TXU Energy Chief Executive Officer Jim Burke is delivering the keynote address today at KEMA’s 19th Executive Forum. His remarks as prepared, "Competition: Unleashing Possibilities," follow:

Good Morning. I'd like to welcome all of you to North Texas.

North Texas is my home and the home of dedicated TXU Energy employees who serve our customers and communities on a daily basis. I hope you enjoy our Texas hospitality during your stay.

As I thought about my remarks, I reflected on the word "change." Change is a word that we seem to be hearing a lot these days. Or, at least that seems to be the operative word this political season.

I know change is something everyone in this room understands and appreciates -- not only with respect to recent history, but also in thinking about what lies ahead for our industry.

To start, I want to highlight some of the recent changes at TXU Energy.

But, I'm really going to focus more broadly on the changes taking place in our industry -- and just why competition is so important to helping us meet the challenges faced by our customers and our communities.

It shouldn't come as a surprise that I, as someone who is focused on the demand (or customer) side of the supply and demand equation, view competition as the key to managing these changes. But, before I get too far down that road, let me talk about TXU Energy for just a second.

About this time last year I was scheduled to speak at this conference, but a funny thing happened on the way to the forum. KKR, TPG, and Goldman Sachs decided they wanted to change TXU Corp. from a publicly held company to private ownership.

Given its significance, it generated a lot of attention over the past year. This transformation affected a whole lot more than just the capital structure of the company. The truth is we did a lot of listening over the past year and made significant changes as a result of what we heard.

Today, what you once knew as TXU Corp. is Energy Future Holdings. Don Evans, former U.S. Secretary of Commerce, is Chairman of the Board. John Young, formerly with Exelon and Southern Company, is CEO of EFH.

The holding company is made up of three separate and distinct operating companies:

- Luminant -- the competitive generation company.
- Oncor -- the regulated poles and wires company.
- And, TXU Energy -- the competitive retail electric provider and the company I have the privilege of leading as we serve approximately 2 million customers throughout Texas.

Each company has a distinct:
- Name
- Board of directors
- CEO and management team
- And, in the next few weeks, separate headquarters

But, beyond these structural elements, TXU Energy took aggressive steps to re-position itself in the Texas marketplace.

For example:
- We started lowering prices last March, reaching a total 15 percent reduction by November for the majority of our residential customers and protected these prices at least until the end of 2008- a valuable commitment to customers in a time of rising fuel prices like we have today
- We are investing $100 million over five years to help develop new energy efficiency and conservation solutions for customers- efforts to help customers save money and help the environment by using less electricity.
- We are providing $150 million of financial assistance over the next five years to help reduce, and help pay, energy bills of at-risk customers- and we are proud to have the largest company-provided fuel fund in the country.
- Finally, we are establishing a Low Income Advisory Committee, which includes representation from leading consumer advocates. Working collaboratively, I am confident we will find effective, targeted solutions to help low income customers overcome some of the challenges they face.

These commitments - among others - accelerated the transformation of a company with deep roots in this community and in this state. And, we look forward to making even more changes as we move forward.

TXU Energy faces some real stiff competition. Many of you in the room today ensure that's the case. For us to be successful, we must manage through rapid changes, deliver more effective solutions and build stronger relationships with customers.

Currently, more than one million residential and small commercial customers in our traditional North Texas market are served by competitors- that's about 40 percent of the market- and that's a big change since January of 2002.

Now, that's not a trend I want to see continue. But, it has forced us to truly recognize the power of choice customers now have.Approximately 90 percent of residential customers across the major competitive areas of Texas are aware of their right to choose, and more than 80 percent of those customers support competition in the Texas electric market.

Simply put: if they want to pick another provider, they have that choice. If they want the lowest price, they have that choice. If they want all renewable power, they have that choice. And, if they want to lock in their price for months or even years, they have that choice, too.

Not only are they aware, not only do they favor competition, but also they are actively engaging in the market.

Consolidated data from electric retailers shows that four out of five Texas residential customers have made an active choice since the market opened in 2002. That is an incredible number, especially in comparison to any other U.S. market. Choice rates among commercial and industrial customers are even higher.

If customers do not like their current supplier, they can easily fire them and choose retailers who better suits their needs.

Equally important, customer satisfaction in competitive areas of the state, across all retailers, is fairly strong. On a 10-point scale the range of satisfied customers outnumbers dissatisfied approximately nine to one.

That said, satisfaction is not as strong as I'd like to see it. And, I suspect that reflects some of the changes that have been going in terms of energy prices across the board, including electricity.

While price has been the main basis for judging competitive markets across the country, including Texas, our ultimate mission is to bring innovation and customer benefits that are expected in every other competitive product or service category.

Ultimately customers - and the active role they now have in the market - will spur TXU Energy, and other retailers, to develop products and services that meet their needs. And, that is the key to competition - customers driving change in the marketplace as companies search for customer relevant solutions in an effort to succeed.

