority perfected security interest in the transferred transition property, free and clear of all liens of CenterPoint Houston or anyone else (except for any lien created in favor of the transition bondholders pursuant to Section 39.309 of the Restructuring Act or any lien created by us under the basic documents) have been taken or made;

	4.	the applicable financing order has been issued by the Texas commission in accordance with the Restructuring Act, the applicable financing order and the process by which it was issued comply with all applicable laws, rules and regulations of the State of Texas and the federal laws of the United States, and the applicable financing order is final, non-appealable and in full force and effect;
	5.	as of the date of issuance of the related transition bonds, those transition bonds will be entitled to the protections provided by the Restructuring Act and the applicable financing order, and the applicable financing order and the transition charges authorized therein will have become irrevocable and not subject to reduction, impairment or adjustment by further action of the Texas commission, except as permitted by Section 39.307 of the Restructuring Act, the issuance advice letter relating to the transferred transition property to be sold on such a date will have been filed in accordance with the applicable financing order, and the Texas commission will not have issued any order prior to noon on the fourth business day after submission of the issuance advice letter that those transition bonds do not comply with specified ordering provisions of the applicable financing order and the initial transition charges and the final term of the transition bonds set forth in the related issuance advice letter will have become effective;

	6.     a.	under the Restructuring 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 transferred under the applicable sale agreement or, except as permitted in Section 39.307 of the Restructuring Act, reduce, alter or impair the related transition charges 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,

	b.	under the laws of the State of Texas and the federal laws of the United States, the State of Texas could not constitutionally take any action of a legislative character, including the repeal or amendment of the Restructuring Act, which would substantially limit, alter or impair the transition property or other rights vested in the transition bondholders pursuant to the applicable 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 the important public purpose justifying that action, and, under the takings clauses of the Texas and United States Constitutions, the State of Texas could not repeal or amend the Restructuring Act or take any other action in contravention of its pledge quoted above without paying just compensation to the related transition bondholders, as determined by a court of competent jurisdiction, if doing so would constitute a permanent appropriation of a substantial property interest of those transition bondholders in the transition property and deprive those transition 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 those transition bonds;

	7.	there is no order by any court providing for the revocation, alteration, limitation or other impairment of the Restructuring Act, the applicable financing order or issuance advice letter, the transferred

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		transition property or the related transition charges or any rights arising under any of them or that seeks to enjoin the performance of any obligations under the applicable financing order;
	8.	under the laws of the State of Texas and the federal laws of the United States in effect on the applicable transfer date, no other approval, authorization, consent, order or other action of, or filing with any court, federal or state regulatory body, administrative agency or other governmental instrumentality is required in connection with the creation or transfer of CenterPoint Houston’s rights and interests related to the applicable series of transition bonds under the applicable financing order and our purchase of the transition property from CenterPoint Houston, except those that have been obtained or made;
	9.	based on information available to CenterPoint Houston on the applicable transfer date, the assumptions used in calculating the transition charges in the applicable issuance advice letter are reasonable and made in good faith; however, notwithstanding the foregoing, CenterPoint Houston 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;

	10.    a.	upon the effectiveness of the applicable issuance advice letter, the transfer of CenterPoint Houston’s rights and interests related to the applicable series of transition bonds under the related financing order and our purchase of the transition property from CenterPoint Houston pursuant to the applicable sale agreement, the transferred transition property will constitute a present property right,

	b.	upon the effectiveness of the applicable issuance advice letter, the transfer of CenterPoint Houston’s rights and interests under the applicable financing order that relate to the series of transition bonds to be issued and sold and our purchase of the transition property from CenterPoint Houston pursuant to the applicable sale agreement, the transferred transition property will include, without limitation:

	(1)	the right to impose, collect and receive transition charges authorized in the related financing order that relate to such series of transition bonds, including, without limitation, the right to receive transition charges in amounts and at times sufficient to pay principal and interest on such series of transition bonds,
	(2)	all rights and interests of CenterPoint Houston under the applicable financing order that relate to such series of transition bonds,
	(3)	the rights to file for periodic adjustments of the related transition charges as provided in the applicable financing order, and
	(4)	all revenues and collections resulting from the related transition charges,

	c.	upon the effectiveness of the applicable issuance advice letter and the transfer of CenterPoint Houston’s rights and interests under the applicable financing order that relate to such series of transition bonds and our purchase of the transition property from CenterPoint Houston on such transfer date pursuant to such sale agreement, the transferred transition property will not be subject to any lien created by a previous indenture;

