TEXAS UTILITIES ELECTRIC CO, S-3, 1995-11-14

TEXAS UTILITIES ELECTRIC CO
S-3, 1995-11-14
ELECTRIC SERVICES

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Registration No. 33-
As filed with the Securities and Exchange Commission on , 1995
=============================================================================

SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
------------------------------------

FORM S-3
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933

------------------------------------

TEXAS UTILITIES ELECTRIC COMPANY
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)

Texas 75-1837355
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)

TU ELECTRIC CAPITAL III
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)

Delaware To Be Applied For
(State of incorporation or organization) (I.R.S. Employer Identification No.)

1601 Bryan Street
Dallas, Texas 75201
(214) 812-4600
(Address, including zip code, and telephone number, including area code,
of registrant's principal executive offices)

ROBERT A. WOOLDRIDGE, Esq. PETER B. TINKHAM
Worsham, Forsythe Texas Utilities Electric Company
& Wooldridge, L.L.P. Secretary
1601 Bryan Street 1601 Bryan Street
Dallas, Texas 75201 Dallas, Texas 75201
(214) 979-3000 (214) 812-4600

ROBERT J. REGER, JR., Esq
Reid & Priest LLP
40 West 57th Street
New York, New York 10019
(212) 603-2000

(NAMES AND ADDRESSES, INCLUDING ZIP CODES, AND TELEPHONE NUMBERS,
INCLUDING AREA CODES, OF AGENTS FOR SERVICE)
------------------------------------

It is respectfully requested that the Commission send copies
of all notices, orders and communications to:

STEPHEN K. WAITE, Esq.
Winthrop, Stimson, Putnam & Roberts
One Battery Park Plaza
New York, New York 10004-1490
(212) 858-1000
------------------------------------

APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: AS SOON AS
PRACTICABLE AFTER THE REGISTRATION STATEMENT BECOMES EFFECTIVE.
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. [ ]
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or interest
reinvestment plans, check the following box. [ ]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [ ]

------------------------

CALCULATION OF REGISTRATION FEE
===============================================================================
AMOUNT PROPOSED MAXIMUM
TITLE OF EACH CLASS OF TO BE OFFERING PRICE
SECURITIES TO BE REGISTERED REGISTERED PER UNIT(1)
- -------------------------------------------------------------------------------
TU ELECTRIC CAPITAL III CUMULATIVE
QUARTERLY INCOME PREFERRED
SECURITIES........................ 8,000,000 $25.00
- -------------------------------------------------------------------------------
TEXAS UTILITIES ELECTRIC COMPANY
GUARANTEE AND OTHER OBLIGATIONS WITH
RESPECT TO TU ELECTRIC CAPITAL III
CUMULATIVE QUARTERLY INCOME PREFERRED
SECURITIES(3)
- -------------------------------------------------------------------------------
TEXAS UTILITIES ELECTRIC COMPANY
JUNIOR SUBORDINATED DEBENTURES,
SERIES C(4).......................
==============================================================================
PROPOSED MAXIMUM
TITLE OF EACH CLASS OF AGGREGATE OFFERING AMOUNT OF
SECURITIES TO BE REGISTERED PRICE(1)(2) REGISTRATION FEE
-----------------------------------------------------------------------------
TU ELECTRIC CAPITAL III CUMULATIVE
QUARTERLY INCOME PREFERRED
SECURITIES....................... $200,000,000 $40,000
------------------------------------------------------------------------------
TEXAS UTILITIES ELECTRIC COMPANY
GUARANTEE AND OTHER OBLIGATIONS WITH
RESPECT TO TU ELECTRIC CAPITAL III
CUMULATIVE QUARTERLY INCOME PREFERRED
SECURITIES(3)
------------------------------------------------------------------------------
TEXAS UTILITIES ELECTRIC COMPANY
JUNIOR SUBORDINATED DEBENTURES,
SERIES C(4).......................

===============================================================================
(1) ESTIMATED SOLELY FOR THE PURPOSE OF CALCULATING THE REGISTRATION FEE.
(2) EXCLUSIVE OF ACCRUED DISTRIBUTIONS, IF ANY.
(3) NO SEPARATE CONSIDERATION WILL BE RECEIVED FOR THE TEXAS UTILITIES
ELECTRIC COMPANY GUARANTEE AND SUCH OTHER OBLIGATIONS.
(4) THE JUNIOR SUBORDINATED DEBENTURES WILL BE PURCHASED BY TU ELECTRIC
CAPITAL III WITH THE PROCEEDS OF THE SALE OF THE QUIPS. NO SEPARATE
CONSIDERATION WILL BE RECEIVED FOR THE JUNIOR SUBORDINATED DEBENTURES.

THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933 OR UNTIL THIS REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A),
MAY DETERMINE.

<PAGE>

INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY
OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES
EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE
SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE SECURITIES
IN ANY JURISDICTION IN WHICH SUCH OFFER, SOLICITATION, OR SALE WOULD BE UNLAWFUL
PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH
JURISDICTION.

SUBJECT TO COMPLETION, DATED NOVEMBER , 1995

TU ELECTRIC CAPITAL III
% CUMULATIVE QUARTERLY INCOME PREFERRED
SECURITIES (QUIPS*)
(LIQUIDATION PREFERENCE $25.00 PER UNIT)
GUARANTEED TO THE EXTENT SET FORTH HEREIN BY

TEXAS UTILITIES ELECTRIC COMPANY

The __% Cumulative Quarterly Income Preferred Securities (QUIPS) offered
hereby are being issued by and represent undivided preferred beneficial
interests in TU Electric Capital III (TU Electric Capital), a statutory
business trust formed under the laws of the State of Delaware. Texas
Utilities Electric Company (Company), a Texas corporation, is the owner
of the undivided common beneficial interests in the assets of TU Electric
Capital (Common Securities, together with the QUIPS herein referred to as the
Trust Securities). The Bank of New York and The Bank of New York (Delaware)
are the Property Trustee and the Delaware Trustee, respectively, and
three individuals who are employees of the Company or its affiliates are
the Administrative Trustees of TU Electric Capital. TU Electric Capital
exists for the sole purpose of issuing its trust interests (including
the QUIPS) and investing the proceeds thereof in % Junior Subordinated
Debentures, Series C, Due , issued by the Company (Junior
Subordinated Debentures) in an aggregate principal amount equal to the aggregate
liquidation preference of the Trust Securities. The QUIPS will have a preference
under certain circumstances with respect to cash distributions and amounts
payable on liquidation, redemption or otherwise over the Common Securities. See
DESCRIPTION OF THE QUIPS -- "Subordination of Common Securities."

(cover continued on following page)

SEE RISK FACTORS, BEGINNING ON PAGE 6, FOR CERTAIN INFORMATION RELEVANT TO
AN INVESTMENT IN THE QUIPS, INCLUDING THE PERIOD AND CIRCUMSTANCES DURING AND
UNDER WHICH PAYMENT OF DISTRIBUTIONS ON THE QUIPS MAY BE DEFERRED AND CERTAIN
RELATED FEDERAL INCOME TAX CONSEQUENCES.

------------------------

THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED
BY THE SECURITIES AND EXCHANGE COMMISSION OR BY ANY STATE
SECURITIES COMMISSION NOR HAS THE SECURITIES AND EXCHANGE
COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS.
ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.

------------------------

INITIAL PUBLIC UNDERWRITING PROCEEDS TO
OFFERING PRICE COMMISSION(1) COMPANY(2)(3)
Per Unit of QUIPS...... $ (2) $
Total.................. $ (2)

(1) TU Electric Capital and the Company have agreed to indemnify the
several Underwriters against certain liabilities, including
liabilities under the Securities Act of 1933, as amended. See
UNDERWRITING.
(2) In view of the fact that the entire proceeds of the sale of the QUIPS
will be used to purchase the Junior Subordinated Debentures, the
Underwriting Agreement provides that the Company will pay to the
Underwriters, as compensation for their arranging the investment
therein of such proceeds, $ per unit of QUIPS (or $ in the aggregate).
See UNDERWRITING.
(3) Expenses of the offering, which are payable by the Company, are
estimated to be $445,000.

The QUIPS offered hereby are offered severally by the Underwriters, as
specified herein, and subject to receipt and acceptance by them and subject to
their right to reject any order in whole or in part. It is expected that
delivery of the QUIPS will be made only in book-entry form through the
facilities of DTC on or about , 1995.

GOLDMAN, SACHS & CO.

------------------------

The date of this Prospectus is , 1995.
- --------
*Registered Service Mark of Goldman, Sachs & Co.

<PAGE>

(cover continued)

Holders of the QUIPS will be entitled to receive cumulative cash
distributions accruing from the date of original issuance and payable quarterly
in arrears on the last day of March, June, September and December of each year,
commencing , 199_, at the per annum rate of % of the liquidation preference
amount thereof. Interest on the Junior Subordinated Debentures is the sole
source of income for TU Electric Capital from which payment of distributions on
the QUIPS can be made. The Company has the right to defer payments of interest
on the Junior Subordinated Debentures by extending the interest payment period
thereon at any time for up to 20 consecutive quarters (each such extended
payment period, an Extension Period), provided that the aggregate interest
payment period, as so extended, may not exceed 20 consecutive quarterly interest
payment periods or extend beyond the maturity of the Junior Subordinated
Debentures. Upon the termination of any Extension Period and the payment of all
amounts then due, including interest on deferred interest payments, the Company
may elect a new Extension Period, subject to the above requirements.

If interest payments are so deferred, distributions on the QUIPS will also
be deferred to such extent. During an Extension Period, distributions will
continue to accrue, and Holders of QUIPS will be required to accrue income for
United States federal income tax purposes. Cash distributions in arrears will
bear interest thereon at the per annum rate of % (to the extent permitted by
applicable law), compounded quarterly. See DESCRIPTION OF THE JUNIOR
SUBORDINATED DEBENTURES -- "Option to Extend Interest Payment Period" and
CERTAIN UNITED STATES FEDERAL INCOME TAX CONSEQUENCES -- "Original Issue
Discount." During an Extension Period, the Company may not declare or pay
dividends on (other than dividends paid in shares of Common Stock of the
Company) or redeem or acquire, any of its capital stock, redeem any indebtedness
that is pari passu with the Junior Subordinated Debentures or make any guarantee
payment with respect to the foregoing. Any Extension Period with respect to
payment of interest on the Junior Subordinated Debentures, other Debt Securities
(as defined herein) or on any similar securities will apply to all such
securities and will also apply to distributions with respect to the QUIPS and
all other securities with terms substantially the same as the QUIPS. Based upon
the Company's current financial condition and, in light of the restriction on
payment of dividends on the Company's securities during an Extension Period, the
Company believes that an extension of a distribution payment period on the QUIPS
is currently unlikely and has no current intention to cause such an extension.
See DESCRIPTION OF THE QUIPS -- "Distributions."

The payment of distributions out of moneys held by TU Electric Capital and
payments on liquidation of TU Electric Capital or the redemption of QUIPS, as
set forth below, are guaranteed by the Company to the extent TU Electric Capital
has sufficient funds available to make such payments (Guarantee). See
DESCRIPTION OF THE GUARANTEE. If the Company fails to make interest payments on
the Junior Subordinated Debentures held by TU Electric Capital, TU Electric
Capital will have insufficient funds to pay distributions on the QUIPS. The
Guarantee does not cover payment of distributions when TU Electric Capital does
not have sufficient funds to pay such distributions. In such event, the Holders
of QUIPS would be required to rely on enforcement of the rights of TU Electric
Capital under the Junior Subordinated Debentures held by TU Electric Capital.
The Company's obligations under the Guarantee are subordinate and junior in
right of payment to all other liabilities of the Company except any liabilities
that may be made pari passu expressly by their terms. The Company may organize
trusts similar to TU Electric Capital for the purpose of issuing securities
similar to the QUIPS. It is expected that junior subordinated debentures or
other Debt Securities of the Company that are pari passu with the Junior
Subordinated Debentures will be issued in connection with the issuance of any
such securities. Any extension period with respect to any such junior
subordinated debentures of the Company will apply to the Junior Subordinated
Debentures, any other Debt Securities, any similar securities, the QUIPS and any
securities substantially the same as the QUIPS.

The QUIPS are subject to mandatory redemption upon repayment of the Junior
Subordinated Debentures at maturity or upon their earlier redemption. See
DESCRIPTION OF THE QUIPS -- "Redemption Procedures." The Company will have the
option at any time on or after upon not less than 45 days' notice, to redeem the
Junior Subordinated Debentures, in whole or in part. The Company also will have
the right at any time, upon the occurrence of a Tax Event (as defined herein),
to cause the termination of TU Electric Capital and, in connection therewith,
after satisfaction of creditors of TU Electric Capital, if any, to distribute
Junior Subordinated Debentures to the Holders of QUIPS or, under certain
circumstances, to redeem, in whole or in part, the Junior Subordinated
Debentures. Any redemption of the QUIPS and the Common Securities by TU Electric
Capital will be, upon not less than 30 days' nor more than 60 days' notice to
the Holders thereof, in amounts having an aggregate liquidation preference equal
to the aggregate principal of Junior Subordinated Debentures to be redeemed at a
redemption price of 100% of such liquidation preference amount, plus accrued and
unpaid distributions and interest thereon, if any, to the redemption date. Each
class of the Trust Securities will be redeemed in proportion to the percentage
they represent of all the Trust Securities. See DESCRIPTION OF THE JUNIOR
SUBORDINATED DEBENTURES -- "Optional Redemption."

The Junior Subordinated Debentures are subordinated and junior
in right of payment to all Senior Indebtedness (as defined herein)
of the Company. As of September 30, 1995, the Company had approximately
$7.5 billion of principal amount of indebtedness for borrowed money and
capital lease obligations constituting Senior Indebtedness (as defined
herein). See DESCRIPTION OF THE JUNIOR SUBORDINATED DEBENTURES --
"Subordination" and DESCRIPTION OF THE QUIPS.

In the event of the liquidation of TU Electric Capital, the Holders
of the Trust Securities will be entitled to receive Junior Subordinated
Debentures in an aggregate principal amount of $25 for each security or,
in certain circumstances, a liquidation preference of $25 for each security,
plus accrued and unpaid distributions thereon to the date of payment,
subject to certain limitations. See DESCRIPTION OF THE QUIPS --
"Liquidation Distribution upon Dissolution."

Application will be made to list the QUIPS on the New York Stock Exchange
(NYSE).
- ii -

<PAGE>

IN CONNECTION WITH THIS OFFERING, THE UNDERWRITERS MAY OVER-ALLOT OR EFFECT
TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE SECURITIES
OFFERED HEREBY AT LEVELS ABOVE THOSE WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN
MARKET. SUCH TRANSACTIONS MAY BE EFFECTED ON THE NEW YORK STOCK EXCHANGE, IN THE
OVER-THE-COUNTER MARKET OR OTHERWISE. SUCH STABILIZING, IF COMMENCED, MAY BE
DISCONTINUED AT ANY TIME.

INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE

The following documents filed by the Company with the Securities and
Exchange Commission (Commission) pursuant to the Securities Exchange Act of
1934, as amended (1934 Act), are incorporated herein by reference:

1. Annual Report on Form 10-K for the year ended December 31, 1994
(1994 10-K).

2. Quarterly Reports on Form 10-Q for the quarters ended March 31,
1995, June 30, 1995 and September 30, 1995.

3. Current Reports on Form 8-K, dated October 17, 1995 and October
26, 1995.

All documents subsequently filed by the Company pursuant to Section 13(a),
13(c), 14 or 15(d) of the 1934 Act and prior to the termination of the offering
hereunder shall be deemed to be incorporated by reference in this Prospectus and
to be a part hereof from the date of filing of such documents. The documents
which are incorporated by reference in this Prospectus are sometimes hereinafter
referred to as the "Incorporated Documents."

Any statement contained in an Incorporated Document shall be deemed to be
modified or superseded for purposes of this Prospectus to the extent that a
statement contained herein or in any other subsequently filed document which is
deemed to be incorporated by reference herein modifies or supersedes such
statement. Any such statement so modified or superseded shall not be deemed,
except as so modified or superseded, to constitute a part of this Prospectus.

THE COMPANY HEREBY UNDERTAKES TO PROVIDE WITHOUT CHARGE TO EACH PERSON,
INCLUDING ANY BENEFICIAL OWNER, TO WHOM A COPY OF THIS PROSPECTUS HAS BEEN
DELIVERED, ON THE WRITTEN OR ORAL REQUEST OF ANY SUCH PERSON, A COPY OF ANY OR
ALL OF THE DOCUMENTS REFERRED TO ABOVE WHICH HAVE BEEN OR MAY BE INCORPORATED IN
THIS PROSPECTUS BY REFERENCE, OTHER THAN EXHIBITS TO SUCH DOCUMENTS (UNLESS SUCH
EXHIBITS ARE SPECIFICALLY INCORPORATED BY REFERENCE INTO SUCH DOCUMENTS).
REQUESTS SHOULD BE DIRECTED TO PETER B. TINKHAM, SECRETARY, TEXAS UTILITIES
ELECTRIC COMPANY, 1601 BRYAN STREET, DALLAS, TEXAS 75201, TELEPHONE NUMBER (214)
812-4600.

AVAILABLE INFORMATION

The Company is subject to the informational requirements of the 1934 Act
and in accordance therewith files reports and other information with the
Commission. Such reports and other information filed by the Company can be
inspected and copied at the public reference facilities maintained by the
Commission at Room 1024, 450 Fifth Street, N.W., Washington, D.C. 20549, and at
the following Regional Offices of the Commission: Chicago Regional Office,
Citicorp Center, 500 West Madison, Suite 1400, Chicago, Illinois 60661; and New
York Regional Office, 7 World Trade Center, 13th Floor, New York, New York
10048. Copies of such material can also be obtained from the Public Reference
Section of the Commission at 450 Fifth Street, N.W., Washington, D.C. 20549 at
prescribed rates. Certain depositary shares representing shares of cumulative
preferred stock of the Company are listed on the NYSE, where reports and other
information concerning the Company may be inspected.

Securityholders of the Company may obtain, upon request, copies of an
Annual Report on Form 10-K containing financial statements as of the end of the
most recent fiscal year audited and reported upon (with an opinion expressed) by
independent auditors.

No separate financial statements of TU Electric Capital are included
herein. The Company considers that such financial statements would not be
material to Holders of the QUIPS because the Company is a reporting company
under the Exchange Act and TU Electric Capital has no independent operations,
but exists for the sole purpose of issuing the Trust Securities and holding as
trust assets the Junior Subordinated Debentures.

- 2 -

<PAGE>

TU Electric Capital will not file separate reports under the 1934 Act. The
obligations of the Company under the Junior Subordinated Debentures to pay
principal and interest, and the obligations of the Company under the Junior
Subordinated Debentures and pursuant to the Trust Agreement to pay amounts equal
to all expenses of TU Electric Capital, together with the Guarantee and the
rights of the Holders of QUIPS to directly enforce the Company's obligations
with respect to the Junior Subordinated Debentures, constitute a full and
unconditional guarantee by the Company of payments due on the QUIPS. See
DESCRIPTION OF THE JUNIOR SUBORDINATED DEBENTURES -- "Additional Interest" and
DESCRIPTION OF THE GUARANTEE -- "Events of Default."

- 3 -

<PAGE>

PROSPECTUS SUMMARY

The following is a summary of certain information contained herein and
should be read in conjunction with such information contained elsewhere in this
Prospectus and is subject to and qualified by reference to such information.
Capitalized terms used herein have the respective meanings ascribed to them
elsewhere in this Prospectus.

THE COMPANY

The Company was incorporated under the laws of Texas in 1982 and is an
electric utility engaged in the generation, purchase, transmission, distribution
and sale of electric energy wholly within the state of Texas. The principal
executive offices of the Company are located at Energy Plaza, 1601 Bryan Street,
Dallas, Texas 75201; and the telephone number is (214) 812-4600.

TU ELECTRIC CAPITAL

TU Electric Capital is a Delaware statutory business trust formed for the
exclusive purposes of (i) issuing the QUIPS and Common Securities representing
undivided beneficial interests in the assets of TU Electric Capital, (ii)
holding as trust assets the Junior Subordinated Debentures and (iii) engaging in
only those other activities necessary or incidental thereto. Upon issuance of
the QUIPS, the Holders thereof will own all of the issued and outstanding QUIPS.
The Company has agreed to acquire Common Securities in an amount equal to at
least 3% of the total capital of TU Electric Capital and will own all of the
issued and outstanding Common Securities.

DESCRIPTION OF QUIPS

The QUIPS are undivided preferred beneficial interests in the assets of TU
Electric Capital and will have a preference, under certain circumstances, with
respect to cash distributions and amounts payable on liquidation, redemption or
otherwise over the trust interests represented by the Common Securities issued
by TU Electric Capital.

Holders of the QUIPS will be entitled to receive cumulative cash
distributions accruing from the date of original issuance and payable quarterly
in arrears on the last day of March, June, September and December of each year,
commencing , 199 , at the per annum rate of % of the liquidation preference
amount thereof to the persons in whose names the QUIPS are registered at the
close of business on the relevant record dates. Such distributions will
originally accrue from, and include, the Closing Date and will accrue to, and
include, the first distribution payment date, and thereafter will accrue from,
and exclude, the last distribution payment date through which distributions have
been paid. In the event that any date on which a distribution is payable on the
QUIPS is not a Business Day (as defined herein), then such distribution will be
made on the next succeeding Business Day (and without any interest or other
payment in respect of any such delay), except that, if such Business Day is in
the next succeeding calendar year, such payment shall be made on the immediately
preceding Business Day, in each case with the same force and effect as if made
on such date.

TU Electric Capital will hold Junior Subordinated Debentures in an
aggregate principal amount equal to the liquidation preference of the Trust
Securities. The Junior Subordinated Debentures are unsecured subordinated debt
securities issued under an Indenture dated as of December 1, 1995, between the
Company and The Bank of New York, as Trustee (Indenture). TU Electric Capital
will use interest payments on the Junior Subordinated Debentures to make
distributions on the QUIPS. The Junior Subordinated Debentures will be
subordinate to all Senior Indebtedness of the Company but are senior to all
capital stock of the Company.

The Company has the right to defer payments of interest on the Junior
Subordinated Debentures during Extension Periods of up to 20 consecutive
quarters, provided that no single distribution payment period, as extended, may
exceed 20 consecutive quarterly interest payment periods or extend beyond the
maturity of the Junior Subordinated Debentures. Distributions on the QUIPS will
accrue with interest, compounded quarterly, but will not be payable, during an
Extension Period. The Company may prepay at any time all

- 4 -

<PAGE>

or any portion of the interest accrued during an Extension Period. Based
upon the Company's current financial condition and, in light of the restriction
on payment of dividends during an Extension Period, the Company believes that an
extension of a distribution payment period on the QUIPS is unlikely and has no
current intention to extend such a distribution payment period. Upon the
termination of any Extension Period and the payment of all amounts then due, the
Company may elect another Extension Period. The Company will give TU Electric
Capital and the Debenture Trustee notice of its election of an Extension Period
prior to the earlier of (i) one Business Day prior to the record date for the
distribution which would occur but for such election or (ii) the date the
Company is required to give notice to the NYSE or other applicable
self-regulatory organization of such record date and will cause the Trust to
send notice of such election to the Holders of QUIPS.

If and to the extent the Company makes interest payments on the Junior
Subordinated Debentures deposited in TU Electric Capital as trust assets, the
Property Trustee is obligated to make distributions promptly on the QUIPS. The
payment of distributions on the QUIPS and payments on liquidation of TU Electric
Capital and the redemption of QUIPS are guaranteed by the Company if and to the
extent that TU Electric Capital has funds available therefor.

The Junior Subordinated Debentures are redeemable, in whole or in part, on
or after , or at any time upon the occurrence of a Tax Event, at the option of
the Company. Upon redemption of the Junior Subordinated Debentures, the QUIPS
will be redeemed.

Upon the occurrence and during the continuation of a Tax Event arising from
a change in law or a change in legal interpretation or other specified
circumstance, TU Electric Capital shall, unless the Junior Subordinated
Debentures are redeemed in the limited circumstances described below and subject
to certain other limited exceptions, be terminated, with the result that after
the satisfaction of creditors of TU Electric Capital, if any, the Junior
Subordinated Debentures will be distributed to the Holders of the QUIPS and the
Common Securities on a pro rata basis, in lieu of any cash distribution. In the
case of a Tax Event, the Company will have the right in certain circumstances to
redeem the Junior Subordinated Debentures at any time, in which event TU
Electric Capital will redeem the Trust Securities on a pro rata basis to the
same extent as the Junior Subordinated Debentures are redeemed. If the Junior
Subordinated Debentures are distributed to the Holders of the QUIPS, the Company
will use its best efforts to have the Junior Subordinated Debentures listed on
the New York Stock Exchange or on such other exchange as the QUIPS are then
listed. See DESCRIPTION OF THE QUIPS -- "Tax Event Redemption or Distribution."

The Company will guarantee payment, where applicable, of accrued and unpaid
distributions, the redemption price and amounts due upon liquidation, to the
extent TU Electric Capital has funds available therefor.

The Trust Agreement (as defined herein) provides that the Company shall pay
for all debts and obli- gations (other than with respect to the Trust
Securities) and all costs and expenses of TU Electric Capital, including any
taxes and all costs and expenses with respect thereto, to which TU Electric
Capital may become subject, except for United States withholding taxes.

No Sinking Fund will be established for the benefit of the QUIPS.

- 5 -

<PAGE>

RISK FACTORS

Prospective purchasers of QUIPS should carefully consider the following
risk factors with respect to the QUIPS:

DEPENDENCE OF TU ELECTRIC CAPITAL ON THE COMPANY FOR FUNDS; SUBORDINATION
OF GUARANTEE AND JUNIOR SUBORDINATED DEBENTURES

The ability of TU Electric Capital to pay amounts due on the QUIPS is
solely dependent upon the Company making payments on the Junior Subordinated
Debentures as and when required.

The Company's obligations under the Guarantee are subordinated and junior
in right of payment to all other liabilities of the Company, except any
liabilities that may be made pari passu expressly by their terms. The
obligations of the Company under the Junior Subordinated Debentures are
subordinated and junior in right of payment to Senior Indebtedness of the
Company. As of September 30, 1995, Senior Indebtedness of the Company aggregated
approximately $7.5 billion. There are no terms of the QUIPS, the Junior
Subordinated Debentures or the Guarantee that limit the Company's ability to
incur additional indebtedness, including indebtedness that would rank senior to
the Junior Subordinated Debentures and the Guarantee. See DESCRIPTION OF THE
GUARANTEE -- "Status of the Guarantee" and DESCRIPTION OF THE JUNIOR
SUBORDINATED DEBENTURES -- "Subordination."

PAYMENT DELAY UPON EXERCISE OF OPTION TO EXTEND INTEREST PAYMENT PERIOD

The Company has the right under the Indenture to extend the interest
payment period from time to time on the Junior Subordinated Debentures, for a
period not exceeding 20 consecutive quarters. Upon the termination of any such
Extension Period and the payment of all amounts then due, the Company may select
an additional Extension Period, subject to the requirements described herein.
During any such Extension Period, quarterly distributions on the QUIPS would be
deferred (but would continue to accrue with interest thereon compounded
quarterly) by TU Electric Capital. In the event that the Company exercises this
right, during the Extension Period the Company may not declare or pay dividends
or distributions (other than dividends or distributions in Common Stock of the
Company) on, or redeem, purchase, acquire, or make a liquidation payment with
respect to any of its capital stock, redeem any indebtedness that is pari passu
with the Junior Subordinated Debentures or make any guarantee payment with
respect to the foregoing. Prior to the termination of any such Extension Period,
the Company may further extend the interest payment period, provided that such
Extension Period together with all such previous and further extensions thereof
may not exceed 20 consecutive quarters and that such extended interest payment
period may not extend beyond the maturity date of the Junior Subordinated
Debentures. Any extension period with respect to payment of interest on the
Junior Subordinated Debentures, other Debt Securities or on any similar
securities will apply to all such securities and will also apply to
distributions with respect to the QUIPS and all other securities with terms
substantially the same as the QUIPS. If the Company should determine to exercise
its extension right in the future, the market price of the QUIPS is likely to be
affected. Based upon the Company's current financial condition and, in light of
the restriction on payment of dividends during an Extension Period, TU Electric
Capital and the Company believe that such an extension of an interest payment
period on the Junior Subordinated Debentures is unlikely to occur. See
DESCRIPTION OF THE QUIPS -- "Distributions" and DESCRIPTION OF THE JUNIOR
SUBORDINATED DEBENTURES -- "Option to Extend Interest Payment Period."

ADVERSE TAX CONSEQUENCES OF EXTENSION OF INTEREST PAYMENT PERIOD; OID

Because the Company has the right to extend the interest payment period for
the Junior Subordinated Debentures, the Junior Subordinated Debentures will be
treated as having been issued with OID for United States federal income tax
purposes. As a result, Holders of QUIPS will be required to include in their
gross income distributions with respect to the QUIPS as they accrue, rather than
when they are paid, regardless of the Holders' regular method of accounting. OID
on the QUIPS will be treated as interest and will generally be equal to the
amount of stated distributions accruing on the QUIPS each year. During an
Extension Period, a Holder of QUIPS that is subject to United States federal
income tax would be required to continue to include in gross income an amount of
OID in respect of the distributions accruing on the QUIPS for United States
federal income tax purposes in advance of the receipt of cash regardless of such
Holder's regular method of accounting. See CERTAIN UNITED STATES FEDERAL INCOME
TAX CONSEQUENCES -- "Original Issue Discount." A Holder that disposed of its
QUIPS prior to the record date for the payment of interest at the end of an
Extension Period would

- 6 -

<PAGE>

not receive cash from TU Electric Capital related to such interest because
the accrued distributions related to such interest will be paid to the Holder of
record on such record date, regardless of who the Holder of record may have been
on other dates during the Extension Period. In addition, as a result of the
Company's right to extend the interest payment period, the market price of the
QUIPS may be more volatile than debt instruments with OID which do not afford
the issuer such a right. See CERTAIN UNITED STATES FEDERAL INCOME TAX
CONSEQUENCES -- "Original Issue Discount."

RIGHTS UNDER THE GUARANTEE; LIMITATION AS TO FUNDS AVAILABLE TO TU ELECTRIC
CAPITAL

The Guarantee will be qualified as an indenture under the Trust Indenture
Act of 1939, as amended (Trust Indenture Act). The Bank of New York will act as
indenture trustee under the Guarantee for the purposes of compliance with the
Trust Indenture Act (Guarantee Trustee). The Bank of New York will also act as
trustee for the Junior Subordinated Debentures and will hold the Guarantee for
the benefit of the Holders of the QUIPS.

The Guarantee guarantees to the Holders of the QUIPS the payment (but not
the collection) of (i) any accrued and unpaid distributions required to be paid
on the QUIPS, to the extent TU Electric Capital has funds available therefor,
(ii) the redemption price, including all accrued and unpaid distributions, with
respect to QUIPS called for redemption by the Issuer, to the extent TU Electric
Capital has funds available therefor and (iii) upon a voluntary or involuntary
dissolution, winding-up or termination of TU Electric Capital (other than in
connection with a redemption of all of the QUIPS), the lesser of (a) the
aggregate of the liquidation preference and all accrued and unpaid distributions
on the QUIPS to the date of payment and (b) the amount of assets of TU Electric
Capital remaining available for distribution to Holders of the QUIPS in
liquidation of TU Electric Capital. The Holders of a majority in liquidation
preference of the QUIPS have the right to direct the time, method and place of
conducting any proceeding for any remedy available to the Guarantee Trustee or
to direct the exercise of any trust or power conferred upon the Guarantee
Trustee under the Guarantee. If the Company were to default on its obligations
under the Junior Subordinated Debentures, TU Electric Capital would lack
available funds for the payment of distributions or amounts payable on
redemption of the QUIPS or otherwise, and in such event Holders of the QUIPS
would not be able to rely upon the Guarantee for payment of such amounts.
Instead, Holders of the QUIPS would be required to rely on the enforcement by
the Property Trustee of its rights, as registered Holder of the Junior
Subordinated Debentures, against the Company pursuant to the terms of the Junior
Subordinated Debentures. See DESCRIPTION OF THE GUARANTEE -- "Status of the
Guarantee" and DESCRIPTION OF THE JUNIOR SUBORDINATED DEBENTURES --
"Subordination" herein. The Trust Agreement pursuant to which TU Electric
Capital has been formed provides that each Holder of QUIPS by acceptance thereof
agrees to the provisions of the Guarantee and the Indenture.

TAX EVENT REDEMPTION OR DISTRIBUTION; POTENTIAL ADVERSE EFFECT ON MARKET PRICE

Upon the occurrence of a Tax Event, the Company shall cause the termination
of TU Electric Capital and, in connection therewith, after satisfaction of
creditors of TU Electric Capital, if any, distribute Junior Subordinated
Debentures to the Holders of Trust Securities; provided that, under certain
circumstances the Company shall have the right to redeem the Junior Subordinated
Debentures, in whole or in part, in which event TU Electric Capital will redeem
the QUIPS. There can be no assurance as to the market prices for the Junior
Subordinated Debentures which may be distributed in exchange for QUIPS if a
termination and liquidation of TU Electric Capital were to occur. Accordingly,
such Junior Subordinated Debentures could, if distributed, trade at a discount
to the price of the QUIPS exchanged. See DESCRIPTION OF THE QUIPS -- "Tax Event
Redemption or Distribution" and CERTAIN UNITED STATES FEDERAL INCOME TAX
CONSEQUENCES.

- 7 -

<PAGE>

NO ESTABLISHED TRADING MARKET FOR QUIPS

The QUIPS constitute a new issue of securities with no established trading
market. While the Company will apply to list the QUIPS on the NYSE, a minimum of
400 beneficial holders and 1,000,000 outstanding securities is required for
listing a new class of securities on the NYSE. Accordingly, no assurance can be
given as to the liquidity of, or the development and maintenance of trading
markets for, the QUIPS. See LISTING AND TRADING OF QUIPS.

UNDERWRITER MARKET ACTIVITY; NO ASSURANCE AS TO ACTIVE MARKET

The Underwriters currently plan to make a market in the QUIPS. However,
there can be no assurance that the Underwriters will engage in such activities
or that any active market in the QUIPS will develop or be maintained.

TRADING PRICE; POTENTIAL ADVERSE INCOME TAX EFFECT

The QUIPS may trade at a price that does not fully reflect the value of
accrued but unpaid interest with respect to the underlying Junior Subordinated
Debentures. A Holder that disposes of QUIPS between record dates for payments of
distributions thereon will be required to include in his or her income accrued
but unpaid interest on the Junior Subordinated Debentures through the date of
disposition, and to add such amount to such Holder's adjusted tax basis in his
or her pro rata share of the underlying Junior Subordinated Debentures deemed
disposed of. To the extent the selling price is less than the Holder's adjusted
tax basis (which will include, in the form of OID, all accrued and unpaid
interest), a Holder will recognize a capital loss. Subject to certain limited
exceptions, capital losses cannot be applied to offset ordinary income for
United States federal income tax purposes. See CERTAIN UNITED STATES FEDERAL
INCOME TAX CONSEQUENCES -- "Original Issue Discount" and "Sale, Exchange and
Retirement of the QUIPS."

QUIPS HAVE NO VOTING RIGHTS

Subject to the Company's right to extend payment as described under
DESCRIPTION OF THE QUIPS -- "Distributions," Holders will have the right to
receive distributions as and when due but will have only limited voting rights,
exercisable only in the event of a proposed change in the terms of the QUIPS.
See DESCRIPTION OF THE QUIPS -- "Voting Rights."

- 8 -

<PAGE>

THE COMPANY

The Company was incorporated under the laws of the State of Texas in
1982 and has perpetual existence under the provisions of the Texas Business
Corporation Act. The Company is an electric utility engaged in the generation,
purchase, transmission, distribution and sale of electric energy wholly within
the State of Texas. The principal executive offices of the Company are located
at Energy Plaza, 1601 Bryan Street, Dallas, Texas 75201; the telephone number is
(214) 812-4600.

The Company is the principal subsidiary of Texas Utilities Company
(Texas Utilities). The other electric utility subsidiary of Texas Utilities is
Southwestern Electric Service Company, which is engaged in the purchase,
transmission, distribution and sale of electric energy in ten counties in the
eastern and central parts of Texas with a population estimated at 125,000. Texas
Utilities also has five other subsidiaries which perform specialized functions
within the Texas Utilities Company System: Texas Utilities Fuel Company owns a
natural gas pipeline system, acquires, stores and delivers fuel gas and provides
other fuel services at cost for the generation of electric energy by the
Company; Texas Utilities Mining Company owns, leases and operates fuel
production facilities for the surface mining and recovery of lignite at cost for
the generation of electric energy by the Company; Texas Utilities Properties
Inc. owns, leases and manages real and personal properties; Texas Utilities
Communications Inc. was recently organized to provide access to advanced
telecommunications technology, primarily for the System Companies' expected
expanding energy service business in the future; and Texas Utilities Services
Inc. provides financial, accounting, information technology, personnel,
procurement and other administrative services at cost.

The Company's service area covers the north central, eastern and
western parts of Texas, with a population estimated at 5,730,000 -- about
one-third of the population of Texas. Electric service is provided in 91
counties and 372 incorporated municipalities, including Dallas, Fort Worth,
Arlington, Irving, Plano, Waco, Mesquite, Grand Prairie, Wichita Falls, Odessa,
Midland, Carrollton, Tyler, Richardson and Killeen. The area is a diversified
commercial and industrial center with substantial banking, insurance,
communications, electronics, aerospace, petrochemical and specialized steel
manufacturing, and automotive and aircraft assembly. The territory served
includes major portions of the oil and gas fields in the Permian Basin and East
Texas, as well as substantial farming and ranching sections of the State. It
also includes the Dallas-Fort Worth International Airport and the Alliance
Airport.

TU ELECTRIC CAPITAL

TU Electric Capital is a statutory business trust created under
Delaware law pursuant to (i) a trust agreement executed by the Company, as
depositor for TU Electric Capital, and the Property Trustee and the Delaware
Trustee and the Administrative Trustees (each as defined herein) of such trust
(Original Trust Agreement) and (ii) the filing of a certificate of trust with
the Delaware Secretary of State on October __, 1995. Such trust agreement will
be amended and restated in its entirety (as so amended and restated, the Trust
Agreement) substantially in the form filed as an exhibit to the Registration
Statement of which this Prospectus forms a part. The Trust Agreement will be
qualified as an indenture under the Trust Indenture Act. TU Electric Capital
exists for the exclusive purposes of (i) issuing Trust Securities representing
undivided beneficial interests in the assets of TU Electric Capital, (ii)
holding the Junior Subordinated Debentures as trust assets and (iii) engaging in
only those other activities necessary or incidental thereto. All of the Common
Securities will be owned by the Company. The Common Securities will rank pari
passu, and payments will be made thereon pro rata, with the QUIPS, except that
upon the occurrence and continuance of a default under the Trust Agreement, the
rights of the Holder of the Common Securities to payment in respect of
distributions and payments upon liquidation, redemption and otherwise will be
subordinated to the rights of the Holders of the QUIPS. The Company will acquire
Common Securities having an aggregate liquidation preference amount equal to 3%
of the total capital of TU Electric Capital. TU Electric Capital has a term of
approximately 40 years, but may terminate earlier as provided in the Trust
Agreement. TU Electric Capital's business and affairs will be conducted by the
Administrative Trustees (as defined herein). The office of the Delaware Trustee
in the State of Delaware is White Clay Center, Route 273, Newark, Delaware
19711. The principal place of business of TU Electric Capital is c/o Texas
Utilities Electric Company, Energy Plaza, 1601 Bryan Street, Dallas, Texas
75201.

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<PAGE>

SUMMARY FINANCIAL INFORMATION

(Thousands of Dollars, Except Ratios and Percentages)

The following material, which is presented herein solely to furnish limited
introductory information, is qualified in its entirety by, and should be
considered in conjunction with, the other information appearing in this
Prospectus, including the Incorporated Documents. In the opinion of the Company,
all adjustments (constituting only normal recurring accruals) necessary for a
fair statement of the results of operations for the twelve months ended
September 30, 1995, have been made.

Twelve Months Ended
----------------------------------------------------------------------------

December 31, September 30,
------------------------------------------------------------ 1995
1990 1991 1992 1993 1994 (Unaudited)
--------- -------- -------- --------- ------------- -------------
<S> <C> <C> <C> <C> <C> <C>

Income statement data:
Operating Revenues................. $4,540,915 $4,891,522 $4,906,695 $5,409,156 $5,613,175 $5,545,186
Net Income (Loss)(a)............... 964,276 (289,173) 821,123 476,526 658,192 408,083
Ratio of Earnings to
Fixed Charges (a)(b).............. 2.54 0.34 2.48 2.00 2.45 1.92
Ratio of Earnings to
Fixed Charges and
Preferred Dividends (a)(b)........ 2.13 0.27 2.08 1.62 2.03 1.62

</TABLE>

Adjusted(c)
Outstanding at -----------
September 30, 1995 Amount Percent
------------------ ------ -------
<S> <C> <C> <C>
Capitalization (Unaudited):
Long-term Debt............................ $07,234,493 $07,252,959 50.9%
Preferred Stock
Not subject to mandatory redemption..... 855,869 374,044
Subject to mandatory redemption......... 275,645 275,645
---------- ----------

Total Preferred Stock................. 1,131,514 649,689 4.6
Company Obligated Mandatorily Redeemable
Preferred Securities of Trusts (d)...... - 481,825 3.4
Common Stock Equity......................... 5,849,891 5,849,891 41.1
---------- ----------- ------

Total Capitalization...................... $14,215,898 $14,234,364 100.0%
=========== =========== =====

</TABLE>

- ------------------
(a) The net loss for the twelve-month period ended December 31, 1991 was
due primarily to the recognition of a charge against earnings,
representing a provision for regulatory disallowances and for fuel gas
costs disallowed in the Company's Docket 9300 rate case. Additionally,
the twelve month periods ended December 31, 1990, December 31, 1991
and December 31, 1992 were affected by the discontinuation of the
accrual of allowance for funds used during construction (AFUDC) and
the commencement of depreciation on approximately $1.3 billion of
investment in Unit 1 of the Comanche Peak nuclear generating station
(Comanche Peak) and facilities which are common to Comanche Peak Units
1 and 2 incurred after the end of the June 30, 1989 test year and,
therefore, not included in the Company's Docket 9300 rate case.
Effective January 1992, the Company began recording base rate revenue
for energy sold but not billed to achieve a better matching of
revenues and expenses. The effect of this change in accounting
increased net income for the twelve months ended December 31, 1992, by
approximately $102 million, of which approximately $80 million
represents the cumulative effect of the change in accounting at
January 1, 1992. The twelve-month period ended December 31, 1993 was
affected by the recording of regulatory disallowances in Docket 11735
(See the 1994 10-K.). The twelve month period ended September 30, 1995
was affected by the impairment of several nonperforming assets. (See
the Company's Current Report on Form 8-K dated October 17, 1995).
(b) The Company's earnings were inadequate to cover its fixed charges and
its fixed charges and preferred dividends for the twelve month period
ended December 31, 1991. The deficiencies in such coverage were
$499,062,000 and $706,809,000, respectively. The computations of the
ratios of earnings to fixed charges and earnings to fixed charges and
preferred dividends do not include interest payments made by
affiliated companies on senior notes, which are recovered currently
through the fuel component of rates.
(c) To give effect to (1) this transaction, (2) the consummation of
pending offers by the Company to exchange for preferred securities
plus cash or for cash only 19,273,000 outstanding depositary shares of
the Company, assuming that 8,000,000 of such depositary shares are
validly tendered and accepted by the Company for cash only and
11,273,000 of such depositary shares are validly tendered and accepted
by the Company for exchange for preferred securities, (3) the
prepayment in October 1995 of $175,534,049 of long-term debt, (4) the
redemption in November 1995 of $6,000,000 of First Mortgage Bonds and
(5) the proposed sale of $200,000,000 of Medium-Term Notes in November
1995 pursuant to a program established in October 1995. Adjusted
amounts do not reflect any possible future sales from time to time by
TU Electric of up to an additional $100,000,000 of Medium-Term Notes,
$350,000,000 principal amount of First Mortgage Bonds and $25,000,000
of the Company's cumulative preferred stock (Preferred Stock), for
which registration statements are effective pursuant to Rule 415 under
the Securities Act of 1933 (1933 Act).
(d) The sole assets of such trusts consist of junior subordinated
debentures of the Company in principal amounts, and having other
payment terms, corresponding to the securities issued by such trusts.

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<PAGE>

RATE PROCEEDINGS

In July 1994, the Company filed a petition in the 200th Judicial District
Court of Travis County, Texas to seek judicial review of the final order of the
Public Utility Commission of Texas (PUC) granting a $449 million, or 9.0%, rate
increase in connection with the Company's January 1993 rate increase request of
$760 million, or 15.3% (Docket 11735). Other parties to the PUC proceedings also
filed appeals with respect to various portions of the order. The Company is
unable to predict the outcome of such appeals.

The PUC's final order (Order) in connection with the Company's January 1990
rate increase request (Docket 9300) was reviewed by the 250th Judicial District
Court of Travis County, Texas (District Court) and thereafter was appealed to
the Court of Appeals for the Third District of Texas (Court of Appeals). In June
1994, the Court of Appeals affirmed a prudence disallowance of $472 million
provided for in the Order with respect to the Company's Comanche Peak nuclear
generating station (Comanche Peak), reversed and remanded the portion of the
District Court's judgment that had affirmed a disallowance of $25 million
relating to the Company's reacquisitions of the minority owner interests in
Comanche Peak nuclear fuel, and affirmed the District Court's remand of the
remainder of the disallowance of $884 million relating to the reacquisitions of
such minority owner interests. Therefore, the Court of Appeals remanded an
aggregate of $909 million of disallowances with respect to the Company's
reacquisitions of minority owner interests in Comanche Peak to the PUC for
reconsideration and ordered that such reconsideration be on the basis of a
prudent investment standard.

