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SUMMARY OF TESTIMONY <br /> <br />Witness: Stephen N. Ragland <br /> <br />Background: Received a Bachelor of Science degree in Business <br /> Administration in 1977. Certified Public Accountant in the State of <br /> Texas. Employed by Dallas Power & Light in 1979. Held <br /> numerous financial and accounting positions since this time and <br /> assumed my present position of Affiliate Transaction and <br /> Regulatory Financial Manager in July 2002. Have previously <br /> testified before the Railroad Commission of Texas and the Public <br /> Utility Commission regarding affiliate transactions. <br /> <br />Purpose of Testimony: <br /> <br /> (1) Discuss the business relationships and the services <br /> provided by TXU Business Services, TXU Receivables <br /> Company, and TXU Vermont Insurance Company to the <br /> vadous subsidiaries and divisions of TXU Corp., including <br /> TXU Gas. <br /> (2) Support the conclusion that all charges between these <br /> parties are in compliance with the affiliate standard set out <br /> in GURA Section 104.055(b). <br /> <br /> Key Points/Issues: <br /> <br /> (1) The costs charged by TXU Business are for support <br /> services (accounting, information technology, human <br /> resources, etc.) that would be required of any business <br /> and are therefore necessary. The cost of each service is <br /> assigned to each subsidiary or division based on the <br /> principal of cost-causation. The services were provided at <br /> cost with no equity return or profit. Proper cost control <br /> mechanisms ara in place to ensure reasonableness. The <br /> prices charged to TXU Gas were no higher than the prices <br /> charged to others for the same item or class of items. <br /> (2) TXU Receivables Company is a wholly-owned bankruptcy <br /> remote subsidiary of TXU Gas Company which sells <br /> undivided interests in accounts receivable it purchases <br /> from various TXU Corp. subsidiaries and divisions to <br /> financial institutions. Those TXU Corp. subsidiaries <br /> participating in this program benefit by (1) expediting cash <br /> flow, thereby reducing cash working capital requirements; <br /> (2) having access to a lower cost source of funds; and (3) <br /> <br /> Ragland - Summary of Testimony Page 1 of 2 <br /> <br /> <br />