	11.	CenterPoint Houston is a limited liability company duly organized and in good standing under the laws of the State of Texas, with limited liability company power and authority to own its properties and conduct its business as currently owned or conducted;
	12.	CenterPoint Houston has the limited liability company power and authority to obtain the applicable financing order and to execute and deliver the applicable sale agreement and to carry out its terms; CenterPoint Houston has the limited liability company power and authority to own the rights and interests under the applicable financing order related to the applicable series of transition bonds, to

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		sell and assign those rights and interests under the applicable financing order to us, whereupon (subject to the effectiveness of the related issuance advice letter) such rights and interests will become transition property; and the execution, delivery and performance of the applicable sale agreement have been duly authorized by CenterPoint Houston by all necessary limited liability company action;
	13.	the applicable sale agreement constitutes a legal, valid and binding obligation of CenterPoint Houston, enforceable against CenterPoint Houston in accordance with its terms, subject to customary exceptions relating to bankruptcy, creditors’ rights and equitable principles;
	14.	the consummation of the transactions contemplated by the applicable sale agreement and the fulfillment of the terms thereof do not (a) conflict with or result in any breach of any of the terms and provisions of, or constitute (with or without notice or lapse of time) a default under, the articles of organization or limited liability company regulations of CenterPoint Houston, or any indenture, mortgage, credit agreement or other agreement or instrument to which CenterPoint Houston is a party or by which it or its properties is bound; (b) result in the creation or imposition of any lien upon any of CenterPoint Houston’s properties pursuant to the terms of any such indenture or agreement or other instrument (except for any lien created in favor of the transition bondholders pursuant to Section 39.309 of the Restructuring Act or any lien created by us under the basic documents) or (c) violate any existing law or any existing order, rule or regulation applicable to CenterPoint Houston of any court or of any federal or state regulatory body, administrative agency or other governmental instrumentality having jurisdiction over CenterPoint Houston or its properties;
	15.	except for continuation filings under the Uniform Commercial Code and other filings under the Restructuring Act and the Uniform Commercial Code, no approval, authorization, consent, order or other action of, or filing with, any court, federal or state regulatory body, administrative agency or other governmental instrumentality is required under any applicable law, rule or regulation in connection with the execution and delivery by CenterPoint Houston of the applicable sale agreement, the performance by CenterPoint Houston of the transactions contemplated by such sale agreement or the fulfillment by CenterPoint Houston of the terms of such sale agreement, except those that have previously been obtained or made and those that CenterPoint Houston, in its capacity as servicer under the related servicing agreement, is required to make in the future pursuant to that servicing agreement;
	16.	except as disclosed in this prospectus or a prospectus supplement, there are no proceedings pending, and to CenterPoint Houston’s knowledge, (a) there are no proceedings threatened and (b) there are no investigations pending or threatened before any court, federal or state regulatory body, administrative agency or other governmental instrumentality having jurisdiction over CenterPoint Houston or its properties involving or related to CenterPoint Houston or us or, to CenterPoint Houston’s knowledge, to any other person:

	a.	asserting the invalidity of the applicable sale agreement, any of the other basic documents, the related series of transition bonds, the Restructuring Act or the applicable financing order,
	b.	seeking to prevent the issuance of the related series of transition bonds or the consummation of the transactions contemplated by the applicable sale agreement or any of the other basic documents,
	c.	seeking any determination or ruling that could reasonably be expected to materially and adversely affect the performance by CenterPoint Houston of its obligations under, or the validity or enforceability of, the applicable sale agreement or any of the other basic documents or the related series of transition bonds, or
	d.	challenging CenterPoint Houston’s treatment of the related series of transition bonds as debt of CenterPoint Energy for federal or state income, gross receipts or franchise tax purposes;

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	17.	after giving effect to the sale of any transferred transition property under the applicable sale agreement, CenterPoint Houston:

	a.	is solvent and expects to remain solvent,
	b.	is adequately capitalized to conduct its business and affairs considering its size and the nature of its business and intended purposes,
	c.	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,
	d.	reasonably believes that it will be able to pay its debts as they become due, and
	e.	is able to pay its debts as they become due and does not intend to incur, or believes that it will incur, indebtedness that it will not be able to repay at its maturity; and

	18.	CenterPoint Houston is duly qualified to do business as a foreign limited liability company 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 requires 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 CenterPoint Houston’s business, operations, assets, revenues or properties).