In addition, the Court of Appeals reversed the District Court's finding
that the PUC erred in ordering a refund of $2.5 million with respect to certain
fuel gas costs. Also, the Court of Appeals specified that, on remand, the PUC
will be required to re-evaluate the appropriate level of the Company's
construction work in progress included in rate base in light of its financial
condition at the time of the initial hearing and to reconsider whether the $442
million revenue increase provided for in the PUC's final order remains the
benchmark in light of this reexamination.

The Court of Appeals also ruled in the appeal of the Company's Docket 9300
rate case that prior court rulings required that the tax benefits generated by
costs, including capital costs, not allowed in rates, must be used to reduce
rates charged to customers, reversing the District Court's decision. The Company
believes that such ruling is erroneous and not consistent with the Texas Public
Utility Regulatory Act. The Company contended that, according to a Private
Letter Ruling issued to the Company by the Internal Revenue Service (IRS) with
respect to investment tax credits, such ratemaking treatment, to the extent
related to property classified for tax purposes as public utility property,
would result in a violation of the normalization rules under the Internal
Revenue Code of 1986, as amended. In September 1995, the IRS issued another
Private Letter Ruling to the Company, which ruled that such ratemaking treatment
would also violate the normalization rules applicable to depreciation. Violation
of the normalization rules would result in a significant adverse effect on the
Company's results of operation and liquidity. If there are normalization
violations, the Company will forfeit its investment tax credits that remain
unamortized as of the date of the violation, and will also forfeit the ability
to take advantage of accelerated tax depreciation in years to which the
violative order relates. This could result in payments to the IRS of up to $1.3
billion. The Company disagrees with certain portions of the decision of the
Court of Appeals, including specifically its decision with respect to federal
income taxes, and has filed an appeal to the Supreme Court of Texas. Other
parties have also filed appeals of this decision to the Supreme Court of Texas.
The Company cannot predict whether such appeals will be accepted by the Supreme
Court of Texas and cannot predict the outcome of any such appeals or any
resulting reconsideration of these issues on remand by the PUC.

In April 1995, in an appeal of a rate case involving another utility, the
Supreme Court of Texas held that the PUC has considerable discretion in
determining the fair share of consolidated tax savings to be allocated to a
utility and, accordingly, is not required to include losses of unregulated
affiliates in determining such fair share. The Supreme Court of Texas also held
that the PUC could not use the tax benefits generated by disallowed expenses to
reduce rates.

- 11 -

<PAGE>

USE OF PROCEEDS

The proceeds to be received by TU Electric Capital from the sale of the
QUIPS will be used to purchase Junior Subordinated Debentures of the Company.
The proceeds of such purchase will be applied by the Company for general
corporate purposes, which may include the acquisition of outstanding securities
of the Company.

DESCRIPTION OF THE QUIPS

TU Electric Capital was authorized and created by the Original Trust
Agreement. The QUIPS and the Common Securities will be created pursuant to the
terms of the Trust Agreement. The QUIPS represent undivided beneficial interests
in the assets of TU Electric Capital and entitle the Holders thereof to a
preference over the Common Securities in certain circumstances with respect to
distributions and amounts payable on redemption or liquidation, as well as other
benefits as described in the Trust Agreement. The following summaries of certain
provisions of the Trust Agreement do not purport to be complete and are subject
to, and are qualified in their entirety by reference to, the provisions of the
Trust Agreement, including the definitions therein of certain terms, and the
Trust Indenture Act. Wherever particular sections or defined terms of the Trust
Agreement are referred to, such sections or defined terms are incorporated
herein by reference. The Trust Agreement has been filed as an exhibit to the
Registration Statement of which this Prospectus forms a part.

GENERAL

All of the Common Securities are owned by the Company. The Common
Securities rank pari passu, and payments will be made thereon pro rata, with the
QUIPS based on the liquidation preference of the Trust Securities, except as
described under "Subordination of Common Securities." (Section 4.03) The Junior
Subordinated Debentures will be owned by TU Electric Capital and held by the
Property Trustee in trust for the benefit of the Holders of the Trust
Securities. (Section 2.09). The Guarantee is a full and unconditional guarantee
with respect to the QUIPS but does not guarantee payment of distributions or
amounts payable on redemption or liquidation of the QUIPS when TU Electric
Capital does not have funds available to make such payments.

DISTRIBUTIONS

The distributions payable on the QUIPS will be fixed at a rate per annum of
% of the stated liquidation preference amount thereof. The term "distributions"
as used herein includes interest payable on overdue distributions, unless
otherwise stated. The amount of distributions payable for any period will be
computed on the basis of a 360-day year of twelve 30-day months and for any
period shorter than a full month, on the basis of the actual number of days
elapsed. (Section 4.01(b)).

Distributions on the QUIPS will be cumulative, will accrue from the date of
initial issuance thereof, and will be payable quarterly in arrears, on March 31,
June 30, September 30 and December 31 of each year, commencing
, 199 , except as otherwise described below. Such distributions will
originally accrue from, and include, the date of initial issuance and will
accrue to, and include, the first distribution payment date, and thereafter will
accrue from, and exclude, the last distribution payment date through which
distributions have been paid. In the event that any date on which distributions
are otherwise payable on the QUIPS is not a Business Day, payment of the
distribution payable on such date will be made on the next succeeding Business
Day (and without any interest or other payment in respect of any such delay)
except that, if such Business Day is in the next succeeding calendar year,
payment of such distribution shall be made on the immediately preceding Business
Day, in each case with the same force and effect as if made on such date (each
date on which distributions are otherwise payable in accordance with the
foregoing, a distribution payment date). (Section 4.01(a)). A Business Day is
used herein to mean any day other than a Saturday or a Sunday or a day on which
banking institutions in The City of New York are authorized or required by law
or executive order to remain closed or a day on which the Corporate Trust Office
of the Property Trustee or the Debenture Trustee (as defined herein) is closed
for business.

It is anticipated that the income of TU Electric Capital available for
distribution to the Holders of the QUIPS will be limited to payments on the
Junior Subordinated Debentures for which TU Electric Capital will exchange the
QUIPS and the Common Securities. See DESCRIPTION OF THE JUNIOR SUBORDINATED
DEBENTURES. If the Company does not make interest payments on the Junior
Subordinated Debentures, the Property Trustee will

- 12 -

<PAGE>

not have funds available to pay distributions on the QUIPS. The payment of
distributions (if and to the extent TU Electric Capital has sufficient funds
available for the payment of such distributions) is guaranteed on a limited
basis by the Company as set forth herein under DESCRIPTION OF THE GUARANTEE.

Distributions on the QUIPS will be payable to the Holders thereof as they
appear on the register of TU Electric Capital on the relevant record dates,
which is 15 days prior to the relevant distribution payment date or if such date
is not a Business Day, the next succeeding Business Day. (Section 4.01(d)).

The Company has the right under the Indenture pursuant to which it will
issue the Junior Subordinated Debentures to extend the interest payment period
from time to time on the Junior Subordinated Debentures to a period not
exceeding 20 consecutive quarters, with the consequence that quarterly
distributions on the QUIPS would be deferred (but would continue to accrue with
interest payable on unpaid distributions at the rate per annum set forth above,
compounded quarterly) by TU Electric Capital during any such Extension Period.
In the event that the Company exercises this right, during such period the
Company may not declare or pay any dividend or distribution on (other than
dividends paid in shares of Common Stock of the Company), or redeem, purchase,
acquire or make a liquidation payment with respect to, any of its capital stock,
or make any guarantee payments with respect to the foregoing or redeem any
indebtedness that is pari passu with the Junior Subordinated Debentures. Any
Extension Period with respect to payment of interest on the Junior Subordinated
Debentures, or any extended interest payment period in respect of other Debt
Securities or on any similar securities will apply to all such securities and
will also apply to distributions with respect to the QUIPS and all other
securities with terms substantially the same as the QUIPS. Prior to the
termination of any such Extension Period, the Company may further extend the
interest payment period, provided that such Extension Period together with all
such previous and further extensions thereof may not exceed 20 consecutive
quarters or extend beyond the maturity of the Junior Subordinated Debentures.
Upon the termination of any Extension Period and the payment of all amounts then
due, the Company may select a new extended interest payment period, subject to
the foregoing requirements. See DESCRIPTION OF THE JUNIOR SUBORDINATED
DEBENTURES -- "Interest" and "Option to Extend Interest Payment Period." The
Holders of QUIPS do not have a right to appoint a special representative in the
event that the Company defers interest on the Junior Subordinated Debentures.

REDEMPTION OF QUIPS

The Junior Subordinated Debentures will mature on __________, and the
Company has the right to redeem the Junior Subordinated Debentures in whole
or in part on or after________, or earlier in certain circumstances upon the
occurrence of a Tax Event, subject to the conditions described under
DESCRIPTION OF THE JUNIOR SUBORDINATED DEBENTURES -- "Optional Redemption."

Upon the repayment of the Junior Subordinated Debentures, whether at
maturity or upon earlier redemption as provided in the Indenture, the proceeds
from such repayment shall be applied by the Property Trustee to redeem a Like
Amount (as defined herein) of Trust Securities, upon not less than 30 nor more
than 60 days' notice, at the redemption price plus accrued and unpaid
distributions. See DESCRIPTION OF THE JUNIOR SUBORDINATED DEBENTURES --
"Optional Redemption."

Like Amount means (i) with respect to a redemption of Trust Securities,
QUIPS and Common Securities, each in amounts having a liquidation value equal to
the proportion all such securities have to the liquidation value of all the
Trust Securities, together having an aggregate liquidation value equal to the
principal amount of Junior Subordinated Debentures to be contemporaneously
redeemed in accordance with the Indenture, the proceeds of which are to be used
to pay the redemption price plus accrued and unpaid distributions of such Trust
Securities and (ii) with respect to a distribution of Junior Subordinated
Debentures to Holders of Trust Securities in connection with a liquidation of TU
Electric Capital upon the occurrence of a Tax Event or the bankruptcy,
termination or liquidation of TU Electric Capital, Junior Subordinated
Debentures having a principal amount equal to the liquidation value of the Trust
Securities of the Holders to which such Junior Subordinated Debentures are
distributed.

TAX EVENT REDEMPTION OR DISTRIBUTION

If at any time, a Tax Event shall occur and be continuing, TU Electric
Capital shall, unless the Junior Subordinated Debentures are redeemed in the
limited circumstances described below, be terminated with the result that, after
satisfaction of creditors of TU Electric Capital, if any, Junior Subordinated
Debentures in a Like Amount

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<PAGE>

of the QUIPS and the Common Securities would be distributed on a pro rata basis
to the Holders of the QUIPS and the Common Securities in liquidation of such
Holders' interests in TU Electrical Capital, within 90 days following the
occurrence of such Tax Event; provided, however, that as a condition of such
termination and distribution, the Administrative Trustees shall have received an
opinion of nationally recognized independent tax counsel experienced in such
matters (No Recognition Opinion), which opinion may rely on any then applicable
published revenue rulings of the Internal Revenue Service, to the effect that
the Holders of the QUIPS will not recognize any gain or loss for United States
federal income tax purposes as a result of such termination and distribution of
Junior Subordinated Debentures; and, provided, further, that, if at the time
there is available to TU Electric Capital the opportunity to eliminate, within
such 90-day period, the Tax Event by taking some ministerial action, such as
filing a form or making an election, or pursuing some other similar reasonable
measure, which has no adverse effect on TU Electric Capital or the Company or
the Holders of the QUIPS, TU Electric Capital will pursue such measure in lieu
of termination. Furthermore, if (i) the Administrative Trustees have received an
opinion of nationally recognized independent tax counsel experienced in such
matters (Redemption Tax Opinion) that, as a result of a Tax Event, there is more
than an insubstantial risk that the Company would be precluded from deducting
the interest on the Junior Subordinated Debentures for United States federal
income tax purposes even if the Junior Subordinated Debentures were distributed
to the Holders of QUIPS and Common Securities in liquidation of such Holders'
interests in TU Electric Capital as described above or (ii) the Administrative
Trustees shall have been informed by such tax counsel that a No Recognition
Opinion cannot be delivered to TU Electric Capital, the Company shall have the
right, upon not less than 30 nor more than 60 days' notice, to redeem the Junior
Subordinated Debentures in whole or in part for cash within 90 days following
the occurrence of such Tax Event, and promptly following such redemption QUIPS
and Common Securities with an aggregate liquidation preference amount equal to
the aggregate principal amount of the Junior Subordinated Debentures so redeemed
will be redeemed by TU Electric Capital at the Redemption Price on a pro rata
basis, provided, however, that if at the time there is available to the Company
or the Administrative Trustees the opportunity to eliminate, within such 90-day
period, the Tax Event by taking some ministerial action, such as filing a form
or making an election, or pursuing some other similar reasonable measure, which
has no adverse effect on TU Electric Capital, the Company or the Holders of the
QUIPS, the Company will pursue such measure in lieu of redemption and provided
further that the Company shall have no right to redeem the Junior Subordinated
Debentures while the Administrative Trustees on behalf of TU Electric Capital
are pursuing any such ministerial action. The Common Securities will be redeemed
on a pro rata basis with the QUIPS, except that if an Event of Default under the
Trust Agreement has occurred and is continuing, the QUIPS will have a priority
over the Common Securities with respect to payment of the Redemption Price.

"Tax Event" means the receipt by TU Electric Capital of an opinion of
counsel experienced in such matters to the effect that, as a result of (a) any
amendment to, clarification of, or change (including any announced prospective
change) in, the laws or treaties (or any regulations thereunder) of the United
States or any political subdivision or taxing authority thereof or therein
affecting taxation, (b) any judicial decision or any official administrative
pronouncement, ruling, regulatory procedure, notice or announcement (including
any notice or announcement of intent to issue or adopt any such administrative
pronouncement, ruling, regulatory procedure or regulation) (each, an
Administrative Action), or (c) any amendment to, clarification of, or change in
the official position or the interpretation of any such Administrative Action or
judicial decision or any interpretation or pronouncement that provides for a
position with respect to such Administrative Action or judicial decision that
differs from the theretofore generally accepted position, in each case by any
legislative body, court, governmental authority or regulatory body, irrespective
of the manner in which such amendment, clarification or change is made known,
which amendment, clarification, or change is effective, which Administrative
Action is taken or which judicial decision is issued, in each case on or after
the date of issuance of the QUIPS, there is more than an insubstantial risk that
(i) TU Electric Capital is, or will be, subject to United States federal income
tax with respect to interest received on the Junior Subordinated Debentures,
(ii) interest payable by the Company on the Junior Subordinated Debentures is
not, or will not be, fully deductible for United States federal income tax
purposes, or (iii) TU Electric Capital is, or will be, subject to more than a de
minimis amount of other taxes, duties or other governmental charges.

On the date fixed for any distribution of Junior Subordinated Debentures,
upon termination of TU Electric Capital (i) the QUIPS and the Common Securities
will no longer be deemed to be outstanding and (ii) certificates representing
QUIPS will be deemed to represent Junior Subordinated Debentures having an
aggregate principal amount equal to the stated liquidation preference amount of,
and bearing accrued and unpaid interest equal to accrued and unpaid
distributions on, such QUIPS until such certificates are presented to the
Company or its agent for transfer or reissuance.

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<PAGE>

There can be no assurance as to the market price for the Junior
Subordinated Debentures which may be distributed in exchange for QUIPS if a
termination and liquidation of TU Electric Capital were to occur. Accordingly,
the Junior Subordinated Debentures which the investor may subsequently receive
on termination and liquidation of TU Electric Capital, may trade at a discount
to the price of the QUIPS exchanged. If the Junior Subordinated Debentures are
distributed to the Holders of QUIPS upon the dissolution of the Company, the
Company will use its best efforts to list the Junior Subordinated Debentures on
the NYSE or on such other exchange on which the QUIPS are then listed.

REDEMPTION PROCEDURES

The Company may not redeem fewer than all the Junior Subordinated
Debentures and TU Electric Capital may not redeem fewer than all the outstanding
QUIPS unless all accrued and unpaid distributions have been paid on all QUIPS
for all quarterly distribution periods terminating on or prior to the date of
redemption or if a partial redemption of the QUIPS would result in the delisting
of the QUIPS by any national securities exchange on which the QUIPS are then
listed.

QUIPS redeemed on each redemption date shall be redeemed at the redemption
price plus accrued and unpaid distributions with the proceeds from the
contemporaneous redemption of Junior Subordinated Debentures. Redemptions of the
QUIPS shall be made and the redemption price plus accrued and unpaid
distributions shall be deemed payable on each date selected for redemption
(Redemption Date) only to the extent that TU Electric Capital has funds
available for the payment of such redemption price plus accrued and unpaid
distributions. (Section 4.02(c)). See also "Subordination of Common Securities."

If TU Electric Capital gives a notice of redemption in respect of QUIPS
(which notice will be irrevocable), then, on or before the Redemption Date, TU
Electric Capital will irrevocably deposit with the paying agent for the QUIPS
funds sufficient to pay the applicable redemption price plus accrued and unpaid
distributions and will give such paying agent irrevocable instructions and
authority to pay the redemption price plus accrued and unpaid distributions to
the Holders thereof upon surrender of their certificates evidencing QUIPS.
Notwithstanding the foregoing, distributions payable on or prior to the
redemption date for any QUIPS called for redemption shall be payable to the
Holders of such QUIPS on the relevant record dates for the related distribution
payment dates. If notice of redemption shall have been given and funds deposited
as required, then on the Redemption Date, all rights of Holders of such QUIPS so
called for redemption will cease, except the right of the Holders of such QUIPS
to receive the redemption price plus accrued and unpaid distributions, but
without interest thereon, and such QUIPS will cease to be outstanding. In the
event that any date fixed for redemption of QUIPS is not a Business Day, then
payment of the amount payable on such date will be made on the next succeeding
day which is a Business Day (and without any interest or other payment in
respect of any such delay). In the event that payment of the redemption price
plus accrued and unpaid distributions in respect of QUIPS called for redemption
is improperly withheld or refused and not paid either by TU Electric Capital or
by the Company pursuant to the Guarantee described herein under DESCRIPTION OF
THE GUARANTEE, distributions on such QUIPS will continue to accrue at the then
applicable rate, from the original redemption date to the date of payment, in
which case the actual payment date will be considered the date fixed for
redemption for purposes of calculating the redemption price plus accrued and
unpaid distributions.

Subject to applicable law (including, without limitation, United States
federal securities law), the Company may at any time and from time to time
purchase outstanding QUIPS by tender, in the open market or by private
agreement.

If less than all the Trust Securities are to be redeemed on a Redemption
Date, then the aggregate liquidation preference of such securities to be
redeemed shall be allocated on a pro rata basis to the Common Securities and the
QUIPS. The particular QUIPS to be redeemed shall be selected not more than 60
days prior to the Redemption Date by the Property Trustee from the outstanding
QUIPS not previously called for redemption, by such method as the Property
Trustee shall deem fair and appropriate and which may provide for the selection
for redemption of QUIPS in liquidation preference amounts equal to $25 or
integral multiples thereof. The Property Trustee shall promptly notify the
security registrar in writing of the QUIPS selected for redemption and, in the
case of any QUIPS selected for partial redemption, the liquidation preference
amount thereof to be redeemed. For all purposes of the Trust Agreement, unless
the context otherwise requires, all provisions relating to the redemption of
QUIPS

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<PAGE>

shall relate, in the case of any QUIPS redeemed or to be redeemed only in part,
to the portion of the liquidation preference amount of QUIPS that has been or is
to be redeemed. (Section 4.02(f)).

SUBORDINATION OF COMMON SECURITIES

Payment of distributions on, and the redemption price plus accrued and
unpaid distributions of, the Trust Securities, shall be made pro rata based on
the liquidation preference of the Trust Securities; provided, however, that if
on any distribution payment date or Redemption Date a default (as described
below, see "Events of Default; Notice") under the Trust Agreement shall have
occurred and be continuing, no payment of any Distribution on, or redemption
price plus accrued and unpaid distributions of, any Common Security, and no
other payment on account of the redemption, liquidation or other acquisition of
Common Securities, shall be made unless payment in full in cash of all
accumulated and unpaid distributions on all outstanding QUIPS for all
distribution periods terminating on or prior thereto, or in the case of payment
of the redemption price plus accrued and unpaid distributions, the full amount
of such redemption price plus accrued and unpaid distributions on all
outstanding QUIPS, shall have been made or provided for, and all funds available
to the Property Trustee shall first be applied to the payment in full of all
distributions on, or redemption price plus accrued and unpaid distributions of,
QUIPS then due and payable. (Section 4.03(a)).

In the case of any default under the Trust Agreement resulting from an
Event of Default under the Indenture, the Holder of Common Securities will be
deemed to have waived any such default under the Trust Agreement until the
effect of all such Defaults with respect to the QUIPS have been cured, waived or
otherwise eliminated. Until any such default under such Trust Agreement with
respect to the QUIPS has been so cured, waived or otherwise eliminated, the
Property Trustee shall act solely on behalf of the Holders of the QUIPS and not
the Holders of the Common Securities, and only Holders of QUIPS will have the
right to direct the Property Trustee to act on their behalf. (Section 4.03(b)).

LIQUIDATION DISTRIBUTION UPON TERMINATION

Pursuant to the Trust Agreement, TU Electric Capital shall terminate and
shall be liquidated by the Property Trustee on the first to occur of: (i)
December 31, [ ], the expiration of the term of TU Electric Capital; (ii) the
bankruptcy, dissolution or liquidation of the Company; (iii) the occurrence of a
Tax Event; and (iv) the redemption of all of the QUIPS. (Sections 9.01 and
9.02).

If an early termination occurs as described in clause (ii) and (iii) above,
TU Electric Capital shall be liquidated by the Property Trustee as expeditiously
as the Property Trustee determines to be appropriate by adequately providing for
the satisfaction of liabilities of creditors, if any, and by distributing to
each Holder of QUIPS and Common Securities a Like Amount of Junior Subordinated
Debentures, unless such distribution is determined by the Property Trustee not
to be practical, in which event such Holders will be entitled to receive, out of
the assets of TU Electric Capital available for distribution to Holders after
adequate provision, as determined by the Property Trustee, has been made for the
satisfaction of liabilities of creditors, if any, an amount equal to, in the
case of Holders of QUIPS, the aggregate liquidation preference of the QUIPS plus
accrued and unpaid distributions thereon to the date of payment (such amount
being the Liquidation Distribution). If such Liquidation Distribution can be
paid only in part because TU Electric Capital has insufficient assets available
to pay in full the aggregate Liquidation Distribution, then the amounts payable
directly by TU Electric Capital on the QUIPS shall be paid on a pro rata basis.
The Company as Holder of the Common Securities, will be entitled to receive
distributions upon any such termination pro rata with the Holders of the QUIPS,
except that if default has occurred and is continuing under the Trust Agreement,
the QUIPS shall have a preference over the Common Securities. (Sections 9.04(a)
and 9.04(d)).

EVENTS OF DEFAULT; NOTICE

Any one of the following events constitutes an Event of Default under the
Trust Agreement (whatever the reason for such Event of Default and whether it
shall be voluntary or involuntary or be effected by operation of law or pursuant
to any judgment, decree or order of any court or any order, rule or regulation
of any administrative or governmental body):

(i) the occurrence of an Event of Default as defined in Section 801 of
the Indenture (see DESCRIPTION OF THE JUNIOR SUBORDINATED DEBENTURES --
"Events of Default"); or

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<PAGE>

(ii) default by the TU Electric Capital in the payment of any
distribution when it becomes due and payable, and continuation of such
default for a period of 30 days; or

(iii) default by the TU Electric Capital in the payment of any
redemption price, plus accrued and unpaid distributions, of any Trust
Security when it becomes due and payable; or

(iv) default in the performance, or breach, in any material respect, of
any covenant or warranty of the Property Trustee in the Trust Agreement
(other than a covenant or warranty a default in the performance of which or
the breach of which is specifically dealt with in clause (ii) or (iii)
above), and continuation of such default or breach for a period of 60 days
after there has been given, by registered or certified mail, to the
Property Trustee by the Holders of QUIPS having at least 10% of the total
liquidation preference amount of the outstanding QUIPS a written notice
specifying such default or breach and requiring it to be remedied and
stating that such notice is a Notice of Default thereunder; or

(v) the occurrence of certain events of bankruptcy or insolvency with
respect to the Property Trustee;

Within five Business Days after the occurrence of any Event of Default, the
Property Trustee shall transmit to the Holders of Trust Securities and the
Company notice of any such Event of Default actually known to the Property
Trustee, unless such Event of Default shall have been cured or waived.

Unless an Event of Default shall have occurred and be continuing, the
Property Trustee may be removed at any time by act of the Holder of the Common
Securities. If an Event of Default has occurred and is continuing, the Property
Trustee may be removed at such time by act of the Holders of QUIPS having a
majority of the liquidation preference of the QUIPS. No resignation or removal
of the Property Trustee and no appointment of a successor trustee shall be
effective until the acceptance of appointment by the successor Property Trustee
in accordance with the provisions of the Trust Agreement. (Section 8.10).

If an Event of Default described above has not occurred solely by reason of
the requirement that time lapse or notice be given, and is continuing, the QUIPS
shall have a preference over the Common Securities upon termination of TU
Electric Capital as described above. See "Liquidation Distribution upon
Termination."

MERGER OR CONSOLIDATION OF THE PROPERTY TRUSTEE OR THE DELAWARE TRUSTEE

Any entity into which the Property Trustee or the Delaware Trustee may be
merged or with which it may be consolidated, or any entity resulting from any
merger, conversion or consolidation to which the Property Trustee or the
Delaware Trustee shall be a party, or any entity succeeding to all or
substantially all the corporate trust business of the Property Trustee or the
Delaware Trustee, shall be the successor to the Property Trustee or the Delaware
Trustee under the Trust Agreement, provided such entity shall be otherwise
qualified and eligible.
(Section 8.12).

BOOK-ENTRY ONLY ISSUANCE -- THE DEPOSITORY TRUST COMPANY

The Depository Trust Company (DTC) will act as securities depositary for
the QUIPS. The QUIPS will be issued only as fully-registered securities
registered in the name of Cede & Co. (DTC's nominee). One or more
fully-registered global QUIPS certificates, representing the total aggregate
number of QUIPS, will be issued and will be deposited with DTC.

DTC is a limited-purpose trust company organized under the New York Banking
Law, a "banking organization" within the meaning of the New York Banking Law, a
member of the Federal Reserve System, a "clearing corporation" within the
meaning of the New York Uniform Commercial Code and a "clearing agency"
registered pursuant to the provisions of Section 17A of the 1934 Act. DTC holds
securities that its participants (Participants) deposit with DTC. DTC also
facilitates the settlement among Participants of securities transactions, such
as transfers and pledges, in deposited securities through electronic
computerized book-entry changes in Participants' accounts, thereby eliminating
the need for physical movement of securities certificates. Direct Participants
include securities brokers and dealers, banks, trust companies, clearing
corporations and certain other organizations (Direct Participants). DTC is owned
by a number of its Direct Participants and by the New York Stock Exchange, the
American Stock Exchange, Inc., and the National Association of Securities
Dealers, Inc. Access to the DTC system

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is also available to others, such as securities brokers and dealers, banks and
trust companies that clear transactions through or maintain a direct or indirect
custodial relationship with a Direct Participant either directly or indirectly
(Indirect Participants). The rules applicable to DTC and its Direct Participants
and Indirect Participants (together, Participants) are on file with the
Commission.

Purchases of QUIPS within the DTC system must be made by or through Direct
Participants, which will receive a credit for the Preferred Securities on DTC's
records. The ownership interest of each actual purchaser of each Preferred
Security (Beneficial Owner) is in turn to be recorded on the Participants'
records. Beneficial Owners will not receive written confirmation from DTC of
their purchases, but Beneficial Owners are expected to receive written
confirmations providing details of the transactions, as well as periodic
statements of their holdings, from the Participants through which the Beneficial
Owners purchased QUIPS. Transfers of ownership interests in the QUIPS are to be
accomplished by entries made on the books of Participants acting on behalf of
Beneficial Owners. Beneficial Owners will not receive certificates representing
their ownership interests in the QUIPS, except in the event that use of the
book-entry system for the QUIPS is discontinued.

To facilitate subsequent transfers, all the QUIPS deposited by Direct
Participants with DTC are registered in the name of DTC's nominee, Cede & Co.
The deposit of QUIPS with DTC and their registration in the name of Cede & Co.
effect no change in beneficial ownership. DTC has no knowledge of the actual
Beneficial Owners of the QUIPS; DTC's records reflect only the identity of the
Direct Participants to whose accounts such QUIPS are credited, which may or may
not be the Beneficial Owners. The Participants will remain responsible for
keeping account of their holdings on behalf of their customers.

Conveyance of notices and other communications by DTC to Direct
Participants, by Direct Participants to Indirect Participants and by
Participants to Beneficial Owners will be governed by arrangements among them,
subject to any statutory or regulatory requirements that may be in effect from
time to time.

Redemption notices shall be sent to Cede & Co. If less than all of the
QUIPS are being redeemed, DTC's practice is to determine by lot the amount of
the interest of each Direct Participant in such issue to be redeemed.

Although voting with respect to the QUIPS is limited, in those cases where
a vote is required, neither DTC nor Cede & Co. will itself consent or vote with
respect to QUIPS. Under its usual procedures, DTC would mail an Omnibus Proxy to
TU Electric Capital as soon as possible after the record date. The Omnibus Proxy
assigns Cede & Co. consenting or voting rights to those Direct Participants to
whose accounts the QUIPS are credited on the record date (identified in a
listing attached to the Omnibus Proxy). The Company and TU Electric Capital
believe that the arrangements among DTC, Direct and Indirect Participants, and
Beneficial Owners will enable the Beneficial Owners to exercise rights
equivalent in substance to the rights that can be directly exercised by a holder
of a beneficial interest in TU Electric Capital.

Distribution payments on the QUIPS will be made to DTC. DTC's practice is
to credit Direct Participants' accounts on the relevant payment date in
accordance with their respective holdings shown on DTC's records unless DTC has
reason to believe that it will not receive payments on such payment date.
Payments by Participants to Beneficial Owners will be governed by standing
instructions and customary practices, as is the case with securities held for
the account of customers in bearer form or registered in "street name," and such
payments will be the responsibility of such Participant and not of DTC, TU
Electric Capital or the Company, subject to any statutory or regulatory
requirements to the contrary that may be in effect from time to time. Payment of
distributions to DTC is the responsibility of TU Electric Capital, disbursement
of such payments to Direct Participants is the responsibility of DTC, and
disbursement of such payments to the Beneficial Owners is the responsibility of
Participants.

Except as provided herein, a Beneficial Owner will not be entitled to
receive physical delivery of QUIPS. Accordingly, each Beneficial Owner must rely
on the procedures of DTC to exercise any rights under the QUIPS.

DTC may discontinue providing its services as securities depositary with
respect to the QUIPS at any time by giving reasonable notice to TU Electric
Capital. Under such circumstances, in the event that a successor securities
depositary is not obtained, QUIPS certificates are required to be printed and
delivered. Additionally, the Administrative Trustees (with the consent of the
Company) may decide to discontinue use of the system of book-entry transfers
through DTC (or any successor depositary) with respect to the QUIPS. In that
event, certificates for the QUIPS will be printed and delivered.

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The information in this section concerning DTC and DTC's book-entry system
has been obtained from sources that the Company and TU Electric Capital believe
to be reliable, but neither the Company nor TU Electric Capital takes
responsibility for the accuracy thereof.

VOTING RIGHTS

Holders of Trust Securities shall be entitled to one vote for each $25 in
liquidation preferences represented by their Trust Securities in respect of any
matter as to which such Holders of Trust Securities are entitled to vote. Except
as described below and under "Amendments to the Trust Agreement," and under
DESCRIPTION OF THE GUARANTEE -- "Amendments and Assignment" and as otherwise
required by law and the Trust Agreement, the Holders of the QUIPS will have no
voting rights. (Section 6.01(a)).

So long as any Junior Subordinated Debentures are held by the Property
Trustee, the Property Trustee shall not (i) direct the time, method and place of
conducting any proceeding for any remedy available to the Debenture Trustee, or
executing any trust or power conferred on the Debenture Trustee with respect to
the Junior Subordinated Debentures, (ii) waive any past default which is
waivable under Section 6.01 of the Indenture, (iii) exercise any right to
rescind or annul a declaration that the principal of all the Junior Subordinated
Debentures shall be due and payable or (iv) consent to any amendment,
modification or termination of the Indenture or the Junior Subordinated
Debentures, where such consent shall be required, without, in each case,
obtaining the prior approval of the Holders of QUIPS having of at least 66 2/3%
of the liquidation preference amount of the outstanding QUIPS; provided,
however, that where a consent under the Indenture would require the consent of
each Holder of Junior Subordinated Debentures affected thereby, no such consent
shall be given by the Property Trustee without the prior consent of each Holder
of QUIPS. The Property Trustee shall not revoke any action previously authorized
or approved by a vote of the QUIPS. If the Property Trustee fails to enforce its
rights under the Junior Subordinated Debentures or the Trust Agreement to the
fullest extent permitted by law, a Holder of QUIPS may, after such Holder's
written request to the Property Trustee to enforce such rights, institute a
legal proceeding directly against the Company to enforce the Property Trustee's
rights under the Junior Subordinated Debentures or the Trust Agreement without
first instituting any legal proceeding against the Property Trustee or any other
person or entity. The Property Trustee shall notify all Holders of the QUIPS of
any notice of default received from the Debenture Trustee. In addition to
obtaining the foregoing approvals of the Holders of the QUIPS, prior to taking
any of the foregoing actions, the Property Trustee shall receive an opinion of
counsel experienced in such matters to the effect that TU Electric Capital will
not be classified as an association taxable as a corporation for United States
federal income tax purposes on account of such action. (Section 6.01(b)).

Any required approval of Holders of QUIPS may be given at a separate
meeting of Holders of QUIPS convened for such purpose or pursuant to written
consent. The Administrative Trustees will cause a notice of any meeting at which
Holders of QUIPS are entitled to vote, or of any matter upon which action by
written consent of such Holders is to be taken, to be given to each Holder of
QUIPS in the manner set forth in the Trust Agreement.
(Section 6.02).

No vote or consent of the Holders of QUIPS will be required for TU Electric
Capital to redeem and cancel QUIPS in accordance with the Trust Agreement.

Notwithstanding that Holders of QUIPS are entitled to vote or consent under
any of the circumstances described above, any of the QUIPS that are owned by the
Company, the Property Trustee or any affiliate of the Company or the Property
Trustee, shall, for purposes of such vote or consent, be treated as if they were
not outstanding.

Holders of the QUIPS will have no rights to appoint or remove the
Administrative Trustees, who may be appointed, removed or replaced solely by the
Company as the Holder of the Common Securities.

AMENDMENTS

The Trust Agreement may be amended from time to time by TU Electric Capital
(on approval of a majority of the Administrative Trustees) and the Company,
without the consent of any Holders of Trust Securities, (i) to cure any
ambiguity, correct or supplement any provision herein or therein which may be
inconsistent with any other provision herein or therein, or to make any other
provisions with respect to matters or questions arising under the Trust
Agreement, which shall not be inconsistent with the other provisions of the
Trust Agreement, provided,

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however, that any such amendment shall not adversely affect in any material
respect the interests of any Holder of Trust Securities or (ii) to modify,
eliminate or add to any provisions of the Trust Agreement to such extent as
shall be necessary to ensure that TU Electric Capital will not be classified for
United States federal income tax purposes as an association taxable as a
corporation at any time that any Trust Securities are outstanding or to ensure
TU Electric Capital's exemption from the status of an "investment company" under
the Investment Company Act of 1940, as amended; provided, however, that, except
in the case of clause (ii), such action shall not adversely affect in any
material respect the interests of any Holder of Trust Securities and, in the
case of clause (i), any amendments of the Trust Agreement shall become effective
when notice thereof is given to the Holders of Trust Securities.

Except as provided below, any provision of the Trust Agreement may be
amended by the Trustees and the Company with (i) the consent of Holders of Trust
Securities representing not less than a majority in liquidation preference of
the Trust Securities then outstanding and (ii) receipt by the Trustees of an
opinion of counsel to the effect that such amendment or the exercise of any
power granted to the Trustees in accordance with such amendment will not cause
TU Electric Capital to be classified for federal income tax purposes as an
association taxable as a corporation or affect TU Electric Capital's exemption
from status of an "investment company" under the Investment Company Act of 1940,
as amended.

Without the consent of each affected Holder of Trust Securities, the Trust
Agreement may not be amended to (i) change the amount or timing of any
distribution with respect to the Trust Securities or otherwise adversely affect
the amount of any distribution required to be made in respect of the Trust
Securities as of a specified date or (ii) restrict the right of a Holder of
Trust Securities to institute suit for the enforcement of any such payment on or
after such date.

CO-TRUSTEES AND SEPARATE TRUSTEE

Unless an Event of Default under the Trust Agreement shall have occurred
and be continuing, at any time or times, for the purpose of meeting the legal
requirements of the Trust Indenture Act or of any jurisdiction in which any part
of the Trust Property (as defined in the Trust Agreement) may at the time be
located, the Holder of the Common Securities and the Property Trustee shall have
power to appoint, and upon the written request of the Property Trustee, the
Company, as Depositor, shall for such purpose join with the Property Trustee in
the execution, delivery and performance of all instruments and agreements
necessary or proper to appoint one or more persons approved by the Property
Trustee either to act as co-trustee, jointly with the Property Trustee, of all
or any part of such Trust Property, or to act as separate trustee of any such
property, in either case with such powers as may be provided in the instrument
of appointment, and to vest in such person or persons in such capacity, any
property, title, right or power deemed necessary or desirable, subject to the
provisions of the Trust Agreement. If the Company, as Depositor, does not join
in such appointment within 15 days after the receipt by it of a request so to
do, or in case an Event of Default under the Indenture has occurred and is
continuing, the Property Trustee alone shall have power to make such
appointment. (Section 8.09).

FORM, EXCHANGE, AND TRANSFER

The QUIPS will be issuable only in fully registered form in units having a
liquidation preference amount of $25 and any integral multiple thereof.

At the option of the Holder, subject to the terms of the Trust Agreement,
QUIPS will be exchangeable for other QUIPS of the same series, of any authorized
denomination and of like tenor and aggregate liquidation preference.

Subject to the terms of the Trust Agreement, QUIPS may be presented for
exchange as provided above or for registration of transfer (duly endorsed or
accompanied by a duly executed instrument of transfer) at the office of the
Security Registrar or at the office of any transfer agent designated by the
Company for such purpose. The Company may designate itself the Security
Registrar. No service charge will be made for any registration of transfer or
exchange of QUIPS, but the Company may require payment of a sum sufficient to
cover any tax or other governmental charge payable in connection therewith. Such
transfer or exchange will be effected upon the Security Registrar or such
transfer agent, as the case may be, being satisfied with the documents of title
and identity of the person making the request. The Company may at any time
designate additional transfer agents or rescind the designation of any transfer
agent or approve a change in the office through which any transfer agent acts,
except that the Company will be required to maintain a transfer agent in each
place of payment for the QUIPS.

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TU Electric Capital will not be required to (i) issue, register the
transfer of, or exchange any QUIPS during a period beginning at the opening of
business 15 calendar days before the day of mailing of a notice of redemption of
any QUIPS called for redemption and ending at the close of business on the day
of such mailing or (ii) register the transfer of or exchange any QUIPS so
selected for redemption, in whole or in part, except the unredeemed portion of
any such QUIPS being redeemed in part.

REGISTRAR AND TRANSFER AGENT

Texas Utilities Services Inc. will act as registrar and transfer agent for
the QUIPS.

Registration of transfers of QUIPS will be effected without charge by or on
behalf of TU Electric Capital, but upon payment (with the giving of such
indemnity as TU Electric Capital or the Company may require) in respect of any
tax or other governmental charges which may be imposed in relation to it.

TU Electric Capital will not be required to register or cause to be
registered any transfer of QUIPS after they have been called for redemption
except the unredeemed portion of any QUIPS being redeemed in part.

CONCERNING THE PROPERTY TRUSTEE

The Property Trustee is trustee under the Company's Mortgage and Deed of
Trust with respect to substantially all the properties of the Company, which
secures the Company's first mortgage bonds. The Company maintains deposit
accounts and conducts other banking transactions with the Property Trustee in
the ordinary course of their businesses. The Property Trustee also acts as the
Guarantee Trustee under the Guarantee and the Debenture Trustee under the
Indenture.

MISCELLANEOUS

Application will be made to list the QUIPS on the New York Stock Exchange.

The Delaware Trustee will act as the resident trustee in the State of
Delaware and will have no other significant duties. The Property Trustee will
hold the Junior Subordinated Debentures on behalf of TU Electric Capital and
will maintain a payment account with respect to the Trust Securities, and will
also act as trustee under the Trust Agreement for the purposes of the Trust
Indenture Act. See "Events of Default; Notice." The Administrative Trustees will
administer the day to day operations of TU Electric Capital. See "Voting
Rights."

The Administrative Trustees are authorized and directed to conduct the
affairs of TU Electric Capital and to operate TU Electric Capital so that TU
Electric Capital will not be deemed to be an "investment company" required to be
registered under the 1940 Act or taxed as a corporation for United States
federal income tax purposes and so that the Junior Subordinated Debentures will
be treated as indebtedness of the Company for United States federal income tax
purposes. In this connection, the Administrative Trustees are authorized to take
any action, not inconsistent with applicable law, the certificate of trust or
the Trust Agreement, that the Administrative Trustees determine in their
discretion to be necessary or desirable for such purposes, as long as such
action does not materially adversely affect the interests of the Holders of the
QUIPS.

Holders of the QUIPS have no preemptive rights.

DESCRIPTION OF THE GUARANTEE

Set forth below is a summary of information concerning the Guarantee that
will be executed and delivered by the Company for the benefit of the Holders
from time to time of QUIPS. The Guarantee will be qualified as an indenture
under the Trust Indenture Act. The Bank of New York will act as Guarantee
Trustee under the Guarantee for the purposes of compliance with the Trust
Indenture Act. The terms of the Guarantee will be those set forth in such
Guarantee and those made part of such Guarantee by the Trust Indenture Act. The
summary does not purport to be complete and is subject in all respects to the
provisions of, and is qualified in its entirety by reference to, the Guarantee,
which is filed as an exhibit to the Registration Statement of which this
Prospectus forms a part,

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and the Trust Indenture Act. The Guarantee Trustee will hold the Guarantee for
the benefit of the Holders of the QUIPS.

GENERAL

The Company will fully and unconditionally agree, to the extent set forth
herein, to pay the Guarantee Payments (as defined herein) in full to the Holders
of the QUIPS (except to the extent paid by or on behalf of TU Electric Capital),
as and when due, regardless of any defense, right of set-off or counterclaim
that the Company may have or assert. The following payments with respect to the
QUIPS, to the extent not paid by or on behalf of TU Electric Capital (Guarantee
Payments), will be subject to the Guarantee (without duplication): (i) any
accrued and unpaid distributions required to be paid on the QUIPS, to the extent
TU Electric Capital has funds available therefor, (ii) the redemption price,
including all accrued and unpaid distributions, with respect to any QUIPS called
for redemption by TU Electric Capital (redemption price plus accrued and unpaid
distributions), to the extent TU Electric Capital has funds available therefor
and (iii) upon a voluntary or involuntary dissolution, winding-up or termination
of TU Electric Capital (other than in connection with a redemption of all of the
QUIPS), the lesser of (a) the aggregate of the liquidation preference and all
accrued and unpaid distributions on the QUIPS to the date of payment and (b) the
amount of assets of TU Electric Capital remaining available for distribution to
Holders of QUIPS in liquidation of TU Electric Capital. The Company's obligation
to make a Guarantee Payment may be satisfied by direct payment of the required
amounts by the Company to the Holders of QUIPS or by causing TU Electric Capital
to pay such amounts to such Holders.

The Guarantee will be a guarantee with respect to the QUIPS issued by TU
Electric Capital from the time of issuance of the QUIPS, but will not apply to
(i) any payment of distributions if and to the extent that TU Electric Capital
does not have funds available to make such payments, or (ii) collection of
payment. If the Company does not make interest payments on the Junior
Subordinated Debentures held by TU Electric Capital, TU Electric Capital will
not have funds available to pay distributions on the QUIPS. The Guarantee will
rank subordinate and junior in right of payment to all liabilities of the
Company (except those made pari passu by their terms). See "Status of the
Guarantee."

AMENDMENTS AND ASSIGNMENT

Except with respect to any changes that do not materially adversely affect
the rights of Holders of QUIPS (in which case no vote will be required), the
terms of the Guarantee may be changed only with the prior approval of the
Holders of QUIPS having at least 66 2/3% of the liquidation preference amount of
the outstanding QUIPS. All guarantees and agreements contained in the Guarantee
shall bind the successors, assigns, receivers, trustees and representatives of
the Company and shall inure to the benefit of the Holders of the QUIPS then
outstanding.

EVENTS OF DEFAULT

An event of default under the Guarantee will occur upon the failure of the
Company to perform any of its payment obligations thereunder. The Holders of
QUIPS having a majority of the liquidation preference of the QUIPS have the
right to direct the time, method and place of conducting any proceeding for any
remedy available to the Guarantee Trustee in respect of the Guarantee or to
direct the exercise of any trust or power conferred upon the Guarantee Trustee
under the Guarantee.

If the Guarantee Trustee fails to enforce the Guarantee, any Holder of
QUIPS may, enforce the Guarantee, institute a legal proceeding directly against
the Company to enforce the Guarantee Trustee's rights under such Guarantee
without first instituting a legal proceeding against TU Electric Capital, the
Guarantee Trustee or any other person or entity.

The Company will be required to provide annually to the Guarantee Trustee a
statement as to the performance by the Company of certain of its obligations
under the Guarantee and as to any default in such performance.

