Correction - Fitch Downgrades TXU and Affiliates & Places All Ratings on Rating Watch Negative.

NEW YORK -- (This is a correction for the earlier release. The fifth paragraph has been edited.)

Fitch has downgraded the ratings of TXU Corp (TXU; Issuer Default Rating IDR 'BBB-') and its subsidiaries and simultaneously places all entities on Rating Watch Negative following today's announcement

that a Kohlberg, Kravis and Roberts (KKR) and Texas Pacific Group-led consortium have signed an agreement to acquire TXU for $45 billion, including the assumption of existing debt. The consensual $45 billion transaction would include the purchase of the outstanding stock of TXU for $69.25 per share and the assumption of approximately $ 11.5 billion of debt. (See the full list of affected ratings below.)

The ratings actions are based on Fitch's concerns that the acquisition of TXU would be funded through a highly levered entity, or result in the incurrence of substantial indebtedness at the TXU holding company or subsidiary levels. Additionally there is uncertainty concerning the strategic direction of the company as well as likely changes to the financial practices and corporate structure of TXU and subsidiaries.

Fitch notes that the buyers stated they intend to significantly scale back TXU's plans to build approximately 10 gigawatts (GWHs) of new generation in Texas. The smaller new-build program would be more manageable within existing financial resources and thus less subject to the financing, market, and event risks inherent in a large-scale program. Fitch's affirmation of TXU's ratings in January 2007 assumed that the company's new-build program would be performed by a newly formed subsidiary using non-recourse debt and a level of third-party equity contributions as well as hedges or contracts for most of planned output. Therefore changes in the manner in which any new-build plans are executed could have negative ratings implications.

Fitch notes that the senior debt of TXU existing senior notes do not prohibit a change of control nor a leveraged buyout. However, closing of the transaction is subject to regulatory approvals including the Federal Regulatory Commission, the Nuclear Regulatory Commission, and the Securities and Exchange Commission. TXU believes that the transaction does not require the approval of the Texas Public Utility Commission (PUCT), which should expedite the merger process and reduce the potential risk of not closing the transaction, which is often the case in utility mergers.

TXU Delivery (Delivery), however, will continue to be regulated by the PUCT. In addition, as Delivery's rates assume a 40% equity base, Fitch assumes that the new owners will not over-lever Delivery.

The resolution of the Ratings Watch will depend upon Fitch's analysis of the financing, organization and resulting capital structures, and the new owner's usage of the significant excess cash flow that is currently being generated by TXU's competitive supply subsidiary, TXU Energy. Fitch may take interim rating actions ahead of the consummation of the transaction as further details are disseminated and TXU's ratings may end up deep in the non-investment grade area. Because of the continued regulation of Delivery by the PUCT, Fitch expects that any further ratings actions on Delivery may be more limited than those taken for its parent and affiliates.

TXU Corp is engaged in the generation, sale, delivery and transmission of electricity primarily in Texas.

Fitch downgrades the following:

TXU Corp

--IDR to 'BB+' from 'BBB-';

--Unsecured debt to 'BB+' from 'BBB-';

--Commercial paper to 'B' from 'F3'.

TXU US Holdings Inc

--IDR to 'BB+' from 'BBB-';

--Unsecured debt to 'BB+' from 'BBB-'.

TXU Energy Co LLC

--IDR to 'BBB-' from 'BBB';

--Unsecured debt to 'BBB-' from 'BBB';

--Commercial paper to 'F3' from 'F2'.

TXU Electric Delivery Co

--IDR to 'BBB-' from 'BBB';

--Unsecured debt to 'BBB' from 'BBB+';

--Commercial paper to 'F3' from 'F2'.

Fitch's rating definitions and the terms of use of such ratings are available on the agency's public site, www.fitchratings.com. Published ratings, criteria and methodologies are available from this site, at all times. Fitch's code of conduct, confidentiality, conflicts of interest, affiliate firewall, compliance and other relevant policies and procedures are also available from the 'Code of Conduct' section of this site.