	1.	subject to its rights to assign its rights and obligations under the sale agreement, so long as the transition bonds of any series are outstanding, CenterPoint Houston will (i) keep in full force and effect its existence and remain in good standing under the laws of the state of its organization, and will obtain and preserve its qualification to do business in each jurisdiction in which such qualification is or will be necessary to protect the validity and enforceability of the applicable sale agreement and each other instrument or agreement to which CenterPoint Houston is a party necessary to the proper administration of such sale agreement and the transactions contemplated by such sale agreement and (ii) continue to operate its transmission and distribution system in order to provide electric services to retail electric customers in its certificated service area, provided that CenterPoint Houston is not prohibited from selling, assigning or otherwise divesting its transmission and distribution system or any part thereof in accordance with the sale agreement and the applicable financing order;
	2.	except for the conveyances under the applicable sale agreement or any lien under Section 39.309 of the Restructuring Act for our benefit, the transition bondholders and the trustee, CenterPoint Houston may not sell, pledge, assign or transfer to any other person, or grant, create, incur, assume or suffer to exist any lien on, any of the applicable transferred transition property, whether then existing or thereafter created, or any interest therein. CenterPoint Houston may not at any time assert any lien against or with respect to the applicable transferred transition property, and CenterPoint Houston shall defend the right, title and interest of us and of the trustee, as our assignee, in, to and under the transferred transition property against all claims of third parties claiming through or under CenterPoint Houston;
	3.	in the event that CenterPoint Houston receives any payments under the terms of an intercreditor agreement in respect of the related transition charges or the proceeds thereof other than in its capacity as the servicer, CenterPoint Houston agrees to pay all those payments to the servicer, in

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		accordance with such intercreditor agreement, as soon as practicable after receipt thereof by CenterPoint Houston;
	4.	CenterPoint Houston will notify us and the trustee promptly after becoming aware of any lien on any of the transferred transition property, other than the conveyances under the applicable sale agreement, any lien created in favor of the transition bondholders under Section 39.309 of the Restructuring Act or any lien created by us under the indenture;
	5.	CenterPoint Houston agrees to comply with its organizational or governing documents and all laws, treaties, rules, regulations and determinations of any court or federal or state regulatory body, administrative agency or governmental instrumentality 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 applicable transferred transition property or under the basic documents or CenterPoint Houston’s performance of its obligations under the applicable sale agreement;
	6.	so long as any transition bonds of the applicable series are outstanding, CenterPoint Houston

	a.	will treat the transition bonds as our debt and not debt of CenterPoint Houston, except for financial reporting or tax purposes or as required in connection with the SEC’s administration of the 1935 Act;
	b.	will disclose in its financial statements that it is not the owner of the applicable transferred transition property and that our assets are not available to pay creditors of CenterPoint Houston or its affiliates (other than us);
	c.	will not own or purchase any transition bonds; and
	d.	will disclose the effects of all transactions between us and CenterPoint Houston in accordance with generally accepted accounting principles;

	7.	so long as any transition bonds of the applicable series are outstanding:

	a.	in all proceedings relating directly or indirectly to the applicable transferred transition property, CenterPoint Houston will affirmatively certify and confirm that it has sold all of its rights and interests under the applicable financing order that relate to such series of transition bonds to us (other than for financial reporting or tax purposes or as required in connection with the SEC’s administration of the 1935 Act), and will not make any statement or reference in respect of such transferred transition property that is inconsistent with our ownership interest (other than for financial reporting or tax purposes or as required in connection with the SEC’s administration of the 1935 Act),
	b.	CenterPoint Houston will not take any action in respect of the applicable transferred transition property except solely in its capacity as servicer thereof pursuant to the related servicing agreement or as contemplated by the basic documents,
	c.	CenterPoint Houston will not sell a new series of transition bonds unless the rating agency condition has been satisfied with respect to the series of transition bonds related to that sale agreement;

	8.	CenterPoint Houston agrees that, upon the sale by CenterPoint Houston of all of its rights and interests related to the applicable series of transition bonds under the applicable financing order to us pursuant to the applicable sale agreement any payment to the servicer by any person responsible for remitting transition charges to the servicer under the terms of the applicable financing order or the Restructuring Act or applicable tariff shall discharge such person’s obligations in respect of such transferred transition property to the extent of such payment, notwithstanding any objection or direction to the contrary by CenterPoint Houston;
	9.	CenterPoint Houston will execute and file such filings, and cause to be executed and filed such filings in such manner and in such places as may be required by law fully to preserve, maintain and