The Company will also be required to file annually with the Guarantee
Trustee an officer's certificate as to the Company's compliance with all
conditions under the Guarantee.

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INFORMATION CONCERNING THE GUARANTEE TRUSTEE

The Guarantee Trustee, prior to the occurrence of a default by the Company
in performance of the Guarantee, has undertaken to perform only such duties as
are specifically set forth in the Guarantee and, after default with respect to
the Guarantee, must exercise the same degree of care as a prudent individual
would exercise in the conduct of his or her own affairs. Subject to this
provision, the Guarantee Trustee is under no obligation to exercise any of the
powers vested in it by the Guarantee at the request of any Holder of QUIPS
unless it is offered reasonable indemnity against the costs, expenses and
liabilities that might be incurred thereby. See DESCRIPTION OF THE QUIPS --
"Concerning the Property Trustee."

TERMINATION OF THE GUARANTEE

The Guarantee will terminate and be of no further force and effect upon
full payment of the redemption price plus accrued and unpaid distributions of
all QUIPS, the distribution of Junior Subordinated Debentures to Holders of
QUIPS in exchange for all of the QUIPS or full payment of the amounts payable
upon liquidation of TU Electric Capital. The Guarantee will continue to be
effective or will be reinstated, as the case may be, if at any time any Holder
of QUIPS must restore payment of any sums paid under the QUIPS or the Guarantee.

STATUS OF THE GUARANTEE

The Guarantee will constitute an unsecured obligation of the Company and
will rank (i) subordinate and junior in right of payment to all liabilities of
the Company (except liabilities that may be made pari passu by their terms),
(ii) pari passu with the most senior preferred or preference stock now or
hereafter issued by the Company and with any guarantee now or hereafter entered
into by the Company in respect of any preferred or preference stock of any
affiliate of the Company and (iii) senior to the Company's common stock. The
Trust Agreement provides that each Holder of QUIPS by acceptance thereof agrees
to the subordination provisions and other terms of the Guarantee.

The Guarantee will constitute a guarantee of payment and not of collection
(i.e., the guaranteed party may institute a legal proceeding directly against
the Guarantor to enforce its rights under the Guarantee without first
instituting a legal proceeding against any other person or entity).

GOVERNING LAW

The Guarantee will be governed by and construed in accordance with the laws
of the State of New York.

DESCRIPTION OF THE JUNIOR SUBORDINATED DEBENTURES

Set forth below is a description of the specific terms of the Junior
Subordinated Debentures which TU Electric Capital will hold as trust assets. The
following description does not purport to be complete and is qualified in its
entirety by reference to the description in the Indenture between the Company
and the Trustee with respect to the Junior Subordinated Debentures (Debenture
Trustee), which is filed as an exhibit to the Registration Statement of which
this Prospectus forms a part. Whenever particular provisions or defined terms in
the Indenture are referred to herein, such provisions or defined terms are
incorporated by reference herein. Section references used herein are references
to provisions of the Indenture unless otherwise noted.

The Indenture provides for the issuance of debentures (including the Junior
Subordinated Debentures), notes or other evidence of indebtedness by the Company
(each a Debt Security) in an unlimited amount from time to time. The Junior
Subordinated Debentures constitute a separate series under the Indenture.

GENERAL

The Junior Subordinated Debentures will be limited in aggregate principal
amount to the sum of the aggregate liquidation preference amount of the QUIPS
and the consideration paid by the Company for the Common Securities. The Junior
Subordinated Debentures are unsecured, subordinated obligations of the Company
which rank junior to all of the Company's Senior Indebtedness.

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The entire outstanding principal amount of the Junior Subordinated
Debentures will become due and payable, together with any accrued and unpaid
interest thereon, including Additional Interest (as defined herein), if any, on
, . The amounts payable as principal and interest on the Junior
Subordinated Debentures will be sufficient to provide for payment of
distributions payable on the Trust Securities.

If Junior Subordinated Debentures are distributed to Holders of QUIPS in a
termination of TU Electric Capital, such Junior Subordinated Debentures will be
issued in fully registered certificated form in denominations of $25 and
integral multiples thereof and may be transferred or exchanged at the offices
described below.

Payments of principal and interest on Junior Subordinated Debentures will
be payable, the transfer of Junior Subordinated Debenture will be registrable,
and Junior Subordinated Debentures will be exchangeable for Junior Subordinated
Debentures of other denominations of a like aggregate principal amount, at the
corporate trust office of the Debenture Trustee in The City of New York;
provided that payment of interest may be made at the option of the Company by
check mailed to the address of the persons entitled thereto and that the payment
in full of principal with respect to any Junior Subordinated Debenture will be
made only upon surrender of such Junior Subordinated Debenture to the Debenture
Trustee.

OPTIONAL REDEMPTION

On or after , the Company will have the right, at any time and from time to
time, to redeem the Junior Subordinated Debentures, in whole or in part, at a
redemption price equal to 100% of the principal amount of the Junior
Subordinated Debentures being redeemed, together with any accrued but unpaid
interest, including Additional Interest, if any, to the redemption date.

If a Tax Event shall occur and be continuing, the Company shall have the
right to redeem the Junior Subordinated Debentures in whole or in part, at a
redemption price plus accrued and unpaid distributions equal to 100% of the
principal amount of Junior Subordinated Debentures then outstanding plus any
accrued and unpaid interest, including Additional Interest, if any, to the
redemption date.

For so long as TU Electric Capital is the Holder of all the outstanding
Junior Subordinated Debentures, the proceeds of any such redemption will be used
by TU Electric Capital to redeem QUIPS and Common Securities in accordance with
their terms. The Company may not redeem less than all the Junior Subordinated
Debentures unless all accrued and unpaid interest (including any Additional
Interest) has been paid in full on all outstanding Junior Subordinated
Debentures for all quarterly interest periods terminating on or prior to the
date of redemption.

Any optional redemption of Junior Subordinated Debentures shall be made
upon not less than 30 nor more than 60 days' notice from the Debenture Trustee
to the Holders of Junior Subordinated Debentures, as provided in the Indenture.
All notices of redemption shall state the redemption date, the redemption price
plus accrued and unpaid distributions, if less than all the Junior Subordinated
Debentures are to be redeemed, the identification of those to be redeemed and
the portion of the principal amount of any Junior Subordinated Debentures to be
redeemed in part; that on the redemption date, subject to the Trustee's receipt
of the redemption monies, the redemption price plus accrued and unpaid
distributions will become due and payable upon each such Junior Subordinated
Debentures to be redeemed and that interest thereon will cease to accrue on and
after said date; and the place or places where such Securities are to be
surrendered for payment of the redemption price plus accrued and unpaid
distributions.

INTEREST

The Junior Subordinated Debentures shall bear interest at the rate of % per
annum. Such interest is payable quarterly in arrears on March 31, June 30,
September 30 and December 31 of each year (each, an Interest Payment Date),
commencing , 199 , to the person in whose name each Junior Subordinated
Debenture is registered, by the close of business on the Business Day 15 days
preceding such Interest Payment Date. It is anticipated that TU Electric Capital
will be the sole Holder of the Junior Subordinated Debentures.

The amount of interest payable for any period will be computed on the basis
of a 360-day year of twelve 30-day months and for any period shorter than a full
month, on the basis of the actual number of days elapsed (Section 310). In the
event that any date on which interest is payable on the Junior Subordinated
Debentures is not a Business Day, then payment of the interest payable on such
date will be made on the next succeeding day which

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is a Business Day (and without any interest or other payment in respect of any
such delay), except that, if such Business Day is in the next succeeding
calendar year, such payment shall be made on the immediately preceding Business
Day, in each case with the same force and effect as if made on the date the
payment was originally payable (Section 113).

OPTION TO EXTEND INTEREST PAYMENT PERIOD

The Company shall have the right under the Indenture to extend the interest
payment period from time to time on the Junior Subordinated Debentures to a
period not exceeding 20 consecutive quarters during which period interest will
be compounded quarterly. At the end of an Extension Period, the Company must pay
all interest then accrued and unpaid (together with interest thereon at the rate
specified for the Junior Subordinated Debentures compounded quarterly, to the
extent permitted by applicable law). However, during any such Extension Period,
the Company shall not declare or pay any dividend or distribution (other than a
dividend or distribution in Common Stock of the Company) on, or redeem,
purchase, acquire or make a liquidation payment with respect to, any of its
capital stock, redeem any indebtedness that is pari passu with the Junior
Subordinated Debentures, or make any guarantee payments with respect to the
foregoing. Prior to the termination of any such Extension Period, the Company
may further extend the interest payment period, provided that such Extension
Period together with all such previous and further extensions thereof shall not
exceed 20 consecutive quarters at any one time or extend beyond the maturity
date of the Junior Subordinated Debentures. Any extension period with respect to
payment of interest on the Junior Subordinated Debentures, other Debt Securities
or on any similar securities will apply to all such securities and will also
apply to distributions with respect to the QUIPS and all other securities with
terms substantially the same as the QUIPS. Upon the termination of any such
Extension Period and the payment of all amounts then due, the Company may select
a new Extension Period, subject to the above requirements. No interest shall be
due and payable during an Extension Period, except at the end thereof. The
Company will give TU Electric Capital and the Debenture Trustee notice of its
election of an Extension Period prior to the earlier of (i) one Business Day
prior to the record date for the distribution which would occur but for such
election or (ii) the date the Company is required to give notice to the NYSE or
other applicable self-regulatory organization of the record date and will cause
the Trust to send notice of such election to the Holders of QUIPS.

ADDITIONAL INTEREST

So long as any QUIPS remain outstanding, if TU Electric Capital shall be
required to pay, with respect to its income derived from the interest payments
on the Junior Subordinated Debentures any amounts for or on account of any
taxes, duties, assessments or governmental charges of whatever nature imposed by
the United States, or any other taxing authority, then, in any such case, the
Company will pay as interest on such Junior Subordinated Debentures such
additional interest (Additional Interest) as may be necessary in order that the
net amounts received and retained by TU Electric Capital after the payment of
such taxes, duties, assessments or governmental charges shall result in the TU
Electric Capital's having such funds as it would have had in the absence of the
payment of such taxes, duties, assessments or governmental charges.

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DEFEASANCE

The principal amount of any series of Debt Securities issued under the
Indenture will be deemed to have been paid for purposes of the Indenture and the
entire indebtedness of the Company in respect thereof will be deemed to have
been satisfied and discharged, if there shall have been irrevocably deposited
with the Debenture Trustee or any paying agent, in trust: (a) money in an amount
which will be sufficient, or (b) in the case of a deposit made prior to the
maturity of the Junior Subordinated Debentures, Government Obligations (as
defined herein), which do not contain provisions permitting the redemption or
other prepayment thereof at the option of the issuer thereof, the principal of
and the interest on which when due, without any regard to reinvestment thereof,
will provide moneys which, together with the money, if any, deposited with or
held by the Debenture Trustee, will be sufficient, or (c) a combination of (a)
and (b) which will be sufficient, to pay when due the principal of and premium,
if any, and interest, if any, due and to become due on the Debt Securities of
such series that are outstanding. For this purpose, Government Obligations,
include direct obligations of, or obligations unconditionally guaranteed by, the
United States of America entitled to the benefit of the full faith and credit
thereof and certificates, depositary receipts or other instruments which
evidence a direct ownership interest in such obligations or in any specific
interest or principal payments due in respect thereof.

It is possible that for federal income tax purposes any deposit
contemplated in the preceding paragraph could be treated as a taxable exchange
of the Junior Subordinated Debentures outstanding for an issue of obligations of
TU Electric Capital or a direct interest in the cash and securities held by TU
Electric Capital. In that case, Holders of the Junior Subordinated Debentures
outstanding would recognize a gain or loss for federal income tax purposes, as
if their share of TU Electric Capital obligations or the cash or securities
deposited, as the case may be, had actually been received by them in exchange
for their Junior Subordinated Debentures. In addition, such Holders thereafter
would be required to include in income a share of the income, gain or loss of TU
Electric Capital. The amount so required to be included in income could be
different from the amount that would be includable in the absence of such
deposit. Prospective investors are urged to consult their own tax advisors as to
the specific consequences to them of such deposit.

SUBORDINATION

The Junior Subordinated Debentures will be subordinate and junior in right
of payment to all Senior Indebtedness of the Company as provided in the
Indenture. No payment of principal of (including redemption and sinking fund
payments), or interest on, the Junior Subordinated Debentures may be made (i)
upon the occurrence of certain events of bankruptcy, insolvency or
reorganization, (ii) if any Senior Indebtedness is not paid when due, (iii) if
any other default has occurred pursuant to which the Holders of Senior
Indebtedness have accelerated the maturity thereof and with respect to (ii) and
(iii), such default has not been cured or waived, or (iv) if the maturity of any
series of Debt Securities has been accelerated, because of an event of default
with respect thereto, which remains uncured. Upon any distribution of assets of
the Company to creditors upon any dissolution, winding-up, liquidation or
reorganization, whether voluntary or involuntary or in bankruptcy, insolvency,
receivership or other proceedings, all principal of, and premium, if any, and
interest due or to become due on, all Senior Indebtedness must be paid in full
before the Holders of the Junior Subordinated Debentures are entitled to receive
or retain any payment thereon. (Section 1502). Subject to the prior payment of
all Senior Indebtedness, the rights of the Holders of the Junior Subordinated
Debentures will be subrogated to the rights of the Holders of Senior
Indebtedness to receive payments or distributions applicable to Senior
Indebtedness until all amounts owing on the Junior Subordinated Debentures are
paid in full. (Section 1504).

The term Senior Indebtedness is defined in the Indenture to mean all
obligations (other than non-recourse obligations and the indebtedness issued
under the Indenture) of, or guaranteed or assumed by, the Company for borrowed
money, including both senior and subordinated indebtedness for borrowed money
(other than the Debt Securities), or for the payment of money relating to any
lease which is capitalized on the consolidated balance sheet of the Company and
its subsidiaries in accordance with generally accepted accounting principles as
in effect from time to time, or evidenced by bonds, debentures, notes or other
similar instruments, and in each case, amendments, renewals, extensions,
modifications and refundings of any such indebtedness or obligations, whether
existing as of the date of this Indenture or subsequently incurred by the
Company unless, in the case of any particular indebtedness, renewal, extension
or refunding, the instrument creating or evidencing the same or the assumption
or guarantee of the same expressly provides that such indebtedness, renewal,
extension or refunding is not superior

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in right of payment to or is pari passu with the Junior Subordinated Debentures;
provided that the Company's obligations under the Guarantee shall not be deemed
to be Senior Indebtedness. (Section 101).

The Indenture does not limit the aggregate amount of Senior Indebtedness
that may be issued. As of September 30, 1995, the Company had approximately $7.5
billion principal amount of indebtedness for borrowed money constituting Senior
Indebtedness. In addition, as of September 30, 1995, there were approximately
$84.610 million of contingent obligations constituting Senior Indebtedness where
there exists a financially viable and unrelated primary obligor and where the
risk of loss to Company is, in the opinion of the Company, remote.

CONSOLIDATION, MERGER, AND SALE OF ASSETS

Under the terms of the Indenture, the Company may not consolidate with or
merge into any other entity or convey, transfer or lease its properties and
assets substantially as an entirety to any entity, unless (i) the corporation
formed by such consolidation or into which the Company is merged or the entity
which acquires by conveyance or transfer, or which leases, the property and
assets of the Company substantially as an entirety shall be a entity organized
and validly existing under the laws of any domestic jurisdiction and such entity
expressly assumes the Company's obligations on all Debt Securities and under the
Indenture, (ii) immediately after giving effect to the transaction, no Event of
Default, and no event which, after notice or lapse of time or both, would become
an Event of Default, shall have occurred and be continuing, and (iii) the
Company shall have delivered to the Debenture Trustee an Officer's Certificate
and an Opinion of Counsel as provided in the Indenture (Section 1101).

EVENTS OF DEFAULT

Each of the following will constitute an Event of Default under the
Indenture with respect to the Debt Securities of any series: (a) failure to pay
any interest on the Debt Securities of such series within 30 days after the same
becomes due and payable; (b) failure to pay principal or premium, if any, on the
Debt Securities of such series when due and payable; (c) failure to perform, or
breach of, any other covenant or warranty of the Company in the Indenture (other
than a covenant or warranty of the Company in the Indenture solely for the
benefit of one or more series of Debt Securities other than such series) for 60
days after written notice to the Company by the Debenture Trustee, or to the
Company and the Debenture Trustee by the Holders of at least 33% in principal
amount of the Debt Securities of such series outstanding under the Indenture as
provided in the Indenture; (d) the entry by a court having jurisdiction in the
premises of (1) a decree or order for relief in respect of the Company in an
involuntary case or proceeding under any applicable Federal or state bankruptcy,
insolvency, reorganization or other similar law or (2) a decree or order
adjudging the Company a bankrupt or insolvent, or approving as properly filed a
petition by one or more Persons other than the Company seeking reorganization,
arrangement, adjustment or composition of or in respect of the Company under any
applicable Federal or state law, or appointing a custodian, receiver,
liquidator, assignee, trustee, sequestrator or other similar official for the
Company or for any substantial part of its property, or ordering the winding up
or liquidation of its affairs, and any such decree or order for relief or any
such other decree or order shall have remained unstayed and in effect for a
period of 90 consecutive days; and (e) the commencement by the Company of a
voluntary case or proceeding under any applicable Federal or state bankruptcy,
insolvency, reorganization or other similar law or of any other case or
proceeding to be adjudicated a bankrupt or insolvent, or the consent by it to
the entry of a decree or order for relief in respect of the Company in a case or
other similar proceeding or to the commencement of any bankruptcy or insolvency
case or proceeding against it under any applicable Federal or state law or the
filing by it of a petition or answer or consent seeking reorganization or relief
under any applicable Federal or state law, or the consent by it to the filing of
such petition or to the appointment of or taking possession by a custodian,
receiver, liquidator, assignee, trustee, sequestrator or similar official of the
Company or of any substantial part of its property, or the making by it of an
assignment for the benefit of creditors, or the admission by it in writing of
its inability to pay its debts generally as they become due, or the
authorization of such action by the Board of Directors (Section 801).

An Event of Default with respect to the Debt Securities of a particular
series may not necessarily constitute an Event of Default with respect to Debt
Securities of any other series issued under the Indenture.

If an Event of Default due to the default in payment of principal of or
interest on any series of Debt Securities or due to the default in the
performance or breach of any other covenant or warranty of the Company
applicable to the Debt Securities of such series but not applicable to all
series occurs and is continuing, then either the Trustee or the Holders of 33%
in principal amount of the outstanding Debt Securities of such series may
declare the

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principal of all of the Debt Securities of such series and interest accrued
thereon to be due and payable immediately (subject to the subordination
provisions of the Indenture). If an Event of Default due to the default in the
performance of any other covenants or agreements in the Indenture applicable to
all outstanding Debt Securities or due to certain events of bankruptcy,
insolvency or reorganization of the Company has occurred and is continuing,
either the Trustee or the Holders of not less than 33% in principal amount of
all outstanding Debt Securities, considered as one class, and not the Holders of
the Debt Securities of any one of such series may make such declaration of
acceleration (subject to the subordination provisions of the Indenture).

At any time after the declaration of acceleration with respect to the Debt
Securities of any series has been made and before a judgment or decree for
payment of the money due has been obtained, the Event or Events of Default
giving rise to such declaration of acceleration will, without further act, be
deemed to have been waived, and such declaration and its consequences will,
without further act, be deemed to have been rescinded and annulled, if

(a) the Company has paid or deposited with the Debenture Trustee a sum
sufficient to pay

(1) all overdue interest on all Debt Securities of such series;

(2) the principal of and premium, if any, on any Debt Securities of
such series which have become due otherwise than by such declaration of
acceleration and interest thereon at the rate or rates prescribed therefor in
such Debt Securities;

(3) interest upon overdue interest at the rate or rates prescribed
therefor in such Debt Securities, to the extent that payment of such interest is
lawful; and

(4) all amounts due to the Debenture Trustee under the Indenture;

(b) any other Event or Events of Default with respect to Debt Securities of
such series, other than the nonpayment of the principal of the Debt Securities
of such series which has become due solely by such declaration of acceleration,
have been cured or waived as provided in the Indenture (Section 802).

Subject to the provisions of the Indenture relating to the duties of the
Debenture Trustee in case an Event of Default shall occur and be continuing, the
Debenture Trustee will be under no obligation to exercise any of its rights or
powers under the Indenture at the request or direction of any of the Holders,
unless such Holders shall have offered to the Debenture Trustee reasonable
indemnity (Section 903). If an Event of Default has occurred and is continuing
in respect of a series of Debt Securities, subject to such provisions for the
indemnification of the Debenture Trustee, the Holders of a majority in principal
amount of the outstanding Debt Securities of such series will have the right to
direct the time, method and place of conducting any proceeding for any remedy
available to the Debenture Trustee, or exercising any trust or power conferred
on the Debenture Trustee, with respect to the Debt Securities of such series;
provided, however, that if an Event of Default occurs and is continuing with
respect to more than one series of Debt Securities, the Holders of a majority in
aggregate principal amount of the outstanding Debt Securities of all such
series, considered as one class, will have the right to make such direction, and
not the Holders of the Debt Securities of any one of such series; and provided,
further, that such direction will not be in conflict with any rule of law or
with the Indenture. (Section 812).

No Holder of Debt Securities of any series will have any right to institute
any proceeding with respect to the Indenture, or for the appointment of a
receiver or a trustee, or for any other remedy thereunder, unless (i) such
Holder has previously given to the Debenture Trustee written notice of a
continuing Event of Default with respect to the Debt Securities of such series,
(ii) the Holders of not less than a majority in aggregate principal amount of
the outstanding Debt Securities of all series in respect of which an Event of
Default shall have occurred and be continuing, considered as one class, have
made written request to the Debenture Trustee, and such Holder or Holders have
offered reasonable indemnity to the Debenture Trustee to institute such
proceeding in respect of such Event of Default in its own name as trustee and
(iii) the Debenture Trustee has failed to institute any proceeding, and has not
received from the Holders of a majority in aggregate principal amount of the
outstanding Debt Securities of such series a direction inconsistent with such
request, within 60 days after such notice, request and offer (Section 807).
However, such limitations do not apply to a suit instituted by a Holder of a
Debt Security for the enforcement of payment of the principal of or any premium
or interest on such Debt Security on or after the applicable due date specified
in such Debt Security (Section 808).

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<PAGE>

The Company will be required to furnish to the Debenture Trustee annually a
statement by an appropriate officer as to such officer's knowledge of the
Company's compliance with all conditions and covenants under the Indenture, such
compliance to be determined without regard to any period of grace or requirement
of notice under the Indenture (Section 606).

MODIFICATION AND WAIVER

Without the consent of any Holder of Debt Securities, the Company and the
Debenture Trustee may enter into one or more supplemental indentures for any of
the following purposes: (a) to evidence the assumption by any permitted
successor to the Company of the covenants of the Company in the Indenture and in
the Debt Securities; or (b) to add one or more covenants of the Company or other
provisions for the benefit of the Holders of outstanding Debt Securities or to
surrender any right or power conferred upon the Company by the Indenture; or (c)
to add any additional Events of Default with respect to outstanding Debt
Securities; or (d) to change or eliminate any provision of the Indenture or to
add any new provision to the Indenture, provided that if such change,
elimination or addition will adversely affect the interests of the Holders of
Debt Securities of any series in any material respect, such change, elimination
or addition will become effective with respect to such series only (1) when the
consent of the Holders of Debt Securities of such series has been obtained in
accordance with the Indenture, or (2) when no Debt Securities of such series
remain outstanding under the Indenture; or (e) to provide collateral security
for all but not part of the Debt Securities; (f) to establish the form or terms
of Debt Securities of any other series as permitted by the Indenture; or (g) to
provide for the authentication and delivery of bearer securities and coupons
appertaining thereto representing interest, if any, thereon and for the
procedures for the registration, exchange and replacement thereof and for the
giving of notice to, and the solicitation of the vote or consent of, the Holders
thereof, and for any and all other matters incidental thereto; or (h) to
evidence and provide for the acceptance of appointment of a successor Debenture
Trustee under the Indenture with respect to the Debt Securities of one or more
series and to add to or change any of the provisions of the Indenture as shall
be necessary to provide for or to facilitate the administration of the trusts
under the Indenture by more than one trustee; or (i) to provide for the
procedures required to permit the utilization of a noncertificated system of
registration for the Debt Securities of all or any series; or (j) to change any
place where (1) the principal of and premium, if any, and interest, if any, on
all or any series of Debt Securities shall be payable, (2) all or any series of
Debt Securities may be surrendered for registration of transfer or exchange and
(3) notices and demands to or upon the Company in respect of Debt Securities and
the Indenture may be served; or (k) to cure any ambiguity or inconsistency or to
add or change any other provisions with respect to matters and questions arising
under the Indenture, provided such changes or additions shall not adversely
affect the interests of the Holders of Debt Securities of any series in any
material respect (Section 1201).

The Holders of at least a majority in aggregate principal amount of the
Debt Securities of all series then outstanding may waive compliance by the
Company with certain restrictive provisions of the Indenture (Section 607). The
Holders of not less than a majority in principal amount of the outstanding Debt
Securities of any series may waive any past default under the Indenture with
respect to such series, except a default in the payment of principal, premium,
or interest and certain covenants and provisions of the Indenture that cannot be
modified or be amended without the consent of the Holder of each outstanding
Debt Security of such series affected (Section 813).

Without limiting the generality of the foregoing, if the Trust Indenture
Act is amended after the date of the Indenture in such a way as to require
changes to the Indenture or the incorporation therein of additional provisions
or so as to permit changes to, or the elimination of, provisions which, at the
date of the Indenture or at any time thereafter, were required by the Trust
Indenture Act to be contained in the Indenture, the Indenture will be deemed to
have been amended so as to conform to such amendment of the Trust Indenture Act
or to effect such changes, additions or elimination, and the Company and the
Debenture Trustee may, without the consent of any Holders, enter into one or
more supplemental indentures to evidence or effect such amendment (Section
1201).

Except as provided above, the consent of the Holders of not less than a
majority in aggregate principal amount of the Debt Securities of all series then
outstanding, considered as one class, is required for the purpose of adding any
provisions to, or changing in any manner, or eliminating any of the provisions
of, the Indenture or modifying in any manner the rights of the Holders of such
Debt Securities under the Indenture pursuant to one or more supplemental
indentures; provided, however, that if less than all of the series of Debt
Securities outstanding are directly affected by a proposed supplemental
indenture, then the consent only of the Holders of a majority in aggregate
principal amount of outstanding Debt Securities of all series so directly
affected, considered as one class,

- 29 -

<PAGE>

will be required; and provided further, that no such amendment or modification
may (a) change the Stated Maturity of the principal of, or any installment of
principal of or interest on, any Debt Security, or reduce the principal amount
thereof or the rate of interest thereon (or the amount of any installment of
interest thereon) or change the method of calculating such rate or reduce any
premium payable upon the redemption thereof, or change the coin or currency (or
other property) in which any Debt Security or any premium or the interest
thereon is payable, or impair the right to institute suit for the enforcement of
any such payment on or after the Stated Maturity of any Debt Security (or, in
the case of redemption, on or after the redemption date) without, in any such
case, the consent of the Holder of such Debt Security, (b) reduce the percentage
in principal amount of the outstanding Debt Security of any series, (or, if
applicable, in liquidation preference of QUIPS) the consent of the Holders of
which is required for any such supplemental indenture, or the consent of the
Holders of which is required for any waiver of compliance with any provision of
the Indenture or any default thereunder and its consequences, or reduce the
requirements for quorum or voting, without, in any such case, the consent of the
Holder of each outstanding Debt Security of such series, or (c) modify certain
of the provisions of the Indenture relating to supplemental indentures, waivers
of certain covenants and waivers of past defaults with respect to the Debt
Security of any series, without the consent of the Holder of each outstanding
Junior Subordinated Debenture affected thereby. A supplemental indenture which
changes or eliminates any covenant or other provision of the Indenture which has
expressly been included solely for the benefit of one or more particular series
of Debt Securities, or modifies the rights of the Holders of Debt Securities of
such series with respect to such covenant or other provision, will be deemed not
to affect the rights under the Indenture of the Holders of the Debt Securities
of any other series (Section 1202).

The Indenture provides that in determining whether the Holders of the
requisite principal amount of the outstanding Debt Securities have given any
request, demand, authorization, direction, notice, consent or waiver under the
Indenture, or whether a quorum is present at the meeting of the Holders of Debt
Securities, Debt Securities owned by the Company or any other obligor upon the
Debt Securities or any affiliate of the Company or of such other obligor (unless
the Company, such affiliate or such obligor owns all Debt Securities outstanding
under the Indenture, determined without regard to this provision) shall be
disregarded and deemed not to be outstanding.

If the Company shall solicit from Holders any request, demand,
authorization, direction, notice, consent, election, waiver or other Act, the
Company may, at its option, fix in advance a record date for the determination
of Holders entitled to give such request, demand, authorization, direction,
notice, consent, waiver or other such act, but the Company shall have no
obligation to do so. If such a record date is fixed, such request, demand,
authorization, direction, notice, consent, waiver or other Act may be given
before or after such record date, but only the Holders of record at the close of
business on such record date shall be deemed to be Holders for the purposes of
determining whether Holders of the requisite proportion of the outstanding Debt
Securities have authorized or agreed or consented to such request, demand,
authorization, direction, notice, consent, waiver or other Act, and for that
purpose the outstanding Debt Securities shall be computed as of the record date.
Any request, demand, authorization, direction, notice, consent, election, waiver
or other Act of a Holder shall bind every future Holder of the same Debt
Security and the Holder of every Debt Security issued upon the registration of
transfer thereof or in exchange therefor or in lieu thereof in respect of
anything done, omitted or suffered to be done by the Debenture Trustee or the
Company in reliance thereon, whether or not notation of such action is made upon
such Debt Security (Section 104).

RESIGNATION OF DEBENTURE TRUSTEE

The Debenture Trustee may resign at any time by giving written notice
thereof to the Company or may be removed at any time by Act of the Holders of a
majority in principal amount of all series of Debt Securities then outstanding
delivered to the Debenture Trustee and the Company. No resignation or removal of
the Debenture Trustee and no appointment of a successor trustee will become
effective until the acceptance of appointment by a successor trustee in
accordance with the requirements of the Indenture. So long as no Event of
Default or event which, after notice or lapse of time, or both, would become an
Event of Default has occurred and is continuing and except with respect to a
Debenture Trustee appointed by Act of the Holders, if the Company has delivered
to the Debenture Trustee a resolution of its Board of Directors appointing a
successor trustee and such successor has accepted such appointment in accordance
with the terms of the Indenture, the Trustee will be deemed to have resigned and
the successor will be deemed to have been appointed as trustee in accordance
with the Indenture (Section 910).

- 30 -

<PAGE>

NOTICES

Notices to Holders of Debt Securities will be given by mail to the
addresses of such Holders as they may appear in the security register therefor.

TITLE

The Company, the Debenture Trustee, and any agent of the Company or the
Debenture Trustee, may treat the Person in whose name Debt Securities are
registered as the absolute owner thereof (whether or not such Debt Securities
may be overdue) for the purpose of making payments and for all other purposes
irrespective of notice to the contrary.

GOVERNING LAW

The Indenture and the Debt Securities will be governed by, and construed in
accordance with, the laws of the State of New York.

REGARDING THE DEBENTURE TRUSTEE

The Debenture Trustee under the Indenture is The Bank of New York. In
addition to acting as Debenture Trustee under the Indenture, The Bank of New
York acts as trustee under the Company's Mortgage and Deed of Trust with respect
to substantially all the properties of the Company, which secures the Company's
first mortgage bonds. In addition, The Bank of New York acts as Property Trustee
under the Trust Agreement and as Guarantee Trustee under the Guarantee and in
the same capacities in respect of other trust subsidiaries of the Company. The
Bank of New York (Delaware) acts as the Delaware Trustee under the Trust
Agreement. See DESCRIPTION OF THE QUIPS -- "Concerning the Property Trustee."

CERTAIN UNITED STATES FEDERAL INCOME TAX CONSEQUENCES

The following summary describes certain United States federal income tax
consequences of the ownership of QUIPS as of the date hereof and represents the
opinion of Reid & Priest LLP, counsel to the Company, insofar as it relates to
matters of law or legal conclusions. Except where noted, it deals only with
QUIPS held as capital assets and does not deal with special situations, such as
those of dealers in securities or currencies, financial institutions, life
insurance companies, persons holding QUIPS as a part of a hedging or conversion
transaction or a straddle, United States Holders (as defined herein) whose
"functional currency" is not the U.S. dollar, or persons who are not United
States Holders. In addition, this discussion does not address the tax
consequences to persons who purchase QUIPS other than pursuant to their initial
issuance and distribution. Furthermore, the discussion below is based upon the
provisions of the Internal Revenue Code of 1986, as amended (Code), and
regulations, rulings and judicial decisions thereunder as of the date hereof,
and such authorities may be repealed, revoked or modified so as to result in
federal income tax consequences different from those discussed below.

PROSPECTIVE PURCHASERS OF QUIPS, INCLUDING PERSONS WHO ARE NOT UNITED
STATES HOLDERS AND PERSONS WHO PURCHASE QUIPS IN THE SECONDARY MARKET, ARE
ADVISED TO CONSULT WITH THEIR TAX ADVISORS AS TO THE UNITED STATES FEDERAL
INCOME TAX CONSEQUENCES OF THE OWNERSHIP AND DISPOSITION OF QUIPS IN LIGHT OF
THEIR PARTICULAR CIRCUMSTANCES, AS WELL AS THE EFFECT OF ANY STATE, LOCAL OR
OTHER TAX LAWS.

UNITED STATES HOLDERS

As used herein, a "United States Holder" means a Holder that is a citizen
or resident of the United States, a corporation, partnership or other entity
created or organized in or under the laws of the United States or any political
subdivision thereof, or an estate or trust the income of which is subject to
United States federal income taxation regardless of its source.

- 31 -

<PAGE>

CLASSIFICATION OF TU ELECTRIC CAPITAL

Reid & Priest LLP, special counsel to the Company and TU Electric Capital,
is of the opinion that, under current law and assuming full compliance with the
terms of the Indenture and the instruments establishing TU Electric Capital (and
certain other documents), TU Electric Capital will be classified as a "grantor
trust" for federal income tax purposes and will not be classified as an
association taxable as a corporation. Each Holder will be treated as owning an
undivided beneficial interest in the Junior Subordinated Debentures.
Accordingly, each Holder will be required to include in its gross income the OID
accrued with respect to its allocable share of Junior Subordinated Debentures as
described below. Investors should be aware that the opinion of Reid & Priest LLP
does not address any other issue and is not binding on the Internal Revenue
Service or the courts.

CLASSIFICATION OF THE JUNIOR SUBORDINATED DEBENTURES

Based on the advice of its counsel, the Company believes and intends to
take the position that the Junior Subordinated Debentures will constitute
indebtedness for United States federal income tax purposes. No assurance can be
given that such position will not be challenged by the Internal Revenue Service
or, if challenged, that such a challenge will not be successful. By purchasing
and accepting QUIPS, each Holder covenants to treat the Junior Subordinated
Debentures as indebtedness and the QUIPS as evidence of an indirect beneficial
ownership in the Junior Subordinated Debentures. The remainder of this
discussion assumes that the Junior Subordinated Debentures will be classified as
indebtedness of the Company for United States federal income tax purposes.

ORIGINAL ISSUE DISCOUNT

Under the terms of the Junior Subordinated Debentures, the Company has the
option to defer payments of interest for up to 20 consecutive quarterly
distribution payment periods and to pay as a lump sum at the end of such period
all of the interest that has accrued during such period. During any such
Extension Period, distributions on the QUIPS will also be deferred. Because of
this option to extend the interest payment periods, all of the stated
distribution payments on the QUIPS will be treated as OID. As a result, United
States Holders will be required to accrue interest income even if they use the
cash method of tax accounting. In the event of an Extension Period, a United
States Holder will be required to continue to include OID in income on an
economic accrual basis notwithstanding that TU Electric Capital will not make
any distribution payments on the QUIPS during such Extension Period.

RECEIPT OF JUNIOR SUBORDINATED DEBENTURES OR CASH UPON LIQUIDATION OF TU
ELECTRIC CAPITAL

Under certain circumstances, as described under the caption DESCRIPTION OF
THE QUIPS -- "Tax Event Redemption on Distribution," Junior Subordinated
Debentures may be distributed to Holders of QUIPS in exchange for the QUIPS and
in liquidation of TU Electric Capital. Under current law, for United States
federal income tax purposes, such a distribution would be treated as a
non-taxable event to each United States Holder, and each United States Holder
would receive an aggregate tax basis in the Junior Subordinated Debentures equal
to such Holder's aggregate tax basis in its QUIPS. A United States Holder's
holding period for the Junior Subordinated Debentures received in liquidation of
TU Electric Capital would include the period during which such Holder held the
QUIPS.

Under certain circumstances, as described under the caption DESCRIPTION OF
THE QUIPS -- "Redemption of QUIPS," the Junior Subordinated Debentures may be
redeemed for cash and the proceeds of such redemption distributed to Holders of
QUIPS in redemption of the QUIPS. Under current law, such a redemption would,
for United States federal income tax purposes, constitute a taxable disposition
of the QUIPS, and a Holder would recognize gain or loss as if such Holder had
sold such redeemed QUIPS. See "Sale, Exchange and Redemption of the QUIPS."

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<PAGE>

SALE, EXCHANGE AND REDEMPTION OF THE QUIPS

Upon the sale, exchange or redemption of QUIPS, a United States Holder will
recognize gain or loss equal to the difference between the amount realized upon
the sale, exchange or redemption and such Holder's adjusted tax basis in the
QUIPS. A United States Holder's adjusted tax basis will, in general, be the
issue price of the QUIPS, increased by the OID previously included in income by
the United States Holder and reduced by any distributions on the QUIPS. Such
gain or loss will be capital gain or loss and will be long-term capital gain or
loss if at the time of sale, exchange or redemption, the QUIPS have been held
for more than one year. Under current law, net capital gains of individuals are,
under certain circumstances, taxed at lower rates than items of ordinary income.
The deductibility of capital losses is subject to limitations.

INFORMATION REPORTING AND BACKUP WITHHOLDING

Subject to the qualification discussed below, income on the QUIPS will be
reported to holders on Forms 1099, which should be mailed to such holders by
January 31 following each calendar year.

TU Electric Capital will be obligated to report annually to Cede & Co., as
holder of record of the QUIPS, the OID related to the Junior Subordinated
Debentures that accrued during the year. TU Electric Capital currently intends
to report such information on Form 1099 prior to January 31, following each
calendar year. The Underwriters have indicated to TU Electric Capital that, to
the extent that they hold QUIPS as nominees for beneficial holders, they
currently expect to report the OID that accrued during the calendar year on such
QUIPS to such beneficial holders on Forms 1099 by January 31 following each
calendar year. Under current law, holders of QUIPS who hold as nominees for
beneficial holders will not have any obligation to report information regarding
the beneficial holders to TU Electric Capital. TU Electric Capital, moreover,
will not have any obligation to report to beneficial holders who are not also
record holders. Thus, beneficial holders of QUIPS who hold their QUIPS through
the Underwriters will receive Forms 1099 reflecting the income on their QUIPS
from such nominee holders rather than from TU Electric Capital.

Payments made in respect of, and proceeds from the sale of, QUIPS (or
Junior Subordinated Debentures distributed to holders of QUIPS) may be subject
to "backup" withholding tax of 31% unless the holder complies with certain
identification requirements or fails to report in full dividend and interest
income. Any withheld amounts will be allowed as a refund or a credit against the
holder's United Stated federal income tax liability, provided the required
information is provided to the Internal Revenue Service.

These information reporting and backup withholding tax rules are subject to
temporary Treasury Regulations. Accordingly, the application of such rules to
the QUIPS could be changed.

EXPERTS

The financial statements and financial statement schedules included in the
1994 10-K, incorporated herein by reference, have been audited by Deloitte &
Touche LLP, Independent Auditors, as stated in their report included in such
1994 10-K, and have been incorporated by reference herein in reliance upon such
report given upon the authority of that firm as experts in accounting and
auditing.

With respect to the unaudited interim financial information included in the
Company's Quarterly Reports on Form 10-Q incorporated herein by reference,
Deloitte & Touche LLP has applied limited procedures in accordance with
professional standards for reviews of such information. However, as stated in
any of their reports that are included in the Company's Quarterly Reports on
Form 10-Q, incorporated herein by reference, they did not audit and they do not
express an opinion on that interim financial information. Deloitte & Touche LLP
is not subject to the liability provisions of Section 11 of the 1933 Act for any
of its reports on such unaudited interim financial information because those
reports are not "reports" or a "part" of the Registration Statement filed under
the 1933 Act with respect to the QUIPS prepared or certified by an accountant
within the meaning of Sections 7 and 11 of the 1933 Act.

The statements made in the Company's latest Annual Report on Form 10-K
under Part I, Item 1 -- Business- Regulation and Rates and Environmental
Matters, incorporated herein by reference, have been reviewed by Worsham,
Forsythe & Wooldridge, L.L.P., Dallas, Texas, General Counsel for the Company.
All of such

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<PAGE>

statements are set forth or incorporated by reference herein in reliance upon
the opinion of that firm given upon their authority as experts. At June 30,
1995, members of the firm of Worsham, Forsythe & Wooldridge, L.L.P. owned
approximately 47,000 shares of the common stock of Texas Utilities. Statements
as to United States federal income taxation under CERTAIN UNITED STATES FEDERAL
INCOME TAX CONSEQUENCES herein have been passed upon for the Company and TU
Electric Capital by Reid & Priest LLP, New York, New York, of counsel to the
Company.

LEGALITY

Certain matters of Delaware law relating to the validity of the QUIPS, the
enforceability of the Trust Agreement and the creation of TU Electric Capital
are being passed upon by Richards, Layton & Finger, Special Delaware counsel for
the Company and TU Electric Capital. The legality of the other securities
offered hereby will be passed upon for the Company and TU Electric Capital by
Worsham, Forsythe & Wooldridge, L.L.P. and by Reid & Priest LLP, and for the
Underwriters by Winthrop, Stimson, Putnam & Roberts, New York, New York.
However, all matters pertaining to incorporation of the Company and all other
matters of Texas law will be passed upon only by Worsham, Forsythe & Wooldridge,
L.L.P.

UNDERWRITING

Subject to the terms and conditions of the Underwriting Agreement, the
Company and TU Electric Capital have agreed that TU Electric Capital will issue
and sell to each of the Underwriters named below, and each of the Underwriters,
for whom Goldman, Sachs & Co., and are acting as Representatives, has severally
agreed to purchase from TU Electric Capital the respective number of QUIPS set
forth opposite its name below:

Number of
Underwriters QUIPS
------------ ---------
Goldman, Sachs & Co.................................

Total............................................... ============

Suject to the terms and conditions of the Underwriting Agreement, the
Underwriters are committed to take and pay for all the QUIPS offered hereby, if
any are taken.

The Underwriters propose to offer the QUIPS in part directly to the public
at the initial public offering price set forth on the cover page of this
Prospectus, and in part to certain securities dealers at such price less a
concession of $. per unit of QUIPS. The Underwriters may allow, and such dealers
may reallow, a concession not in excess of $. per unit of QUIPS to certain
brokers and dealers. After the QUIPS are released for sale to the public, the
offering price and other selling terms may from time to time be varied by the
Representatives.

In view of the fact that the proceeds of the sale of the QUIPS will be used
to purchase the Junior Subordinated Debentures, the Underwriting Agreement
provides that the Company will pay as compensation, for the Underwriters'
arranging the investment therein of such proceeds, an amount of $ per unit of
QUIPS for the accounts of the several Underwriters.

Prior to this offering, there has been no public market for the QUIPS.
Application will be made to list the QUIPS on the NYSE. In order to meet one of
the requirements for listing the QUIPS on the NYSE, the Underwriters will
undertake to sell lots of 100 or more QUIPS to a minimum of 400 beneficial
holders. Trading of the QUIPS on the NYSE is expected to commence within a
seven-day period after the initial delivery of the QUIPS. The Representatives
have advised the Company that they intend to make a market in the QUIPS prior to
commencement of trading on the NYSE, but are not obligated to do so and may
discontinue any such market making at any time without notice.

The Company and TU Electric Capital have agreed to indemnify the
Underwriters against certain liabilities, including liabilities under the 1933
Act.

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<PAGE>

Goldman, Sachs & Co. is acting as dealer manager in a pending exchange
offer by the Company and engages in transactions with, and from time to
time has performed services for, the Company in the ordinary course of
business.

- 35 -

<PAGE>

================================================================================ =============================================

<S> <C>
No person has been authorized to give any information or to make any
representations other than those contained in this Prospectus and, if given or
made, such information or representations must not be relied upon as having been -------------
authorized. This Prospectus does not constitute an offer to sell or the
solicitation of an offer to buy any securities other than the securities QUIPS
described in this Prospectus or an offer to sell or the solicitation of any
offer to buy such securities in any circumstances in which such offer or TU ELECTRIC CAPITAL III
solicitation is unlawful. Neither the delivery of this Prospectus nor any sale
made hereunder shall, under any circumstances, create any implication that the CUMULATIVE
information contained herein or therein is correct as of any time subsequent to QUARTERLY INCOME PREFERRED
the date of such information. SECURITIES

------------------------ GUARANTEED TO THE EXTENT
SET FORTH HEREIN BY

TABLE OF CONTENTS TEXAS UTILITIES
Page ELECTRIC COMAPNY
----
Incorporation of Certain Documents
by Reference......................................................... 2

Available Information.................................................. 2

Prospectus Summary..................................................... 4

Risk Factors........................................................... 6 -------------------

The Company............................................................ 9 PROSPECTUS

TU Electric Capital.................................................... 9 -------------------

Summary Financial Information......................................... 10

Rate Proceedings...................................................... 11 GOLDMAN, SACHS & CO.
--------------------
Use of Proceeds....................................................... 12 --------------------
--------------------
Description of the QUIPS.............................................. 12 --------------------
REPRESENTATIVES OF THE UNDERSRITERS
Description of the Guarantee.......................................... 21

Description of the Junior Subordinated
Debentures........................................................... 23

Certain United States Federal Income
Tax Consequences.................................................... 31

Experts............................................................... 33

Legality.............................................................. 33

Underwriting.......................................................... 34

========================================================================== ===================================================

</TABLE>

<PAGE>

PART II.