Other factors to consider about the Texas competitive market include the fact that there are about one hundred different offers available to residential customers here in the Lone Star state, some of them lower than prices available at the end of regulation in Texas.

And, this is despite the fact there has been a massive shift in energy prices across the board - a fact all of us in the room understand all too well. Prices for natural gas, a key fuel that drives wholesale prices in Texas, have more than tripled since competition began.

We have also seen massive investment in the state. More than one hundred retailers compete across all segments in Texas, more than $20 billion in new generation capacity, plus investments in transmission and distribution assets, and Texas now leads the nation in wind generation.

To sum up - using a variety of factors - it is my judgment that the Texas market has made tremendous progress in a relatively short time frame.

But, I can talk about facts and figures, I can talk about market achievements, and I can talk about all sorts of things until Im blue in the face. Unless customers sense it, unless they see it, unless they feel it working for them - delivering real benefits they can articulate - then our measures of success do not really matter. What really matters is delivering real solutions and answers that customers value - independent of what we think.

Let's not kid ourselves. While competition has helped us meet some significant challenges over the past several years, there are even bigger challenges on the horizon. The real test has just barely begun. The reality is that we are at an energy crossroads - not just here in Texas, but around the globe.

Economies around the world desire access to reliable and affordable electricity because it links so closely with economic growth and the standard of living. With roughly 25 percent of the world's population currently without access to electric power, it is understandable they will want to get it to help raise their standard of living.

Global demand for electric power is projected to nearly double over the next 25 years and this puts upward pressure on wholesale costs. Building a power plant is more expensive as demand for raw materials increases. Input fuel prices could continue to rise in the foreseeable future due to increased demand. New emission regulations, including carbon restrictions, are possible with costs associated with those new regulations. And, on top of all that, competition for expertise and labor is growing.

Here in the U.S., the challenges are just as daunting.CERA estimates that about $900 billion is needed over the next 15 years for electric infrastructure - even after the impact of successful demand side management and efficiency programs. But, that figure still excludes what will probably be needed to address carbon concerns.

That's an investment upwards of 60 billion dollars a year for over the next one and half decades. It's comparable to the total book value of today's power assets. That's huge!

The fact is, whether in a regulated utility service area, a muni, a coop, or a competitive energy market, our energy future is impacted by the globalization of energy markets.

And, here's the kicker. There are no clear-cut solutions or "silver bullets" because the each of the potential solutions has their own set of challenges.

Take, for example, climate change. Our research in February showed that 72 percent of Texas are at least somewhat concerned about this issue. But, the real question is are they willing to pay higher electric bills to help address this concern?

We need to address the concerns about climate change as an industry. But, given that most supply-side solutions envisioned to address climate change have some level of cost associated with them, I am concerned about the impact on customers.

Retailers have the challenge of not only being the interface with the customer, but making sure they get the tools they need to help them address their electric use on the demand-side. Customers expect more from us than simply passing along a higher wholesale cost. In a competitive market, that kind of answer just won't work over the long-term.

So, with all these challenges it would be easy to feel just a bit overwhelmed. Take heart. In 1901, Wilbur Wright, after many unsuccessful trials in North Carolina to find ways to defy gravity, said, "man will not fly for 50 years." Just two short years later he proved himself wrong when he and Orville had success at Kitty Hawk.

It may take more than two years, but I'm confident and optimistic about where we are headed in Texas electricity and here's why. My view is that the competitive market puts us in the best position to help solve the complex and dynamic energy challenges we face. It is the best framework to effectively navigate these big global challenges in a manner that best meets customer needs.

It would be nice to have complete abundance of 100 percent reliable energy with zero pollution and be free of charge. But, that is not our current reality. Our reality is one full of tradeoffs - one where there is no simple solution, and where "one-size-fits-all" regulatory solutions do not fully meet societal or customer needs.

The competitive model is best at that. It can satisfy the needs of the public and individual customers because:

- Competition shifts the risk to investors so customers are not saddled indefinitely with bad business decisions.
- Competition provides strong incentives for efficiency.
- Competition requires companies to continually innovate, at a rapid pace, to meet customer needs.
- Competition forces companies to drive value to customers or risk losing them to others who provide the value they desire.

And, in combination, these forces put the focus where it belongs - on the customer.

Let me give you a few illustrations to drive this point home. These are not pre- and post-competition comparisons, but the constant process of innovation and customer segmentation that is present in these industries.

Airlines demonstrate many of these forces at work. I'm not sure if the Wright Brothers had a need to envision this, but we all know that business class customers willingly pay a higher fare and that helps cover the steep discount on 21-day advance purchase tickets that discount shoppers buy.

Different needs, different solutions, but individual and aggregate customer satisfaction are maximized and the plane flies at or near full capacity resulting in higher efficiency and lower overall costs.

Let me emphasize that - different needs, different solutions to maximum customer satisfaction. Higher capacity and better efficiency resulting in lower overall costs.