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		protect our and the trustee’s interests in the transferred transition property, including all filings required under the Restructuring Act and the Uniform Commercial Code relating to the transfer of the ownership of the rights and interests related to the applicable series of transition bonds under the applicable financing order by CenterPoint Houston to us and the pledge of the transferred transition property by us to the trustee. CenterPoint Houston will deliver (or cause to be delivered) to us and the trustee file-stamped copies of, or filing receipts for, any document filed as provided above, as soon as available following such filing. CenterPoint Houston will institute any action or proceeding reasonably necessary to compel performance by the Texas commission or the State of Texas of any of their obligations or duties under the Restructuring Act, the applicable financing order or the issuance advice letter relating to the transfer of the rights and interests under the applicable financing order that relate to such series of transition bonds by CenterPoint Houston to us, and CenterPoint Houston 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, in each case as may be reasonably necessary:

	a.	to protect us and the transition bondholders from claims, state actions or other actions or proceedings of third parties which, if successfully pursued, would result in a breach of any representation described above under the caption “—CenterPoint Houston’s Representations and Warranties”; or
	b.	so long as CenterPoint Houston is also the servicer, to block or overturn any attempts to cause a repeal of, modification of or supplement to the Restructuring Act, the applicable financing order, the applicable issuance advice letter or the rights of transition bondholders by legislative enactment or constitutional amendment that would be materially adverse to us, the trustee or the transition bondholders.

	The costs of any such actions or proceedings would be reimbursed by us to CenterPoint Houston from amounts on deposit in the collection account as an operating expense in accordance with the terms of the indenture. CenterPoint Houston’s obligations pursuant to this covenant survive and continue notwithstanding that the payment of operating expenses pursuant to the indenture may be delayed.

	10.	so long as any transition bonds of the applicable series are outstanding, CenterPoint Houston will 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, businesses, 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 applicable transferred transition property; provided that no such tax need be paid if CenterPoint Houston or any of its affiliates is contesting the same in good faith by appropriate proceedings promptly instituted and diligently conducted and if CenterPoint Houston or such affiliate has established appropriate reserves as shall be required in conformity with generally accepted accounting principles;
	11.	CenterPoint Houston will comply with all filing requirements imposed upon it in its capacity as seller of the transferred transition property under the applicable financing order, including making any post-closing filings; and
	12.	even if the applicable sale agreement or the indenture providing for the related series of transition bonds is terminated, CenterPoint Houston will not, prior to the date that is one year and one day after the termination of the indenture, petition or otherwise make or cause us to invoke the process of any court or federal or state regulatory body, administrative agency or governmental instrumentality for the purpose of commencing or sustaining a case against us under any federal or state bankruptcy, insolvency or similar law or appointing a receiver, liquidator, assignee, trustee, custodian, sequestrator or other similar official of ours, or any substantial property of ours or ordering the winding up or liquidation of our affairs. We will also agree in each sale agreement not to petition or otherwise induce or cause CenterPoint Houston to invoke such a process for the same period of time.

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	1.	any and all taxes, other than any taxes imposed on transition bondholders of the related series solely as a result of their ownership of transition bonds, that may at any time be imposed on or asserted against any of those persons under existing law as of the applicable transfer date as a result of the sale and assignment of CenterPoint Houston’s rights and interests under the applicable financing order that relates to such series of transition bonds by CenterPoint Houston to us, the acquisition or holding of the applicable transferred transition property by us or the issuance and sale by us of the related series of transition bonds, including any sales, gross receipts, tangible personal property, privilege, franchise or license taxes, but excluding any taxes imposed as a result of a failure of that person to properly withhold or remit taxes imposed with respect to payments on any transition bond of the related series, in the event and to the extent such taxes are not recoverable qualified costs, it being understood that the transition bondholders of the related series will be entitled to enforce their rights against CenterPoint Houston solely through a cause of action brought for their benefit by the trustee in accordance with the terms of the indenture; and

	2.     a.	any and all amounts of principal of and interest on the related series of transition bonds not paid when due or when scheduled to be paid in accordance with their terms and the amount of any deposits to us required to have been made in accordance with the terms of the basic documents which are not made when so required, in each case as a result of CenterPoint Houston’s breach of any of its representations, warranties or covenants contained in the applicable sale agreement; and

	b.	any and all liabilities, obligations, claims, actions, suits or payments of any kind whatsoever that may be imposed on or asserted against any such person, other than any liabilities, obligations or claims for or payments of principal of or interest on the transition bonds of the related series, together with any reasonable costs and expenses incurred by that person, in each case as a result of CenterPoint Houston’s breach of any of its representations, warranties or covenants contained in the applicable sale agreement.