INFORMATION NOT REQUIRED IN PROSPECTUS

ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.

The following table sets forth the expenses payable by the Company in
connection with the issuance and distribution of the securities to be
registered.

Filing fee - Securities and Exchange Commission.......... $40,000.00
Fees of the Trustee...................................... 35,000.00*
Fees of Company's counsel
Worsham, Forsythe & Wooldridge, L.L.P................ 75,000.00*
Reid & Priest LLP.................................... 75,000.00*
Richards, Layton & Finger............................ 25,000.00*
Auditors' fees........................................... 25,000.00*
Rating agencies' fees.................................... 120,000.00*
Printing, including Registration Statement,
prospectuses, exhibits, etc.......................... 25,000.00*
Miscellaneous............................................ 25,000.00*
-----------
Total expenses........................................... $445,000.00*
===========

- ------------------

* Estimated.

ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.

Article IX of the Restated Articles of Incorporation-of-the-Company
provides as follows:

"The Corporation shall reimburse or indemnify any former, present or
future director, officer or employee of the Corporation, or any person who
mayShaveUserved at its request as a director, officer or employee of
another corporation, or any former, present or future director, officer or
employee of the Corporation who shall have served or
shall be serving as an administrator, agent or fiduciary for the
Corporation or for another corporation at the request of the Corporation
(and his heirs, executors and administrators) from and against all expenses
and liabilities incurred by him or them, or imposed on him or them,
including, but not limited to, judgments, settlements, court costs and
attorneys' fees, in connection with, or arising out of, the defense of any
action, suit or proceeding in which he may be involved by reason of his
being or having been such director, officer or employee, except with
respect to matters as to which he shall be adjudged in such action, suit or
proceedingmto,bealiableCbecause he did not act in good faith, or because of
dishonesty or conflict of interest in the performance of his duty.

"No former, present or future director, officer or employee of the
Corporation (or his heirs, executors and administrators) shall be liable
for any act, omission, step or conduct taken or had in good faith, which is
required, authorized or approvedebyaanyeordertor ordersrissued pursuant to
the Public Utility Holding Company Act of 1935, the Federal Power Act, or
any other federal or state statute regulating the Corporation or its
subsidiaries, or any amendments to any thereof. In any action, suit or
proceeding based on any act, omission, step or conduct, as in this
paragraph described, the provisions hereof shall be brought to the
attention of the court. In the event that the foregoing provisions of this
paragraph are found by the court not to constitute a valid defense, each
such director, officer or employee (and his heirs, executors and
administrators) shall be reimbursed for, or indemnified against, all
expenses and liabilities incurred by him or them, or imposed on him or
them, including, but not limited to, judgments, settlements, court costs
and attorneys' fees, in connection with, or arising out of, any such
action, suit or proceeding based on any act, omission, step or conduct
taken or had in good faith as in this paragraph described.

"The foregoing rights shall not be exclusive of other rights to which
any such director, officer or employee (or his heirs, executors and
administrators) may otherwise be entitled under any bylaw, agreement, vote
of shareholders or otherwise, and shall be available whether or not the
director, officer or employee continues to be a director, officer or
employee at the time of incurring such expenses and liabilities. In
furtherance, and not in limitation of the foregoing provisions of this
Article IX, the Corporation may indemnify

II-1

<PAGE>

and insure any such persons to the fullest extent permitted by the Texas
Business Corporation Act, as amended from time to time, or the laws of the
State of Texas, as in effect from time to time."

Article 2.02-1 of the Texas Business Corporation Act permits the Company,
in certain circumstances, to indemnify any present or former director, officer,
employee or agent of the Company against judgments, penalties, fines,
settlements and reasonable expenses incurred in connection with a proceeding in
which any such person was, is or is threatened to be, made a party by reason of
holding such office or position, but only to a limited extent for obligations
resulting from a proceeding in which the person is found liable on the basis
that a personal benefit was improperly received or in circumstances in which the
person is found liable in a derivative suit brought on behalf of the Company.

Article X of the Articles of Incorporation of the Company provides as
follows:

"A director of the Corporation shall not be liable to the
Corporation or its shareholders for monetary damages for any act or
omission in the director's capacity as a director, except that this
provision does not eliminate or limit the liability of a director for:

(a) a breach of a director's duty of loyalty to the
Corporation or its shareholders;

(b) an act or omission not in good faith that constitutes a
breach of duty of a director to the Corporation or an act or omission that
involved intentional misconduct or a knowing violation of the law;

(c) a transaction from which a director received an improper
benefit, whether or not the benefit resulted from an action taken within
the scope of the director's office; or

(d) an act or omission for which the liability of a
director is expressly provided for by statute.

If the laws of the State of Texas are amended to authorize action further
eliminating or limiting the personal liability of directors, then the
liability of a director of the Corporation shall be eliminated or limited
to the fullest extent permitted by such laws as so amended. Any repeal or
modification of this Article X shall not adversely affect any right of
protection of a director of the Corporation existing at the time of such
repeal or modification."

Section 18 of the Company's bylaws provides as follows:

"Section 18. Insurance, Indemnification and Other
Arrangements. Without further specific approval of the shareholders of the
Corporation, the Corporation may purchase, enter into, maintain or provide
insurance, indemnification or other arrangements for the benefit of any
person who is or was a director, officer, employee or agent of the
Corporation or is or was serving another entity at the request of the
Corporation as a director, officer, employee, agent or otherwise, to the
fullest extent permitted by the laws of the State of Texas, including
without limitation Art. 2.02-1 of the Texas Business Corporation Act or any
successor provision, against any liability asserted against or incurred by
any such person in any such capacity or arising out of such person's
service in such capacity whether or not the Corporation would otherwise
have the power to indemnify against any such liability under the Texas
Business Corporation Act. If the laws of the State of Texas are amended to
authorize the purchase, entering into, maintaining or providing of
insurance, indemnification or other arrangements in the nature of those
permitted hereby to a greater extent than presently permitted, then the
Corporation shall have the power and authority to purchase, enter into,
maintain and provide any additional arrangements in such regard as shall be
permitted from time to time by the laws of the State of Texas without
further approval of the shareholders of the Corporation. No repeal or
modification of such laws or this Section 18 shall adversely affect any
such arrangement or right to indemnification existing at the time of such
repeal or modification."

The Company has entered into agreements with its officers and directors
which provide, among other things, for their indemnification by the Company to
the fullest extent permitted by Texas law, unless a final adjudication
establishes that the indemnitee's acts were committed in bad faith, were the
result of active and deliberate dishonesty or that the indemnitee personally
gained a financial profit to which the indemnitee was not legally entitled.
These agreements further provide, under certain circumstances, for the
advancement of expenses and the implementation of other arrangements for the
benefit of the indemnitee.

The Company has insurance covering its expenditures which might arise in
connection with its lawful indemnification of its directors and officers for
their liabilities and expenses. Directors and officers of the Company also have
insurance which insures them against certain other liabilities and expenses.

II-2

<PAGE>

Item 16. Exhibits.

Previously Filed*
----------------------
With
File As
Exhibit Number Exhibit
- ------- ------- -------

1(a) -- Form of Underwriting Agreement.
3(a) 0-11442 3(a) -- Restated Articles of Incorporation of the
Company
Form 10-K
1993
3(b) 33-64694 4(c) -- Bylaws of the Company, as amended.

3(c) -- Trust Agreement relating to the QUIPS.
4(a) -- Form of Amended and Restated Trust Agreement
relating to the QUIPS.
4(b) 33-63031 4(b) -- Form of Indenture relating to the Junior
Subordinated Debentures.
4(c) -- Form of Guarantee Agreement.
4(d) -- Form of Agreement as to Expenses and
Liabilities.
4(e) -- Form of Officers' Certificate establishing
Debentures.
4(f) -- Form of QUIPS.
5(a) -- Opinion of Worsham, Forsythe & Wooldridge,
L.L.P., General Counsel for the Company.
5(b)
and 8 -- Opinion of Reid & Priest LLP, of counsel to
the Company.
5(c) -- Opinion of Richards, Layton & Finger,
Special Delaware Counsel to the Company and
TU Electric Capital.
12(a) 33-63031 12(a) -- Computation of Ratio of Earnings to Fixed
Charges of the Company.
12(b) 33-63031 12(b) -- Computation of Ratio of Earnings to Fixed
Charges and Preferred Dividends of the
Company.
15 -- Letter of Deloitte & Touche LLP regarding
unaudited condensed interim financial
information.
23(a) -- Independent Auditors' Consent.
23(b) -- Consents of Worsham, Forsythe & Wooldridge,
L.L.P., Reid & Priest LLP and Richards,
Layton & Finger are contained in Exhibits
5(a), 5(b) and 5(c), respectively.
24 -- Power of Attorney.
25(a) -- Statement on Form T-1 of The Bank of New
York relating to Amended and Restated Trust
Agreement.
25(b) -- Statement on Form T-1 of The Bank of New
York relating to Indenture.
25(c) -- Statement on Form T-1 of The Bank of New
York relating to Guarantee Agreement.
- ---------------------------

*Incorporated herein by reference.

ITEM 17. UNDERTAKINGS.

The undersigned registrant hereby undertakes:

(1) That, for purposes of determining any liability under the
Securities Act of 1933, each filing of the registrant's annual report
pursuant to Section 13(a) or Section 15(d) of the Securities Exchange Act
of 1934 that is incorporated by reference in this Registration Statement
shall be deemed to be a new registration statement relating to the
securities offered herein, and the offering of such securities at that time
shall be deemed to be the initial bona fide offering thereof.

(2) That, for purposes of determining any liability under the
Securities Act of 1933, the information omitted from the form of prospectus
filed as part of this registration statement in reliance upon Rule 430A and
contained in a form of prospectus filed by the registrant pursuant to Rule
424(b)(1) or (4) or 497(h) under the Securities Act shall be deemed to be
part of this registration statement as of the time it was declared
effective.

(3) That, for the purpose of determining any liability under the
Securities Act of 1933, each post-effective amendment that contains a form
of prospectus shall be deemed to be a new registration statement relating
to the securities offered therein, and the offering of such securities at
that time shall be deemed to be the initial bona fide offering thereof.

II-3

<PAGE>

(4) That, insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers and
controlling persons of the registrant pursuant to the provisions described
under Item 15 above, or otherwise, the registrant has been advised that in
the opinion of the Securities and Exchange Commission such indemnification
is against public policy as expressed in the Act and is, therefore,
unenforceable. In the event that a claim for indemnification against such
liabilities (other than the payment by the registrant of expenses incurred
or paid by a director, officer or controlling person of the registrant in
the successful defense of any action, suit or proceeding) is asserted by
such director, officer or controlling person in connection with the
securities being registered, the registrant will, unless in the opinion of
its counsel the matter has been settled by controlling precedent, submit to
a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the Act and
will be governed by the final adjudication of such issue.

II-4

<PAGE>

POWER OF ATTORNEY

EACH DIRECTOR AND/OR OFFICER OF THE REGISTRANTS WHOSE SIGNATURE APPEARS
BELOW HEREBY APPOINTS THE AGENTS FOR SERVICE NAMED IN THIS REGISTRATION
STATEMENT, AND EACH OF THEM SEVERALLY, AS HIS ATTORNEY-IN-FACT TO SIGN IN HIS
NAME AND BEHALF, IN ANY AND ALL CAPACITIES STATED BELOW, AND TO FILE WITH THE
SECURITIES AND EXCHANGE COMMISSION, ANY AND ALL AMENDMENTS, INCLUDING
POST-EFFECTIVE AMENDMENTS, TO THIS REGISTRATION STATEMENT, AND THE REGISTRANTS
HEREBY ALSO APPOINT EACH SUCH AGENT FOR SERVICE AS THEIR ATTORNEY-IN-FACT WITH
LIKE AUTHORITY TO SIGN AND FILE ANY SUCH AMENDMENTS IN THEIR NAMES AND ON THEIR
BEHALF.

SIGNATURES

PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THE
REGISTRANT CERTIFIES THAT IT HAS REASONABLE GROUNDS TO BELIEVE THAT IT MEETS ALL
OF THE REQUIREMENTS FOR FILING ON FORM S-3 AND HAS DULY CAUSED THIS REGISTRATION
STATEMENT TO BE SIGNED ON ITS BEHALF BY THE UNDERSIGNED, THEREUNTO DULY
AUTHORIZED, IN THE CITY OF DALLAS, AND STATE OF TEXAS, ON THE 14TH DAY OF
NOVEMBER, 1995.

TEXAS UTILITIES ELECTRIC COMPANY

BY /s/ Erle Nye
--------------------------------
(ERLE NYE, CHAIRMAN OF THE BOARD
AND CHIEF EXECUTIVE)

PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THIS
REGISTRATION STATEMENT HAS BEEN SIGNED BELOW BY THE FOLLOWING PERSONS IN THE
CAPACITIES AND ON THE DATE INDICATED.

SIGNATURES TITLE DATE
---------- ----- ----

/s/ Erle Nye
- ------------------------------------- PRINCIPAL EXECUTIVE NOVEMBER 14, 1995
(ERLE NYE, CHAIRMAN OF THE BOARD OFFICER AND DIRECTOR
AND CHIEF EXECUTIVE)

/s/ H. Dan Farell
- -------------------------------------- PRINCIPAL FINANCIAL NOVEMBER 14, 1995
(H. DAN FARELL, SENIOR VICE PRESIDENT) OFFICER AND DIRECTOR

/s/ Marc D. Moseley
- -------------------------------------- PRINCIPAL ACCOUNTING NOVEMBER 14, 1995
(MARC D. MOSELEY, CONTROLLER) OFFICER

/s/ J. S. Farrington
- -------------------------------------- DIRECTOR NOVEMBER 14, 1995
(J.S. FARRINGTON)

/s/ T. L. Baker
- -------------------------------------- DIRECTOR NOVEMBER 14, 1995
(T.L. BAKER)

/s/ H. Jarrell Gibbs
- -------------------------------------- DIRECTOR NOVEMBER 14, 1995
(H. JARRELL GIBBS)

/s/ John U. Martin
- -------------------------------------- DIRECTOR NOVEMBER 14, 1995
(JOHN U. MARTIN)

/s/ Michael D. Spence
- -------------------------------------- DIRECTOR NOVEMBER 14, 1995
(MICHAEL D. SPENCE)

/s/ W. M. Taylor
- -------------------------------------- DIRECTOR NOVEMBER 14, 1995
(W. M. TAYLOR)

/s/ E. L. Watson
- -------------------------------------- DIRECTOR NOVEMBER 14, 1995
(E. L. WATSON)

/s/ Michael J. McNally
- -------------------------------------- DIRECTOR NOVEMBER 14, 1995
(MICHAEL J. MCNALLY)

SIGNATURES

TU ELECTRIC CAPITAL III

BY: /s/ Michael Perkins
----------------------------
Michael Perkins, not in his
individual capacity but
solely as Trustee

II-6
<PAGE>

EXHIBIT INDEX

Exhibit
-------

1(a) Form of Underwriting Agreement

3(c) Trust Agreement relating to the QUIPS

4(a) Form of Amended and Restated Trust Agreement
relating to the QUIPS

4(c) Form of Guarantee Agreement

4(d) Form of Agreement as to Expenses and Liabilities

4(e) Form of Officers' Certificate establishing
Debentures

4(f) Form of QUIPS

5(a) Opinion of Worsham, Forsythe & Wooldridge, L.L.P.,
General Counsel for the Company

5(b)
and 8 Opinion of Reid & Priest LLP, of counsel to the
Company

5(c) Opinion of Richards, Layton & Finger, Special
Delaware Counsel to the Company and TU Electric
Capital

15 Letter of Deloitte & Touche LLP regarding unaudited
condensed interim financial information

23(a) Independent Auditors' Consent

25(a) Statement on Form T-1 of The Bank of New York
relating to Amended and Restated Trust Agreement

25(b) Statement on Form T-1 of The Bank of New York
relating to Indenture

25(c) Statement on Form T-1 of The Bank of New York
relating to Guarantee Agreement

Exhibit 1(a)

TU ELECTRIC CAPITAL III

Quarterly Income Preferred Securities

UNDERWRITING AGREEMENT
----------------------

____________, 1995

c/o

Ladies and Gentlemen:

1. Introduction. Texas Utilities Electric Company, a
------------
Texas corporation (the "Company"), and its financing subsidiary,
TU Electric Capital III, a Delaware business trust (the "Trust",
hereinafter together with the Company, the "Offerors") propose
for the Trust to issue and sell severally to you (the
"Underwriters"), the Trust's Quarterly Income Preferred
Securities of the series designation, with the terms and in the
liquidation preference amount specified in Schedule I hereto (the
"Preferred Securities").

2. Description of Preferred Securities. The Offerors
-----------------------------------
propose for the Trust to issue the Preferred Securities pursuant
to an Amended and Restated Trust Agreement, to be dated as of
______, among The Bank of New York, as Property Trustee, The Bank
of New York (Delaware) as Delaware Trustee and three employees of
the Company as Administrative Trustees, in substantially the form
heretofore delivered to you, said Agreement being hereinafter
referred to as the "Trust Agreement". In connection with the
issuance of the Preferred Securities, the Company proposes (i) to
issue its ____% Junior Subordinated Debentures (the "Debentures")
pursuant to an Indenture, dated as of December 1, 1995, between
the Company and The Bank of New York, as trustee (the
"Indenture") and (ii) to issue a guarantee of the Preferred
Securities to the extent described in the Prospectus (as defined
below) (the "Guarantee").

3. Representations and Warranties of the Offerors.
----------------------------------------------
The Offerors represent and warrant to the several Underwriters
that:

(a) The Offerors have filed with the Securities and
Exchange Commission (the "Commission") a registration
statement on Form S-3, including a prospectus, on November ,
1995 (Registration Nos. 33-__________ and 33________) for
the registration of $___,000,000 aggregate liquidation
preference amount of the Trust's Preferred Securities
("Preferred Securities"), a like principal amount of
Debentures and the Guarantee under the Securities Act of
1933, as amended (the "Securities Act"). Such registration
statement ("registration statement Nos. 33-________ and
33_______") was declared effective by the Commission on
. References herein to the term "Registration
Statement" as of any date shall be deemed to refer to
registration statement Nos. 33-________ and 33-___________,
as amended or supplemented to such date, including all
documents incorporated by reference therein as of such date
pursuant to Item 12 of Form S-3 ("Incorporated Documents").
References herein to the term "Prospectus" as of any given
date shall be deemed to refer to the prospectus forming a
part of registration statement Nos. 33-________ and 33-
___________, as amended or supplemented as of such date,
including all Incorporated Documents as of such date.
References herein to the term "Effective Date" shall be
deemed to refer to the later of the time and date
registration statement Nos. 33-________ and 33-___________
was declared effective or the time and date of the filing
thereafter of the Company's most recent Annual Report on
Form 10-K if such filing is made prior to the Closing Date,
as hereinafter defined. The Company will not file any
amendment to the Registration Statement or supplement to the
Prospectus after the date of this Agreement and prior to the
Closing Date, as hereinafter defined, without prior notice
to the Underwriters, or to which Counsel for the
Underwriters shall reasonably object in writing. For the
purposes of this Agreement, any Incorporated Document filed
with the Commission on a date prior to the Closing Date, as
hereinafter defined, shall be deemed an amendment or
supplement to the Registration Statement and the Prospectus.

(b) On the Effective Date, the Registration Statement
and the Prospectus fully complied and at the Closing Date,
as hereinafter defined, the Registration Statement, the
Prospectus, the Trust Agreement, the Indenture and the
Guarantee will fully comply in all material respects with
the applicable provisions of the Securities Act, the Trust
Indenture Act of 1939, as amended ("Trust Indenture Act"),
and the applicable rules and regulations of the Commission
thereunder; on the Effective Date the Registration Statement
did not, and at the Closing Date, as hereinafter defined,
the Registration Statement will not, contain an untrue
statement of a material fact or omit to state a material
fact required to be stated therein or necessary to make the
statements therein not misleading; on the Effective Date the
Prospectus did not, and at the Closing Date, as hereinafter
defined, and on the date it is filed with, or transmitted
for filing to, the Commission pursuant to Rule 424 of the
General Rules and Regulations of the Securities Act ("Rule
424"), the Prospectus will not, contain an untrue statement
of a material fact or omit to state a material fact neces-
sary in order to make the statements therein, in the light
of the circumstances under which they were made, not
misleading; and on said dates the Incorporated Documents,
taken together as a whole, fully complied or will comply in
all material respects with the applicable provisions of the
Securities Exchange Act of 1934, as amended (the "Exchange
Act"), and the applicable rules and regulations of the
Commission thereunder, and, when read together with the
Prospectus on said dates did not and will not contain an
untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to
make the statements therein not misleading; provided that
the foregoing representations and warranties in this
paragraph (b) shall not apply to statements or omissions
made in reliance upon information furnished in writing to
the Company by, or on behalf of, any Underwriter for use in
connection with the preparation of the Registration
Statement or the Prospectus or to any statements in or
omissions from the Statement of Eligibility and
Qualification under the Trust Indenture Act, or amendments
thereto, of the trustee under each of the Trust Agreement,
the Indenture and the Guarantee.

(c) The consummation of the transactions herein
contemplated and the fulfillment of the terms hereof will
not result in a breach of any of the terms or provisions of,
or constitute a default under, any indenture, mortgage, deed
of trust or other agreement or instrument to which the
Company is now a party.

4. Purchase and Sale.
-----------------

(a) On the basis of the representations and warranties
herein contained, and subject to the terms and conditions
herein set forth, the Trust shall sell to each of the
Underwriters, and each Underwriter shall purchase from the
Trust, at the time and place herein specified, severally and
not jointly, the respective liquidation preference amount of
the Preferred Securities set forth opposite the name of such
Underwriter in Schedule II attached hereto, at the purchase
price or prices set forth in Schedule I hereto.

(b) The Company shall pay to the Underwriters a
commission equal to __% of the aggregate liquidation
preference amount of the Preferred Securities.

5. Time and Place of Closing. Delivery of the
-------------------------
Preferred Securities against payment therefor by certified or
official bank check or checks payable to the Trust or pursuant to
its order in New York Clearing House funds shall be made at the
offices of Reid & Priest LLP, 40 West 57th Street, New York, New
York, at 10:00 A.M., New York Time, on , or at such
other place, time and date as shall be agreed upon in writing by
the Offerors and you or established in accordance with the
following paragraph. The hour and date of such delivery and
payment are herein called the "Closing Date". The Preferred
Securities shall be delivered to you for the respective accounts
of the Underwriters in fully registered form in such
denominations of $1,000 or any multiple thereof and registered in
such names as you shall reasonably request in writing not later
than the close of business on the fourth business day prior to
the Closing Date, or, to the extent not so requested, registered
in the names of the respective Underwriters in such authorized
denominations as the Company shall determine. The Trust agrees
to make the Preferred Securities available to you for checking
purposes not later than 10:00 A.M., New York Time, on the last
business day preceding the Closing Date at the office of The Bank
of New York, 101 Barclay Street, 7th Floor East, New York, New
York.

If any Underwriter shall fail or refuse (otherwise than
for some reason sufficient to justify, in accordance with the
terms hereof, the cancellation or termination of its obligations
hereunder) to purchase and pay for the liquidation preference
amount of the Preferred Securities which such Underwriter has
agreed to purchase and pay for hereunder, the Company shall
immediately give notice to the other Underwriters of the default
of such Underwriter, and the other Underwriters shall have the
right within 24 hours after the receipt of such notice to
determine to purchase, or to procure one or more others, who are
members of the National Association of Securities Dealers, Inc.
("NASD") (or, if not members of the NASD, who are not eligible
for membership in the NASD and who agree (i) to make no sales
within the United States, its territories or its possessions or
to persons who are citizens thereof or residents therein and (ii)
in making sales to comply with the NASD's Rules of Fair Practice)
and satisfactory to the Company, to purchase, upon the terms
herein set forth, the liquidation preference amount of the
Preferred Securities which the defaulting Underwriter had agreed
to purchase. If any non-defaulting Underwriter or Underwriters
shall determine to exercise such right, such Underwriter or
Underwriters shall give written notice to the Company of the
determination in that regard within 24 hours after receipt of
notice of any such default, and thereupon the Closing Date shall
be postponed for such period, not exceeding three business days,
as the Company shall determine. If in the event of such a
default no non-defaulting Underwriter shall give such notice then
this Agreement may be terminated by the Company, upon like notice
given to the non-defaulting Underwriters, within a further period
of 24 hours. If in such case the Company shall not elect to
terminate this Agreement it shall have the right, irrespective of
such default:

(a) to require such non-defaulting Underwriters to
purchase and pay for the respective liquidation preference
amounts of Preferred Securities which they had severally
agreed to purchase hereunder as hereinabove provided and, in
addition, the principal amounts of Preferred Securities
which the defaulting Underwriter shall have so failed to
purchase up to a liquidation preference amount thereof equal
to one-ninth (1/9) of the respective principal amounts of
the Preferred Securities which such non-defaulting
Underwriters have otherwise agreed to purchase hereunder,
and/or

(b) to procure one or more persons, who are members of
the NASD (or, if not members of the NASD, who are not
eligible for membership in the NASD and who agree (i) to
make no sales within the United States, its territories or
its possessions or to persons who are citizens thereof or
residents therein and (ii) in making sales to comply with
the NASD's Rules of Fair Practice), to purchase, upon the
terms herein set forth, either all or a part of the
liquidation preference amount of the Preferred Securities
which such defaulting Underwriter had agreed to purchase or
that portion thereof which the remaining Underwriters shall
not be obligated to purchase pursuant to the foregoing
clause (a).

In the event the Company shall exercise its rights under (a)
and/or (b) above, the Company shall give written notice thereof
to the non-defaulting Underwriters within such further period of
24 hours, and thereupon the Closing Date shall be postponed for
such period, not exceeding three business days, as the Company
shall determine.

In the computation of any period of 24 hours referred
to in this Section 5, there shall be excluded a period of 24
hours in respect of each Saturday, Sunday or legal holiday which
would otherwise be included in such period of time.

Any action taken by the Company under this Section 5
shall not relieve any defaulting Underwriter from liability in
respect of any default of such Underwriter under this Agreement.
Termination by the Company under this Section 5 shall be without
any liability on the part of the Company or any non-defaulting
Underwriter, except as otherwise provided in Sections 6(g) and 9
hereof.

6. Covenants of the Company. The Company agrees
------------------------
that:

(a) It will promptly deliver to each of you a signed
copy of the Registration Statement as originally filed or,
to the extent a signed copy is not available, a conformed
copy, certified by an officer of the Company to be in the
form as originally filed, including all Incorporated
Documents and exhibits and of all amendments thereto.

(b) It will deliver to you, as soon as practicable
after the date hereof, as many copies of the Prospectus as
of such date as you may reasonably request.

(c) It will cause the Prospectus to be filed with, or
transmitted for filing to, the Commission pursuant to Rule
424 as soon as practicable and advise you of the issuance of
any stop order under the Securities Act with respect to the
Registration Statement or the institution of any proceedings
therefor of which the Offerors shall have received notice.
The Company will use its best efforts to prevent the
issuance of any such stop order and to secure the prompt
removal thereof if issued.

(d) If, during such period of time (not exceeding nine
months) after the Prospectus has been filed with, or
transmitted for filing to, the Commission pursuant to Rule
424 as in the opinion of Counsel for the Underwriters a
prospectus covering the Preferred Securities is required by
law to be delivered in connection with sales by an
Underwriter or dealer, any event relating to or affecting
the Company or of which the Company shall be advised in
writing by you shall occur which in the Company's reasonable
opinion should be set forth in a supplement to, or an
amendment of, the Prospectus in order to make the Prospectus
not misleading in the light of the circumstances when it is
delivered to a purchaser, the Company will, at its expense,
amend or supplement the Prospectus by either (i) preparing
and furnishing to you at the Company's expense a reasonable
number of copies of a supplement or supplements or an
amendment or amendments to the Prospectus or (ii) making an
appropriate filing pursuant to Section 13 of the Exchange
Act, which will supplement or amend the Prospectus so that,
as supplemented or amended, it will not contain any untrue
statement of a material fact or omit to state any material
fact necessary in order to make the statements therein, in
the light of the circumstances when the Prospectus is
delivered to a purchaser, not misleading; provided that
should such event relate solely to the activities of any of
the Underwriters, then the Underwriters shall assume the
expense of preparing and furnishing any such amendment or
supplement. In case any Underwriter is required to deliver
a prospectus after the expiration of nine months from the
date the Prospectus is filed with, or transmitted for filing
to, the Commission pursuant to Rule 424, the Company, upon
your request, will furnish to you, at the expense of such
Underwriter, a reasonable quantity of a supplemental
prospectus or supplements to the Prospectus complying with
Section 10(a) of the Securities Act.

(e) It will make generally available to its security
holders and the security holders of the Trust, as soon as
practicable, an earning statement (which need not be
audited) covering a period of at least twelve months
beginning not earlier than the first day of the month next
succeeding the month in which occurred the effective date of
the Registration Statement as defined in Rule 158 under the
Securities Act.

(f) It will furnish such proper information as may be
lawfully required and otherwise cooperate in qualifying the
Preferred Securities for offer and sale under the blue-sky
laws of such jurisdictions as you may designate, provided
that the Offerors shall not be required to qualify as a
foreign corporation or dealer in securities, to file any
consents to service of process under the laws of any
jurisdiction, or to meet any other requirements deemed by
the Offerors to be unduly burdensome.

(g) It will, except as herein provided, pay all
expenses and taxes (except transfer taxes) in connection
with (i) the preparation and filing by it of the
Registration Statement, (ii) the issuance and delivery of
the Preferred Securities as provided in Section 5 hereof,
(iii) the preparation, execution and filing by it of the
Supplemental Indenture, (iv) the qualification of the
Preferred Securities under blue-sky laws (including counsel
fees not to exceed $7,500), and (v) the printing and
delivery to the Underwriters of reasonable quantities of the
Registration Statement and, except as provided in Section
6(d) hereof, of the Prospectus. The Company shall not,
however, be required to pay any amount for any expenses of
yours or any of the Underwriters, except that, if this
Agreement shall be terminated in accordance with the
provisions of Section 7, 8 or 10 hereof, the Company will
reimburse you for the fees and disbursements of Counsel for
the Underwriters, whose fees and disbursements the
Underwriters agree to pay in any other event, and will
reimburse the Underwriters for their reasonable out-of-
pocket expenses, in an aggregate amount not exceeding
$5,000, incurred in contemplation of the performance of this
Agreement. The Company shall not in any event be liable to
any of the several Underwriters for damages on account of
loss of anticipated profits.

7. Conditions of Underwriters' Obligations. The
---------------------------------------
obligations of the Underwriters to purchase and pay for the
Preferred Securities shall be subject to the accuracy of the rep-
resentations and warranties made herein on the part of the
Offerors, to the performance by the Offerors of their obligations
to be performed hereunder prior to the Closing Date, and to the
following conditions:

(a) The Prospectus shall have been filed with, or
transmitted for filing to, the Commission pursuant to Rule
424 prior to 6:00 P.M., New York Time, on the second
business day after the date of this Agreement, or such other
time and date as may be approved by you.

(b) No stop order suspending the effectiveness of the
Registration Statement shall be in effect, and no
proceedings for that purpose shall be pending before, or
threatened by, the Commission on the Closing Date; and you
shall have received a certificate, dated the Closing Date
and signed by an officer of the Company, to the effect that
no such stop order is in effect and that no proceedings for
such purpose are pending before, or to the knowledge of the
Company threatened by, the Commission.

(c) On the Closing Date, you shall have received from
Richards, Layton & Finger, Delaware counsel for the Company,
Worsham, Forsythe & Wooldridge, L.L.P., General Counsel for
the Company, Reid & Priest LLP, of counsel for the Company,
and Winthrop, Stimson, Putnam & Roberts, Counsel for the
Underwriters, opinions in substantially the form and
substance prescribed in Schedules III, IV, V and VI hereto
(i) with such changes therein as may be agreed upon by the
Company and you, with the approval of Counsel for the
Underwriters, and (ii) if the Prospectus relating to the
Preferred Securities shall be supplemented or amended after
the Prospectus shall have been filed with, or transmitted
for filing to, the Commission pursuant to Rule 424, with any
changes therein necessary to reflect such supplementation or
amendment.

(d) On and as of the Closing Date you shall have
received from Deloitte & Touche LLP a letter to the effect
that (i) they are independent certified public accountants
with respect to the Company, within the meaning of the
Securities Act and the applicable published rules and
regulations thereunder, (ii) in their opinion, the financial
statements audited by them and included or incorporated by
reference in the Prospectus comply as to form in all
material respects with the applicable accounting
requirements of the Exchange Act and the published rules and
regulations thereunder, (iii) on the basis of a reading of
the unaudited amounts of operating revenues and net income
included or incorporated by reference in the Prospectus and
the related financial statements from which these amounts
were derived, the latest available unaudited financial
statements of the Company and the minute books of the
Company and inquiries of officers of the Company who have
responsibility for financial and accounting matters (it
being understood that the foregoing procedures do not
constitute an audit made in accordance with generally
accepted auditing standards and would not necessarily reveal
matters of significance with respect to the comments made in
such letter, and accordingly that Deloitte & Touche LLP
makes no representation as to the sufficiency of such
procedures for the several Underwriters' purposes), nothing
has come to their attention which caused them to believe
that (A) the unaudited financial statements incorporated by
reference in the Prospectus were not determined in accor-
dance with generally accepted accounting principles applied
on a basis substantially consistent with that of the
corresponding amounts in the latest available audited
financial statements, (B) the unaudited amounts of operating
revenues and net income of the Company included or
incorporated by reference in the Prospectus were not
determined on a basis substantially consistent with that of
the corresponding amounts in the audited statements of
income incorporated by reference in the Prospectus, (C) for
the twelve months ended as of the date of the latest
available financial statements of the Company, there were
any decreases in operating revenues or net income as
compared with the comparable period of the preceding year,
and (D) at a specified date not more than five days prior to
the date of such letter, there was any change in the capital
stock of the Company, short-term bank loans, commercial
paper, notes payable to Texas Utilities Company or long-term
debt of the Company or decrease in its net assets, in each
case as compared with amounts shown in the most recent
balance sheet incorporated by reference in the Prospectus,
except in all instances for changes or decreases that the
Prospectus discloses have occurred or may occur or which are
occasioned by the declaration of a regular quarterly
dividend or the acquisition of long-term debt for sinking
fund purposes, or which are described in such letter, and
(iv) they have compared the dollar amounts (or percentages
or ratios derived from such dollar amounts) and other
financial information included or incorporated by reference
in the Registration Statement and the Prospectus as
reasonably requested by you (in each case to the extent that
such dollar amounts, percentages and other financial
information are derived from the general accounting records
of the Company subject to the internal controls of the
Company's accounting system or are derived indirectly from
such records by analysis or computation) with the results
obtained from inquiries, a reading of such general
accounting records and other procedures specified in such
letter, and have found such dollar amounts, percentages and
other financial information to be in agreement with such
results, except as otherwise specified in such letter.

(e) Since the most recent dates as of which in-
formation is given in the Registration Statement or the
Prospectus there shall not have been any material adverse
change in the business, property or financial condition of
the Company and, since such dates, there shall not have been
any material transaction entered into by the Company, in
each case other than transactions in the ordinary course of
business and transactions contemplated by the Registration
Statement or Prospectus and at the Closing Date you shall
have received a certificate to such effect dated the Closing
Date and signed by an officer of the Company.

(f) All legal proceedings to be taken in connection
with the issuance and sale of the Preferred Securities shall
have been satisfactory in form and substance to Counsel for
the Underwriters.

In case any of the conditions specified above in this
Section 7 shall not have been fulfilled, this Agreement may be
terminated with the consent of Underwriters which have agreed to
purchase in the aggregate 50% or more of the liquidation
preference amount of Preferred Securities upon notice thereof to
the Company. Any such termination shall be without liability of
any party to any other party except as otherwise provided in
Sections 6(g) and 9 hereof.

8. Conditions of Company's Obligations. The
-----------------------------------
obligation of the Company to deliver the Preferred Securities
shall be subject to the conditions that the Prospectus shall have
been filed with, or transmitted for filing to, the Commission
pursuant to Rule 424 prior to 6:00 P.M., New York Time, on the
second business day after the date of this Agreement or such
other time and date as may be approved by the Company, and no
stop order suspending the effectiveness of the Registration
Statement shall be in effect at the Closing Date and no
proceedings for that purpose shall be pending before, or
threatened by, the Commission at the Closing Date. In case these
conditions shall not have been fulfilled, this Agreement may be
terminated by the Company upon notice thereof to you. Any such
termination shall be without liability of any party to any other
party except as otherwise provided in Sections 6(g) and 9 hereof.

9. Indemnification.
---------------

(a) The Offerors shall jointly and severally
indemnify, defend and hold harmless each Underwriter and
each person who controls any Underwriter within the meaning
of Section 15 of the Securities Act from and against any and
all losses, claims, damages or liabilities, joint or
several, to which they or any of them may become subject
under the Securities Act or any other statute or common law
and shall reimburse each such Underwriter and controlling
person for any legal or other expenses (including, to the
extent hereinafter provided, reasonable counsel fees)
incurred by them in connection with investigating any such
losses, claims, damages or liabilities or in connection with
defending any actions, insofar as such losses, claims,
damages, liabilities, expenses or actions arise out of or
are based upon any untrue statement or alleged untrue
statement of a material fact contained in any preliminary
prospectus prior to the Effective Date, or in the
Registration Statement or the Prospectus, or the omission or
alleged omission to state therein a material fact required
to be stated therein or necessary to make the statements
therein in the light of the circumstances under which they
were made not misleading; provided, however, that the
indemnity agreement contained in this Section 9 shall not
apply to any such losses, claims, damages, liabilities,
expenses or actions arising out of, or based upon, any such
untrue statement or alleged untrue statement, or any such
omission or alleged omission, if such statement or omission
was made in reliance upon information furnished in writing
to the Offerors by any Underwriter, through you or
otherwise, for use in connection with the preparation of the
Registration Statement or the Prospectus or any amendment or
supplement to either thereof, or arising out of, or based
upon, statements in or omissions from that part of the
Registration Statement which shall constitute the Statement
of Eligibility and Qualification under the Trust Indenture
Act of the Trustee under the Mortgage; and provided further,
that the indemnity agreement contained in this Section 9
shall not inure to the benefit of any Underwriter (or of any
person controlling such Underwriter) on account of any such
losses, claims, damages, liabilities, expenses or actions
arising from the sale of the Preferred Securities to any
person if a copy of the Prospectus (exclusive of the
Incorporated Documents) shall not have been given or sent to
such person by or on behalf of such Underwriter with or
prior to the written confirmation of the sale involved
unless, with respect to the delivery of any amendment or
supplement to the Prospectus, the alleged omission or
alleged untrue statement was not corrected in such amendment
or supplement at the time of such written confirmation. The
indemnity agreement of the Offerors contained in this
Section 9 and the representations and warranties of the
Offerors contained in Section 3 hereof shall remain
operative and in full force and effect regardless of any
termination of this Agreement or of any investigation made
by or on behalf of any Underwriter or any such controlling
person, and shall survive the delivery of the Preferred
Securities.

(b) Each Underwriter shall indemnify, defend and hold
harmless the Offerors, their officers and directors, and
each person who controls either of the Offerors within the
meaning of Section 15 of the Securities Act, from and
against any and all losses, claims, damages or liabilities,
joint or several, to which they or any of them may become
subject under the Securities Act or any other statute or
common law and shall reimburse each of them for any legal or
other expenses (including, to the extent hereinafter
provided, reasonable counsel fees) incurred by them in
connection with investigating any such losses, claims,
damages or liabilities or in connection with defending any
actions, insofar as such losses, claims, damages,
liabilities, expenses or actions arise out of or are based
upon any untrue statement or alleged untrue statement of a
material fact contained in the Registration Statement or the
Prospectus, or the omission or alleged omission to state
therein a material fact required to be stated therein or
necessary to make the statements therein not misleading, if
such statement or omission was made in reliance upon
information furnished in writing to the Offerors by or on
behalf of such Underwriter, through you or otherwise, for
use in connection with the preparation of the Registration
Statement or the Prospectus or any amendment or supplement
to either thereof. Each Underwriter hereby furnishes to the
Offerors in writing expressly for use in the Prospectus (i)
the statements relating to offerings by the Underwriters on
the cover page, [(ii) the statements in the first paragraph
on page S-2 concerning stabilization and over allotment by
the Underwriters,] and (iii) under "Underwriting",
statements concerning the offering of the Preferred
Securities, and the ______ and _____ sentence of the ___
paragraph, concerning market making for the Preferred
Securities. The indemnity agreement of the respective
Underwriters contained in this Section 9 shall remain
operative and in full force and effect regardless of any
termination of this Agreement or of any investigation made
by or on behalf of either Offeror, its directors or its
officers, any such Underwriter, or any such controlling
person, and shall survive the delivery of the Preferred
Securities.

(c) The Company, the Trust and the several
Underwriters each shall, upon the receipt of notice of the
commencement of any action against it or any person
controlling it as aforesaid, in respect of which indemnity
may be sought on account of any indemnity agreement
contained herein, promptly give written notice of the
commencement thereof to the party or parties against whom
indemnity shall be sought hereunder, but the omission so to
notify such indemnifying party or parties of any such action
shall not relieve such indemnifying party or parties from
any liability which it or they may have to the indemnified
party otherwise than on account of such indemnity agreement.
In case such notice of any such action shall be so given,
such indemnifying party shall be entitled to participate at
its own expense in the defense, or, if it so elects, to
assume (in conjunction with any other indemnifying parties)
the defense of such action, in which event such defense
shall be conducted by counsel chosen by such indemnifying
party or parties and satisfactory to the indemnified party
or parties who shall be defendant or defendants in such
action, and such defendant or defendants shall bear the fees
and expenses of any additional counsel retained by them; but
if the indemnifying party shall elect not to assume the
defense of such action, such indemnifying party will
reimburse such indemnified party or parties for the
reasonable fees and expenses of any counsel retained by
them; provided, however, if the defendants in any such
action include both the indemnified party and the
indemnifying party and counsel for the indemnifying party
shall have reasonably concluded that there may be a conflict
of interest involved in the representation by such counsel
of both the indemnifying party and the indemnified party,
the indemnified party or parties shall have the right to
select separate counsel, satisfactory to the indemnifying
party, to participate in the defense of such action on
behalf of such indemnified party or parties (it being
understood, however, that the indemnifying party shall not
be liable for the expenses of more than one separate counsel
representing the indemnified parties who are parties to such
action).

(d) If the indemnification provided for in sub-
paragraph (a) or (b) above shall be unenforceable under
applicable law by an indemnified party, each indemnifying
party agrees to contribute to such indemnified party with
respect to any and all losses, claims, damages, liabilities
and expenses for which each such indemnification provided
for in subparagraph (a) or (b) above shall be unenforceable,
in such proportion as shall be appropriate to reflect the
relative fault of each indemnifying party on the one hand
and the indemnified party on the other in connection with
the statements or omissions which have resulted in such
losses, claims, damages, liabilities and expenses, as well
as any other relevant equitable considerations; provided,
however, that no indemnified party guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of
the Securities Act) shall be entitled to contribution from
any indemnifying party not guilty of such fraudulent
misrepresentation. Relative fault shall be determined by
reference to, among other things, whether the untrue or
alleged untrue statement of a material fact or the omission
or alleged omission to state a material fact relates to
information supplied by such indemnifying party or the
indemnified party and each such party's relative intent,
knowledge, access to information and opportunity to correct
or prevent such untrue statement or omission. The Offerors
and each of the Underwriters agree that it would not be just
and equitable if contributions pursuant to this subparagraph
(d) were to be determined by pro rata allocation (even if
the Underwriters were treated as one entity for such
purpose) or by any other method of allocation which does not
take account of the equitable considerations referred to
above.

10. Termination. This Agreement may be terminated, at
-----------
any time prior to the Closing Date, by you with the consent of
the Underwriters which have agreed to purchase in the aggregate
50% or more of the aggregate liquidation preference amount of the
Preferred Securities if (a) after the date hereof and at or prior
to the Closing Date there shall have occurred any general
suspension of trading in securities on the New York Stock
Exchange or there shall have been established by the New York
Stock Exchange or by the Commission or by any federal or state
agency or by the decision of any court, any general limitation on
prices for such trading or any general restrictions on the
distribution of securities, or a general banking moratorium
declared by New York or federal authorities, or (b) there shall
have occurred any new material (i) outbreak of hostilities or
(ii) other national or international calamity or crisis,
including, but not limited to, an escalation of hostilities which
existed prior to the date of this Agreement, and the effect of
any such event specified in clause (a) or (b) above on the
financial markets of the United States shall be such as to make
it impracticable, in the reasonable judgment of the Underwriters,
for the Underwriters to enforce contracts for the sale of the
Preferred Securities. This Agreement may also be terminated at
any time prior to the Closing Date by you with the consent of the
Underwriters which have agreed to purchase in the aggregate 50%
or more of the liquidation preference amount of the Preferred
Securities, if, in your reasonable judgment, the subject matter
of any amendment or supplement to the Registration Statement or
the Prospectus (other than an amendment or supplement relating
solely to the activity of any Underwriter or Underwriters)
prepared and issued by the Company after the effectiveness of
this Agreement shall have disclosed a material adverse change in
the business, property or financial condition of the Company
which has materially impaired the marketability of the Preferred
Securities. Any termination hereof pursuant to this Section 10
shall be without liability of any party to any other party except
as otherwise provided in Sections 6(g) and 9 hereof.