Even Southwest Airlines - arguably the closest thing to a "one-size-fits-all" airline and one that has consistently taken a different path from other airlines - recently rolled out a tiered service called Business Select- same seat, but with priority boarding and other features. They recognize that tailoring products and services will drive the higher satisfaction among different customer segments and in aggregate which benefits both the customer and the company.

Next, telecom. Just imagine AT&T conducting market research back in 1984 and asking a customer what they wanted. They might have said a lower per minute charge for long distance. If they thought about it some more, some might have said a 10-foot cord that curls up neatly.

But, I seriously doubt anyone would have said anything about an iPhone, camera phone, Blackberry or the Internet. Even if the concepts were explained to them, it would have seemed too far-fetched, too unnecessary and too costly.

Does anyone seriously think that in a regulated market Apple could deliver advanced technology like an iPhone and within six months generate roughly five million customers? Customers who have grown accustomed to getting free phones are willingly paying $400 up front because they see value in the innovation. In a regulated world, Apple might still be in the early stages of a rate case. Yet, the competitive market unleashes the possibilities. It delivers all that to customers and so much more. Competition spurs customer-focused innovation and commercialization - at a rapid pace that the "one size fits all" regulatory scheme simply cannot match.

In some research we just concluded, Texans that reside in both competitive areas and noncompetitive areas believe that a competitive electric market is better suited than regulation to meet their future energy needs. They expressed support for the notion lower prices, better service, more choice, and tools and information to use less electricity are more likely to come from a competitive market than a regulated one- by an average margin of two and half to one.

Delivering against those objectives is important to TXU Energy, especially that last one. That's a big part of our focus moving forward.

Our chairman at EFH, Don Evans, said it at CERA Week: "We want more Texans to use less electricity." I mentioned earlier that TXU Energy is investing $100 million over the next five years to develop innovative, energy efficiency and conservation solutions. I firmly believe this strategy makes fundamental sense in this low margin business.

As a retailer, we can be more successful if we help the customer use less energy and charge for services the customer values. If we can deliver a value-based solution for customers, where they use less and pay less overall, then everyone wins- the customer, the environment and TXU Energy. And, we've "retained" that customer for the long-term.

But, we know we have more work to do to deliver those kinds of solutions. We know that customers need more tools and more information to make informed decisions in the Texas marketplace. It's our job as retailers to give it to them.

We recently analyzed results from a pilot program we conducted over the last year. In it we used a combination of time-of-use plans, standard pricing plans, and our new Power Monitor device. This innovative device gives real-time customer feedback on consumption, demand, projected bill amounts, and the like. The pilot yielded some pretty interesting insights that are consistent with other things we have seen around the country.

We observed that customers reduced annual consumption by an average of five to seven percent versus similar customers not in the pilot. While this resulted in decent savings for the customer, it doesn't even factor in the disproportionate impact on peak savings.

And, that's an important part of this. Demand-side reductions benefit not only the customers on the programs, but other customers as well because peak wholesale prices can be mitigated across the market.

Rough estimates from industry experts, and extrapolations of our own insights, suggest that savings in the Texas marketplace could range from $500 million to $1 billion annually by reducing peak and overall electricity use.

In short, this kind of listening to, and learning from, customers is absolutely essential in a competitive market.

Let me also point out one other very important thing. For competition to deliver its full potential, price signals must be able to reach all market participants, including residential customers. When this occurs, valuable information and real incentives are out in the open. Customers engage and they choose among a range of options based upon what best meets their needs.

And, as they smartly demand solutions, finding the one that is important for them, the result is higher customer satisfaction among individual customers and in the aggregate- and it results in the most efficient use of resources.

If history has taught us one thing, it is the power of creative minds in solving complex problems- to imagine and unleash all the possibilities. The question is what is the right framework to address those challenges in the electric industry? I think we found it here in Texas. It is one based on the power of competitive markets and giving the customer the right to choose.

I appreciate the opportunity to share my beliefs about competitive markets this morning:

- I believe we have significant and complex global energy challenges before us, and they require solutions beyond our current knowledge. I'm ok with not knowing all the answers today, because I have a glimpse of what is possible and have confidence in where we are headed.
- I believe competitive markets can and will help solve these challenges. Competition brings imagination and innovation at a very rapid pace to deliver customer-relevant solutions.
- And, I believe in the power of customers. They are smart, and they are ultimately the best at determining what they want and need. They will drive us to change in ways we have yet to imagine.

The simple freedom to choose - will drive suppliers and customers to unleash all the possibilities of competition in this industry. Thank you very much.

For More Information: Sophia Stoller, 214-549-4518 or Tom Stewart at 214-236-5016

About TXU Energy
TXU Energy is a market-leading competitive retailer that provides electricity and related services to more than 2.1 million electricity customers in Texas. TXU Energy offers a variety of innovative products and solutions, allowing both its residential and business customers to choose options that best meet their needs, including 24/7 customer service, competitively priced electricity service plans, innovative energy efficiency options, renewable energy programs and other electricity-related products and services. Visit http://www.txuenergy.com for more information about TXU Energy.