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	•	immediately after giving effect to any transaction referred to in this paragraph, no representation or warranty made in the sale agreement will have been breached in any material respect, 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 to the seller must execute an agreement of assumption to perform every obligation of the seller under the sale agreement,
	•	the rating agencies specified in the sale agreement will have received prior written notice of the transaction, and
	•	officers’ certificates and opinions of counsel specified in the sale agreement will have been delivered to us and the trustee.

	•	calculating and billing the related transition charges,
	•	obtaining meter reads and collecting the related transition charges from retail electric providers or an agent appointed by the servicer or an account designated under the intercreditor agreement to collect the charges, as applicable, and posting all collections,
	•	responding to inquiries by retail electric customers, retail electric providers, the Texas commission or any federal, local or other state governmental authority with respect to the related transition property and related transition charges,
	•	accounting for collected transition charges and late-payment penalties of retail electric providers, investigating and resolving delinquencies, processing and depositing collections, making periodic remittances to the trustee and furnishing periodic reports to us, the trustee, the Texas commission and the rating agencies,

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	•	providing certified calculations and other information reasonably requested by agents appointed by the servicer to collect the charges to enable the agents to perform collection services properly under the intercreditor agreements and monitoring the collections of the agents for compliance with the intercreditor agreements,
	•	monitoring payments by each retail electric provider, reviewing reports provided by each retail electric provider and monitoring compliance by each retail electric provider with the credit standards and deposit obligations set forth in the applicable financing order,
	•	notifying each retail electric provider of any defaults by such retail electric provider in its payment obligations and other obligations (including its credit standards), and enforcing against such retail electric provider at the earliest date permitted any remedies provided by applicable law,
	•	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 related transition property and other collateral,
	•	selling, as our agent, defaulted or written-off accounts in accordance with the servicer’s usual and customary practices,
	•	taking action in connection with adjustments to the related transition charges and allocation of the charges among various classes of customers as described below, and
	•	any other duties specified for a servicer under applicable law.

	•	except where the failure to comply with any of the following would not materially adversely affect our or the trustee’s respective interests in the related transition property,

	•	it will manage, service, administer and make collections in respect of the related transition property with reasonable care and in material compliance with applicable law, including all applicable Texas commission regulations and guidelines, using the same degree of care and diligence that the servicer exercises with respect to billing and collection activities that the servicer conducts for itself and others,
	•	it will follow standards, policies and procedures in performing its duties as servicer that are customary in the electric transmission and distribution industry or that the Texas commission has mandated and consistent with the terms of the applicable financing order, tariffs and existing law,
	•	it will use all reasonable efforts, consistent with its customary servicing procedures, to enforce and maintain the trustee’s and our rights in respect of the related transition property,
	•	it will calculate the related transition charges and the allocation of transition charges among customer classes in compliance with the Restructuring Act, the applicable financing order, any Texas commission order related to transition charge allocation and any applicable tariffs,
	•	it will use all reasonable efforts consistent with its customary servicing procedures to collect all amounts owed in respect of the related transition property as they become due,
	•	it will provide all reports to such parties to the intercreditor agreement regarding the related transition charges as are necessary to effect collection, allocation and remittance of payments

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		in respect of related transition charges and other collected funds in accordance with such servicing agreement and the intercreditor agreement,
	•	it will make all filings required under the applicable Uniform Commercial Code or the Restructuring Act to maintain the perfected security interest of the trustee in the collateral and use all reasonable efforts to otherwise enforce and maintain the trustee’s rights in respect of the related transition property and the collateral,

	•	it will petition the Texas commission for adjustments to the related transition charges and allocation of the charges among customer classes that the servicer determines to be necessary in accordance with the applicable financing order, and
	•	it will keep on file, in accordance with customary procedures, all documents pertaining to the related transition property and will maintain accurate and complete accounts, records and computer systems pertaining to the related transition property.

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	•	the transition bond balance equaling the projected transition bond balance and the aggregate reimbursement amount due and owing for the preceding calendar year to any retail electric provider,
	•	the replenishment of any amounts drawn from the related capital subaccount,
	•	amortization of the remaining outstanding principal amount in accordance with the expected amortization schedule and payment of interest when due,
	•	the servicer’s reconciliation of past overpayments and underpayments by any retail electric provider of transition charges arising out of the retail electric provider’s right to hold back certain payments of transition charges in expectation of future write-offs from customers who do not pay their electric bills, and
	•	the servicer’s recovery of any interest paid to a retail electric provider arising out of a dispute between the servicer and such retail electric provider in which the servicer’s claim to the funds in dispute was not clearly unfounded.