11. Miscellaneous. THE VALIDITY AND INTERPRETATION OF
-------------
THIS AGREEMENT SHALL BE GOVERNED BY THE LAWS OF THE STATE OF NEW
YORK. This Agreement shall inure to the benefit of the Company,
the several Underwriters and, with respect to the provisions of
Section 9 hereof, each director, officer and controlling person
referred to in said Section 9, and their respective successors.
Nothing herein is intended or shall be construed to give to any
other person, firm or corporation any legal or equitable right,
remedy or claim under or in respect of any provision in this
Agreement. The term "successor" as used herein shall not include
any purchaser, as such purchaser, of any of the Preferred
Securities from any of the several Underwriters.

12. Notices. All communications hereunder shall be in
-------
writing, and, if to the Underwriters, shall be mailed or
delivered to you at the address set forth above, or, if to the
Company, shall be mailed or delivered to it at 2001 Bryan Tower,
Dallas, Texas 75201, Attention: Treasurer.

<PAGE>

If the foregoing is in accordance with your
understanding of our agreement, please indicate your acceptance
thereof in the space provided below for that purpose, whereupon
this letter and your acceptance shall constitute a binding
agreement between the Company and the several Underwriters in
accordance with its terms.

Very truly yours,

TEXAS UTILITIES ELECTRIC COMPANY

By
-----------------------------

TU ELECTRIC CAPITAL III

By
-----------------------------

Accepted and delivered as of
the date first above written

By
--------------------------

<PAGE>

SCHEDULE I
----------

Underwriting Agreement dated:
Underwriters:

Securities:

Designation:

Liquidation Preference Amount:

Date of Maturity:

Distribution Rate:

Purchase Price:

Public Offering Price:

<PAGE>

SCHEDULE II
-----------

TU ELECTRIC CAPITAL III

QUARTERLY INCOME PREFERRED SECURITIES

Liquidation
Name Preferences
---- -----------

<PAGE>

Schedule III

[LETTERHEAD OF RICHARDS, LAYTON & FINGER]

[Date]

as Underwriters named in the Underwriting
Agreement, dated ,
between Texas Utilities Electric Company,
TU Electric Capital III and such underwriters

c/o

Re: TU Electric Capital III
-----------------------

Ladies and Gentlemen:

We have acted as special Delaware counsel for Texas
Utilities Electric Company, a Texas corporation (the "Company"),
and TU Electric Capital III, a Delaware business trust (the
"Trust"), in connection with the matters set forth herein. At
the request of the Company and the Trust, this opinion is being
furnished to you.

For purposes of giving the opinions hereinafter set
forth, our examination of documents has been limited to the
examination of originals or copies of the following:

(a) The Certificate of Trust of the Trust, dated as of
October ___, 1995 (the "Certificate"), as filed in the office of
the Secretary of State of the State of Delaware (the "Secretary
of State") on October ___, 1995;

(b) The Trust Agreement of the Trust, dated as of
October ___, 1995, between the Company and the trustees of the
Trust named therein;

(c) The Prospectus, dated ____________________, 199__
(the "Prospectus"), relating to the ____% Quarterly Income
Preferred Securities of the Trust representing preferred
undivided beneficial interests in the assets of the Trust (each,
a "Preferred Security" and collectively, the "Preferred
Securities");

(d) The Amended and Restated Trust Agreement of the
Trust, dated as of ____________________, among the Company, the
trustees of the Trust named therein (the "Trustees"), and the
holders, from time to time, of undivided beneficial interests in
the assets of the Trust (including Exhibits B and D thereto) (the
"Trust Agreement");

(e) The Underwriting Agreement, dated
____________________ (the "Underwriting Agreement"), among the
Company, the Trust, and Goldman, Sachs & Co.; and

(f) A Certificate of Good Standing for the Trust, dated
____________________, obtained from the Secretary of State.

Initially capitalized terms used herein and not otherwise
defined are used as defined in the Trust Agreement.

For purposes of this opinion, we have not reviewed any
documents other than the documents listed in paragraphs (a)
through (f) above. In particular, we have not reviewed any
document (other than the documents listed in paragraphs (a)
through (f) above) that is referred to in or incorporated by
reference into the documents reviewed by us. We have assumed
that there exists no provision in any document that we have not
reviewed that is inconsistent with the opinions stated herein.
We have conducted no independent factual investigation of our own
but rather have relied solely upon the foregoing documents, the
statements and information set forth therein and the additional
matters recited or assumed herein, all of which we have assumed
to be true, complete and accurate in all material respects.

With respect to all documents examined by us, we have
assumed (i) that the Trust Agreement constitutes the entire
agreement among the parties thereto with respect to the subject
matter thereof, including with respect to the creation, operation
and termination of the Trust, and that the Trust Agreement and
the Certificate are in full force and effect and have not been
amended, (ii) except to the extent provided in paragraph 1 below,
the due creation or due organization or due formation, as the
case may be, and valid existence in good standing of each party
to the documents examined by us under the laws of the
jurisdiction governing its creation, organization or formation,
(iii) the legal capacity of natural persons who are parties to
the documents examined by us, (iv) that each of the parties to
the documents examined by us has the power and authority to
execute and deliver, and to perform its obligations under, such
documents, (v) except to the extent set forth in paragraph 3
below, the due authorization, execution and delivery by all
parties thereto of all documents examined by us, (vi) the receipt
by each Person to whom a Preferred Security is to be issued by
the Trust (collectively, the "Preferred Security Holders") of a
Preferred Securities Certificate registered in the name of such
Person for such Preferred Security and the payment for the
Preferred Security acquired by it, in accordance with the Trust
Agreement and the Prospectus, and (vii) that the Preferred
Securities are issued and sold to the Preferred Security Holders
in accordance with the Trust Agreement and the Prospectus. We
have not participated in the preparation of the Prospectus and
assume no responsibility for its contents.

This opinion is limited to the laws of the State of
Delaware (excluding the securities laws of the State of
Delaware), and we have not considered and express no opinion on
the laws of any other jurisdiction, including federal laws and
rules and regulations relating thereto. Our opinions are
rendered only with respect to Delaware laws and rules,
regulations and orders thereunder which are currently in effect.

Based upon the foregoing, and upon our examination of
such questions of law and statutes of the State of Delaware as we
have considered necessary or appropriate, and subject to the
assumptions, qualifications, limitations and exceptions set forth
herein, we are of the opinion that:

1. The Trust has been duly created and is validly
existing in good standing as a business trust under the Delaware
Business Trust Act and, under the Trust Agreement and the
Delaware Business Trust Act, has the trust power and authority to
conduct its business as described in the Prospectus.

2. The Trust Agreement is a legal, valid and binding
agreement of the Company and the Trustees, and is enforceable
against the Company and the Trustees, in accordance with its
terms.

3. Under the Trust Agreement and the Delaware Business
Trust Act, the execution and delivery of the Underwriting
Agreement by the Trust, and the performance by the Trust of its
obligations thereunder, have been duly authorized by all
requisite trust action on the part of the Trust.

4. The Preferred Securities have been duly authorized
by the Trust Agreement, and when issued and sold in accordance
with the Trust Agreement, the Preferred Securities will be,
subject to the qualifications set forth in paragraph 5 below,
fully paid and nonassessable beneficial interests in the assets
of the Trust.

5. The Preferred Security Holders, as beneficial owners
of the Trust, will be entitled to the same limitation of personal
liability extended to stockholders of private corporations for
profit organized under the General Corporation Law of the State
of Delaware. We note that the Preferred Security Holders may be
obligated to make payments as set forth in the Trust Agreement.

6. Under the Delaware Business Trust Act and the Trust
Agreement, the issuance of the Preferred Securities is not
subject to preemptive rights.

The opinion expressed in paragraph 2 above is subject to
the effect upon the Trust Agreement of (i) bankruptcy,
insolvency, moratorium, receivership, reorganization,
liquidation, fraudulent conveyance and other similar laws
relating to or affecting the rights and remedies of creditors
generally, (ii) principles of equity, including applicable law
relating to fiduciary duties (regardless of whether considered
and applied in a proceeding in equity or at law), and (iii) the
effect of applicable public policy on the enforceability of
provisions relating to indemnification or contribution.

We consent to your relying as to matters of Delaware law
upon this opinion in connection with your entering into the
Underwriting Agreement. Except as stated above, without our
prior written consent, this opinion may not be furnished or
quoted to, or relied upon by, any other Person for any purpose.

Very truly yours,

<PAGE>

SCHEDULE IV

[Letterhead of Worsham, Forsythe & Wooldridge, L.L.P.]

[Date]

as Underwriters named in the Underwriting
Agreement, dated ,
between Texas Utilities Electric Company,
TU Electric Capital III and such underwriters

c/o

We have acted as General Counsel to Texas Utilities
Electric Company (the "Company") in connection with the
transactions contemplated by the Underwriting Agreement dated the
date hereof between the Company and you (the "Underwriting
Agreement") in which TU Electric Capital III (the "Trust"), a
statutory business trust organized under the Delaware Business
Trust Act (the "Delaware Act") proposes to issue $_____ aggregate
liquidation preference amount of its __% Quarterly Income
Preferred Securities due _________________ (the "Preferred
Securities"), the Company proposes to issue $_____________
principal amount of its Debentures and the Company proposes to
guarantee the Preferred Securities to the extent described in the
Prospectus (as defined in the Underwriting Agreement).

Terms not otherwise defined herein are used with the
meanings ascribed to them in the Underwriting Agreement.

In so acting we have participated in or reviewed the
corporate proceedings in connection with the authorization,
execution and delivery of the Underwriting Agreement, the Trust
Agreement, the Indenture, the Debentures and the Guarantee. We
have also examined such other documents and satisfied ourselves
as to such other matters as we have deemed necessary as a basis
for the conclusions of law contained in the opinions enumerated
below. We have relied as to various questions of fact upon the
representations and warranties of the Company contained in the
Underwriting Agreement and, where deemed appropriate, on
certificates of public officials. In our examination we have
assumed the genuineness of all signatures and the authenticity of
all documents submitted to us as originals and the conformity to
original documents of all documents submitted to us as
photostatic or certified copies.

Upon the basis of our familiarity with these
transactions, we are of the opinion that:

1. The Company is a public utility corporation duly
authorized by its articles of incorporation, as amended, to
conduct the business which it is now conducting, is subject, as
to rates and services, to the jurisdiction of certain
authorities, as set forth in the Prospectus, and holds valid and
subsisting franchises, licenses and permits authorizing it to
carry on the utility business in which it is engaged.

2. The Underwriting Agreement has been duly authorized,
executed and delivered by the Company;

3. The Indenture has been duly qualified under the
Trust Indenture Act and, assuming due authorization, execution
and delivery of the Indenture by the Company, the Indenture will
be enforceable against the Company in accordance with its terms,
subject to the effect of bankruptcy, insolvency, reorganization,
receivership, moratorium and other laws affecting the rights and
remedies of creditors generally and of general principles of
equity;

4. The Debentures and the Indenture have been duly
authorized, executed and delivered by the Company, the Debentures
are entitled to the benefits of the Indenture and are legal,
valid and binding obligations of the Company enforceable against
the Company in accordance with their terms, subject to the effect
of bankruptcy, insolvency, reorganization, receivership,
moratorium and other laws affecting the rights and remedies of
creditors generally and of general principles of equity;

5. The Guarantee has been duly authorized, executed and
delivered by the Company, and is enforceable against the Company
in accordance with its terms, subject to the effect of
bankruptcy, insolvency, reorganization, receivership, moratorium
and other laws affecting the rights and remedies of creditors
generally and of general principles of equity;

6. The statements made in the Prospectus under the
captions "Description of the QUIPS," "Description of the Junior
Subordinated Debentures," and "Description of the Guarantee",
insofar as such statements constitute summaries of the legal
matters or documents referred to therein, are accurate in all
material respects;

7. Neither the Company nor the Trust is, or after
giving effect to the issuance and sale of the Preferred
Securities, will be, and neither the Company nor the Trust is
directly or indirectly controlled by, or acting on behalf of any
person which is, an investment company within the meaning of the
Investment Company Act of 1940, as amended;

8. No other approval, authorization, consent or order
of any public board or body (other than in connection or in
compliance with the provisions of the blue-sky laws of any
jurisdiction) is legally required for the authorization of the
issue and sale by the Company of the Debentures and the Guarantee
as contemplated; and

9. Other than as stated in the Registration Statement
and the Prospectus, there are no material pending legal
proceedings to which the Company is a party or of which property
of the Company is the subject which depart from the ordinary
routine litigation incident to the kind of business conducted by
the Company, and to our best knowledge no such proceedings are
contemplated.

10. The Registration Statement, as amended, as of the
effective date thereof, and the Prospectus as of such date
(except for financial statements and schedules and financial and
statistical data as to which we do not express any belief and,
(except for that part of the Registration Statement that
constitutes the Forms T-1) complied as to form in all material
respects with the Securities Act.

In the course of the preparation of the information
relating to the Company contained in the Prospectus (including
the documents incorporated therein by reference) we had
discussions with certain of its officers and representatives,
with other counsel for the Company and with certain of your
officers and employees and your counsel, but we made no
independent verification of the accuracy or completeness of the
representations and statements made to us by the Company or the
information included by the Company in the Prospectus and take no
responsibility therefor except as set forth in paragraph 5 above.
However, our examination of the information relating to the
Company contained in the Registration Statement and the
Prospectus and our discussions did not disclose to us anything
which gives us reason to believe that (except for financial
statements and schedules and financial and statistical data as to
which we do not express any belief and except for that part of
the Registration Statement that constitutes the Forms T-1) (i)
the Registration Statement, as of its effective date, included an
untrue statement of a material fact or omitted to state a
material fact required to be stated therein or necessary to make
the statements therein not misleading or (ii) that the Prospectus
includes an untrue statement of a material fact or omitted or
omits to state a material fact necessary in order to make the
statements therein, in the light of the circumstances under which
they were made, not misleading.

We are members of the State Bar of Texas and do not hold
ourselves out as experts in the laws of the State of New York.
As to all matters of New York law, we have, with your consent,
relied upon the opinion of Reid & Priest LLP, New York, New York,
of Counsel to the Company.

Very truly yours,

WORSHAM, FORSYTHE &
WOOLDRIDGE L.L.P.

<PAGE>

SCHEDULE V

[Letterhead of Reid & Priest LLP]

[Date]

as Underwriters named in the Underwriting
Agreement, dated ,
between Texas Utilities Electric Company,
TU Electric Capital III and such underwriters

c/o

We have acted as counsel to Texas Utilities Electric
Company (the "Company") in connection with the transactions
contemplated by the Underwriting Agreement dated the date hereof
between the Company and you (the "Underwriting Agreement") in
which TU Electric Capital III (the "Trust"), a statutory business
trust organized under the Delaware Business Trust Act (the
"Delaware Act") proposes to issue $_____ aggregate liquidation
preference amount of its __% Quarterly Income Preferred
Securities due _________________ (the "Preferred Securities"),
the Company proposes to issue $_____________ principal amount of
its Debentures and the Company proposes to guarantee the
Preferred Securities to the extent described in the Prospectus
(as defined in the Underwriting Agreement).

Terms not otherwise defined herein are used with the
meanings ascribed to them in the Underwriting Agreement.

Upon the basis of our familiarity with these
transactions, we are of the opinion that:

1. The Underwriting Agreement has been duly authorized,
executed and delivered by the Company;

2. The Indenture has been duly qualified under the
Trust Indenture Act and, assuming due authorization, execution
and delivery of the Indenture by the Company, the Indenture will
be enforceable against the Company in accordance with its terms,
subject to the effect of bankruptcy, insolvency, reorganization,
receivership, moratorium and other laws affecting the rights and
remedies of creditors generally and of general principles of
equity;

3. The Debentures and the Indenture have been duly
authorized, executed and delivered by the Company, the Debentures
are entitled to the benefits of the Indenture and are legal,
valid and binding obligations of the Company enforceable against
the Company in accordance with their terms, subject to the effect
of bankruptcy, insolvency, reorganization, receivership,
moratorium and other laws affecting the rights and remedies of
creditors generally and of general principles of equity;

4. The Guarantee has been duly authorized, executed
and delivered by the Company, and is enforceable against the
Company in accordance with its terms, subject to the effect of
bankruptcy, insolvency, reorganization, receivership, moratorium
and other laws affecting the rights and remedies of creditors
generally and of general principles of equity;

5. The statements made in the Prospectus under the
captions "Description of the QUIPS," "Description of the Junior
Subordinated Debentures," and "Description of the Guarantee",
insofar as such statements constitute summaries of the legal
matters or documents referred to therein, are accurate in all
material respects;

6. Neither the Company nor the Trust is, or after
giving effect to the issuance and sale of the Preferred
Securities, will be, and neither the Company nor the Trust is
directly or indirectly controlled by, or acting on behalf of any
person which is, an investment company within the meaning of the
Investment Company Act of 1940, as amended;

7. No other approval, authorization, consent or order
of any public board or body (other than in connection or in
compliance with the provisions of the blue-sky laws of any
jurisdiction) is legally required for the authorization of the
issue and sale by the Company of the Debentures and the Guarantee
as contemplated; and

8. The Registration Statement, as amended, as of the
effective date thereof, and the Prospectus as of such date
(except for financial statements and schedules and financial and
statistical data as to which we do not express any belief and,
(except for that part of the Registration Statement that
constitutes the Forms T-1) complied as to form in all material
respects with the Securities Act.

We herewith confirm as our opinion the statements under
the caption "Certain United States Federal Income Tax
Consequences" in the Prospectus.

We are members of the New York Bar and do not hold
ourselves out as experts in the laws of the State of Texas. As
to all matters of Texas law, we have, with your consent, relied
upon the opinion of Worsham, Forsythe & Wooldridge, L.L.P.,
Dallas, Texas, General Counsel for the Company. We believe that
you and we are justified in relying on such opinion.

Very truly yours,

REID & PRIEST LLP

<PAGE>

SCHEDULE VI

[Letterhead of Winthrop, Stimson, Putnam & Roberts]

[Date]

as Underwriters named in the Underwriting
Agreement, dated ,
between Texas Utilities Electric Company,
TU Electric Capital III and such underwriters

c/o

We have acted as counsel to you in connection
with the transactions contemplated by the Underwriting
Agreement dated the date hereof between Texas Utilities
Electric Company (the "Company") and you (the "Underwriting
Agreement") in which TU Electric Capital III (the "Trust"),
a statutory business trust organized under the Delaware
Business Trust Act (the "Delaware Act") proposes to issue
$_____ aggregate liquidation preference amount of its __%
Quarterly Income Preferred Securities due _________________
(the "Preferred Securities"), the Company proposes to issue
$_____________ principal amount of its Debentures and the
Company proposes to guarantee the Preferred Securities to
the extent described in the Prospectus (as defined in the
Underwriting Agreement).

Terms not otherwise defined herein are used with
the meanings ascribed to them in the Underwriting
Agreement.

In so acting we have participated in or reviewed
the corporate proceedings in connection with the
authorization, execution and delivery of the Underwriting
Agreement, the Trust Agreement, the Indenture, the
Debentures and the Guarantee. We have also examined such
other documents and satisfied ourselves as to such other
matters as we have deemed necessary as a basis for the
conclusions of law contained in the opinions enumerated
below. We have relied as to various questions of fact upon
the representations and warranties of the Company contained
in the Underwriting Agreement and, where deemed
appropriate, on certificates of public officials. In our
examination we have assumed the genuineness of all
signatures and the authenticity of all documents submitted
to us as originals and the conformity to original documents
of all documents submitted to us as photostatic or
certified copies.

Upon the basis of our familiarity with these
transactions, we are of the opinion that:

1. The Underwriting Agreement has been duly
authorized, executed and delivered by the Company;

2. The Indenture has been duly qualified under
the Trust Indenture Act and, assuming due authorization,
execution and delivery of the Indenture by the Company, the
Indenture will be enforceable against the Company in
accordance with its terms, subject to the effect of
bankruptcy, insolvency, reorganization, receivership,
moratorium and other laws affecting the rights and remedies
of creditors generally and of general principles of equity;

3. The Debentures and the Indenture have been
duly authorized, executed and delivered by the Company, the
Debentures are entitled to the benefits of the Indenture
and are legal, valid and binding obligations of the Company
enforceable against the Company in accordance with their
terms, subject to the effect of bankruptcy, insolvency,
reorganization, receivership, moratorium and other laws
affecting the rights and remedies of creditors generally
and of general principles of equity;

4. The Guarantee has been duly authorized,
executed and delivered by the Company, and is enforceable
against the Company in accordance with its terms, subject
to the effect of bankruptcy, insolvency, reorganization,
receivership, moratorium and other laws affecting the
rights and remedies of creditors generally and of general
principles of equity;

5. The statements made in the Prospectus
under the captions "Description of the QUIPS," "Description
of the Junior Subordinated Debentures," and "Description of
the Guarantee", insofar as such statements constitute
summaries of the legal matters or documents referred to
therein, are accurate in all material respects;

6. Neither the Company nor the Trust is, or
after giving effect to the issuance and sale of the
Preferred Securities, will be, and neither the Company nor
the Trust is directly or indirectly controlled by, or
acting on behalf of any person which is, an investment
company within the meaning of the Investment Company Act of
1940, as amended;

7. No other approval, authorization, consent
or order of any public board or body (other than in
connection or in compliance with the provisions of the
blue-sky laws of any jurisdiction) is legally required for
the authorization of the issue and sale by the Company of
the Debentures and the Guarantee as contemplated; and

8. The Registration Statement, as amended, as of
the effective date thereof, and the Prospectus as of such
date (except for financial statements and schedules and
financial and statistical data as to which we do not
express any belief and, (except for that part of the
Registration Statement that constitutes the Forms T-1)
complied as to form in all material respects with the
Securities Act.

In the course of the preparation of the
information relating to the Company contained in the
Prospectus (including the documents incorporated therein by
reference) we had discussions with certain of its officers
and representatives, with other counsel for the Company and
with certain of your officers and employees and your
counsel, but we made no independent verification of the
accuracy or completeness of the representations and
statements made to us by the Company or the information
included by the Company in the Prospectus and take no
responsibility therefor except as set forth in paragraph 5
above. However, our examination of the information
relating to the Company contained in the Registration
Statement and the Prospectus and our discussions did not
disclose to us anything which gives us reason to believe
that (except for financial statements and schedules and
financial and statistical data as to which we do not
express any belief and except for that part of the
Registration Statement that constitutes the Forms T-1) (i)
the Registration Statement, as of its effective date,
included an untrue statement of a material fact or omitted
to state a material fact required to be stated therein or
necessary to make the statements therein not misleading or
(ii) that the Prospectus includes an untrue statement of a
material fact or omitted or omits to state a material fact
necessary in order to make the statements therein, in the
light of the circumstances under which they were made, not
misleading.

We are members of the New York Bar and do not
hold ourselves out as experts in the laws of the State of
Texas. As to all matters of Texas law, we have, with your
consent, relied upon the opinion of Worsham, Forsythe &
Wooldridge, L.L.P., Dallas, Texas, General Counsel for the
Company. We believe that you and we are justified in
relying on such opinion.

Very truly yours,

WINTHROP, STIMSON,
PUTNAM & ROBERTS

Exhibit 3(a)

TRUST AGREEMENT
OF TU ELECTRIC CAPITAL III

This TRUST AGREEMENT of TU Electric Capital III (the

"Trust"), dated as of October 17, 1995, among (i) Texas Utilities

Electric Company, a Texas corporation (the "Depositor"), (ii) The

Bank of New York, a New York banking corporation, not in its

individual capacity but solely as trustee of the Trust, (iii) The

Bank of New York (Delaware), a Delaware banking corporation, not

in its individual capacity but solely as trustee of the Trust,

and (iv) Wayne Patterson, an individual employed by the

Depositor, not in his individual capacity but solely as trustee

of the Trust (each of such trustees in (ii), (iii) and (iv) a

"Trustee" and collectively, the "Trustees"). The Depositor and

the Trustees hereby agree as follows:

1. The trust created hereby shall be known as "TU

Electric Capital III", in which name the Trustees, or the

Depositor to the extent provided herein, may conduct the business

of the Trust, make and execute contracts, and sue and be sued.

2. The Depositor hereby assigns, transfers, conveys

and sets over to the Trustees the sum of $10. The Trustees

hereby acknowledge receipt of such amount in trust from the

Depositor, which amount shall constitute the initial trust

estate. The Trustees hereby declare that they will hold the

trust estate in trust for the Depositor. It is the intention of

the parties hereto that the Trust created hereby constitute a

business trust under Chapter 38 of Title 12 of the Delaware Code,

12 Del. C. ss.3801 et seq. (the "Business Trust Act"), and that
------ -- ---

this document constitutes the governing instrument of the Trust.

The Trustees are hereby authorized and directed to execute and

file a certificate of trust with the Delaware Secretary of State

in accordance with the provisions of the Business Trust Act.

3. The Depositor and the Trustees will enter into an

amended and restated Trust Agreement, satisfactory to each such

party and substantially in the form to be included as an exhibit

to the 1933 Act Registration Statement referred to below, to

provide for the contemplated operation of the Trust created

hereby and the issuance of the Preferred Securities and Common

Securities referred to therein. Prior to the execution and

delivery of such amended and restated Trust Agreement, the

Trustees shall not have any duty or obligation hereunder or with

respect of the trust estate, except as otherwise required by

applicable law or as may be necessary to obtain prior to such

execution and delivery any licenses, consents or approvals

required by applicable law or otherwise.

4. The Depositor and the Trustees hereby authorize

and direct the Depositor (i) to file with the Securities and

Exchange Commission (the "Commission") and execute, in each case

on behalf of the Trust, (a) a Registration Statement on Form S-3

(the "1933 Act Registration Statement"), including any pre-

effective or post-effective amendments to the 1933 Act

Registration Statement, relating to the registration under the

Securities Act of 1933, as amended, of the Preferred Securities

of the Trust and certain other securities and (b) a Registration

Statement on Form 8-A (the "1934 Act Registration Statement")

(including all pre-effective and post-effective amendments

thereto) relating to the registration of the Preferred Securities

of the Trust under Section 12(b) of the Securities Exchange Act

of 1934, as amended; (ii) to file with the New York Stock

Exchange (the "Exchange") and execute on behalf of the Trust a

listing application and all other applications, statements,

certificates, agreements and other instruments as shall be

necessary or desirable to cause the Preferred Securities to be

listed on the Exchange and (iii) to file and execute on behalf of

the Trust such applications, reports, surety bonds, irrevocable

consents, appointments of attorney for service of process and

other papers and documents as shall be necessary or desirable to

Sky" laws of such jurisdictions as the Depositor, on behalf of

the Trust, may deem necessary or desirable. In the event that

any filing referred to in clauses (i) and (ii) above is required

by the rules and regulations of the Commission, the Exchange or

state securities or blue sky laws, to be executed on behalf of

the Trust by one or more of the Trustees, each of the Trustees,

in its or his capacity as Trustee of the Trust, is hereby

authorized and, to the extent so required, directed to join in

any such filing and to execute on behalf of the Trust any and all

of the foregoing, it being understood that The Bank of New York

and The Bank of New York (Delaware), in their capacities as

Trustees of the Trust, respectively, shall not be required to

join in any such filing or execute on behalf of the Trust any

such document unless required by the rules and regulations of the

Commission, the New York Stock Exchange or state securities or

blue sky laws. In connection with all of the foregoing, the

Depositor and each Trustee, solely in its or his capacity as

Trustee of the Trust, hereby constitutes and appoints Robert A.

Wooldridge, Peter B. Tinkham and Robert J. Reger, Jr., and each

of them, as its or his true and lawful attorneys-in-fact and

agents, with full power of substitution and resubstitution, for

the Depositor or such Trustee or in the Depositor's or such

Trustee's name, place and stead, in any and all capacities, to

sign any and all amendments (including post-effective amendments)

to the 1933 Act Registration Statement and the 1934 Act Registra-

tion Statement and to file the same, with all exhibits thereto,

and other documents in connection therewith and in connection

with the filing of the 1933 Act Registration Statement and the

1934 Act Registration Statement, with the Commission, granting

unto said attorneys-in-fact and agents full power and authority

to do and perform each and every act and thing requisite and

necessary to be done in connection therewith, as fully to all

intents and purposes as the Depositor or such Trustee might or

could do in person, hereby ratifying and confirming all that said

attorneys-in-fact and agents or any of them, or their respective

substitute or substitutes, shall do or cause to be done by virtue

hereof.

5. This Trust Agreement may be executed in one or

more counterparts.

6. The number of Trustees initially shall be three

(3) and thereafter the number of Trustees shall be such number as

shall be fixed from time to time by a written instrument signed

by the Depositor which may increase or decrease the number of

Trustees; provided, however, that to the extent required by the

Business Trust Act, one Trustee shall either be a natural person

who is a resident of the State of Delaware, or, if not a natural

person, an entity which has its principal place of business in

the State of Delaware and otherwise meets the requirements of

applicable Delaware law. Subject to the foregoing, the Depositor

is entitled to appoint or remove without cause any Trustee at any

time. The Trustees may resign upon thirty days prior notice to

Depositor.

7. This Trust Agreement shall be governed by, and

construed in accordance with, the laws of the State of Delaware

(without regard to conflict of laws principles).

<PAGE>

IN WITNESS WHEREOF, the parties hereto have caused this

Trust Agreement to be duly executed as of the day and year first

above written.

TEXAS UTILITIES ELECTRIC COMPANY,
as Depositor

By: /s/ Cathryn Hulen
_____________________________
Name: Cathryn Hulen
Title: Treasurer and
Assistant Secretary

THE BANK OF NEW YORK, not in its
individual capacity but solely
as Trustee

By: /s/ Walter N. Gitlin
____________________________
Name: Walter N. Gitlin
Title: Vice President

THE BANK OF NEW YORK,
(DELAWARE), not in its
individual capacity but
solely as Trustee

By: /s/ Joseph F. Leary
____________________________
Name: Joseph F. Leary
Title: Vice President

WAYNE PATTERSON, not in his
individual capacity but
solely as Trustee

By: /s/ Wayne Patterson
____________________________

Exhibit 4(a)

=================================================================

AMENDED AND RESTATED

TRUST AGREEMENT

between

TEXAS UTILITIES ELECTRIC COMPANY, as Depositor

and

THE BANK OF NEW YORK,

THE BANK OF NEW YORK (DELAWARE),

Wayne Patterson,

Cathryn C. Hulen

and

Michael Perkins, as Trustees

Dated as of _________ __, 1995

TU ELECTRIC CAPITAL III

=================================================================

<PAGE>

TU Electric Capital II

Certain Sections of this Trust Agreement relating to
Sections 310 through 318 of the
Trust Indenture Act of 1939:

Trust Indenture Trust Agreement
Act Section Section
--------------- ---------------
Section 310(a)(1) . . . . . . . . . . . . . 8.07
(a)(2) . . . . . . . . . . . . . 8.07
(a)(3) . . . . . . . . . . . . . 8.09
(a)(4) . . . . . . . . . . . . . Not Applicable
(b) . . . . . . . . . . . . . 8.08
Section 311(a) . . . . . . . . . . . . . 8.13
(b) . . . . . . . . . . . . . 8.13
Section 312(a) . . . . . . . . . . . . . 5.07
(b) . . . . . . . . . . . . . 5.07
(c) . . . . . . . . . . . . . 5.07
Section 313(a) . . . . . . . . . . . . . 8.14(a)
(a)(4) . . . . . . . . . . . . . 8.14(b)
(b) . . . . . . . . . . . . . 8.14(b)
(c) . . . . . . . . . . . . . 8.14(a)
(d) . . . . . . . . . . . . . 8.14(a), 8.14(b)
Section 314(a) . . . . . . . . . . . . . Not Applicable
(b) . . . . . . . . . . . . . Not Applicable
(c)(1) . . . . . . . . . . . . . Not Applicable
(c)(2) . . . . . . . . . . . . . Not Applicable
(c)(3) . . . . . . . . . . . . . Not Applicable
(d) . . . . . . . . . . . . . Not Applicable
(e) . . . . . . . . . . . . . Not Applicable
Section 315(a) . . . . . . . . . . . . . 8.01
(b) . . . . . . . . . . . . . 8.02, 8.14(b)
(c) . . . . . . . . . . . . . 8.01(a)
(d) . . . . . . . . . . . . . 8.01, 8.03
(e) . . . . . . . . . . . . . Not Applicable
Section 316(a) . . . . . . . . . . . . . Not Applicable
(a)(1)(A) . . . . . . . . . . . . . Not Applicable
(a)(1)(B) . . . . . . . . . . . . . Not Applicable
(a)(2) . . . . . . . . . . . . . Not Applicable
(b) . . . . . . . . . . . . . Not Applicable
(c) . . . . . . . . . . . . . Not Applicable
Section 317(a)(1) . . . . . . . . . . . . . Not Applicable
(a)(2) . . . . . . . . . . . . . Not Applicable
(b) . . . . . . . . . . . . . 5.09
Section 318(a) . . . . . . . . . . . . . 10.10

----------------
Note: This reconciliation and tie shall not, for any purpose,
be deemed to be a part of the Trust Agreement.

<PAGE>

TABLE OF CONTENTS

ARTICLE I.

Defined Terms

Section 1.01. Definitions . . . . . . . . . . . . . . 2

ARTICLE II.

Establishment of the Trust

Section 2.01. Name . . . . . . . . . . . . . . . . . . 11
Section 2.02. Office of the Delaware Trustee;
Principal Place of Business . . . . . . 11
Section 2.03. Initial Contribution of Trust Property;
Organizational Expenses . . . . . . . . 11
Section 2.04. Issuance of the Preferred Securities . . 11
Section 2.05. Subscription and Purchase of Debentures;
Issuance of the Common Securities . . . 11
Section 2.06. Declaration of Trust; Appointment of
Additional Administrative Trustees . . 11
Section 2.07. Authorization to Enter into Certain
Transactions . . . . . . . . . . . . . 12
Section 2.08. Assets of Trust . . . . . . . . . . . . . 16
Section 2.09. Title to Trust Property . . . . . . . . . 16

ARTICLE III.

Payment Account

Section 3.01. Payment Account . . . . . . . . . . . . . 16

ARTICLE IV.

Distributions; Redemption

Section 4.01. Distributions . . . . . . . . . . . . . . 16
Section 4.02. Redemption . . . . . . . . . . . . . . . 17
Section 4.03. Subordination of Common Securities . . . 19
Section 4.04. Payment Procedures . . . . . . . . . . . 20
Section 4.05. Tax Returns and Reports . . . . . . . . . 20

ARTICLE V.

Trust Securities Certificates

Section 5.01. Initial Ownership . . . . . . . . . . . . 20
Section 5.02. The Trust Securities Certificates . . . . 21
Section 5.03. Execution and Delivery of Trust
Securities Certificates . . . . . . . . 21
Section 5.04. Registration of Transfer and Exchange of
Preferred Securities Certificates . . . 21
Section 5.05. Mutilated, Destroyed, Lost or Stolen
Trust Securities Certificates . . . . . 22
Section 5.06. Persons Deemed Securityholders . . . . . 22
Section 5.07. Access to List of Securityholders' Names
and Addresses . . . . . . . . . . . . . 22
Section 5.08. Maintenance of Office or Agency . . . . . 23
Section 5.09. Appointment of Paying Agent . . . . . . . 23
Section 5.10. Ownership of Common Securities by
Depositor . . . . . . . . . . . . . . . 24
Section 5.11. Definitive Preferred Securities
Certificates . . . . . . . . . . . . . 24
Section 5.12. Book-Entry System . . . . . . . . . . . . 24
Section 5.13. Rights of Securityholders . . . . . . . . 25

ARTICLE VI.

Acts of Securityholders; Meetings; Voting

Section 6.01. Limitations on Voting Rights . . . . . . 25
Section 6.02. Notice of Meetings . . . . . . . . . . . 26
Section 6.03. Meetings of Holders of Preferred
Securities . . . . . . . . . . . . . . 27
Section 6.04. Voting Rights . . . . . . . . . . . . . . 27
Section 6.05. Proxies, etc. . . . . . . . . . . . . . . 27
Section 6.06. Securityholder Action by Written
Consent . . . . . . . . . . . . . . . . 27
Section 6.07. Record Date for Voting and Other
Purposes . . . . . . . . . . . . . . . 28
Section 6.08. Acts of Securityholders . . . . . . . . . 28
Section 6.09. Inspection of Records . . . . . . . . . . 29

ARTICLE VII.

Representations and Warranties of the Property
Trustee and the Delaware Trustee

Section 7.01. Property Trustee . . . . . . . . . . . . 29
Section 7.02. Delaware Trustee . . . . . . . . . . . . 30

ARTICLE VIII.

The Trustees

Section 8.01. Certain Duties and Responsibilities . . . 30
Section 8.02. Notice of Defaults . . . . . . . . . . . 32
Section 8.03. Certain Rights of Property Trustee . . . 32
Section 8.04. Not Responsible for Recitals or Issuance
of Securities . . . . . . . . . . . . . 35
Section 8.05. May Hold Securities . . . . . . . . . . . 35
Section 8.06. Compensation; Fees; Indemnity . . . . . . 35
Section 8.07. Certain Trustees Required; Eligibility . 36
Section 8.08. Conflicting Interests . . . . . . . . . . 36
Section 8.09. Co-Trustees and Separate Trustee . . . . 37
Section 8.10. Resignation and Removal; Appointment of
Successor . . . . . . . . . . . . . . . 38
Section 8.11. Acceptance of Appointment by Successor . 39
Section 8.12. Merger, Conversion, Consolidation or
Succession to Business . . . . . . . . 40
Section 8.13. Preferential Collection of Claims
Against Depositor or Trust . . . . . . 41
Section 8.14. Reports by Property Trustee . . . . . . . 41
Section 8.15. Reports to the Property Trustee . . . . . 41
Section 8.16. Evidence of Compliance With Conditions
Precedent . . . . . . . . . . . . . . . 42
Section 8.17. Number of Trustees. . . . . . . . . . . . 42
Section 8.18. Delegation of Power. . . . . . . . . . . 42
Section 8.19. Fiduciary Duty . . . . . . . . . . . . . 43

ARTICLE IX.

Termination and Liquidation

Section 9.01. Termination Upon Expiration Date . . . . 44
Section 9.02. Early Termination . . . . . . . . . . . . 44
Section 9.03. Termination . . . . . . . . . . . . . . . 44
Section 9.04. Liquidation . . . . . . . . . . . . . . . 44

ARTICLE X.

Miscellaneous Provisions

Section 10.01. Guarantee by the Depositor and
Assumption of Obligations . . . . . . 47
Section 10.02. Limitation of Rights of
Securityholders . . . . . . . . . . . 47
Section 10.03. Amendment . . . . . . . . . . . . . . . 48
Section 10.04. Separability . . . . . . . . . . . . . . 49
Section 10.05. Governing Law . . . . . . . . . . . . . 49
Section 10.06. Successors . . . . . . . . . . . . . . . 49
Section 10.07. Headings . . . . . . . . . . . . . . . . 49
Section 10.08. Notice and Demand . . . . . . . . . . . 49
Section 10.09. Agreement Not to Petition . . . . . . . 50
Section 10.10. Conflict with Trust Indenture Act . . . 50

<PAGE>

AMENDED AND RESTATED TRUST AGREEMENT, dated as of
_______, 1995, between (i) Texas Utilities Electric Company, a
Texas corporation (the "Depositor"), (ii) The Bank of New York, a
banking corporation duly organized and existing under the laws of
New York, as trustee (the "Property Trustee" and, in its separate
capacity and not in its capacity as Property Trustee, the
"Bank"), (iii) The Bank of New York (Delaware), a banking
corporation duly organized under the laws of Delaware, as
Delaware trustee (the "Delaware Trustee") (iv) Wayne Patterson,
an individual, Cathryn C. Hulen, an individual and Michael
Perkins, an individual, each of whose address is c/o Texas
Utilities Services Inc., 1601 Bryan Street, Dallas, Texas 75201
(each, an "Administrative Trustee" and collectively the
"Administrative Trustees") (the Property Trustee, the Delaware
Trustee and the Administrative Trustees referred to collectively
as the "Trustees") and (v) the several Holders, as hereinafter
defined.

W I T N E S S E T H:
- - - - - - - - - -

WHEREAS, the Depositor, the Property Trustee, the
Delaware Trustee and Wayne Patterson, as the Administrative
Trustee, have heretofore duly declared and established a business
trust pursuant to the Delaware Business Trust Act by the entering
into of that certain Trust Agreement, dated as of October 17,
1995 (the "Original Trust Agreement"), and by the execution by
the Property Trustee, the Delaware Trustee and Wayne Patterson,
as Administrative Trustee and filing with the Secretary of State
of the State of Delaware of the Certificate of Trust, dated
October 17, 1995, a copy of which is attached as Exhibit A; and

WHEREAS, the Depositor, the Property Trustee, Delaware
Trustee and Wayne Patterson, as Administrative Trustee, desire to
amend and restate the Original Trust Agreement in its entirety as
set forth herein to provide for, among other things, (i) the
acquisition by the Trust from the Depositor of all of the right,
title and interest in the Debentures, (ii) the issuance of the
Common Securities by the Trust to the Depositor, (iii) the
issuance of the Preferred Securities by the Trust and (iv) the
appointment of the additional Administrative Trustees;

NOW THEREFORE, in consideration of the agreements and
obligations set forth herein and for other good and valuable
consideration, the sufficiency of which is hereby acknowledged,
each party, for the benefit of the other party and for the
benefit of the Securityholders, hereby amends and restates the
Original Trust Agreement in its entirety and agrees as follows:

ARTICLE I.

Defined Terms

Section 1.01. Definitions. For all purposes of this
Trust Agreement, except as otherwise expressly provided or unless
the context otherwise requires:

(a) the terms defined in this Article have the
meanings assigned to them in this Article and include
the plural as well as the singular;

(b) all other terms used herein that are defined
in the Trust Indenture Act, either directly or by
reference therein, have the meanings assigned to them
therein;

(c) unless the context otherwise requires, any
reference to an "Article" or a "Section" refers to an
Article or a Section, as the case may be, of this Trust
Agreement; and

(d) the words "herein", "hereof" and "hereunder"
and other words of similar import refer to this Trust
Agreement as a whole and not to any particular Article,
Section or other subdivision.

"Act" has the meaning specified in Section 6.08.

"Additional Amount" means, with respect to Trust
Securities of a given Liquidation Amount and/or a given period,
the amount of Additional Interest (as defined in the Subordinated
Indenture) paid by the Depositor on a Like Amount of Debentures
for such period.

"Administrative Trustee" means each of the individuals
identified as an "Administrative Trustee" in the preamble to this
Trust Agreement solely in their capacities as Administrative
Trustees of the Trust formed hereunder and not in their
individual capacities, or such trustee's successor in interest in
such capacity, or any successor trustee appointed as herein
provided.

"Affiliate" of any specified Person means any other
Person directly or indirectly controlling or controlled by or
under direct or indirect common control with such specified
Person. For the purposes of this definition, "control" when used
with respect to any specified Person means the power to direct
the management and policies of such Person, directly or
indirectly, whether through the ownership of voting securities,
by contract or otherwise; and the terms "controlling" and
"controlled" have meanings correlative to the foregoing.

"Bank" has the meaning specified in the preamble to
this Trust Agreement.

"Bankruptcy Event" means, with respect to any Person:

(i) the entry of a decree or order by a court having
jurisdiction in the premises judging such Person a
bankrupt or insolvent, or approving as properly filed a
petition seeking reorganization, arrangement,
adjudication or composition of or in respect of such
Person under Federal bankruptcy law or any other
applicable Federal or State law, or appointing a
receiver, liquidator, assignee, trustee sequestrator or
other similar official of such Person or of any
substantial part of its property, or ordering the
winding up or liquidation of its affairs, and the
continuance of any such decree or order unstayed and in
effect for a period of 60 consecutive days; or

(ii) the institution by such Person of proceedings to
be adjudicated a bankrupt or insolvent, or of the
consent by it to the institution of bankruptcy or
insolvency proceedings against it, or the filing by it
of a petition or answer or consent seeking
reorganization or relief under Federal bankruptcy law
or any other applicable Federal or State law, or the
consent by it to the filing of such petition or to the
appointment of a receiver, liquidator, assignee,
trustee, sequestrator or similar official of such
Person or of any substantial part of its property, or
the making by it of an assignment for the benefit of
creditors, or the admission by it in writing of its
inability to pay its debts generally as they become
due.

"Bankruptcy Laws" has the meaning specified in Section
10.09.

"Board Resolution" means a copy of a resolution
certified by the Secretary or an Assistant Secretary of the
Depositor to have been duly adopted by the Depositor's Board of
Directors or a duly authorized committee thereof and to be in
full force and effect on the date of such certification, and
delivered to the appropriate Trustee.

"Business Day" means a day other than (x) a Saturday or
a Sunday, (y) a day on which banks in New York, New York are
authorized or obligated by law or executive order to remain
closed or (z) a day on which the Property Trustee's Corporate
Trust Office or the Debenture Trustee's principal corporate trust
office is closed for business.

"Certificate of Trust" has the meaning specified in
Section 2.07(d).

"Clearing Agency" means an organization registered as a
"clearing agency" pursuant to Section 17A of the Securities
Exchange Act of 1934, as amended. The Depository Trust Company
will be the initial Clearing Agency.

"Closing Date" means the date of execution and delivery
of this Trust Agreement.

"Code" means the Internal Revenue Code of 1986, as
amended.

"Commission" means the Securities and Exchange
Commission, as from time to time constituted, created under the
Exchange Act, or, if at any time after the execution of this
instrument such Commission is not existing and performing the
duties now assigned to it under the Trust Indenture Act, then the
body performing such duties at such time.