	•	if the servicer expects, at the next payment date, more than a 5% variation between (a) the actual principal balance of the transition bonds of that series, taking into account amounts on deposit in the excess collections subaccount for that series, and (b) the expected principal balance on the expected amortization schedule,
	•	as needed to meet any rating agency requirement that the transition bonds of that series be paid in full at scheduled maturity, or
	•	to correct any undercollection of related transition charges, regardless of cause, in order to assure timely payment of the transition bonds of that series based on rating agency and transition

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		bondholder considerations, including a mandatory interim true-up in connection with each semi-annual payment date if the servicer forecasts that collections of related transition charges during the next semi-annual payment period will be insufficient to make all scheduled payments of interest, principal and other amounts in respect of the transition bonds of that series and to replenish the capital subaccount for that series to its required level.

	•	0.05% of the aggregate initial principal amount of all outstanding transition bonds, for so long as the servicer remains CenterPoint Houston or any of its permitted successors or assigns or an affiliate (allocated among all outstanding series of transition bonds pro rata based on outstanding principal amount), or
	•	an amount agreed upon by the successor servicer and the trustee, but, unless the Texas commission consents, not more than 0.60% of the aggregate initial principal amount of all outstanding transition bonds if CenterPoint Houston, any permitted successor or assign or an affiliate is not the servicer (allocated among all outstanding transition bonds pro rata based on outstanding principal amount).

	•	the servicer is duly organized, validly existing and in good standing under the laws of the state of its organization (which is Texas, when CenterPoint Houston is the servicer), with the limited liability company or corporate, as the case may be, power and authority to conduct its business as presently conducted and to execute, deliver and carry out the terms of the servicing agreement and the intercreditor agreement,

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	•	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 it is required to do so (except where such failure would not be reasonably likely to have a material adverse effect on its business, operations or properties or adversely affect the servicing of the transition property),
	•	the servicer’s execution, delivery and performance of the servicing agreement and the intercreditor agreement have been duly authorized by the servicer by all necessary limited liability company or corporate, as the case may be, action,
	•	the servicing agreement and the intercreditor agreement both constitute legal, valid and binding obligations of the servicer, enforceable against the servicer in accordance with their terms, subject to customary exceptions relating to bankruptcy and equitable principles,
	•	the consummation of the transactions contemplated by the servicing agreement and the intercreditor agreement will not conflict with or result in any breach of the terms and provisions of nor constitute a default under the servicer’s limited liability company agreement or articles of incorporation or by-laws, as the case may be, or any material agreement to which the servicer is a party or by which it is bound or result in the creation or imposition of any lien upon the servicer’s properties (other than any lien that may be granted under the basic documents or any lien created pursuant to Section 39.309 of the Restructuring Act) or violate any law or any existing order, rule or regulation applicable to the servicer,
	•	except for the issuance advice letter and filings with the Texas commission for adjusting the amount and allocation of the related transition charges and filings under the Uniform Commercial Code and under the Restructuring Act, no governmental approvals, authorizations, consents, orders or other actions or filings are required for the servicer to execute, deliver and perform its obligations under the servicing agreement, except those that have previously been obtained,
	•	except as disclosed in this prospectus or the prospectus supplement, there are no proceedings pending and, to the servicer’s knowledge, there are no proceedings threatened before any court, federal or state regulatory body, administrative agency or other governmental instrumentality having jurisdiction over the servicer or its properties:

	•	seeking any determination or ruling that might materially and adversely affect the performance by the servicer of its obligations under, or the validity or enforceability against the servicer of, the servicing agreement,
	•	relating to the servicer and that might materially and adversely affect the federal or state income, gross receipts or franchise tax attributes of the related series of transition bonds, or
	•	seeking to prevent the issuance of the related series of transition bonds or the consummation of any of the transactions contemplated by the servicing agreement or any other underlying agreement,

	•	each report and certificate delivered in connection with any filing made with the Texas commission by the servicer on our behalf with respect to related transition charges or adjustments will be true and correct in all material respects except that the servicer represents and warrants with respect to any assumption, forecast or prediction in such report or certificate that it is reasonably based on historical performance,

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	•	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 under the servicing agreement, and
	•	litigation and related expenses relating to its status and obligations as servicer (other than any proceedings the servicer is required to institute under the servicing agreement).

	•	the transition bond balance and the projected transition bond balance for that series as of the immediately preceding payment date,
	•	the amount on deposit in the capital subaccount for that series and the amount required to be on deposit in the capital subaccount for that series as of the immediately preceding payment date,
	•	the amount on deposit in the excess funds subaccount for that series as of the immediately preceding payment date,
	•	the projected transition bond balance for that series on the calculation date and the servicer’s projection of the transition bond balance for that series on the payment date immediately preceding the next succeeding adjustment date,
	•	the required capital subaccount balance for that series and the servicer’s projection of the amount on deposit in the capital subaccount for that series for the payment date immediately preceding the next succeeding adjustment date, and
	•	the servicer’s projection of the amount on deposit in the excess funds subaccount for that series for the payment date immediately preceding the next succeeding adjustment date.

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	•	into which the servicer may be merged, converted or consolidated and which succeeds to all or substantially all of the electric transmission and distribution business of the servicer (or, if the transmission and distribution business is split, which provides distribution services directly to a majority of the customers in CenterPoint Houston’s service territory),
	•	which results from the division of the servicer into two or more persons and which succeeds to all or substantially all of the electric transmission and distribution business of the servicer (or, if the transmission and distribution business is split, which provides distribution services directly to a majority of the customers in CenterPoint Houston’s service territory),
	•	which may result from any merger, conversion or consolidation to which the servicer shall be a party and which succeeds to all or substantially all of the electric transmission and distribution business of the servicer (or, if the transmission and distribution business is split, which provides distribution services directly to a majority of the customers in CenterPoint Houston’s service territory),
	•	which may purchase or otherwise succeed to the properties and assets of the servicer substantially as a whole and which purchases or succeeds to all or substantially all of the electric transmission and distribution business of the servicer (or, if the transmission and distribution business is split, which provides distribution services directly to a majority of the customers in CenterPoint Houston’s service territory), or
	•	which may otherwise purchase or succeed to the major part of the electric transmission and distribution business of the servicer (or, if the transmission and distribution business is split, which

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		provides distribution services directly to a majority of the customers in CenterPoint Houston’s service territory),

	•	immediately after giving effect to any transaction referred to above, the representations and warranties made by the servicer in the servicing agreement will be true and correct and no servicer default, and no event which, after notice or lapse of time, or both, would become a servicer default, will have occurred and be continuing,
	•	the successor to the servicer must execute an agreement of assumption to perform every obligation of the servicer under the servicing agreement,
	•	officers’ certificates and opinions of counsel will have been delivered to us, the Texas commission and the trustee, and
	•	prior written notice will have been received by the Texas commission and rating agencies.

	•	any failure by the servicer to remit to the trustee, on our behalf, any required remittance by the date that such remittance must be made and that continues unremedied for a period of five business days,
	•	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 duly to observe or perform, in any material respect, any other covenant or agreement in the servicing agreement or any other basic document to which it is a party, which failure materially and adversely affects the applicable transition property or the timely collection of the related transition charges and which continues unremedied for 60 days after written notice of this

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		failure has been given to the servicer by us, the Texas commission or the trustee or after discovery of this failure by an officer of the servicer, as the case may be,
	•	any representation or warranty made by the servicer in the servicing agreement proves to have been incorrect when made, which has a material adverse effect on any of the applicable transition property, the bondholders of the related series of transition bonds or their investment in the transition bonds of such series, the trustee, the Texas commission or us and which continues unremedied for 60 days after written notice of this failure has been given to the servicer by us or the trustee or after discovery of this failure by an officer of the servicer, as the case may be, or
	•	an event of bankruptcy, insolvency, readjustment of debt, marshaling of assets and liabilities or similar proceedings with respect to the servicer or an action by the servicer indicating its insolvency, reorganization pursuant to bankruptcy proceedings or inability to pay its obligations as specified in the servicing agreement.

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	•	the servicer that allocates and remits funds received from retail electric providers for each series of transition bonds to which this prospectus relates and for the transition bonds issued by Transition Bond Company I and places such funds into deposit accounts (such allocation, remittance and deposits hereafter referred to as the “allocation services”) must be the same entity under the servicing agreements relating to each series of transition bonds to which this prospectus relates and the servicing agreement relating to the transition bonds issued by Transition Bond Company I, and
	•	each of the trustees of each series of the transition bonds to which this prospectus relates, acting upon the vote of transition bondholders representing a majority of the outstanding principal amount of the transition bonds of the affected series, and the trustee of the transition bonds issued by Transition Bond Company I must agree upon a replacement servicer that performs the allocation services.