"Common Security" means an undivided beneficial
interest in the assets of the Trust having a Liquidation Amount
of $25 and having the rights provided therefor in this Trust
Agreement, including the right to receive Distributions and a
Liquidation Distribution as provided herein.

"Common Securities Certificate" means a certificate
evidencing ownership of Common Securities, substantially in the
form attached as Exhibit B.

"Corporate Trust Office" means the principal corporate
trust office of the Property Trustee located in New York, New
York.

"Covered Person" means: (a) any officer, director,
shareholder, partner, member, representative, employee or agent
of the Trust or the Trust's Affiliates; and (b) any Holder of
Trust Securities.

"Debenture Event of Default" means an "Event of
Default" as defined in the Subordinated Indenture.

"Debenture Issuer" means Texas Utilities Electric
Company, a Texas corporation, in its capacity as issuer of the
Debentures.

"Debenture Redemption Date" means "Redemption Date" as
defined in the Subordinated Indenture with respect to the
Debentures.

"Debenture Trustee" means The Bank of New York, as
trustee under the Subordinated Indenture.

"Debentures" means the $____________ aggregate
principal amount of the Depositor's ____% Junior Subordinated
Debentures, Series B, Due ___________, 2030, issued pursuant to
the Subordinated Indenture.

"Definitive Preferred Securities Certificates" means
Preferred Securities Certificates issued in certificated, fully
registered form as provided in Section 5.11.

"Delaware Business Trust Act" means Chapter 38 of Title
12 of the Delaware Code, 12 Del. Code Section 3801 et seq., as it
may be amended from time to time.

"Delaware Trustee" means the banking corporation
identified as the "Delaware Trustee" in the preamble to this
Trust Agreement solely in its capacity as Delaware Trustee of the
Trust formed hereunder and not in its individual capacity, or its
successor in interest in such capacity, or any successor trustee
appointed as herein provided.

"Depositor" has the meaning specified in the preamble
to this Trust Agreement and includes Texas Utilities Electric
Company in its capacity as Holder of the Common Securities.

"Distribution Date" has the meaning specified in
Section 4.01(a).

"Distributions" means amounts payable in respect of the
Trust Securities as provided in Section 4.01.

"Early Termination Event" has the meaning specified in
Section 9.02.

"Event of Default" means any one of the following
events (whatever the reason for such Event of Default and whether
it shall be voluntary or involuntary or be effected by operation
of law or pursuant to any judgment, decree or order of any court
or any order, rule or regulation of any administrative or
governmental body):

(i) the occurrence of a Debenture Event of Default;
or

(ii) default by the Trust in the payment of any
Distribution when it becomes due and payable, and
continuation of such default for a period of 30 days;
or

(iii) default by the Trust in the payment of any
Redemption Price, plus accumulated and unpaid
distributions of any Trust Security when it becomes due
and payable; or

(iv) default in the performance, or breach, in any
material respect of any covenant or warranty of the
Trustees in this Trust Agreement (other than a covenant
or warranty a default in whose performance or breach is
specifically dealt with in clause (ii) or (iii), above)
and continuation of such default or breach for a period
of 60 days after there has been given, by registered or
certified mail, to the Trust by the Holders of at least
10% in Liquidation Amount of the Outstanding Preferred
Securities a written notice specifying such default or
breach and requiring it to be remedied and stating that
such notice is a "Notice of Default" hereunder; or

(v) the occurrence of a Bankruptcy Event with
respect to the Trust.

"Exchange Act" has the meaning specified in Section
2.07(c).

"Expense Agreement" means the Agreement as to Expenses
and Liabilities between the Depositor and the Trust,
substantially in the form attached as Exhibit C, as amended from
time to time.

"Expiration Date" shall have the meaning specified in
Section 9.01.

"Guarantee" means the Guarantee Agreement executed and
delivered by the Depositor and The Bank of New York, a New York
banking corporation, as trustee, contemporaneously with the
execution and delivery of this Trust Agreement, for the benefit
of the Holders of the Preferred Securities, as amended from time
to time.

"Indemnified Person" means any Trustee, any Affiliate
of any Trustee, or any officers, directors, shareholders,
members, partners, employees, representatives or agents of any
Trustee, or any employee or agent of the Trust or its Affiliates.

"Lien" means any lien, pledge, charge, encumbrance,
mortgage, deed of trust, adverse ownership interest,
hypothecation, assignment, security interest or preference,
priority or other security agreement or preferential arrangement
of any kind or nature whatsoever.

"Like Amount" means (i) Trust Securities having a
Liquidation Amount equal to the principal amount of Debentures to
be contemporaneously redeemed in accordance with the Subordinated
Indenture and the proceeds of which will be used to pay the
Redemption Price of such Trust Securities plus accumulated and
unpaid Distributions to the date of such payment and (ii)
Debentures having a principal amount equal to the Liquidation
Amount of the Trust Securities of the Holder to whom such
Debentures are distributed.

"Liquidation Amount" means the stated amount of $25 per
Trust Security.

"Liquidation Date" means the date on which Debentures
are to be distributed to Holders of Trust Securities in
connection with a termination and liquidation of the Trust
pursuant to Section 9.04(a).

"Liquidation Distribution" has the meaning specified in
Section 9.04(e).

"No Recognition Opinion" has the meaning specified in
Section 9.04(d).

"Offer" has the meaning specified in Section 2.07(c).

"Officers' Certificate" means a certificate signed by
the Chairman of the Board, a Vice Chairman of the Board, the
President or a Vice President, and by the Treasurer, an Assistant
Treasurer, the Secretary or an Assistant Secretary, of the
Depositor, and delivered to the appropriate Trustee. One of the
officers signing an Officers' Certificate given pursuant to
Section 8.16 shall be the principal executive, financial or
accounting officer of the Depositor. Any Officers' Certificate
delivered with respect to compliance with a condition or covenant
provided for in this Trust Agreement shall include:

(a) a statement that each officer signing the
Officers' Certificate has read the covenant or condition and
the definitions relating thereto;

(b) a brief statement of the nature and scope of the
examination or investigation undertaken by each officer in
rendering the Officers' Certificate;

(c) a statement that each such officer has made such
examination or investigation as, in such officer's opinion,
is necessary to enable such officer to express an informed
opinion as to whether or not such covenant or condition has
been complied with; and

(d) a statement as to whether, in the opinion of each
such officer, such condition or covenant has been complied
with.

"Opinion of Counsel" means a written opinion of
counsel, who may be counsel for the Trust, the Property Trustee,
the Delaware Trustee or the Depositor, but not an employee of the
Trust, the Property Trustee, the Delaware Trustee or the
Depositor, and who shall be reasonably acceptable to the Property
Trustee.

"Original Trust Agreement" has the meaning specified in
the recitals to this Trust Agreement.

"Outstanding," when used with respect to Preferred
Securities, means, as of the date of determination, all Preferred
Securities theretofore delivered under this Trust Agreement,
except:

(i) Preferred Securities theretofore canceled by the
Administrative Trustees or delivered to the
Administrative Trustees for cancellation;

(ii) Preferred Securities for whose payment or
redemption money in the necessary amount has been
theretofore deposited with the Property Trustee or any
Paying Agent for the Holders of such Preferred
Securities; provided that, if such Preferred Securities
are to be redeemed, notice of such redemption has been
duly given pursuant to this Trust Agreement; and

(iii) Preferred Securities in exchange for or in lieu
of which other Preferred Securities have been delivered
pursuant to this Trust Agreement, including pursuant to
Sections 5.04, 5.05 or 5.11;

provided, however, that in determining whether the Holders of the
requisite Liquidation Amount of the Outstanding Preferred
Securities have given any request, demand, authorization,
direction, notice, consent or waiver hereunder, Preferred
Securities owned by the Depositor, any Trustee or any Affiliate
of the Depositor or any Trustee shall be disregarded and deemed
not to be Outstanding, except that (a) in determining whether any
Trustee shall be protected in relying upon any such request,
demand, authorization, direction, notice, consent or waiver, only
Preferred Securities which such Trustee knows to be so owned
shall be so disregarded and (b) the foregoing shall not apply at
any time when all of the outstanding Preferred Securities are
owned by the Depositor, one or more of the Trustees and/or any
such Affiliate. Preferred Securities so owned which have been
pledged in good faith may be regarded as Outstanding if the
pledgee establishes to the satisfaction of the Administrative
Trustee the pledgee's right so to act with respect to such
Preferred Securities and that the pledgee is not the Depositor or
any Affiliate of the Depositor.

"Owner" means each Person who is the owner of a
Preferred Securities Certificate as reflected in the Securities
Register.

"Paying Agent" means any paying agent or co-paying
agent appointed pursuant to Section 5.09 and shall initially be
Texas Utilities Services, Inc.

"Payment Account" means a segregated non-interest-
bearing corporate trust account maintained by the Property
Trustee with the Bank in its trust department for the benefit of
the Securityholders in which all amounts paid in respect of the
Debentures will be held and from which the Property Trustee shall
make payments to the Securityholders in accordance with
Sections 4.01 and 4.02.

"Person" means any individual, corporation,
partnership, joint venture, trust, limited liability company or
corporation, unincorporated organization or government or any
agency or political subdivision thereof.

"Preferred Security" means a quarterly income preferred
security representing an undivided beneficial interest in the
assets of the Trust having a Liquidation Amount of $25 and having
rights provided therefor in this Trust Agreement, including the
right to receive Distributions and a Liquidation Distribution as
provided herein.

"Preferred Securities Certificate" means a certificate
evidencing ownership of Preferred Securities, substantially in
the form attached as Exhibit D.

"Property Trustee" means the commercial bank or trust
company identified as the "Property Trustee" in the preamble to
this Trust Agreement solely in its capacity as Property Trustee
of the Trust formed and continued hereunder and not in its
individual capacity, or its successor in interest in such
capacity, or any successor trustee appointed as herein provided.

"Redemption Date" means, with respect to any Trust
Security to be redeemed, the date fixed for such redemption by or
pursuant to this Trust Agreement; provided that each Debenture
Redemption Date shall be a Redemption Date for a Like Amount of
Trust Securities.

"Redemption Price" means, with respect to any date
fixed for redemption of any Trust Security, the Liquidation
Amount of such Trust Security.

"Redemption Tax Opinion" has the meaning specified in
Section 9.04(d).

"Relevant Trustee" shall have the meaning specified in
Section 8.10.

"Securities Depository" shall have the meaning
specified in Section 5.12.

"Securities Register" and "Securities Registrar" shall
mean the Securities Register and Securities Registrar described
in Section 5.04.

"Securityholder" or "Holder" means a Person in whose
name a Trust Security or Securities is registered in the
Securities Register; any such Person shall be deemed to be a
beneficial owner of such security within the meaning of the
Delaware Business Trust Act.

"Subordinated Indenture" means the Indenture, dated as
of __________, 1995, between the Depositor and the Debenture
Trustee, as trustee, as amended or supplemented from time to
time.

"Tax Event" means the receipt by the Trust of an
opinion of nationally recognized independent tax counsel
experienced in such matters to the effect that, as a result of
(a) any amendment to, clarification of, or change (including any
announced prospective change) in, the laws or treaties (or any
regulations thereunder) of the United States or any political
subdivision or taxing authority thereof or therein affecting
taxation, (b) any judicial decision or any official
administrative pronouncement, ruling, regulatory procedure,
notice or announcement (including any notice or announcement of
intent to issue or adopt any such administrative pronouncement,
ruling, regulatory procedure or regulation) (each, for purposes
of this definition, an "Administrative Action"), or (c) any
amendment to, clarification of, or change in the official
position or the interpretation of any such Administrative Action
or judicial decision or any interpretation or pronouncement that
provides for a position with respect to such Administrative
Action or judicial decision that differs from the theretofore
generally accepted position, in each case by any legislative
body, court, governmental authority or regulatory body,
irrespective of the manner in which such amendment, clarification
or change is made known, which amendment, clarification, or
change is effective, which Administrative Action is taken or
which judicial decision is issued, in each case on or after the
date of issuance of the Preferred Securities, there is more than
an insubstantial risk that (i) the Trust is, or will be, subject
to United States federal income tax with respect to interest
received on the Debentures, (ii) interest payable by the
Depositor on the Debentures is not, or will not be, fully
deductible by the Depositor for United States federal income tax
purposes, or (iii) the Trust is, or will be, subject to more than
a de minimis amount of other taxes, duties or other governmental
charges.

"Trust" means the Delaware business trust created by
the Original Trust Agreement and continued hereby and identified
on the cover page to this Trust Agreement.

"Trust Agreement" means this Amended and Restated Trust
Agreement, as the same may be modified, amended or supplemented
in accordance with the applicable provisions hereof, including
all exhibits hereto, including, for all purposes of this Amended
and Restated Trust Agreement and any such modification, amendment
or supplement, the provisions of the Trust Indenture Act that are
deemed to be a part of and govern this Amended and Restated Trust
Agreement and any such modification, amendment or supplement,
respectively.

"Trust Indenture Act" means the Trust Indenture Act of
1939 as in force at the date as of which this instrument was
executed; provided, however, that in the event the Trust
Indenture Act of 1939 is amended after such date, "Trust
Indenture Act" means, to the extent required by any such
amendment, the Trust Indenture Act of 1939 as so amended.

"Trust Property" means (i) the Debentures, (ii) any
cash on deposit in, or owing to, the Payment Account and (iii)
all proceeds and rights in respect of the foregoing and any other
property and assets for the time being held by the Property
Trustee pursuant to the trusts of this Trust Agreement.

"Trust Security" means any one of the Common Securities
or the Preferred Securities.

"Trust Securities Certificate" means any one of the
Common Securities Certificates or the Preferred Securities
Certificates.

"Underwriting Agreement" means the Underwriting
Agreement, dated as of __________, 1995, among the Trust, the
Depositor and the underwriters named therein.

ARTICLE II.

Establishment of the Trust

Section 2.01. Name. The Trust created hereby shall be
known as "TU Electric Capital II", in which name the Trustees may
conduct the business of the Trust, make and execute contracts and
other instruments on behalf of the Trust and sue and be sued.

Section 2.02. Office of the Delaware Trustee;
Principal Place of Business. The office of the Delaware Trustee
in the State of Delaware is White Clay Center, Route 273, Newark,
Delaware 19711, or at such other address in Delaware as the
Delaware Trustee may designate by written notice to the
Securityholders and the Depositor. The principal place of
business of the Trust is c/o Texas Utilities Electric Company,
Energy Plaza, 1601 Bryan Street, Dallas, Texas 75201.

Section 2.03. Initial Contribution of Trust Property;
Organizational Expenses. The Property Trustee acknowledges
receipt in trust from the Depositor in connection with the
Original Trust Agreement of the sum of $10, which constituted the
initial Trust Property. The Depositor shall pay organizational
expenses of the Trust as they arise or shall, upon request of any
Trustee, promptly reimburse such Trustee for any such expenses
paid by such Trustee. The Depositor shall make no claim upon the
Trust Property for the payment of such expenses.

Section 2.04. Issuance of the Preferred Securities.
On ______, 1995 the Depositor, on behalf of the Trust, executed
and delivered the Underwriting Agreement. Contemporaneously
with the execution and delivery of this Trust Agreement, one of
the Administrative Trustees, on behalf of the Trust in accordance
with Section 5.02, shall execute and deliver to the underwriters
named therein Preferred Securities Certificates, registered in
the name of the nominee of The Depository Trust Company, in an
aggregate amount of [ ] Preferred Securities having an
aggregate Liquidation Amount of $[ ] against receipt of
the aggregate purchase price of such Preferred Securities of
$[ ], which amount the Administrative Trustees shall promptly
deliver to the Property Trustee.

Section 2.05. Subscription and Purchase of Debentures;
Issuance of the Common Securities. Contemporaneously with the
execution and delivery of this Trust Agreement, the
Administrative Trustees, on behalf of the Trust, shall subscribe
to and purchase from the Depositor Debentures, registered in the
name of the Trust and having an aggregate principal amount equal
to $[ ], and, in satisfaction of the purchase price for
such Debentures, (x) the Administrative Trustees, on behalf of the
Trust, shall execute and deliver to the Depositor Common Securities
Certificates, registered in the name of the Depositor, in an
aggregate amount of $[ ] Common Securities having an aggregate
Liquidation Amount of $[ ], and (y) the Property Trustee, on
behalf of the Trust, shall deliver to the Depositor the sum of
$[ ].

Section 2.06. Declaration of Trust; Appointment of
Additional Administrative Trustees. (a) The exclusive purposes
and functions of the Trust are (i) to issue Trust Securities and
invest the proceeds thereof in Debentures, and (ii) to engage
in those activities necessary, convenient or incidental thereto.
The Depositor hereby appoints the Trustees as trustees of the
Trust, to have all the rights, powers and duties to the extent
set forth herein. The Property Trustee hereby declares that it
will hold the Trust Property in trust upon and subject to the
conditions set forth herein for the benefit of the
Securityholders. The Trustees shall have all rights, powers and
duties set forth herein and in accordance with applicable law
with respect to accomplishing the purposes of the Trust.
Anything in this Trust Agreement to the contrary notwithstanding
the Delaware Trustee shall not be entitled to exercise any
powers, nor shall the Delaware Trustee have any of the duties and
responsibilities, of the Property Trustee or the Administrative
Trustees set forth herein. The Delaware Trustee shall be one of
the Trustees of the Trust for the sole and limited purpose of
fulfilling the requirements of Section 3807 of the Delaware
Business Trust Act.

(b) The Property Trustee, the Delaware Trustee and
Wayne Patterson, as Administrative Trustee, hereby appoint
Cathryn C. Hulen and Michael Perkins as additional Administrative
Trustees, each of which persons by execution of this Trust
Agreement accepts such appointment.

Section 2.07. Authorization to Enter into Certain
Transactions. (a) The Trustees shall conduct the affairs of the
Trust in accordance with the terms of this Trust Agreement.
Subject to the limitations set forth in paragraph (b) of this
Section and Article VIII and in accordance with the following
provisions (A) and (B), the Trustees shall have the authority to
enter into all transactions and agreements determined by the
Trustees to be appropriate in exercising the authority, express
or implied, otherwise granted to the Trustees under this Trust
Agreement, and to perform all acts in furtherance thereof,
including without limitation, the following:

(A) As among the Trustees, the Administrative Trustees
shall have the power, duty and authority to act on behalf of the
Trust with respect to the following matters:

(i) the issuance and sale of the Trust Securities;

(ii) without the consent of any Person, to cause the
Trust to enter into and to execute, deliver and perform
on behalf of the Trust, the Expense Agreement, the
Underwriting Agreement and such other agreements as
may be necessary or desirable in connection with the
consummation hereof (such execution to be by the
Administrative Trustees or any one of them);

(iii) to qualify the Trust to do business in any
jurisdiction as may be necessary or desirable;

(iv) the collection of interest, principal and any
other payments made in respect of the Debentures in the
Payment Account;

(v) the registration of the Preferred Securities
under the Securities Act of 1933, as amended, and under
state securities or blue sky laws, and the
qualification of this Trust Agreement as a trust
indenture under the Trust Indenture Act;

(vi) the listing of the Preferred Securities upon
such securities exchange or exchanges as shall be
determined by the Depositor and the registration of the
Preferred Securities under the Exchange Act, as
amended, and the preparation and filing of all periodic
and other reports and other documents pursuant to the
foregoing;

(vii) the appointment of a Paying Agent and Securities
Registrar in accordance with this Trust Agreement;

(viii) registering transfers of the Trust Securities
in accordance with this Trust Agreement;

(ix) to the extent provided in this Trust Agreement,
the winding up of the affairs of and liquidation of the
Trust and the preparation, execution and filing of the
certificate of cancellation with the Secretary of State
of Delaware; and

(x) the taking of any action incidental to the
foregoing as the Administrative Trustees may from time
to time determine is necessary or advisable to protect
and conserve the Trust Property for the benefit of the
Securityholders (without consideration of the effect of
any such action on any particular Securityholder).

(B) As among the Trustees, the Property Trustee shall have
the power, duty and authority to act on behalf of the Trust with
respect to the following matters:

(i) the establishment of the Payment Account;

(ii) the receipt of the Debentures;

(iii) the deposit of interest, principal and any other
payments made in respect of the Debentures in the
Payment Account;

(iv) the distribution of amounts owed to the
Securityholders in respect of the Trust Securities in
accordance with the terms of this Trust Agreement;

(v) the sending of notices of default and other
information regarding the Trust Securities and the
Debentures to the Securityholders in accordance with
the terms of this Trust Agreement;

(vi) the distribution of the Trust Property in
accordance with the terms of this Trust Agreement;

(vii) as provided in this Trust Agreement, the winding
up of the affairs of and liquidation of the Trust and
the execution of the certificate of cancellation to be
prepared and filed by the Administrative Trustees with
the Secretary of State of the State of Delaware; and

(viii) the taking of any action incidental to the
foregoing as the Property Trustee may from time to time
determine is necessary or advisable to protect and
conserve the Trust Property for the benefit of the
Securityholders (without consideration of the effect of
any such action on any particular Securityholder).

Subject to this Section 2.07(a)(B), the Property
Trustee shall have none of the duties, powers or authority of the
Administrative Trustee set forth in Section 2.07(a)(A) or the
Depositor set forth in Section 2.07(c).

(b) So long as this Trust Agreement remains in effect,
the Trust (or the Trustees acting on behalf of the Trust) shall
not undertake any business, activities or transaction except as
expressly provided herein or contemplated hereby. In particular,
the Trustees shall not (i) acquire any investments or engage in
any activities not authorized by this Trust Agreement, (ii) sell,
assign, transfer, exchange, pledge, set-off or otherwise dispose
of any of the Trust Property or interests therein, including to
Securityholders, except as expressly provided herein, (iii) take
any action that would cause the Trust to fail or cease to qualify
as a "grantor trust" for United States federal income tax
purposes and not as an association taxable as a corporation, (iv)
incur any indebtedness for borrowed money or (v) take or consent
to any action that would result in the placement of a Lien on any
of the Trust Property. The Trustees shall defend all claims and
demands of all Persons at any time claiming any Lien on any of
the Trust Property adverse to the interest of the Trust or the
Securityholders in their capacity as Securityholders.

(c) In connection with the issue of the Preferred
Securities, the Depositor shall have the right and responsibility
to assist the Trust with respect to, or effect on behalf of the
Trust, the following (and any actions taken by the Depositor in
furtherance of the following prior to the date of this Trust
Agreement are hereby ratified and confirmed in all respects):

(i) to prepare for filing by the Trust with the
Commission and to execute a registration statement on
Form S-3 in relation to the Preferred Securities,
including any amendments thereto;

(ii) to determine the States in which to take
appropriate action to qualify or register for sale all
or part of the Preferred Securities and to do any and
all such acts, other than actions which must be taken
by or on behalf of the Trust, and advise the Trustees
of actions they must take on behalf of the Trust, and
prepare for execution and filing any documents to be
executed and filed by the Trust or on behalf of the
Trust, as the Depositor deems necessary or advisable in
order to comply with the applicable laws of any such
States;

(iii) to prepare for filing by the Trust an
application to the New York Stock Exchange or any other
national stock exchange or the Nasdaq National Market
for listing upon notice of issuance of any Preferred
Securities;

(iv) to prepare for filing by the Trust with the
Commission and to execute a registration statement on
Form 8-A relating to the registration of the Preferred
Securities under Section 12(b) of the Securities
Exchange Act of 1934, as amended ("Exchange Act"),
including any amendments thereto;

(v) to select the investment banker or bankers to
act as underwriters with respect to the offer and sale
by the Trust of Preferred Securities ("Offer") and
negotiate the terms of an Underwriting Agreement and
pricing agreement providing for the Offer;

(vi) to take any other actions necessary or desirable
to carry out any of the foregoing activities; and

(vii) to designate itself or an Affiliate to be the
Securities Registrar.

(d) Notwithstanding anything herein to the contrary,
the Administrative Trustees are authorized and directed to
conduct the affairs of the Trust and to operate the Trust so that
the Trust will not be deemed to be an "investment company"
required to be registered under the Investment Company Act of
1940, as amended, or classified other than as a "grantor trust"
for United States federal income tax purposes and not as an
association taxable as a corporation and so that the Debentures
will be treated as indebtedness of the Depositor for United
States federal income tax purposes. In this connection, the
Depositor and the Administrative Trustees are authorized to take
any action, not inconsistent with applicable law, the certificate
of trust filed with the Secretary of State of the State of
Delaware with respect to the Trust (the "Certificate of Trust")
or this Trust Agreement, that each of the Depositor and the
Administrative Trustees determines in its discretion to be
necessary or desirable for such purposes, as long as such action
does not materially adversely affect the interests of the holders
of the Preferred Securities.

Section 2.08. Assets of Trust. The assets of the
Trust shall consist of the Trust Property.

Section 2.09. Title to Trust Property. Legal title to
all Trust Property shall be vested at all times in the Property
Trustee (in its capacity as such) and shall be held and
administered by the Property Trustee for the benefit of the
Securityholders in accordance with this Trust Agreement.

ARTICLE III.

Payment Account

Section 3.01. Payment Account.

(a) On or prior to the Closing Date, the Property
Trustee shall establish the Payment Account. The Property
Trustees and the Paying Agent appointed by the Administrative
Trustees shall have exclusive control and sole right of
withdrawal with respect to the Payment Account for the purpose of
making deposits in and withdrawals from the Payment Account in
accordance with this Trust Agreement. All monies and other
property deposited or held from time to time in the Payment
Account shall be held by the Property Trustee in the Payment
Account for the exclusive benefit of the holders of Trust
Securities and for distribution as herein provided, including
(and subject to) any priority of payments provided for herein.

(b) The Property Trustee shall deposit in the Payment
Account, promptly upon receipt, all payments of principal or
interest on, and any other payments or proceeds with respect to,
the Debentures. Amounts held in the Payment Account shall not be
invested by the Property Trustee pending distribution thereof.

ARTICLE IV.

Distributions; Redemption

Section 4.01. Distributions.

(a) Distributions on the Trust Securities shall be
cumulative, and will accumulate whether or not there are funds of
the Trust available for the payment of Distributions.
Distributions shall accrue from _________, 199__, and, except
in the event that the Depositor exercises its right to extend the
interest payment period for the Debentures pursuant to Section
311 of the Subordinated Indenture, shall be payable quarterly in
arrears on March 31, June 30, September 30 and December 31 of
each year, commencing on _________ __, 199__. If any date on
which Distributions are otherwise payable on the Trust Securities
is not a Business Day, then the payment of such Distribution
shall be made on the next succeeding day which is a Business Day
(and without any interest or other payment in respect of any such
delay) except that, if such Business Day is in the next
succeeding calendar year, payment of such distribution shall be
made on the immediately preceding Business Day, in each case,
with the same force and effect as if made on such date (each date
on which distributions are payable in accordance with this
Section 4.01(a) a "Distribution Date").

(b) Distributions payable on the Trust Securities
shall be fixed at a rate of ____% per annum of the Liquidation
Amount of the Trust Securities. The amount of Distributions
payable for any full quarterly period shall be computed on the
basis of twelve 30-day months and a 360-day year and for any
period shorter than a full month, on the basis of the actual
number of days elapsed. If the interest payment period for the
Debentures is extended pursuant to Section 311 of the
Subordinated Indenture, then Distributions on the Preferred
Securities will be deferred for the period equal to the extension
of the interest payment period for the Debentures and the rate
per annum at which Distributions on the Trust Securities
accumulate shall be increased by an amount such that the
aggregate amount of Distributions that accumulate on all Trust
Securities during any such extended interest payment period is
equal to the aggregate amount of interest (including interest
payable on unpaid interest at the percentage rate per annum set
forth above, compounded monthly) that accrues during any such
extended interest payment period on the Debentures. The amount
of Distributions payable for any period shall include the
Additional Amounts, if any.

(c) Distributions on the Trust Securities shall be
made and shall be deemed payable on each Distribution Date only
to the extent that the Trust has funds available in the Payment
Account for the payment of such Distributions.

(d) Distributions on the Trust Securities with respect
to a Distribution Date shall be payable to the Holders thereof as
they appear on the Securities Register for the Trust Securities
on the relevant record date, which shall be 15 days prior to the
relevant Distribution Date.

Section 4.02. Redemption. (a) On each Debenture
Redemption Date, the Property Trustee will be required to redeem
a Like Amount of Trust Securities at the Redemption Price plus
accumulated and unpaid Distributions to the date of such payment.

(b) Notice of redemption shall be given by the
Property Trustee by first-class mail, postage prepaid, mailed not
less than 30 nor more than 60 days prior to the Redemption Date
to each Holder of Trust Securities to be redeemed, at such
Holder's address appearing in the Security Register. All notices
of redemption or liquidation shall state:

(i) the Redemption Date;

(ii) the Redemption Price and the amount of
accumulated and unpaid Dividends to be paid on the
Redemption Date;

(iii) the CUSIP number;

(iv) if less than all the Outstanding Trust
Securities are to be redeemed, the identification and
the total Liquidation Amount of the particular Trust
Securities to be redeemed; and

(v) that on the Redemption Date the Redemption Price
plus accumulated and unpaid Distributions to the date
of such payment will become due and payable upon each
such Trust Security to be redeemed and that interest
thereon will cease to accrue on and after said date.

(c) The Trust Securities redeemed on each Redemption
Date shall be redeemed at the Redemption Price plus accumulated
and unpaid Distributions to the date of such payment with the
proceeds from the contemporaneous redemption of Debentures.
Redemptions of the Trust Securities shall be made and the
Redemption Price plus accumulated and unpaid Distributions to the
date of such payment shall be deemed payable on each Redemption
Date only to the extent that the Trust has funds immediately
available in the Payment Account for such payment.

(d) If the Property Trustee gives a notice of
redemption in respect of any Preferred Securities, then, by 12:00
noon, New York time, on the Redemption Date, subject to Section
4.02(c), the Property Trustee shall irrevocably deposit with the
Paying Agent funds sufficient to pay the applicable Redemption
Price plus accumulated and unpaid Distributions to the date of
such payment and will give the Paying Agent irrevocable
instructions and authority to pay the Redemption Price plus
accumulated and unpaid Distributions to the date of such payment
to the holders thereof upon surrender of their Preferred
Securities Certificates. Notwithstanding the foregoing,
Distributions payable on or prior to the redemption date for any
Trust Securities called for redemption shall be payable to the
Holders of such Trust Securities as they appear on the Register
for the Trust Securities on the relevant record dates for the
related Distribution Dates. If notice of redemption shall have
been given and funds deposited as required, then on the
Redemption Date, all rights of Securityholders holding Trust
Securities so called for redemption will cease, except the right
of such Securityholders to receive the Redemption Price plus
accumulated and unpaid Distributions to the date of such payment,
but without interest thereon, and such Securities will cease to
be outstanding. In the event that any Redemption Date is not a
Business Day, then payment of the Redemption Price payable on
such date plus accumulated and unpaid Distributions to such date
shall be made on the next succeeding day which is a Business Day
(and without any interest or other payment in respect of any such
delay). In the event that payment of the Redemption Price plus
accumulated and unpaid Distributions in respect of any Trust
Securities called for redemption is improperly withheld or
refused and not paid either by the Trust or by the Depositor
pursuant to the Guarantee, Distributions on such Trust Securities
will continue to accrue, at the then applicable rate, from the
Redemption Date originally established by the Trust for such
Trust Securities to the date such Redemption Price plus
accumulated and unpaid Distributions is actually paid, in which
case the actual payment date will be deemed the date fixed for
redemption for purposes of calculating the Redemption Price plus
accumulated and unpaid Distributions to such date.

(e) Payment of the Redemption Price on the Trust
Securities shall be made to the Holders thereof as they appear on
the Securities Register for the Trust Securities on the relevant
record date, which shall be the fifteenth day prior to the
Redemption Date.

(f) If less than all the Outstanding Trust Securities
are to be redeemed on a Redemption Date, then the aggregate
Liquidation Amount of Trust Securities to be redeemed shall be
allocated 3% to the Common Securities and 97% to the Preferred
Securities. The particular Preferred Securities to be redeemed
shall be selected not more than 60 days prior to the Redemption
Date by the Property Trustee from the Outstanding Preferred
Securities not previously called for redemption, by such method
as the Property Trustee shall deem fair and appropriate and which
may provide for the selection for a redemption of portions (equal
to $25 or integral multiples thereof) of the Liquidation Amount
of Preferred Securities of a denomination larger than $25. The
Property Trustee shall promptly notify the Security Registrar in
writing of the Preferred Securities selected for redemption and,
in the case of any Preferred Securities selected for partial
redemption, the Liquidation Amount thereof to be redeemed. For
all purposes of this Trust Agreement, unless the context
otherwise requires, all provisions relating to the redemption of
Preferred Securities shall relate, in the case of any Preferred
Securities redeemed or to be redeemed only in part, to the
portion of the Liquidation Amount of Preferred Securities which
has been or is to be redeemed.

Section 4.03. Subordination of Common Securities. (a)
Payment of Distributions (including Additional Amounts, if
applicable) on, and the Redemption Price plus accumulated and
unpaid distributions of, the Trust Securities, as applicable,
shall be made pro rata based on the Liquidation Amount of the
Trust Securities; provided, however, that if on any Distribution
Date or Redemption Date a Debenture Event of Default shall have
occurred and be continuing, no payment of any Distribution
(including Additional Amounts, if applicable) on, or Redemption
Price of, any Common Security, and no other payment on account of
the redemption, liquidation or other acquisition of Common
Securities, shall be made unless payment in full in cash of all
accumulated and unpaid Distributions (including Additional
Amounts, if applicable) on all Outstanding Preferred Securities
for all distribution periods terminating on or prior thereto, or
in the case of payment of the Redemption Price plus accumulated
and unpaid Distributions the full amount of such Redemption Price
plus accumulated and unpaid Distributions on all Outstanding
Preferred Securities, shall have been made or provided for, and
all funds immediately available to the Property Trustee shall
first be applied to the payment in full in cash of all
Distributions (including Additional Amounts, if applicable) on,
or Redemption Price of plus accumulated and unpaid Distributions
of, Preferred Securities then due and payable.

(b) In the case of the occurrence of any Event of
Default resulting from a Debenture Event of Default, the Holder
of Common Securities will be deemed to have waived any such Event
of Default under this Trust Agreement until the effect of all
such Events of Default with respect to the Preferred Securities
have been cured, waived or otherwise eliminated. Until any such
Events of Default under this Trust Agreement with respect to the
Preferred Securities have been so cured, waived or otherwise
eliminated, the Property Trustee shall act solely on behalf of
the Holders of the Preferred Securities and not the Holder of the
Common Securities, and only the Holders of the Preferred
Securities will have the right to direct the Property Trustee to
act on their behalf.

Section 4.04. Payment Procedures. Payments in respect
of the Preferred Securities shall be made by check mailed to the
address of the Person entitled thereto as such address shall
appear on the Register or, if the Preferred Securities are held
by a Clearing Agency, such Distributions shall be made to the
Clearing Agency, which shall credit the relevant Persons'
accounts at such Clearing Agency on the applicable distribution
dates. Payments in respect of the Common Securities shall be
made in such manner as shall be mutually agreed between the
Administrative Trustees and the Holder of the Common Securities.

Section 4.05. Tax Returns and Reports. The
Administrative Trustees shall prepare (or cause to be prepared),
at the Depositor's expense and direction, and file all United
States federal, state and local tax and information returns and
reports required to be filed by or in respect of the Trust. In
this regard, the Administrative Trustees shall (a) prepare and
file (or cause to be prepared or filed) the Internal Revenue
Service Form 1041 (or any successor form) required to be filed in
respect of the Trust in each taxable year of the Trust and (b)
prepare and furnish (or cause to be prepared and furnished) to
each Securityholder the related Internal Revenue Service Form
1099, or any successor form or the information required to be
provided on such form. The Administrative Trustees shall provide
the Depositor and the Property Trustee with a copy of all such
returns, reports and schedules promptly after such filing or
furnishing. The Trustees shall comply with United States federal
withholding and backup withholding tax laws and information
reporting requirements with respect to any payments to
Securityholders under the Trust Securities.

ARTICLE V.

Trust Securities Certificates

Section 5.01. Initial Ownership. Upon the formation
of the Trust by the contribution by the Depositor pursuant to
Section 2.03 and until the issuance of the Trust Securities, and
at any time during which no Trust Securities are outstanding, the
Depositor shall be the sole beneficial owner of the Trust.

Section 5.02. The Trust Securities Certificates. The
Trust Securities Certificates shall be issued in denominations of
$25 Liquidation Amount and integral multiples thereof. The Trust
Securities Certificates shall be executed on behalf of the Trust
by manual signature of at least one Administrative Trustee.
Trust Securities Certificates bearing the manual signatures of
individuals who were, at the time when such signatures shall have
been affixed, authorized to sign on behalf of the Trust, shall be
validly issued and entitled to the benefits of this Trust
Agreement, notwithstanding that such individuals or any of them
shall have ceased to be so authorized prior to the delivery of
such Trust Securities Certificates or did not hold such offices
at the date of delivery of such Trust Securities Certificates. A
transferee of a Trust Securities Certificate shall become a
Securityholder, and shall be entitled to the rights and subject
to the obligations of a Securityholder hereunder, upon due
registration of such Trust Securities Certificate in such
transferee's name pursuant to Section 5.04 or 5.11.

Section 5.03. Execution and Delivery of Trust
Securities Certificates. On the Closing Date, the Administrative
Trustees shall cause Trust Securities Certificates, in an
aggregate Liquidation Amount as provided in Sections 2.04 and
2.05, to be executed on behalf of the Trust, delivered to or upon
the written order of the Depositor signed by its chairman of the
board, any of its vice presidents or its Treasurer, without
further corporate action by the Depositor, in authorized
denominations.

Section 5.04. Registration of Transfer and Exchange of
Preferred Securities Certificates. The Securities Registrar
shall keep or cause to be kept, at the office or agency
maintained pursuant to Section 5.08, a Securities Register in
which, subject to such reasonable regulations as it may
prescribe, the Securities Registrar shall provide for the
registration of Preferred Securities Certificates and the Common
Securities Certificates (subject to Section 5.10 in the case of
the Common Securities Certificates) and registration of transfers
and exchanges of Preferred Securities Certificates as herein
provided. Texas Utilities Services, Inc. shall be the initial
Securities Registrar.

Upon surrender for registration of transfer of any
Preferred Securities Certificate at the office or agency
maintained pursuant to Section 5.08, the Administrative Trustees,
or any one of them, shall execute and deliver (or shall cause The
Bank of New York as its agent to deliver), in the name of the
designated transferee or transferees, one or more new Preferred
Securities Certificates in authorized denominations of a like
aggregate Liquidation Amount. At the option of a Holder,
Preferred Securities Certificates may be exchanged for other
Preferred Securities Certificates in authorized denominations of
the same class and of a like aggregate Liquidation Amount upon
surrender of the Preferred Securities Certificates to be
exchanged at the office or agency maintained pursuant to Section
5.08.

Every Preferred Securities Certificate presented or
surrendered for registration of transfer or exchange shall be
accompanied by a written instrument of transfer in form
satisfactory to the Administrative Trustees and the Securities
Registrar duly executed by the Holder or such Holder's attorney
duly authorized in writing. Each Preferred Securities
Certificate surrendered for registration of transfer or exchange
shall be canceled and subsequently disposed of by the
Administrative Trustees in accordance with customary practice.
The Trust shall not be required to (i) issue, register the
transfer of, or exchange any Preferred Securities during a period
beginning at the opening of business 15 calendar days before the
day of mailing of a notice of redemption of any Preferred
Securities called for redemption and ending at the close of
business on the day of such mailing or (ii) register the transfer
of or exchange any Preferred Securities so selected for
redemption, in whole or in part, except the unredeemed portion of
any such Preferred Securities being redeemed in part.

No service charge shall be made for any registration of
transfer or exchange of Preferred Securities Certificates, but
the Securities Registrar may require payment of a sum sufficient
to cover any tax or governmental charge that may be imposed in
connection with any transfer or exchange of Preferred Securities
Certificates.

Section 5.05. Mutilated, Destroyed, Lost or Stolen
Trust Securities Certificates. If (a) any mutilated Trust
Securities Certificate shall be surrendered to the Securities
Registrar, or if the Securities Registrar shall receive evidence
to its satisfaction of the destruction, loss or theft of any
Trust Securities Certificate and (b) there shall be delivered to
the Securities Registrar and the Administrative Trustees such
security or indemnity as may be required by them to save each of
them and the Depositor harmless, then in the absence of notice
that such Trust Securities Certificate shall have been acquired
by a bona fide purchaser, the Administrative Trustees, or any one
of them, on behalf of the Trust shall execute by manual signature
and the Administrative Trustees, or any one of them, shall make
available for delivery, in exchange for or in lieu of any such
mutilated, destroyed, lost or stolen Trust Securities
Certificate, a new Trust Securities Certificate of like class,
tenor and denomination. In connection with the issuance of any
new Trust Securities Certificate under this Section, the
Administrative Trustees or the Securities Registrar may require
the payment of a sum sufficient to cover any tax or other
governmental charge that may be imposed in connection therewith.
Any duplicate Trust Securities Certificate issued pursuant to
this Section shall constitute conclusive evidence of an ownership
interest in the Trust, as if originally issued, whether or not
the lost, stolen or destroyed Trust Securities Certificate shall
be found at any time.

Section 5.06. Persons Deemed Securityholders. Prior
to due presentation of a Trust Securities Certificate for
registration of transfer, the Trustees and the Securities
Registrar shall be entitled to treat the Person in whose name any
Trust Securities Certificate shall be registered in the
Securities Register as the owner of such Trust Securities
Certificate for the purpose of receiving distributions and for
all other purposes whatsoever, and neither the Trustee nor the
Securities Registrar shall be bound by any notice to the
contrary.

Section 5.07. Access to List of Securityholders' Names
and Addresses. The Administrative Trustees shall furnish or
cause to be furnished (x) to the Depositor, within 15 days after
receipt by any Administrative Trustee of a request therefor from
the Depositor in writing and (y) to the Property Trustee,
promptly after receipt by any Administrative Trustee of a request
therefor from the Property Trustee in writing in order to enable
the Property Trustee to discharge its obligations under this
Trust Agreement, a list, in such form as the Depositor may
reasonably require, of the names and addresses of the
Securityholders as of the most recent Record Date. If Holders of
Trust Securities Certificates evidencing ownership at such time
and for the previous six months not less than 25% of the
outstanding aggregate Liquidation Amount apply in writing to any
Administrative Trustee, and such application states that the
applicants desire to communicate with other Securityholders with
respect to their rights under this Trust Agreement or under the
Trust Securities Certificates and such application is accompanied
by a copy of the communication that such applicants propose to
transmit, then the Administrative Trustees shall, within five
Business Days after the receipt of such application, afford such
applicants access during normal business hours to the current
list of Securityholders. Each Holder, by receiving and holding a
Trust Securities Certificate, shall be deemed to have agreed not
to hold either the Depositor or the Administrative Trustees
accountable by reason of the disclosure of its name and address,
regardless of the source from which such information was derived.

Section 5.08. Maintenance of Office or Agency. The
Administrative Trustees shall maintain in the Borough of
Manhattan, The City of New York, an office or offices or agency
or agencies where Preferred Securities Certificates may be
surrendered for registration of transfer or exchange and where
notices and demands to or upon the Trustees in respect of the
Trust Securities Certificates may be served. The Administrative
Trustees initially designate The Bank of New York, 101 Barclay
Street, Floor 21 West, New York, New York 10286 at its principal
corporate trust office for such purposes. The Administrative
Trustees shall give prompt written notice to the Depositor and to
the Securityholders of any change in the location of the
Securities Register or any such office or agency.

Section 5.09. Appointment of Paying Agent. The Paying
Agent shall make distributions to Securityholders from the
Payment Account and shall report the amounts of such
distributions to the Administrative Trustees and the Property
Trustee. Any Paying Agent shall have the revocable power to
withdraw funds from the Payment Account for the purpose of making
the distributions referred to above. The Property Trustee shall
be entitled to rely upon a certificate of the Paying Agent
stating in effect the amount of such funds so to be withdrawn and
that same are to be applied by the Paying Agent in accordance
with this Section 5.09. The Administrative Trustees or any one
of them may revoke such power and remove the Paying Agent if the
Administrative Trustee determines in its sole discretion that the
Paying Agent shall have failed to perform its obligations under
this Agreement in any material respect. The Paying Agent shall
initially be Texas Utilities Services, Inc., and it may choose
any co-paying agent that is acceptable to the Administrative
Trustees and the Depositor. The Paying Agent shall be permitted
to resign upon 30 days' written notice to the Administrative
Trustees and the Depositor. In the event that Texas Utilities
Services, Inc. shall no longer be the Paying Agent, the
Administrative Trustees shall appoint a successor that is
reasonably acceptable to the Property Trustee and the Depositor
to act as Paying Agent (which shall be a bank or trust company).
The Administrative Trustees shall cause such successor Paying
Agent or any additional Paying Agent appointed by the
Administrative Trustees to execute and deliver to the Trustees an
instrument in which such successor Paying Agent or additional
Paying Agent shall agree with the Trustees that as Paying Agent,
such successor Paying Agent or additional Paying Agent will hold
all sums, if any, held by it for payment to the Securityholders
in trust for the benefit of the Securityholders entitled thereto
until such sums shall be paid to such Securityholders. The
Paying Agent shall return all unclaimed funds to the Property
Trustee and upon resignation or removal of a Paying Agent such
Paying Agent shall also return all funds in its possession to the
Property Trustee. The provisions of Sections 8.01, 8.03 and 8.06
shall apply to the paying agent appointed hereunder. Any
reference in this Trust Agreement to the Paying Agent shall
include any co-paying agent unless the context requires
otherwise.

Section 5.10. Ownership of Common Securities by
Depositor. On the Closing Date and on each other date provided
for in Section 2.05, the Depositor shall acquire, and thereafter
retain, beneficial and record ownership of the Common Securities.
Any attempted transfer of the Common Securities shall be void.
The Administrative Trustees shall cause each Common Securities
Certificate issued to the Depositor to contain a legend stating
"THIS CERTIFICATE IS NOT TRANSFERABLE". Common Securities
Certificates representing the Common Securities shall be issued
to the Depositor in the form of a typewritten or definitive
Common Securities Certificate.