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	•	an individual who is a citizen or resident of the United States for U.S. federal income tax purposes,
	•	a corporation, including an entity treated as a corporation, created or organized in or under the laws of the United States, or any state, including the District of Columbia, or any political subdivision thereof,
	•	an estate, the net income of which is subject to United States federal income taxation regardless of its source, or
	•	a trust, if a court within the United States is able to exercise primary supervision over the administration of such trust and one or more United States persons have the authority to control all substantial decisions of such trust or if the trust has a valid election in effect under applicable Treasury regulations to be treated as a United States person.

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	•	such non-U.S. holder does not own, actually or constructively, 10% or more of the total combined voting power of all classes of voting stock of CenterPoint Energy, is not a controlled foreign corporation related, directly or indirectly, to CenterPoint Energy, through stock ownership and is not a bank receiving interest pursuant to a loan agreement entered into in the ordinary course of its trade or business,
	•	the statement requirement described below has been fulfilled with respect to the beneficial owner,
	•	such non-U.S. holder is not an individual who is present in the United States for 183 days or more in the taxable year of disposition, or such individual does not have a “tax home” (as defined in the Internal Revenue Code) or an office or other fixed place of business in the United States and such holder is not subject to the rules under the Internal Revenue Code applicable to expatriates, and
	•	such payments and gain are not effectively connected with the conduct by such non-U.S. holder of a trade or business in the United States.

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	•	the individual did not own, actually or constructively, 10% or more of the total combined voting power of all classes of CenterPoint Energy’s voting stock, and
	•	payments with respect to a transition bond would not have been effectively connected with the conduct by such individual of a trade or business in the United States.

	•	employee benefit plans, as defined in Section 3(3) of ERISA, that are subject to Title I of ERISA;
	•	plans, as defined in Section 4975(e)(1) of the Code, that are subject to Section 4975 of the Code, including, but not limited to, individual retirement accounts and certain types of Keogh plans;
	•	any entities whose underlying assets include plan assets by reason of that plan’s investment in those entities, each of the entities described in the first three bullet points being referred to as a “plan;” and
	•	persons who, based on their specific relationship to a plan, are “parties in interest” under Section 3(14) of ERISA or “disqualified persons” under Section 4975(e)(2) of the Code (collectively referred to as “parties in interest”). Parties in interest with respect to a plan include, but are not limited to, fiduciaries, persons providing services to the plan, employers any of whose employees are covered by the plan, and employee organizations any of whose members are covered by the plan

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	•	PTCE 84-14, which exempts certain transactions effected on behalf of a Plan by a “qualified professional asset manager” (“QPAM”), with such exemption referred to as the “QPAM exemption;”
	•	PTCE 90-1, which exempts certain transactions between insurance company pooled 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; and
	•	PTCE 96-23, which exempts certain transactions effected on behalf of a plan by an “in-house asset manager.”

	•	whether the fiduciary has the authority to make the investment,
	•	whether the investment constitutes a direct or indirect transaction with a party in interest,
	•	the composition of the plan’s portfolio with respect to diversification by type of asset,

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	•	the plan’s funding objectives,
	•	the tax effects of the investment, and
	•	whether, under the general fiduciary standards of investment prudence and diversification, an investment in the transition bonds is appropriate for the plan, taking into account the overall investment policy of the plan and the composition of the plan’s investment portfolio.

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Report of Independent Registered Public Accounting Firm		F-2
Balance Sheets as of December 31, 2004 and September 30, 2005 (unaudited)		F-3
Statements of Member’s Equity for the period from December 3, 2004 (date of inception) to December 31, 2004 and the nine months ended September 30, 2005 (unaudited)		F-4
Statements of Cash Flows for the period from December 3, 2004 (date of inception) to December 31, 2004 and the nine months ended September 30, 2005 (unaudited)		F-5
Notes to Financial Statements		F-6

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		December 31, 2004				September 30, 2005
						(unaudited)
Total assets – cash		$	1,000			$	1,000
Member’s equity		$	1,000			$	1,000

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Initial contribution on December 3, 2004 (date of inception)		$	1,000
Net income for the period from December 3, 2004 (date of inception) to December 31, 2004			—
Member’s equity at December 31, 2004		$	1,000
Net income for the nine months ended September 30, 2005 (unaudited)			—
Member’s equity at September 30, 2005 (unaudited)		$	1,000

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			December 3, 2004
			(inception) to				Nine Months Ended
			December 31, 2004				September 30, 2005
							(unaudited)
Cash Flows from Financing Activities:
	Contribution from member		$	1,000			$	—
Net Increase in Cash				1,000				—
Cash at Beginning of Period				—				1,000
Cash at End of Period			$	1,000			$	1,000

F-5

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F-6

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Table of Contents