Section 5.11. Definitive Preferred Securities
Certificates. Upon initial issuance of the Preferred Securities
the Definitive Preferred Securities Certificates shall be
typewritten, printed, lithographed or engraved or may be produced
in any other manner as is reasonably acceptable to the
Administrative Trustees, as evidenced by the execution thereof by
the Administrative Trustees, or any one of them. The
Administrative Trustees, or any one of them, shall execute by
manual signature the Definitive Preferred Securities Certificates
initially in accordance with the instructions of the Depositor.
Neither the Securities Registrar nor any of the Administrative
Trustees shall be liable for any delay in delivery of such
instructions and may conclusively rely on, and shall be protected
in relying on, such instructions.

Section 5.12. Book-Entry System. Some or all of the
Preferred Securities may be registered in the name of a
securities depository ("Securities Depository") or a nominee
therefor, and held in the custody of the Securities Depository.
In such event, a single certificate will be issued and delivered
to the Securities Depository for such Preferred Securities, in
which case the beneficial owners of such Preferred Securities
will not receive physical delivery of certificates for Preferred
Securities. Except as provided herein, all transfers of
beneficial ownership interests in such Preferred Securities will
be made by book-entry only, and no investor or other party
purchasing, selling or otherwise transferring beneficial
ownership of the Preferred Securities will receive, hold or
deliver any certificate for Preferred Securities. The Depositor,
the Trustees and the Paying Agent will recognize the Securities
Depository or its nominee as the Holder of Preferred Securities
for all purposes, including notices and voting.

The Administrative Trustees, at the direction and
expense of the Depositor, may from time to time appoint a
Securities Depository or a successor thereto and enter into a
letter of representations or other agreement with such Securities
Depository to establish procedures with respect to the Preferred
Securities. Any Securities Depository shall be a Clearing
Agency.

The Depositor and the Trustees covenant and agree to
meet the requirements of a Securities Depository for the
Preferred Securities with respect to required notices and other
provisions of the letter of representations or agreement executed
with respect to such Preferred Securities.

Whenever the beneficial ownership of any Preferred
Securities is determined through the books of a Securities
Depository, the requirements in this Trust Agreement of holding,
delivering or transferring such Preferred Securities shall be
deemed modified with respect to such Preferred Securities to meet
the requirements of the Securities Depository with respect to
actions of the Trustees, the Depositor and the Paying Agent. Any
provisions hereof permitting or requiring delivery of such
Preferred Securities shall, while such Preferred Securities are
in a Book-Entry System, be satisfied by the notation on the books
of the Securities Depository in accordance with applicable state
law.

Section 5.13. Rights of Securityholders. The legal
title to the Trust Property is vested exclusively in the Property
Trustee (in its capacity as such) in accordance with Section
2.09, and the Securityholders shall not have any right or title
therein other than an undivided beneficial interest in the assets
of the Trust conferred by their Trust Securities and they shall
have no right to call for any partition or division of property,
profits or rights of the Trust except as described below. The
Trust Securities shall be personal property giving only the
rights specifically set forth therein and in this Trust
Agreement. The Preferred Securities shall have no preemptive
rights and when issued and delivered to Securityholders against
payment of the purchase price therefor will be fully paid and
nonassessable by the Trust.

ARTICLE VI.

Acts of Securityholders; Meetings; Voting

Section 6.01. Limitations on Voting Rights.
(a) Except as provided in this Section 6.01, in Section 10.03
and as otherwise required by law, no Holder of Preferred
Securities shall have any right to vote or in any manner
otherwise control the administration, operation and management of
the Trust or the obligations of the parties hereto, nor shall
anything herein set forth, or contained in the terms of the Trust
Securities Certificates, be construed so as to constitute the
Securityholders from time to time as partners or members of an
association.

(b) So long as any Debentures are held by the Property
Trustee, the Trustees shall not (i) direct the time, method and
place of conducting any proceeding for any remedy available to
the Debenture Trustee, or executing any trust or power conferred
on the Debenture Trustee with respect to such Debentures, (ii)
waive any past default which is waivable under Section 813 of the
Subordinated Indenture, (iii) exercise any right to rescind or
annul a declaration that the principal of all the Debentures
shall be due and payable or (iv) consent to any amendment,
modification or termination of the Subordinated Indenture or the
Debentures, where such consent shall be required, without, in
each case, obtaining the prior approval of the Holders of at
least 66 2/3% of the aggregate Liquidation Amount of the
Preferred Securities; provided, however, that where a consent
under the Subordinated Indenture would require the consent of
each holder of Debentures affected thereby, no such consent shall
be given by any Trustee without the prior written consent of each
holder of Preferred Securities. The Trustees shall not revoke
any action previously authorized or approved by a vote of the
Preferred Securities, except pursuant to a subsequent vote of the
Preferred Securities. The Property Trustee shall notify all
Holders of the Preferred Securities of any notice of default
received from the Debenture Trustee with respect to the
Debentures. In addition to obtaining the foregoing approvals of
the Holders of the Preferred Securities, prior to taking any of
the foregoing actions, the Property Trustees shall, at the
expense of the Depositor, obtain an Opinion of Counsel
experienced in such matters to the effect that the Trust will be
classified as a "grantor trust" and not as an association taxable
as a corporation for United States federal income tax purposes on
account of such action.

(c) If any proposed amendment to the Trust Agreement
provides for, or the Trustee otherwise proposes to effect, (i)
any action that would materially adversely affect the powers,
preferences or special rights of the Preferred Securities,
whether by way of amendment to the Trust Agreement or otherwise,
or (ii) the dissolution, winding-up or termination of the Trust,
other than pursuant to the terms of this Trust Agreement, then
the Holders of outstanding Preferred Securities as a class will
be entitled to vote on such amendment or proposal and such
amendment or proposal shall not be effective except with the
approval of the Holders of at least 66 2/3 in Liquidation Amount
of the outstanding Preferred Securities. No amendment to this
Trust Agreement may be made if, as a result of such amendment,
the Trust would be classified as a "grantor trust" and not as an
association taxable as a corporation for United States federal
income tax purposes.

Section 6.02. Notice of Meetings. Notice of all
meetings of the Holders of Preferred Securities, stating the
time, place and purpose of the meeting, shall be given by the
Administrative Trustees pursuant to Section 10.08 to each Holder
of a Preferred Security, at his registered address, at least 15
days and not more than 90 days before the meeting. At any such
meeting, any business properly before the meeting may be so
considered whether or not stated in the notice of the meeting.
Any adjourned meeting may be held as adjourned without further
notice.

Section 6.03. Meetings of Holders of Preferred
Securities. No annual meeting of Securityholders is required to
be held. The Administrative Trustees, however, shall call a
meeting of Securityholders to vote on any matter upon the written
request of the Holders of 25% of the then outstanding Preferred
Securities (based upon their aggregate Liquidation Amount) and
may, at any time in their discretion, call a meeting of Holders
of Preferred Securities to vote on any matters as to the which
Holders of Preferred Securities are entitled to vote.

Holders of 50% of the then outstanding Preferred
Securities (based upon their aggregate Liquidation Amount),
present in person or by proxy, shall constitute a quorum at any
meeting of Securityholders.

If a quorum is present at a meeting, an affirmative
vote by the Holders of Preferred Securities present, in person or
by proxy, holding more than the lesser of (x) 66 2/3% of the then
outstanding Preferred Securities (based upon their aggregate
Liquidation Amount) held by the Holders of then outstanding
Preferred Securities present, either in person or by proxy, at
such meeting and (y) 50% of the outstanding Preferred Securities
(based upon their aggregate liquidation amount) shall constitute
the action of the Securityholders, unless this Trust Agreement
requires a greater number of affirmative votes.

Section 6.04. Voting Rights. Securityholders shall be
entitled to one vote for each $25 of Liquidation Amount
represented by their Trust Securities in respect of any matter as
to which such Securityholders are entitled to vote.

Section 6.05. Proxies, etc. At any meeting of
Securityholders, any Securityholder entitled to vote thereat may
vote by proxy, provided that no proxy shall be voted at any
meeting unless it shall have been placed on file with the
Administrative Trustees, or with such other officer or agent of
the Trust as the Administrative Trustee may direct, for
verification prior to the time at which such vote shall be taken.
Only Securityholders of record shall be entitled to vote. When
Trust Securities are held jointly by several Persons, any one of
them may vote at any meeting in person or by proxy in respect of
such Trust Securities, but if more than one of them shall be
present at such meeting in person or by proxy, and such joint
owners or their proxies so present disagree as to any vote to be
cast, such vote shall not be received in respect of such Trust
Securities. A proxy purporting to be executed by or on behalf of
a Securityholder shall be deemed valid unless challenged at or
prior to its exercise, or, if earlier, until eleven months after
it is sent and the burden of proving invalidity shall rest on the
challenger.

Section 6.06. Securityholder Action by Written
Consent. Any action which may be taken by Securityholders at a
meeting may be taken without a meeting if Securityholders holding
more than a majority of all outstanding Trust Securities entitled
to vote in respect of such action (or such larger proportion
thereof as shall be required by any express provision of this
Trust Agreement) shall consent to the action in writing (based
upon their aggregate Liquidation Amount).

Section 6.07. Record Date for Voting and Other
Purposes. For the purposes of determining the Securityholders
who are entitled to notice of and to vote at any meeting or by
written consent, or to participate in any distribution on the
Trust Securities in respect of which a record date is not
otherwise provided for in this Trust Agreement, or for the
purpose of any other action, the Administrative Trustees may from
time to time fix a date, not more than 90 days prior to the date
of any meeting of Securityholders or the payment of distribution
or other action, as the case may be, as a record date for the
determination of the identity of the Securityholders of record
for such purposes.

Section 6.08. Acts of Securityholders. Any request,
demand, authorization, direction, notice, consent, waiver or
other action provided or permitted by this Trust Agreement to be
given, made or taken by Securityholders may be embodied in and
evidenced by one or more instruments of substantially similar
tenor signed by such Securityholders in person or by an agent
duly appointed in writing; and, except as otherwise expressly
provided herein, such action shall become effective when such
instrument or instruments are delivered to the Administrative
Trustees. Such instrument or instruments (and the action
embodied therein and evidenced thereby) are herein sometimes
referred to as the "Act" of the Securityholders signing such
instrument or instruments. Proof of execution of any such
instrument or of a writing appointing any such agent shall be
sufficient for any purpose of this Trust Agreement and (subject
to Section 8.01) conclusive in favor of the Trustees, if made in
the manner provided in this Section.

The fact and date of the execution by any Person of any
such instrument or writing may be proved by the affidavit of a
witness of such execution or by a certificate of a notary public
or other officer authorized by law to take acknowledgements of
deeds, certifying that the individual signing such instrument or
writing acknowledged to him the execution thereof. Where such
execution is by a signer acting in a capacity other than his
individual capacity, such certificate or affidavit shall also
constitute sufficient proof of his authority. The fact and date
of the execution of any such instrument or writing, or the
authority of the Person executing the same, may also be proved in
any other manner which any Trustee deems sufficient.

The ownership of Preferred Securities shall be proved
by the Securities Register.

Any request, demand, authorization, direction, notice,
consent, waiver or other Act of the Securityholder of any Trust
Security shall bind every future Securityholder of the same Trust
Security and the Securityholder of every Trust Security issued
upon the registration of transfer thereof or in exchange therefor
or in lieu thereof in respect of anything done, omitted or
suffered to be done by the Trustees or the Trust in reliance
thereon, whether or not notation of such action is made upon such
Trust Security.

Without limiting the foregoing, a Securityholder
entitled hereunder to take any action hereunder with regard to
any particular Trust Security may do so with regard to all or any
part of the Liquidation Amount of such Trust Security or by one
or more duly appointed agents each of which may do so pursuant to
such appointment with regard to all or any part of such
liquidation amount.

If any dispute shall arise between the Securityholders
and the Administrative Trustees or among such Securityholders or
Trustees with respect to the authenticity, validity or binding
nature of any request, demand, authorization, direction, consent,
waiver or other Act of such Securityholder or Trustee under this
Article VI, then the determination of such matter by the Property
Trustee shall be conclusive with respect to such matter.

Section 6.09. Inspection of Records. Subject to
Section 5.07 concerning access to the list of Securityholders,
upon reasonable notice to the Administrative Trustees and the
Property Trustee, the other records of the Trust shall be open to
inspection by Securityholders during normal business hours for
any purpose reasonably related to such Securityholder's interest
as a Securityholder.

ARTICLE VII.

Representations and Warranties of the Property
Trustee and the Delaware Trustee

Section 7.01. Property Trustee. The Property Trustee
hereby represents and warrants for the benefit of the Depositor
and the Securityholders that:

(a) the Property Trustee is a banking corporation or
trust company duly organized, validly existing and in good
standing under the laws of the State of New York;

(b) the Property Trustee has full corporate power,
authority and legal right to execute, deliver and perform its
obligations under this Trust Agreement and has taken all
necessary action to authorize the execution, delivery and
performance by it of this Trust Agreement;

(c) this Trust Agreement has been duly authorized,
executed and delivered by the Property Trustee and constitutes
the valid and legally binding agreement of the Property Trustee
enforceable against it in accordance with its terms, subject to
bankruptcy, insolvency, fraudulent transfer, reorganization,
moratorium and similar laws of general applicability relating to
or affecting creditors' rights and to general equity principles;

(d) the execution, delivery and performance by the
Property Trustee of this Trust Agreement will not violate,
conflict with or constitute a breach of the Property Trustee's
charter or by-laws; and

(e) neither the authorization, execution or delivery
by the Property Trustee of this Trust Agreement nor the
consummation of any of the transactions by the Property Trustee
contemplated herein require the consent or approval of, the
giving of notice to, the registration with or the taking of any
other action with respect to any governmental authority or agency
under any existing Federal law governing the banking or trust
powers of the Property Trustee or under the laws of the State of
New York;

Section 7.02. Delaware Trustee. The Delaware Trustee
represents and warrants for the benefit of the Depositor and the
Securityholders that:

(a) the Delaware Trustee is a banking corporation or
trust company duly organized, validly existing and in good
standing under the laws of the State of Delaware;

(b) the Delaware Trustee has full corporate power,
authority and legal right to execute, deliver and perform its
obligations under this Trust Agreement and has taken all
necessary action to authorize the execution, delivery and
performance by it of this Trust Agreement;

(c) this Trust Agreement has been duly authorized,
executed and delivered by the Delaware Trustee and constitutes
the valid and legally binding agreement of the Delaware Trustee
enforceable against it in accordance with its terms, subject to
bankruptcy, insolvency, fraudulent transfer, reorganization,
moratorium and similar laws of general applicability relating to
or affecting creditors' rights and to general equity principles;

(d) the execution, delivery and performance by the
Delaware Trustee of this Trust Agreement will not violate the
Delaware Trustee's charter or by-laws; and

(e) neither the authorization, execution or delivery
by the Delaware Trustee of this Trust Agreement nor the
consummation of any of the transactions by the Delaware Trustee
contemplated herein require the consent or approval of, the
giving of notice to, the registration with or the taking of any
other action with respect to any governmental authority or agency
under any existing Federal law governing the banking or trust
powers of the Delaware Trustee or under the laws of the State of
Delaware.

ARTICLE VIII.

The Trustees

Section 8.01. Certain Duties and Responsibilities.

(a) The duties and responsibilities of the Trustees
shall be as provided by this Trust Agreement and, in the case of
the Property Trustee, the Trust Indenture Act, and no implied
covenants or obligations shall be read into this Trust Agreement
against any of the Trustees. Notwithstanding the foregoing, no
provision of this Trust Agreement shall require any of the
Trustees to expend or risk its own funds or otherwise incur any
financial liability in the performance of any of its duties
hereunder, or in the exercise of any of its rights or powers, if
it shall have reasonable grounds for believing that repayment of
such funds or adequate indemnity against such risk or liability
is not reasonably assured to it. Notwithstanding anything
contained in this Trust Agreement to the contrary, the duties and
responsibilities of the Property Trustee under this Trust
Agreement shall be subject to the protections and limitations on
liability afforded to the Property Trustee under this Trust
Agreement, the Trust Indenture Act and, to the extent applicable,
Rule 3A-7 under the Investment Company Act of 1940, or any
successor rule thereunder. Whether or not therein expressly so
provided, every provision of this Trust Agreement relating to the
conduct or affecting the liability of or affording protection to
the Trustees shall be subject to the provisions of this Section.

(b) All payments made by the Property Trustee or a
Paying Agent in respect of the Trust Securities shall be made
only from the income and proceeds from the Trust Property and
only to the extent that there shall be sufficient income or
proceeds from the Trust Property to enable the Property Trustee
or Paying Agent to make payments in accordance with the terms
hereof. Each Securityholder, by its acceptance of a Trust
Security, agrees that it will look solely to the income and
proceeds from the Trust Property to the extent available for
distribution to it as herein provided and that the Trustees are
not personally liable to it for any amount distributable in
respect of any Trust Security or for any other liability in
respect of any Trust Security. This Section 8.01(b) does not
limit the liability of the Trustees expressly set forth elsewhere
in this Trust Agreement or, in the case of the Property Trustee,
in the Trust Indenture Act.

(c) All duties and responsibilities of the Property
Trustee contained in this Trust Agreement are subject to the
following:

(i) the Property Trustee's sole duty with respect to
the custody, safe keeping and physical preservation of
the Trust Property shall be to deal with such property
in a similar manner as the Property Trustee deals with
similar property for its own account, subject to the
protections and limitations on liability afforded to
the Property Trustee under this Trust Agreement, the
Trust Indenture Act and Rule 3a-7 thereunder;

(ii) the Property Trustee shall have no duty or
liability for or with respect to the value,
genuineness, existence or sufficiency of the Trust
Property or the payment of any taxes or assessments
levied thereon or in connection therewith;

(iii) the Property Trustee shall not be liable for any
interest on any money received by it except as it may
otherwise agree with the Depositor. Money held by the
Property Trustee need not be segregated from other
funds held by it except in relation to the Payment
Account established by the Property Trustee pursuant to
this Trust Agreement and except to the extent otherwise
required by law; and

(iv) the Property Trustee shall not be responsible
for monitoring the compliance by the Administrative
Trustees or the Depositor with their respective duties
under this Trust Agreement, nor shall the Property
Trustee be liable for the default or misconduct of the
Administrative Trustees or the Depositor.

Section 8.02. Notice of Defaults. Within five
Business Days after the occurrence of any Event of Default, the
Property Trustee shall transmit, in the manner and to the extent
provided in Section 10.08, notice of any default known to the
Property Trustee to the Securityholders and the Depositor, unless
such default shall have been cured or waived. For the purpose of
this Section, the term "default" means any event which is, or
after notice or lapse of time or both would become, an Event of
Default.

Section 8.03. Certain Rights of Property Trustee.
Subject to the provisions of Section 8.01 and except as provided
by law:

(i) the Property Trustee may rely and shall be
protected in acting or refraining from acting in good
faith upon any resolution, Opinion of Counsel,
certificate, written representation of a Holder or
transferee, certificate of auditors or any other
certificate, statement, instrument, opinion, report,
notice, request, direction, consent, order, appraisal,
bond, debenture, note, other evidence of indebtedness
or other paper or document reasonably believed by it to
be genuine and to have been signed or presented by the
proper party or parties;

(ii) if (A) in performing its duties under this Trust
Agreement the Property Trustee is required to decide
between alternative courses of action or (B) in
construing any of the provisions in this Trust
Agreement the Property Trustee finds the same ambiguous
or inconsistent with any other provisions contained
herein or (C) the Property Trustee is unsure of the
application of any provision of this Trust Agreement,
then, except as to any matter as to which the Preferred
Securityholders are entitled to vote under the terms of
this Trust Agreement, the Property Trustee shall
deliver a notice to the Depositor requesting written
instructions of the Depositor as to the course of
action to be taken. The Property Trustee shall take
such action, or refrain from taking such action, as the
Property Trustee shall be instructed in writing to
take, or to refrain from taking, by the Depositor;
provided, however, that if the Property Trustee does
not receive such instructions of the Depositor within
ten Business Days after it has delivered such notice,
or such reasonably shorter period of time set forth in
such notice (which to the extent practicable shall not
be less than two Business Days), it may, but shall be
under no duty to, take or refrain from taking such
action not inconsistent with this Trust Agreement as it
shall deem advisable and in the best interests of the
Securityholders, in which event the Property Trustee
shall have no liability except for its own bad faith,
negligence or willful misconduct;

(iii) whenever in the administration of this Trust
Agreement the Property Trustee shall deem it desirable
that a matter be proved or established prior to taking,
suffering or omitting any action hereunder, the
Property Trustee (unless other evidence be herein
specifically prescribed) may, in the absence of bad
faith on its part, request and rely upon an Officers'
Certificate which, upon receipt of such request, shall
be promptly delivered by the Depositor or the
Administrative Trustees;

(iv) the Property Trustee may consult with counsel of
its selection and the written advice of such counsel or
any Opinion of Counsel shall be full and complete
authorization and protection in respect of any action
taken, suffered or omitted by it hereunder in good
faith and in reliance thereon;

(v) the Property Trustee shall be under no
obligation to exercise any of the rights or powers
vested in it by this Trust Agreement at the request or
direction of any of the Securityholders pursuant to
this Trust Agreement, unless such Securityholders shall
have offered to the Property Trustee reasonable
security or indemnity against the costs, expenses
(including reasonable attorneys' fees and expenses) and
liabilities which might be incurred by it in compliance
with such request or direction;

(vi) the Property Trustee shall not be bound to make
any investigation into the facts or matters stated in
any resolution, certificate, statement, instrument,
opinion, report, notice, request, direction, consent,
order, approval, bond, debenture, note or other
evidence of indebtedness or other paper or document
reasonably believed by it to be genuine, unless
requested in writing to do so by one or more
Securityholders, but the Property Trustee, in its
discretion, may make such further inquiry or
investigation into such facts or matters as it may see
fit, and, if the Property Trustee shall determine to
make such further inquiry or investigation, it shall be
entitled to examine the books, records and premises of
the Depositor personally or by agent or attorney;

(vii) the Property Trustee may execute any of the
trusts or powers hereunder or perform any duties
hereunder either directly or by or through its agents
or attorneys, and the Property Trustee shall not be
responsible for any misconduct or negligence on the
part of any agent or attorney appointed with due care
by it hereunder, provided that the Property Trustee
shall be responsible for its own negligence or
recklessness with respect to selection of any agent or
attorney appointed by it hereunder.

(viii) the Property Trustee shall not be liable for any
action taken, suffered, or omitted to be taken by it in
good faith and reasonably believed by it to be
authorized or within the discretion or rights or powers
conferred upon it by this Trust Agreement;

(ix) the Property Trustee shall not be charged with
knowledge of any default or Event of Default with
respect to the Trust Securities unless either (1) a
responsible officer of the Property Trustee shall have
actual knowledge of the default or Event of Default or
(2) written notice of such default or Event of Default
shall have been given to the Property Trustee by the
Depositor, the Administrative Trustees or by any Holder
of the Trust Securities;

(x) no provision of this Trust Agreement shall be
deemed to impose any duty or obligation on the Property
Trustee to perform any act or acts or exercise any
right, power, duty or obligation conferred or imposed
on it in any jurisdiction in which it shall be illegal,
or in which the Property Trustee shall be unqualified
or incompetent in accordance with applicable law, to
perform any such act or acts or to exercise any such
right, power, duty or obligation; and no permissive or
discretionary power or authority available to the
Property Trustee shall be construed to be a duty; and

(xi) no provision of this Trust Agreement shall
require the Property Trustee to expend or risk its own
funds or otherwise incur personal financial liability
in the performance of any of its duties or in the
exercise of any of its rights or powers, if the
Property Trustee shall have reasonable grounds for
believing that the repayment of such funds or liability
is not reasonably assured to it under the terms of this
Trust Agreement or adequate indemnity against such risk
or liability is not reasonably assured to it;

(xii) the Property Trustee shall have no duty to see
to any recording, filing or registration of any
instrument (including any financing or continuation
statement or any tax or securities) (or any
rerecording, refiling or registration thereof);

(xiii) the Property Trustee shall have the right at any
time to seek instructions concerning the administration
of this Trust Agreement from any court of competent
jurisdiction; and

(xiv) whenever in the administration of this Trust
Agreement the Property Trustee shall deem it desirable
to receive instructions with respect to enforcing any
remedy or right or taking any other action hereunder
the Property Trustee (i) may request instructions from
the Holders of the Trust Securities, which instructions
may only be given by the Holders of the same proportion
and liquidation amount of the Trust Securities as would
be entitled to direct the Property Trustee under the
terms of this Trust Agreement in respect of such
remedies, rights or actions, (ii) may refrain from
enforcing such remedy or right or taking such other
action until such instructions are received, and
(iii) shall be protected in acting in accordance with
such instructions.

Section 8.04. Not Responsible for Recitals or Issuance
of Securities. The recitals contained herein and in the Trust
Securities Certificates shall be taken as the statements of the
Trust, and the Trustees do not assume any responsibility for
their correctness. The Trustees make no representations as to
the value or condition of the property of the Trust or any part
thereof, nor as to the validity or sufficiency of this Trust
Agreement or the Trust Securities. The Trustee shall not be
accountable for the use or application by the Trust of the
proceeds of the Trust Securities in accordance with Section 2.05.

Section 8.05. May Hold Securities. Except as provided
in the definition of the term "Outstanding" in Article I, any
Trustee or any other agent of any Trustee or the Trust, in its
individual or any other capacity, may become the owner or pledgee
of Trust Securities and may otherwise deal with the Trust with
the same rights it would have if it were not a Trustee or such
other agent.

Section 8.06. Compensation; Fees; Indemnity.

The Depositor agrees

(1) to pay to the Trustees from time to time
reasonable compensation for all services rendered by the
Trustees hereunder (which compensation shall not be limited
by any provision of law in regard to the compensation of a
trustee of an express trust);

(2) except as otherwise expressly provided herein, to
reimburse the Trustees upon request for all reasonable
expenses, disbursements and advances reasonably incurred or
made by the Trustees in accordance with any provision of
this Trust Agreement (including the reasonable compensation
and the expenses and disbursements of its agents and
counsel), except any such expense, disbursement or advance
as may be attributable to its negligence (gross negligence,
in the case of any Administrative Trustee), bad faith or
willful misconduct; and

(3) to indemnify each Trustee for, and to hold each
Trustee harmless against, any and all loss, damage, claims,
liability or expense incurred without negligence (gross
negligence, in the case of any Administrative Trustee), bad
faith or willful misconduct on its part, arising out of or
in connection with the acceptance or administration of this
Trust Agreement, including the reasonable costs and expenses
of defending itself against any claim or liability in
connection with the exercise or performance of any of its
powers or duties hereunder.

As security for the performance of the obligations of
the Depositor under this Section, each of the Trustees shall have
a lien prior to the Trust Securities upon all property and funds
held or collected by such Trustee as such, except funds held in
trust for the payment of Distributions on the Trust Securities.

The provisions of this Section shall survive the
termination of this Trust Agreement.

Section 8.07. Certain Trustees Required; Eligibility.
(a) There shall at all times be a Property Trustee hereunder with
respect to the Trust Securities. The Property Trustee shall be a
Person that has a combined capital and surplus of at least
$50,000,000. If any such Person publishes reports of condition
at least annually, pursuant to law or to the requirements of its
supervising or examining authority, then for the purposes of this
Section, the combined capital and surplus of such Person shall be
deemed to be its combined capital and surplus as set forth in its
most recent report of condition so published. If at any time the
Property Trustee with respect to the Trust Securities shall cease
to be eligible in accordance with the provisions of this Section,
it shall resign immediately in the manner and with the effect
hereinafter specified in this Article VIII.

(b) There shall at all times be one or more
Administrative Trustees hereunder with respect to the Trust
Securities. Each Administrative Trustee shall be either a
natural person who is at least 21 years of age or a legal
entity that shall act through one or more persons authorized
to bind such entity.

(c) There shall at all times be a Delaware Trustee
with respect to the Trust Securities. The Delaware Trustee
shall either be (i) a natural person who is at least 21
years of age and a resident of the State of Delaware or (ii)
a legal entity with its principal place of business in the
State of Delaware that otherwise meets the requirements of
applicable Delaware law and that shall act through one or
more persons authorized to bind such entity.

Section 8.08. Conflicting Interests.

If the Property Trustee has or shall acquire a
conflicting interest within the meaning of the Trust Indenture
Act, the Property Trustee shall either eliminate such interest or
resign, to the extent and in the manner provided by, and subject
to the provisions of, the Trust Indenture Act and this Indenture.
The Subordinated Indenture and the Guarantee Agreement shall be
deemed to be specifically described in this Trust Agreement for
the purposes of clause (i) of the first proviso contained in
Section 310(b) of the Trust Indenture Act.

Section 8.09. Co-Trustees and Separate Trustee.

Unless an Event of Default shall have occurred and be
continuing, at any time or times, for the purpose of meeting the
legal requirements of the Trust Indenture Act or of any
jurisdiction in which any part of the Trust Property may at the
time be located, the Depositor and the Property Trustee shall
have power to appoint, and upon the written request of the
Property Trustee, the Depositor shall for such purpose join with
the Property Trustee in the execution, delivery, and performance
of all instruments and agreements necessary or proper to appoint,
one or more Persons approved by the Property Trustee either to
act as co-trustee, jointly with the Property Trustee, of all or
any part of such Trust Property, or to act as separate trustee of
any such property, in either case with such powers as may be
provided in the instrument of appointment, and to vest in such
Person or Persons in the capacity aforesaid, any property, title,
right or power deemed necessary or desirable, subject to the
other provisions of this Section. If the Depositor does not join
in such appointment within 15 days after the receipt by it of a
request so to do, or in case an Event of Default under the
Subordinated Indenture has occurred and is continuing, the
Property Trustee alone shall have power to make such appointment.

Should any written instrument from the Depositor be
required by any co-trustee or separate trustee so appointed for
more fully confirming to such co-trustee or separate trustee such
property, title, right, or power, any and all such instruments
shall, on request, be executed, acknowledged, and delivered by
the Depositor.

Every co-trustee or separate trustee shall, to the
extent permitted by law, but to such extent only, be appointed
subject to the following terms, namely:

(1) The Trust Securities shall be executed and
delivered and all rights, powers, duties, and obligations
hereunder in respect of the custody of securities, cash and
other personal property held by, or required to be deposited
or pledged with, the Trustees designated for such purpose
hereunder, shall be exercised, solely by such Trustees.

(2) The rights, powers, duties, and obligations hereby
conferred or imposed upon the Property Trustee in respect of
any property covered by such appointment shall be conferred
or imposed upon and exercised or performed by the Property
Trustee or by the Property Trustee and such co-trustee or
separate trustee jointly, as shall be provided in the
instrument appointing such co-trustee or separate trustee,
except to the extent that under any law of any jurisdiction
in which any particular act is to be performed, the Property
Trustee shall be incompetent or unqualified to perform such
Act, in which event such rights, powers, duties, and
obligations shall be exercised and performed by such co-
trustee or separate trustee.

(3) The Property Trustee at any time, by an instrument
in writing executed by it, with the written concurrence of
the Depositor, may accept the resignation of or remove any
co-trustee or separate trustee appointed under this Section
8.09, and, in case an Event of Default under the
Subordinated Indenture has occurred and is continuing, the
Property Trustee shall have power to accept the resignation
of, or remove, any such co-trustee or separate trustee
without the concurrence of the Depositor. Upon the written
request of the Property Trustee, the Depositor shall join
with the Property Trustee in the execution, delivery, and
performance of all instruments and agreements necessary or
proper to effectuate such resignation or removal. A
successor to any co-trustee or separate trustee so resigned
or removed may be appointed in the manner provided in this
Section.

(4) No co-trustee or separate trustee hereunder shall
be personally liable by reason of any act or omission of the
Trustee, or any other such trustee hereunder.

(5) The Property Trustee shall not be liable by reason
of any act of a co-trustee or separate trustee.

(6) Any Act of Holders delivered to the Property
Trustee shall be deemed to have been delivered to each such
co-trustee and separate trustee.

Section 8.10. Resignation and Removal; Appointment of
Successor. No resignation or removal of any Trustee (as the case
may be, the "Relevant Trustee") and no appointment of a successor
Relevant Trustee pursuant to this Article shall become effective
until the acceptance of appointment by the successor Relevant
Trustee in accordance with the applicable requirements of Section
8.11.

The Relevant Trustee may resign at any time with
respect to the Trust Securities by giving written notice thereof
to the Securityholders. If the instrument of acceptance by a
successor Relevant Trustee required by Section 8.11 shall not
have been delivered to the Relevant Trustee within 30 days after
the giving of such notice of resignation, the resigning Relevant
Trustee may petition any court of competent jurisdiction for the
appointment of a successor Relevant Trustee with respect to the
Trust Securities.

Unless an Event of Default shall have occurred and be
continuing, the Relevant Trustee may be removed at any time by
Act of the Common Securityholder. If an Event of Default shall
have occurred and be continuing, the Relevant Trustee may be
removed at such time by Act of the Securityholders of a majority
of the aggregate Liquidation Amount of the Preferred Securities
Certificates, delivered to the Relevant Trustee (in its
individual capacity and on behalf of the Trust).

If the Relevant Trustee shall resign, be removed or
become incapable of continuing to act as Relevant Trustee at a
time when no Event of Default shall have occurred and be
continuing, the Common Securityholder, by Act of the Common
Securityholder delivered to the retiring Relevant Trustee, shall
promptly appoint a successor Relevant Trustee or Trustees with
respect to the Trust Securities and the Trust, and the retiring
Relevant Trustee shall comply with the applicable requirements of
Section 8.11. If the Relevant Trustee shall resign, be removed
or become incapable of continuing to act as the Relevant Trustee
at a time when an Event of Default shall have occurred and be
continuing, the Preferred Securityholders, by Act of the
Preferred Securityholders of a majority in Liquidation Amount of
the Preferred Securities then outstanding delivered to the
retiring Relevant Trustee, shall promptly appoint a successor
Relevant Trustee or Trustees with respect to the Trust Securities
and the Trust, and the Relevant Trustee shall comply with the
applicable requirements of Section 8.11. If no successor
Relevant Trustee with respect to the Trust Securities shall have
been so appointed by the Common Securityholders or the Preferred
Securityholders and accepted appointment in the manner required
by Section 8.11, any Securityholder who has been a Securityholder
of Trust Securities for at least six months may, on behalf of
himself and all others similarly situated, petition any court of
competent jurisdiction for the appointment of a successor
Relevant Trustee with respect to the Trust Securities.

The retiring Relevant Trustee shall give notice of each
resignation and each removal of the Relevant Trustee with respect
to the Trust Securities and the Trust and each appointment of a
successor Trustee with respect to the Trust Securities and the
Trust to all Securityholders in the manner provided in Section
10.08 and shall give notice to the Depositor. Each notice shall
include the name and address of the successor Relevant Trustee
with respect to the Trust Securities and the Trust and, in the
case of the Property Trustee, the address of its Corporate Trust
Office.

Notwithstanding the foregoing or any other provision of
this Trust Agreement, in the event any Administrative Trustee or
a Delaware Trustee who is a natural person dies or becomes
incompetent or incapacitated, the vacancy created by such death,
incompetence or incapacity may be filled by (i) the unanimous act
of remaining Administrative Trustees if there are at least two of
them or (ii) otherwise by the Depositor (with the successor in
each case being an individual who satisfies the eligibility
requirement for Administrative Trustees or Delaware Trustee, as
the case may be, set forth in Section 8.07). Additionally,
notwithstanding the foregoing or any other provision of this
Trust Agreement, in the event the Depositor reasonably believes
that any Administrative Trustee who is a natural person has
become incompetent or incapacitated, the Depositor, by notice to
the remaining Trustees, may terminate the status of such Person
as an Administrative Trustee (in which case the vacancy so
created will be filled in accordance with the preceding
sentence).

Section 8.11. Acceptance of Appointment by Successor.
In case of the appointment hereunder of a successor Relevant
Trustee with respect to all Trust Securities and the Trust, every
such successor Relevant Trustee so appointed shall execute,
acknowledge and deliver to the Trust and to the retiring Relevant
Trustee an instrument accepting such appointment, and thereupon
the resignation or removal of the retiring Relevant Trustee shall
become effective and such successor Relevant Trustee, without any
further act, deed or conveyance, shall become vested with all the
rights, powers, trusts and duties of the retiring Relevant
Trustee; but, on the request of the Depositor or the successor
Relevant Trustee, such retiring Relevant Trustee shall, upon
payment of its charges by the Depositor, execute and deliver an
instrument transferring to such successor Relevant Trustee all
the rights, powers and trusts of the retiring Relevant Trustee
and shall duly assign, transfer and deliver to such successor
Relevant Trustee all property and money held by such retiring
Relevant Trustee hereunder, subject, nevertheless, to the
retiring Trustee's prior lien provided for in Section 8.06.

In case of the appointment hereunder of a successor
Relevant Trustee with respect to the Trust Securities and the
Trust, the retiring Relevant Trustee and each successor Trustee
with respect to the Trust Securities shall execute and deliver an
amendment hereto wherein each successor Relevant Trustee shall
accept such appointment and which (1) shall contain such
provisions as shall be necessary or desirable to transfer and
confirm to, and to vest in, each successor Relevant Trustee all
the rights, powers, trusts and duties of the retiring Relevant
Trustee with respect to the Trust Securities and the Trust and
(2) shall add to or change any of the provisions of this Trust
Agreement as shall be necessary to provide for or facilitate the
administration of the trusts hereunder by more than one Relevant
Trustee, it being understood that nothing herein or in such
amendment shall constitute such Relevant Trustees co-trustees of
the same trust and that each such Relevant Trustee shall be
trustee of a trust or trusts hereunder separate and apart from
any trust or trusts hereunder administered by any other such
Relevant Trustee and upon the execution and delivery of such
amendment the resignation or removal of the retiring Relevant
Trustee shall become effective to the extent provided therein and
each such successor Relevant Trustee, without any further act,
deed or conveyance, shall become vested with all the rights,
powers, trusts and duties of the retiring Relevant Trustee with
respect to the Trust Securities and the Trust; but, on request of
the Trust or any successor Relevant Trustee such retiring
Relevant Trustee shall duly assign, transfer and deliver to such
successor Trustee all Trust Property, all proceeds thereof and
money held by such retiring Relevant Trustee hereunder with
respect to the Trust Securities and the Trust.

Upon request of any such successor Relevant Trustee,
the retiring Relevant Trustee shall execute any and all
instruments for more fully and certainly vesting in and
confirming to such successor Relevant Trustee all such rights,
powers and trusts referred to in the first or second preceding
paragraph, as the case may be.

No successor Relevant Trustee shall accept its
appointment unless at the time of such acceptance such successor
Relevant Trustee shall be qualified and eligible under this
Article VIII.

Section 8.12. Merger, Conversion, Consolidation or
Succession to Business. Any Person into which the Property
Trustee or the Delaware Trustee or any Trustee that is not a
natural person may be merged or converted or with which it may be
consolidated, or any Person resulting from any merger, conversion
or consolidation to which such Relevant Trustee shall be a party,
or any Person succeeding to all or substantially all the
corporate trust business of such Relevant Trustee, shall be the
successor of such Relevant Trustee hereunder, provided such
Person shall be otherwise qualified and eligible under this
Article VIII, without the execution or filing of any paper or any
further act on the part of any of the parties hereto.

Section 8.13. Preferential Collection of Claims
Against Depositor or Trust. If and when the Property Trustee
shall be or become a creditor of the Depositor or the Trust (or
any other obligor upon the Debentures or the Trust Securities),
the Property Trustee shall be subject to the provisions of the
Trust Indenture Act regarding the collection of claims against
the Depositor or Trust (or any such other obligor).

Section 8.14. Reports by Property Trustee.
(a) Within 60 days after December 31 of each year commencing
with December 31, 1995 the Property Trustee shall transmit by
mail to all Securityholders, as their names and addresses appear
in the Register, and to the Depositor, a brief report dated as of
such December 31 with respect to:

(i) its eligibility under Section 8.07 or, in lieu
thereof, if to the best of its knowledge it has
continued to be eligible under said Section, a written
statement to such effect;

(ii) a statement that the Property Trustee has
complied with all of its obligations under this Trust
Agreement during the twelve-month period (or, in the
case of the initial report, the period since the
Closing Date) ending with such December 31 or, if the
Property Trustee has not complied in any material
respect with such obligations, a description of such
non-compliance; and

(iii) any action taken by the Property Trustee in the
performance of its duties hereunder which it has not
previously reported and which in its opinion materially
affects the Trust Securities.

(b) In addition the Property Trustee shall transmit to
Securityholders such reports concerning the Property Trustee and
its actions under this Trust Agreement as may be required
pursuant to the Trust Indenture Act at the times and in the
manner provided pursuant thereto.

(c) A copy of each such report shall, at the time of
such transmission to Holders, be filed by the Property Trustee
with each stock exchange upon which the Trust Securities are
listed, with the Commission and with the Depositor.

Section 8.15. Reports to the Property Trustee. The
Depositor and the Administrative Trustees on behalf of the Trust
shall provide to the Property Trustee such documents, reports and
information as required by Section 314 (if any) and the
compliance certificate required by Section 314 of the Trust
Indenture Act in the form, in the manner and at the times
required by Section 314 of the Trust Indenture Act.

Section 8.16. Evidence of Compliance With Conditions
Precedent. Each of the Depositor and the Administrative Trustees
on behalf of the Trust shall provide to the Property Trustee such
evidence of compliance with any conditions precedent, if any,
provided for in this Trust Agreement (including any covenants
compliance with which constitutes a condition precedent) that
relate to any of the matters set forth in Section 314(c) of the
Trust Indenture Act. Any certificate or opinion required to be
given by an officer pursuant to Section 314(c)(1) of the Trust
Indenture Act may be given in the form of an Officers'
Certificate.

Section 8.17. Number of Trustees.

(a) The number of Trustees shall be five, provided
that Depositor, by written instrument may increase or decrease
the number of Administrative Trustees.

(b) If a Trustee ceases to hold office for any reason
and the number of Administrative Trustees is not reduced pursuant
to Section 8.17(a), or if the number of Trustees is increased
pursuant to Section 8.17(a), a vacancy shall occur. The
vacancy shall be filled with a Trustee appointed in accordance
with Section 8.10.

(c) The death, resignation, retirement, removal,
bankruptcy, incompetence or incapacity to perform the duties of a
Trustee shall not operate to annul the Trust. Whenever a vacancy
in the number of Administrative Trustees shall occur, until such
vacancy is filled by the appointment of an Administrative Trustee
in accordance with Section 8.10, the Administrative Trustees in
office, regardless of their number (and notwithstanding any other
provision of this Agreement), shall have all the powers granted
to the Administrative Trustees and shall discharge all the duties
imposed upon the Administrative Trustees by this Trust Agreement.

Section 8.18. Delegation of Power.

(a) Any Administrative Trustee may, by power of
attorney consistent with applicable law, delegate to any other
natural person over the age of 21 his or her power for the
purpose of executing any documents contemplated in Section
2.07(a), including any registration statement or amendment
thereto filed with the Commission, or making any other
governmental filing; and

(b) the Administrative Trustees shall have power to
delegate from time to time to such of their number the doing of
such things and the execution of such instruments either in the
name of the Trust or the names of the Administrative Trustees or
otherwise as the Administrative Trustees may deem expedient, to
the extent such delegation is not prohibited by applicable law or
contrary to the provisions of the Trust, as set forth herein.

Section 8.19. Fiduciary Duty.

(a) To the extent that, at law or in equity, an
Indemnified Person has duties (including fiduciary duties) and
liabilities relating thereto to the Trust or to any other Covered
Person, an Indemnified Person acting under this Trust Agreement
shall not be liable to the Trust or to any other Covered Person
for its good faith reliance on the provisions of this Trust
Agreement. The provisions of this Trust Agreement, to the extent
that they restrict the duties and liabilities of an Indemnified
Person otherwise existing at law or in equity (other than the
duties imposed on the Property Trustee under the Trust Indenture
Act), are agreed by the parties hereto to replace such other
duties and liabilities of such Indemnified Person;

(b) Unless otherwise expressly provided herein:

(i) whenever a conflict of interest exists or arises
between an Indemnified Person and any Covered Person;
or

(ii) whenever this Trust Agreement or any other
agreement contemplated herein or therein provides that
an Indemnified Person shall act in a manner that is, or
provides terms that are, fair and reasonable to the
Trust or any Holder of Trust Securities, the
Indemnified Person shall resolve such conflict of
interest, take such action or provide such terms,
considering in each case the relative interest of each
party (including its own interest) to such conflict,
agreement, transaction or situation and the benefits
and burdens relating to such interests, any customary
or accepted industry practices, and any applicable
generally accepted accounting practices or principles.
In the absence of bad faith by the Indemnified Person,
the resolution, action or term so made, taken or
provided by the Indemnified Person shall not constitute
a breach of this Trust Agreement or any other agreement
contemplated herein or of any duty or obligation of the
Indemnified Person at law or in equity or otherwise;
and

(i) in its "discretion" or under a grant of similar
authority, the Indemnified Person shall be entitled to
consider such interests and factors as it desires,
including its own interests, and shall have no duty or
obligation to give any consideration to any interest of
or factors affecting the Trust or any other Person; or

(ii) in its "good faith" or under another express
standard, the Indemnified Person shall act under such
express standard and shall not be subject to any other
or different standard imposed by this Trust Agreement
or by applicable law.

ARTICLE IX.

Termination and Liquidation

Section 9.01. Termination Upon Expiration Date. The
Trust shall automatically terminate on December 31, 2035 (the
"Expiration Date") and the Trust Property shall be distributed in
accordance with Section 9.04.

Section 9.02. Early Termination. Upon the first to
occur of any of the following events (such first occurrence, an
"Early Termination Event"):

(i) the occurrence of a Bankruptcy Event,
dissolution or liquidation of, in respect of, the
Depositor;

(ii) the redemption of all of the Preferred
Securities;

(iii) the occurrence of a Tax Event;

(iv) an order for judicial termination of the Trust
having been entered by a court of competent
jurisdiction;

the Trust shall terminate and the Trustees shall take such action
as is required by Section 9.04.

Section 9.03. Termination. The respective obligations
and responsibilities of the Trust and the Trustees created hereby
shall terminate upon the latest to occur of the following: (i)
the distribution by the Property Trustee to Securityholders upon
the liquidation of the Trust pursuant to Section 9.04, or upon
the redemption of all of the Trust Securities pursuant to Section
4.02 or 9.04(d), of all amounts required to be distributed
hereunder upon the final payment of the Trust Securities; (ii)
the payment of any expenses owed by the Trust; and (iii) the
discharge of all administrative duties of the Administrative
Trustees, including the performance of any tax reporting
obligations with respect to the Trust or the Securityholders.

Section 9.04. Liquidation. (a) If an Early
Termination Event specified in clause (i) or (iv) of Section 9.02
occurs, after satisfaction of liabilities to creditors of the
Trust as provided by applicable law, the Trust shall be
liquidated by the Property Trustee as expeditiously as the
Property Trustee determines to be appropriate by distributing
to each Securityholder a Like Amount of Debentures, subject to
Section 9.04(e). Notice of liquidation shall be given by the
Administrative Trustees by first-class mail, postage prepaid,
mailed not later than 30 nor more than 60 days prior to the
Liquidation Date to each Holder of Trust Securities at such
Holder's address appearing in the Security Register. All
notices of liquidation shall:

(i) state the Liquidation Date;

(ii) state that from and after the Liquidation Date,
the Trust Securities will no longer be deemed to be
outstanding and any Trust Securities Certificates not
surrendered for exchange will be deemed to represent a
Like Amount of Debentures; and

(iii) provide such information with respect to the
mechanics by which Holders may exchange Trust
Securities Certificates for Debentures, or if Section
9.04(e) applies receive a Liquidation Distribution, as
the Administrative Trustee or the Property Trustee
shall deem appropriate.

(b) Except where Section 9.02(ii) or 9.04(d) or (e)
applies, in order to affect the liquidation of the Trust, if any,
and distribution of the Debentures to Securityholders, the
Property Trustee shall establish a record date for such
distribution (which shall be not more than 45 days prior to the
Liquidation Date) and, either itself acting as exchange agent or
through the appointment of a separate exchange agent, shall
establish such procedures as it shall deem appropriate to effect
the distribution of Debentures in exchange for the Outstanding
Trust Securities Certificates.

(c) Except where Section 9.02(ii) or 9.04(d) or (e)
applies, after the Liquidation Date, (i) the Trust Securities
will no longer be deemed to be Outstanding, (ii) certificates
representing a Like Amount of Debentures will be issued to
Holders of Trust Securities Certificates, upon surrender of such
certificates to the Administrative Trustees or their agent for
exchange, (iii) any Trust Securities Certificates not so
surrendered for exchange will be deemed to represent a Like
Amount of Debentures, accruing interest at the rate provided for
in the Debentures from the last Distribution Date on which a
Distribution was made on such Trust Certificates until such
certificates are so surrendered (and until such certificates are
so surrendered, no payments or interest or principal will be made
to Holders of Trust Securities Certificates with respect to such
Debentures) and (iv) all rights of Securityholders holding Trust
Securities will cease, except the right of such Securityholders
to receive Debentures upon surrender of Trust Securities
Certificates.

(d) If at any time, a Tax Event shall occur and be
continuing, the Administrative Trustees shall, unless the
Debentures are redeemed in the limited circumstances described
below, terminate the Trust and, after satisfaction of creditors
of the Trust, if any, as provided by applicable law cause
Debentures held by the Property Trustee having a Like Amount of
the Preferred Securities and the Common Securities to be
distributed to the Holders of the Preferred Securities and the
Common Securities on a pro rata basis in liquidation of such
Holders' interests in the Trust, within 90 days following the
occurrence of such Tax Event; provided, however, that as a
condition of such termination and distribution, the
Administrative Trustees shall have received an opinion of
nationally recognized independent tax counsel experienced in such
matters (a "No Recognition Opinion"), which opinion may rely on
any then applicable published revenue rulings of the Internal
Revenue Service, to the effect that the Holders of the Preferred
Securities will not recognize any gain or loss for United States
federal income tax purposes as a result of the termination of the
Trust and distribution of Debentures; and, provided, further,
that, if and as long as at the time there is available to the
Trust the opportunity to eliminate, within such 90-day period,
the Tax Event by taking some ministerial action, such as filing a
form or making an election, or pursuing some other similar
reasonable measure which has no adverse effect on the Trust, the
Depositor or the Holders of the Preferred Securities, the Trust
will pursue such measure in lieu of termination. Furthermore, if
(i) the Administrative Trustees have received an opinion of
nationally recognized independent tax counsel experienced in such
matters (a "Redemption Tax Opinion") that, as a result of a Tax
Event, there is more than an insubstantial risk that the
Depositor would be precluded from deducting the interest on the
Debentures for United States federal income tax purposes even if
the Debentures were distributed to the Holders of Preferred
Securities and Common Securities in liquidation of such Holders'
interests in the Trust as described above or (ii) the
Administrative Trustees shall have been informed by such tax
counsel that a No Recognition Opinion cannot be delivered to the
Trust, the Depositor shall have the right, upon not less than 30
nor more than 60 days' notice, to redeem the Debentures in whole
or in part for cash at the Redemption Price plus accumulated and
unpaid Distributions to the date of such payment within 90 days
following the occurrence of such Tax Event, and promptly
following such redemption Preferred Securities and Common
Securities with an aggregate liquidation preference amount equal
to the aggregate principal amount of the Debentures so redeemed
will be redeemed by the Trust at the Redemption Price plus
accumulated and unpaid Distributions on a pro rata basis,
provided, however, that if at the time there is available to the
Depositor or the Administrative Trustees on behalf of the Trust
the opportunity to eliminate, within such 90-day period, the Tax
Event by taking some ministerial action, such as filing a form or
making an election, or pursuing some other similar reasonable
measure, which has no adverse effect on the Trust, the Depositor
or the Holders of the Preferred Securities, the Depositor or the
Administrative Trustees on behalf of the Trust will pursue such
measure in lieu of redemption and provided further that the
Depositor shall have no right to redeem the Debentures while the
Administrative Trustees on behalf of the Trust are pursuing any
such ministerial action. The Common Securities will be redeemed
on a pro rata basis with the Preferred Securities, except that if
an Event of Default has occurred and is continuing, the Preferred
Securities will have a priority over the Common Securities with
respect to payment of the Redemption Price and accumulated and
unpaid Distributions to the date of such payment.

(e) In the event that, notwithstanding the other
provisions of this Section 9.04, whether because of an order for
termination entered by a court of competent jurisdiction or
otherwise, distribution of the Debentures in the manner provided
herein is determined by the Property Trustee not to be practical,
the Trust Property shall be liquidated, and the Trust shall be
dissolved, wound-up or terminated, by the Property Trustee in
such manner as the Property Trustee determines. In such event,
on the date of the dissolution, winding-up or other termination
of the Trust, Securityholders will be entitled to receive out of
the assets of the Trust available for distribution to
Securityholders, after satisfaction of liabilities to creditors
of the Trust, if any, as provided by applicable law, an amount
equal to the Liquidation Amount per Trust Security plus
accumulated and unpaid Distributions thereon to the date of
payment (such amount being the "Liquidation Distribution"). If,
upon any such dissolution, winding up or termination, the
Liquidation Distribution can be paid only in part because the
Trust has insufficient assets available to pay in full the
aggregate Liquidation Distribution, then, subject to the next
succeeding sentence, the amounts payable by the Trust on the
Trust Securities shall be paid on a pro rata basis (based upon
Liquidation Amounts). The Depositor will be entitled to receive
Liquidation Distributions upon any such dissolution, winding-up
or termination pro rata (determined as aforesaid) with Holders of
Preferred Securities, except that, if an Event of Default has
occurred and is continuing or if an Event of Default has not
occurred solely by reason of a requirement that time lapse or
notice be given, the Preferred Securities shall have a priority
over the Common Securities.

ARTICLE X.

Miscellaneous Provisions

Section 10.01. Guarantee by the Depositor and
Assumption of Obligations. Subject to the terms and conditions
hereof, the Depositor irrevocably and unconditionally guarantees
to each Person to whom the Trust is now or hereafter becomes
indebted or liable (the "Beneficiaries"), and agrees to assume
liability for, the full payment, when and as due, of any and all
Obligations (as hereinafter defined) to such Beneficiaries. As
used herein, "Obligations" means any indebtedness, expenses or
liabilities of the Trust, other than obligations of the Trust to
pay to Holders or other similar interests in the Trust the
amounts due such Holders pursuant to the terms of the Preferred
Securities or such other similar interests, as the case may be.
This guarantee and assumption is intended to be for the benefit,
of, and to be enforceable by, all such Beneficiaries, whether or
not such Beneficiaries have received notice hereof.

Section 10.02. Limitation of Rights of
Securityholders. The death or incapacity of any person having an
interest, beneficial or otherwise, in a Trust Security shall not
operate to terminate this Trust Agreement, nor entitle the legal
representatives or heirs of such person or any Securityholder for
such person, to claim an accounting, take any action or bring any
proceeding in any court for a partition or winding up of the
arrangements contemplated hereby, nor otherwise affect the
rights, obligations and liabilities of the parties hereto or any
of them.

Section 10.03. Amendment.

(a) This Trust Agreement may be amended from time to
time by the Trust (on approval of a majority of the
Administrative Trustees and the Depositor, without the consent of
any Securityholder, (i) to cure any ambiguity, correct or
supplement any provision herein or therein which may be
inconsistent with any other provision herein or therein, or to
make any other provisions with respect to matters or questions
arising under this Trust Agreement, which shall not be
inconsistent with the other provisions of this Trust Agreement or
(ii) to modify, eliminate or add to any provisions of this Trust
Agreement to such extent as shall be necessary to ensure that the
Trust will not be classified for United States federal income tax
purposes other than as a "grantor trust" and not as an
association taxable as a corporation at any time that any Trust
Securities are outstanding or to ensure the Trust's exemption
from the status of an "investment company" under the Investment
Company Act of 1940, as amended; provided, however, that, except
in the case of clause (ii), such action shall not adversely
affect in any material respect the interests of any
Securityholder and, in the case of clause (i), any amendments of
this Trust Agreement shall become effective when notice thereof
is given to the Securityholders.

(b) Except as provided in Section 10.03(c), any
provision of this Trust Agreement may be amended by the
Administrative Trustees and the Depositor with (i) the consent of
Holders of Trust Securities representing not less than a majority
(based upon Liquidation Amounts) of the Trust Securities then
outstanding and (ii) receipt by the Trustees of an Opinion of
Counsel to the effect that such amendment or the exercise of any
power granted to the Trustees in accordance with such amendment
will not affect the Trust's status as a grantor trust for federal
income tax purposes or the Trust's exemption from status of an
"investment company" under the Investment Company Act of 1940, as
amended.

(c) In addition to and notwithstanding any other
provision in this Trust Agreement, without the consent of each
affected Securityholder (such consent being obtained in
accordance with Section 6.03 or 6.06), this Trust Agreement may
not be amended to (i) change the amount or timing of any
Distribution on the Trust Securities or otherwise adversely
affect the amount of any Distribution required to be made in
respect of the Trust Securities as of a specified date or (ii)
restrict the right of a Securityholder to institute suit for the
enforcement of any such payment on or after such date.

(d) Notwithstanding any other provisions of this Trust
Agreement, no Trustee shall enter into or consent to any
amendment to this Trust Agreement which would cause the Trust to
fail or cease to qualify for the exemption from status of an
"investment company" under the Investment Company Act of 1940, as
amended, afforded by Rule 3a-5 thereunder.

(e) Notwithstanding anything in this Trust Agreement
to the contrary, without the consent of the Depositor and the
Trustees, this Trust Agreement may not be amended in a manner
which imposes any additional obligation on the Depositor or any
Trustee.

(f) In the event that any amendment to this Trust
Agreement is made, the Administrative Trustees shall promptly
provide to the Depositor a copy of such amendment.

(g) The Property Trustee is entitled to receive an
Opinion of Counsel as conclusive evidence that any amendment to
this Trust Agreement executed pursuant to this Section 10.03 is
authorized or permitted by, and conforms to, the terms of this
Section 10.03, has been duly authorized by and lawfully executed
and delivered on behalf of the other requisite parties, and that
it is proper for the Property Trustee under the provisions of
this Section 10.03 to join in the execution thereof.

Section 10.04. Separability. In case any provision in
this Trust Agreement or in the Trust Securities Certificates
shall be invalid, illegal or unenforceable, the validity,
legality and enforceability of the remaining provisions shall not
in any way be affected or impaired thereby.

SECTION 10.05. GOVERNING LAW. THIS TRUST AGREEMENT
AND THE RIGHTS AND OBLIGATIONS OF EACH OF THE SECURITYHOLDERS,
THE TRUST AND THE TRUSTEES WITH RESPECT TO THIS TRUST AGREEMENT
AND THE TRUST SECURITIES SHALL BE CONSTRUED IN ACCORDANCE WITH
AND GOVERNED BY THE LAWS OF THE STATE OF DELAWARE (WITHOUT REGARD
TO CONFLICT OF LAWS PRINCIPLES).

Section 10.06. Successors. This Trust Agreement shall
be binding upon and shall inure to the benefit of any successor
to the Trust or the Relevant Trustees or any of them, including
any successor by operation of law.

Section 10.07. Headings. The Article and Section
headings are for convenience only and shall not affect the
construction of this Trust Agreement.

Section 10.08. Notice and Demand. Any notice, demand
or other communication which by any provision of this Trust
Agreement is required or permitted to be given or served to or
upon any Securityholder or the Depositor may be given or served
in writing by deposit thereof, postage prepaid, in the United
States mail, hand delivery or facsimile transmission, in each
case, addressed, (i) in the case of a Preferred Securityholder,
to such Preferred Securityholder as such Securityholder's name
and address may appear on the Securities Register and (ii) in the
case of the Common Securityholder or the Depositor, to Texas
Utilities Electric Company, Energy Plaza, 1601 Bryan Street,
Dallas, Texas 75201, Attention: Treasurer, facsimile no. 214-812-
[ ], with a copy to the Secretary, facsimile no. 214-812-[ ].
Such notice, demand or other communication to or upon a
Securityholder shall be deemed to have been sufficiently given or
made, for all purposes, upon hand delivery, mailing or
transmission.

Any notice, demand or other communication which by any
provision of this Trust Agreement is required or permitted to be
given or served to or upon the Trust, the Property Trustee, the
Delaware Trustee or the Administrative Trustees shall be given in
writing addressed (until another address is published by the
Trust) as follows: (i) with respect to the Property Trustee or
the Delaware Trustee, The Bank of New York, 101 Barclay Street,
Floor 21 West, New York, NY 10286, Attention: Corporate Trust
Department with a copy to: The Bank of New York (Delaware), White
Clay Center, Route 273, Newark, Delaware 19711, Attention:
Corporate Trust Department and (ii) with respect to the Trust or
the Administrative Trustees, at the address above for notice to
the Depositor, marked "Attention: Administrative Trustees for TU
Electric Capital II". Such notice, demand or other communication
to or upon the Trust or the Property Trustee shall be deemed to
have been sufficiently given or made only upon actual receipt of
the writing by the Trust or the Property Trustee.

Section 10.09. Agreement Not to Petition. Each of the
Trustees and the Depositor agrees for the benefit of the
Securityholders that, until at least one year and one day after
the Trust has been terminated in accordance with Article IX, it
shall not file, or join in the filing of, a petition against the
Trust under any bankruptcy, reorganization, arrangement,
insolvency, liquidation or other similar law (including, without
limitation, the United States Bankruptcy Code) (collectively,
"Bankruptcy Laws") or otherwise join in the commencement of any
proceeding against the Trust under any Bankruptcy Law. In the
event the Depositor takes action in violation of this Section
10.09, the Property Trustee agrees, for the benefit of
Securityholders, that it shall file an answer with the bankruptcy
court or otherwise properly contest the filing of such petition
by the Depositor against the Trust or the commencement of such
action and raise the defense that the Depositor has agreed in
writing not to take such action and should be stopped and
precluded therefrom and such other defenses, if any, as counsel
for the Property Trustee or the Trust may assert. The provisions
of this Section 10.09 shall survive the termination of this Trust
Agreement.

Section 10.10. Conflict with Trust Indenture Act. (a)
This Trust Agreement is subject to the provisions of the Trust
Indenture Act that are required to be part of this Trust
Agreement and shall, to the extent applicable, be governed by
such provisions.

(b) The Property Trustee shall be the only Trustee
which is a trustee for the purposes of the Trust Indenture Act.

(c) If any provision hereof limits, qualifies or
conflicts with another provision hereof which is required or
deemed to be included in this Trust Agreement by any of the
provisions of the Trust Indenture Act, such required or deemed
provision shall control.

(d) The application of the Trust Indenture Act to this
Trust Agreement shall not affect the nature of the Securities as
equity securities representing interests in the Trust.

THE RECEIPT AND ACCEPTANCE OF A TRUST SECURITY OR ANY INTEREST
THEREIN BY OR ON BEHALF OF A SECURITYHOLDER OR ANY BENEFICIAL
OWNER, WITHOUT ANY SIGNATURE OR FURTHER MANIFESTATION OF ASSENT,
SHALL CONSTITUTE THE UNCONDITIONAL ACCEPTANCE BY THE
SECURITYHOLDER AND ALL OTHERS HAVING A BENEFICIAL INTEREST IN
SUCH TRUST SECURITY OF ALL THE TERMS AND PROVISIONS OF THIS TRUST
AGREEMENT AND THE AGREEMENT OF THE TRUST, SUCH SECURITYHOLDER AND
SUCH OTHERS THAT THOSE TERMS AND PROVISIONS SHALL BE BINDING,
OPERATIVE AND EFFECTIVE AS BETWEEN THE TRUST AND SUCH
SECURITYHOLDER AND SUCH OTHERS.

<PAGE>

IN WITNESS WHEREOF, the parties have caused this Amended and
Restated Trust Agreement to be duly executed, all as of the day
and year first above written.

TEXAS UTILITIES ELECTRIC COMPANY

By:
-----------------------------
Title:

THE BANK OF NEW YORK,
as Property Trustee

By:
-----------------------------
Title:

THE BANK OF NEW YORK (DELAWARE),
as Delaware Trustee

By:
-----------------------------
Title:

-----------------------------
Wayne Patterson
solely in his capacity as
Administrative Trustee

-----------------------------
Cathryn Hulen
solely in her capacity as
Administrative Trustee

-----------------------------
Michael Perkins
solely in his capacity as
Administrative Trustee

<PAGE>

EXHIBIT A

CERTIFICATE OF TRUST

TU ELECTRIC CAPITAL III

THIS CERTIFICATE OF TRUST of TU Electric Capital III (the
"Trust"), dated as of October 17, 1995, is being duly executed
and filed by the undersigned, as trustees, to form a business
trust under the Delaware Business Trust Act (12 Del. C. ss. 3801,
-------
et seq.).
------

1. Name. The name of the business trust being formed
hereby is TU Electric Capital III.

2. Delaware Trustee. The name and business address of
the trustee of the Trust with a principal place of business in
the State of Delaware are The Bank of New York (Delaware), White
Clay Center, Route 273, Newark, New Castle County, Delaware
19711.

3. Effective Date. This Certificate of Trust shall be
effective as of its filing.

IN WITNESS WHEREOF, the undersigned, being the only
trustees of the Trust, have executed this Certificate of Trust as
of the date first above written.

THE BANK OF NEW YORK (DELAWARE), WAYNE PATTERSON,
not in its individual capacity not in his individual
but solely as Trustee capacity but solely
as Trustee

By: By:
--------------- ----------------
Name:
Title:

THE BANK OF NEW YORK,
not in its individual capacity
but solely as Trustee

By:
----------------
Name:
Title:

<PAGE>

EXHIBIT B

THIS CERTIFICATE IS NOT TRANSFERABLE

Certificate Number Number of Common Securities

C-[ ]

Certificate Evidencing Common Securities

TU Electric Capital III

Common Securities
(liquidation amount $25 per Common Security)

TU Electric Capital III, a statutory business trust
formed under the laws of the State of Delaware (the "Trust"),
hereby certifies that Texas Utilities Electric Company (the
"Holder") is the registered owner of _____ (_____) common
securities of the Trust representing undivided beneficial
interests in the assets of the Trust and designated the Common
Securities (liquidation amount $25 per Common Security) (the
"Common Securities"). In accordance with Section 5.10 of the
Trust Agreement (as defined below) the Common Securities are not
transferable and any attempted transfer hereof shall be void.
The designations, rights, privileges, restrictions, preferences
and other terms and provisions of the Common Securities are set
forth in, and this certificate and the Common Securities
represented hereby are issued and shall in all respects be
subject to the terms and provisions of, the Amended and Restated
Trust Agreement of the Trust dated as of _______ ___, 1995, as
the same may be amended from time to time (the "Trust
Agreement"), including the designation of the terms of the Common
Securities as set forth therein. The Trust will furnish a copy
of the Trust Agreement to the Holder without charge upon written
request to the Trust at its principal place of business or
registered office.

Upon receipt of this certificate, the Holder is bound
by the Trust Agreement and is entitled to the benefits
thereunder.

<PAGE>

IN WITNESS WHEREOF, an Administrative Trustee of the
Trust has executed this certificate for and on behalf of the
Trust this ____ day of _________, 199__.

TU Electric Capital III

By:
-------------------------------
not in his (her) individual
capacity, but solely as
Administrative Trustee

<PAGE>

EXHIBIT C

Previously filed as Exhibit 4(d)

<PAGE>

EXHIBIT D

Previously filed as Exhibit 4(f)

Exhibit 4(c)

GUARANTEE AGREEMENT

Between

Texas Utilities Electric Company
(as Guarantor)

and

The Bank of New York
(as Trustee)

dated as of

_____________ ___, 1995

<PAGE>

TABLE OF CONTENTS
-----------------

Page
----

ARTICLE I DEFINITIONS . . . . . . . . . . . . . . . . . . 1
SECTION 1.01 Definitions . . . . . . . . . . . . . . . 1

ARTICLE II TRUST INDENTURE ACT . . . . . . . . . . . . . . 4
SECTION 2.01 Trust Indenture Act; Application . . . . . 4
SECTION 2.02 Lists of Holders of Preferred Securities . 4
SECTION 2.03 Reports by the Guarantee Trustee . . . . . 4
SECTION 2.04 Periodic Reports to Guarantee Trustee . . 4
SECTION 2.05 Evidence of Compliance with Conditions
Precedent . . . . . . . . . . . . . . . . 5
SECTION 2.06 Events of Default; Waiver . . . . . . . . 5
SECTION 2.07 Event of Default; Notice . . . . . . . . . 5
SECTION 2.08 Conflicting Interests . . . . . . . . . . 5

ARTICLE III POWERS, DUTIES AND RIGHTS OF GUARANTEE TRUSTEE . 5
SECTION 3.01 Powers and Duties of the Guarantee
Trustee . . . . . . . . . . . . . . . . . 5
SECTION 3.02 Certain Rights of Guarantee Trustee . . . 7

ARTICLE IV GUARANTEE TRUSTEE . . . . . . . . . . . . . . . 9
SECTION 4.01 Guarantee Trustee; Eligibility . . . . . . 9
SECTION 4.02 Compensation and Reimbursement . . . . . . 9
SECTION 4.03 Appointment, Removal and Resignation of
Guarantee Trustee . . . . . . . . . . . 10

ARTICLE V GUARANTEE . . . . . . . . . . . . . . . . . . . 11
SECTION 5.01 Guarantee . . . . . . . . . . . . . . . . 11
SECTION 5.02 Waiver of Notice and Demand . . . . . . . 11
SECTION 5.03 Obligations Not Affected . . . . . . . . . 12
SECTION 5.04 Rights of Holders . . . . . . . . . . . . 12
SECTION 5.05 Guarantee of Payment . . . . . . . . . . . 13
SECTION 5.06 Subrogation . . . . . . . . . . . . . . . 13
SECTION 5.07 Independent Obligations . . . . . . . . . 13

ARTICLE VI SUBORDINATION . . . . . . . . . . . . . . . . . 13
SECTION 6.01 Subordination . . . . . . . . . . . . . . 13

ARTICLE VII TERMINATION . . . . . . . . . . . . . . . . . . 14
SECTION 7.01 Termination . . . . . . . . . . . . . . . 14

ARTICLE VIII MISCELLANEOUS . . . . . . . . . . . . . . 14
SECTION 8.01 Successors and Assigns . . . . . . . . . . 14
SECTION 8.02 Amendments . . . . . . . . . . . . . . . . 14
SECTION 8.03 Notices . . . . . . . . . . . . . . . . . 14
SECTION 8.04 Benefit . . . . . . . . . . . . . . . . . 15
SECTION 8.05 Interpretation . . . . . . . . . . . . . . 16
SECTION 8.06 Governing Law . . . . . . . . . . . . . . 16

<PAGE>

CROSS-REFERENCE TABLE
---------------------

Section of Section of
Trust Indenture Act Guarantee
of 1939, as amended Agreement
------------------- ----------

310(a) . . . . . . . . . . . . . . . . . . . . . . 4.01(a)
310(b) . . . . . . . . . . . . . . . . . . . . . . 4.01(c), 2.08
310(c) . . . . . . . . . . . . . . . . . . . . . . Inapplicable
311(a) . . . . . . . . . . . . . . . . . . . . . . 2.02(b)
311(b) . . . . . . . . . . . . . . . . . . . . . . 2.02(b)
311(c) . . . . . . . . . . . . . . . . . . . . . . Inapplicable
312(a) . . . . . . . . . . . . . . . . . . . . . . 2.02(a)
312(b) . . . . . . . . . . . . . . . . . . . . . . 2.02(b)
313 . . . . . . . . . . . . . . . . . . . . . . . . 2.03
314(a) . . . . . . . . . . . . . . . . . . . . . . 2.04
314(b) . . . . . . . . . . . . . . . . . . . . . . Inapplicable
314(c) . . . . . . . . . . . . . . . . . . . . . . 2.05
314(d) . . . . . . . . . . . . . . . . . . . . . . Inapplicable
314(e) . . . . . . . . . . . . . . . . . . . . . . 1.01, 2.05,
3.02
314(f) . . . . . . . . . . . . . . . . . . . . . . 2.01, 3.02
315(a) . . . . . . . . . . . . . . . . . . . . . . 3.01(d)
315(b) . . . . . . . . . . . . . . . . . . . . . . 2.07
315(c) . . . . . . . . . . . . . . . . . . . . . . 3.01
315(d) . . . . . . . . . . . . . . . . . . . . . . 3.01(d)
316(a) . . . . . . . . . . . . . . . . . . . . . . 5.04(a), 2.06
316(b) . . . . . . . . . . . . . . . . . . . . . . 5.03
316(c) . . . . . . . . . . . . . . . . . . . . . . 2.02
317(a) . . . . . . . . . . . . . . . . . . . . . . Inapplicable
317(b) . . . . . . . . . . . . . . . . . . . . . . Inapplicable
318(a) . . . . . . . . . . . . . . . . . . . . . . 2.01(b)
318(b) . . . . . . . . . . . . . . . . . . . . . . 2.01
318(c) . . . . . . . . . . . . . . . . . . . . . . 2.01(a)

-------------
* This Cross-Reference Table does not constitute part of the
Guarantee Agreement and shall not affect the interpretation of
any of its terms or provisions.

<PAGE>

GUARANTEE AGREEMENT

This GUARANTEE AGREEMENT ("Guarantee Agreement"), dated
as of __________ __, 1995, is executed and delivered by Texas
Utilities Electric Company, a Texas corporation (the
"Guarantor"), and The Bank of New York, as trustee (the
"Guarantee Trustee"), for the benefit of the Holders (as defined
herein) from time to time of the Preferred Securities (as defined
herein) of TU Electric Capital III, a Delaware statutory business
trust (the "Issuer").

WHEREAS, pursuant to an Amended and Restated Trust
Agreement (the "Trust Agreement"), dated as of _________ __, 199__
among the Trustees of the Issuer named therein and Texas
Utilities Electric Company, as Depositor, the Issuer is issuing
as of the date hereof $___________ aggregate liquidation amount
of its ____% Quarterly Income Preferred Securities (the
"Preferred Securities") representing ownership interests in the
Issuer and having the terms set forth in the Trust Agreement;

WHEREAS, the Preferred Securities are to be issued for
sale by the Issuer and the proceeds are to be invested in $____
principal amount of Debentures (as defined in the Trust Agreement);
and

WHEREAS, in order to enhance the value of the Preferred
Securities, the Guarantor desires to irrevocably and
unconditionally agree, to the extent set forth herein, to pay to
the Holders the Guarantee Payments (as defined herein) and to
make certain other payments on the terms and conditions set forth
herein;

NOW, THEREFORE, in consideration of the purchase of
Debentures, which purchase the Guarantor hereby agrees shall
benefit the Guarantor, the Guarantor executes and delivers this
Guarantee Agreement for the benefit of the Holders from time to
time.

ARTICLE I

DEFINITIONS

SECTION 1.01 Definitions. As used in this Guarantee
Agreement, the terms set forth below shall, unless the context
otherwise requires, have the following meanings. Capitalized or
otherwise defined terms used but not otherwise defined herein
shall have the meanings assigned to such terms in the Trust
Agreement as in effect on the date hereof.

"Common Securities" means the securities representing
common ownership interests in the assets of the Issuer.

"Event of Default" means a default by the Guarantor on
any of its payment obligations under this Guarantee Agreement.

"Guarantee Payments" shall mean the following payments
or distributions, without duplication, with respect to the
Preferred Securities, to the extent not paid or made by or on
behalf of the Issuer: (i) any accrued and unpaid Distributions
that are required to be paid on such Preferred Securities but
only if and to the extent that the Property Trustee has available
in the Payment Account funds sufficient to make such payment,
(ii) the redemption price (the "Redemption Price"), and all
accrued and unpaid Distributions to the date of redemption, with
respect to the Preferred Securities called for redemption by the
Issuer but only if and to the extent that the Property Trustee
has available in the Payment Account funds sufficient to make
such payment, (iii) upon a voluntary or involuntary dissolution,
winding-up or termination of the Issuer (other than in connection
with a redemption of all of the Preferred Securities), the lesser
of (a) the aggregate of the liquidation amount and all accrued
and unpaid Distributions on the Preferred Securities to the date
of payment, and (b) the amount of assets of the Issuer remaining
available for distribution to Holders in liquidation of the
Issuer (in either case, the "Liquidation Distribution").

"Guarantee Trustee" means The Bank of New York until a
Successor Guarantee Trustee has been appointed and has accepted
such appointment pursuant to the terms of this Guarantee
Agreement and thereafter means each such Successor Guarantee
Trustee.

"Holder" shall mean any holder, as registered on the
books and records of the Issuer, of any Preferred Securities then
outstanding; provided, however, that in determining whether the
holders of the requisite percentage of Preferred Securities have
given any request, notice, consent or waiver hereunder, "Holder"
shall not include the Guarantor or any Affiliate of the
Guarantor.

"Indenture" means the Indenture dated as of __________,
1995, among the Guarantor (the "Debenture Issuer") and The Bank
of New York, as trustee pursuant to which the Debentures are
issued.

"Majority in liquidation amount of the Preferred
Securities" means a vote by Holders, voting separately as a
class, of more than 50% of the aggregate liquidation amount of
all Preferred Securities.

"Officers' Certificate" means a certificate signed by
the Chairman of the Board, a Vice Chairman of the Board, the
President or a Vice President, and by the Treasurer, an Assistant
Treasurer, the Secretary or an Assistant Secretary, of the
Guarantor, and delivered to the Guarantee Trustee. Any Officers'
Certificate delivered with respect to compliance with a condition
or covenant provided for in this Guarantee Agreement shall
include:

(a) a statement that each officer signing the
Officers' Certificate has read the covenant or condition and
the definitions relating thereto;

(b) a brief statement of the nature and scope of the
examination or investigation undertaken by each officer in
rendering the Officers' Certificate;

(d) a statement as to whether, in the opinion of each
such officer, such condition or covenant has been complied
with.

"Person" means any individual, corporation,
partnership, joint venture, trust, unincorporated organization or
government or any agency or political subdivision thereof.

"Responsible Officer" means, with respect to the
Guarantee Trustee, any vice-president, any assistant vice-
president, the secretary, any assistant secretary, the treasurer,
any assistant treasurer, any trust officer or assistant trust
officer or any other officer of the Corporate Trust Department of
the Guarantee Trustee customarily performing functions similar to
those performed by any of the above designated officers and also
means, with respect to a particular corporate trust matter, any
other officer to whom such matter is referred because of that
officer's knowledge of and familiarity with the particular
subject.

"Successor Guarantee Trustee" means a successor
Guarantee Trustee possessing the qualifications to act as
Guarantee Trustee under Section 4.01.

"Trust Indenture Act" means the Trust Indenture Act of
1939, as amended.

ARTICLE II

TRUST INDENTURE ACT

SECTION 2.01 Trust Indenture Act; Application.

(a) This Guarantee Agreement is subject to the
provisions of the Trust Indenture Act that are required or deemed
to be part of this Guarantee Agreement and shall, to the extent
applicable, be governed by such provisions; and

(b) if and to the extent that any provision of this
Guarantee Agreement limits, qualifies or conflicts with the
duties imposed by Section 310 to 317, inclusive, of the Trust
Indenture Act, such imposed duties shall control.

SECTION 2.02 Lists of Holders of Preferred
Securities.

(a) The Guarantor shall furnish or cause to be
furnished to the Guarantee Trustee (a) semiannually, not later
than [___________] and [_________] in each year, a list, in such
form as the Guarantee Trustee may reasonably require, of the
names and addresses of the Holders ("List of Holders") as of a
date not more than 15 days prior to the delivery thereof, and (b)
at such other times as the Guarantee Trustee may request in
writing, within 30 days after the receipt by the Guarantor of any
such request, a List of Holders as of a date not more than 15
days prior to the time such list is furnished; provided that, the
Guarantor shall not be obligated to provide such List of Holders
at any time the List of Holders does not differ from the most
recent List of Holders given to the Guarantee Trustee by the
Guarantor. The Guarantee Trustee may destroy any List of Holders
previously given to it on receipt of a new List of Holders.

(b) The Guarantee Trustee shall comply with its
obligations under Section 311(a) of the Trust Indenture Act,
subject to the provisions of Section 311(b) and Section 312(b) of
the Trust Indenture Act.

SECTION 2.03 Reports by the Guarantee Trustee.
Within 60 days after [______] of each year, commencing _________,
199__, the Guarantee Trustee shall provide to the Holders such
reports, if any, as are required by Section 313(a) of the Trust
Indenture Act in the form and in the manner provided by Section
313(a) of the Trust Indenture Act. The Guarantee Trustee shall
also comply with the requirements of Sections 313(b), (c) and (d)
of the Trust Indenture Act.

SECTION 2.04 Periodic Reports to Guarantee Trustee.
The Guarantor shall provide to the Guarantee Trustee such
documents, reports and information as required by Section 314 (if
any) and the compliance certificate required by Section 314 of
the Trust Indenture Act in the form, in the manner and at the
times required by Section 314 of the Trust Indenture Act.

SECTION 2.05 Evidence of Compliance with Conditions
Precedent. The Guarantor shall provide to the Guarantee Trustee
such evidence of compliance with any conditions precedent
provided for in this Guarantee Agreement that relate to any of
the matters set forth in Section 314(c) of the Trust Indenture
Act. Any certificate or opinion required to be given by an
officer pursuant to Section 314(c)(1) of the Trust Indenture Act
may be given in the form of an Officers' Certificate.

SECTION 2.06 Events of Default; Waiver. The Holders
of a Majority in liquidation amount of Preferred Securities may,
by vote, on behalf of all of the Holders, waive any past Event of
Default and its consequences. Upon such waiver, any such Event
of Default shall cease to exist, and any Event of Default arising
therefrom shall be deemed to have been cured, for every purpose
of this Guarantee Agreement, but no such waiver shall extend to
any subsequent or other default or Event of Default or impair any
right consequent thereon.

SECTION 2.07 Event of Default; Notice.

(a) The Guarantee Trustee shall, within 90 days after
the occurrence of an Event of Default, transmit by mail, first
class postage prepaid, to the Holders, notices of all Events of
Default known to the Guarantee Trustee, unless such defaults have
been cured before the giving of such notice, provided that, the
Guarantee Trustee shall be protected in withholding such notice
if and so long as the board of directors, the executive
committee, or a trust committee of directors or Responsible
Officers of the Guarantee Trustee in good faith determines that
the withholding of such notice is in the interests of the
Holders.

(b) The Guarantee Trustee shall not be deemed to have
knowledge of any Event of Default unless the Guarantee Trustee
shall have received written notice, or a Responsible Officer
charged with the administration of the Trust Agreement shall have
obtained written notice, of such Event of Default.

SECTION 2.08 Conflicting Interests. The Trust
Agreement and the Indenture shall be deemed to be specifically
described in this Guarantee Agreement for the purposes of clause
(i) of the first proviso contained in Section 310(b) of the Trust
Indenture Act.

ARTICLE III

POWERS, DUTIES AND RIGHTS OF GUARANTEE TRUSTEE

SECTION 3.01 Powers and Duties of the Guarantee
Trustee.

(a) This Guarantee Agreement shall be held by the
Guarantee Trustee for the benefit of the Holders, and the
Guarantee Trustee shall not transfer this Guarantee Agreement or
any rights hereunder to any Person except a Holder exercising his
or her rights pursuant to Section 5.04 or to a Successor
Guarantee Trustee on acceptance by such Successor Guarantee
Trustee of its appointment to act as Successor Guarantee Trustee.
The right, title and interest of the Guarantee Trustee shall
automatically vest in any Successor Guarantee Trustee, and such
vesting and cessation of title shall be effective whether or not
conveyancing documents have been executed and delivered pursuant
to the appointment of such Successor Guarantee Trustee.

(b) If an Event of Default has occurred and is
continuing, the Guarantee Trustee shall enforce this Guarantee
Agreement for the benefit of the Holders.

(c) The Guarantee Trustee, prior to the occurrence of
any Event of Default and after the curing of all Events of
Default that may have occurred, shall undertake to perform only
such duties as are specifically set forth in this Guarantee
Agreement, and no implied covenants or obligations shall be read
into this Guarantee Agreement against the Guarantee Trustee. In
case an Event of Default has occurred (that has not been cured or
waived pursuant to Section 2.06), the Guarantee Trustee shall
exercise such of the rights and powers vested in it by this
Guarantee Agreement, and use the same degree of care and skill in
its exercise thereof, as a prudent person would exercise or use
under the circumstances in the conduct of his or her own affairs.

(d) No provision of this Guarantee Agreement shall be
construed to relieve the Guarantee Trustee from liability for its
own negligent action, its own negligent failure to act, or its
own willful misconduct, except that:

(i) prior to the occurrence of any Event of
Default and after the curing or waiving of all such
Events of Default that may have occurred:

(A) the duties and obligations of the
Guarantee Trustee shall be determined solely by
the express provisions of this Guarantee
Agreement, and the Guarantee Trustee shall not be
liable except for the performance of such duties
and obligations as are specifically set forth in
this Guarantee Agreement; and

(B) in the absence of bad faith on the part
of the Guarantee Trustee, the Guarantee Trustee
may conclusively rely, as to the truth of the
statements and the correctness of the opinions
expressed therein, upon any certificates or
opinions furnished to the Guarantee Trustee and
conforming to the requirements of this Guarantee
Agreement; but in the case of any such
certificates or opinions that by any provision
hereof are specifically required to be furnished
to the Guarantee Trustee, the Guarantee Trustee
shall be under a duty to examine the same to
determine whether or not they conform to the
requirements of this Guarantee Agreement;

(ii) the Guarantee Trustee shall not be liable
for any error of judgment made in good faith by a
Responsible Officer of the Guarantee Trustee, unless it
shall be proved that the Guarantee Trustee or such
Responsible Officer was negligent in ascertaining the
pertinent facts upon which such judgment was made;

(iii) the Guarantee Trustee shall not be liable
with respect to any action taken or omitted to be taken
by it in good faith in accordance with the direction of
the Holders of a Majority in liquidation amount of the
Preferred Securities relating to the time, method and
place of conducting any proceeding for any remedy
available to the Guarantee Trustee, or exercising any
trust or power conferred upon the Guarantee Trustee
under this Guarantee Agreement; and

(iv) no provision of this Guarantee Agreement
shall require the Guarantee Trustee to expend or risk
its own funds or otherwise incur personal financial
liability in the performance of any of its duties or in
the exercise of any of its rights or powers, if the
Guarantee Trustee shall have reasonable grounds for
believing that the repayment of such funds or liability
is not reasonably assured to it under the terms of this
Guarantee Agreement or adequate indemnity against such
risk or liability is not reasonably assured to it.

SECTION 3.02 Certain Rights of Guarantee Trustee.

(a) Subject to the provisions of Section 3.01:

(i) the Guarantee Trustee may rely and shall be
fully protected in acting or refraining from acting
upon any resolution, certificate, statement,
instrument, opinion, report, notice, request,
direction, consent, order, bond, debenture, note, other
evidence of indebtedness or other paper or document
reasonably believed by it to be genuine and to have
been signed, sent or presented by the proper party or
parties;

(ii) any direction or act of the Guarantor
contemplated by this Guarantee Agreement shall be
sufficiently evidenced by an Officers' Certificate;

(iii) whenever, in the administration of this
Guarantee Agreement, the Guarantee Trustee shall deem
it desirable that a matter be proved or established
before taking, suffering or omitting any action
hereunder, the Guarantee Trustee (unless other evidence
is herein specifically prescribed) may, in the absence
of bad faith on its part, request and rely upon an
Officers' Certificate which, upon receipt of such
request, shall be promptly delivered by the Guarantor;

(iv) the Guarantee Trustee may consult with counsel
of its choice, and the written advice or opinion of
such counsel with respect to legal matters shall be
full and complete authorization and protection in
respect of any action taken, suffered or omitted by it
hereunder in good faith and in accordance with such
advice or opinion; such counsel may be counsel to the
Guarantor or any of its Affiliates and may include any
of its employees; the Guarantee Trustee shall have the
right at any time to seek instructions concerning the
administration of this Guarantee Agreement from any
court of competent jurisdiction;

(v) the Guarantee Trustee shall be under no
obligation to exercise any of the rights or powers
vested in it by this Guarantee Agreement at the request
or direction of any Holder, unless such Holder shall
have provided to the Guarantee Trustee such adequate
security and indemnity as would satisfy a reasonable
person in the position of the Guarantee Trustee,
against the costs, expenses (including attorneys' fees
and expenses) and liabilities that might be incurred by
it in complying with such request or direction,
including such reasonable advances as may be requested
by the Guarantee Trustee; provided that, nothing
contained in this Section 3.02(a)(v) shall be taken to
relieve the Guarantee Trustee, upon the occurrence of
an Event of Default, of its obligation to exercise the
rights and powers vested in it by this Guarantee
Agreement;

(vi) the Guarantee Trustee shall not be bound to
make any investigation into the facts or matters stated
in any resolution, certificate, statement, instrument,
opinion, report, notice, request, direction, consent,
order, bond, debenture, note, other evidence of
indebtedness or other paper or document reasonably
believed by it to be genuine, but the Guarantee
Trustee, in its discretion, may make such further
inquiry or investigation into such facts or matters as
it may see fit;

(vii) the Guarantee Trustee may execute any of the
trusts or powers hereunder or perform any duties
hereunder either directly or by or through agents or
attorneys, and the Guarantee Trustee shall not be
responsible for any misconduct or negligence on the
part of any agent or attorney appointed with due care
by it hereunder;

(viii) whenever in the administration of this
Guarantee Agreement the Guarantee Trustee shall deem it
desirable to receive instructions with respect to
enforcing any remedy or right or taking any other
action hereunder, the Guarantee Trustee (1) may request
instructions from the Holders, (2) may refrain from
enforcing such remedy or right or taking such other
action until such instructions are received, and (3)
shall be protected in acting in accordance with such
instructions; and

(ix) the Guarantee Trustee shall not be liable for
any action taken, suffered or omitted to be taken by it
in good faith and reasonably believed by it to be
authorized or within the discretion or rights or powers
conferred upon it by this Guarantee.

(b) No provision of this Guarantee Agreement shall be
deemed to impose any duty or obligation on the Guarantee Trustee
to perform any act or acts or exercise any right, power, duty or
obligation conferred or imposed on it in any jurisdiction in
which it shall be illegal, or in which the Guarantee Trustee
shall be unqualified or incompetent in accordance with applicable
law, to perform any such act or acts or to exercise any such
right, power, duty or obligation. No permissive power or
authority available to the Guarantee Trustee shall be construed
to be a duty.

ARTICLE IV

GUARANTEE TRUSTEE

SECTION 4.01 Guarantee Trustee; Eligibility.

(a) There shall at all times be a Guarantee Trustee
which shall:

(i) not be an Affiliate of the Guarantor; and

(ii) be a corporation organized and doing
business under the laws of the United States of America
or any State or Territory thereof or of the District of
Columbia, or a corporation or Person permitted by the
Securities and Exchange Commission to act as an
institutional trustee under the Trust Indenture Act,
authorized under such laws to exercise corporate trust
powers, having a combined capital and surplus of at
least 50 million U.S. dollars ($50,000,000), and
subject to supervision or examination by Federal,
State, Territorial or District of Columbia authority.
If such corporation publishes reports of condition at
least annually, pursuant to law or to the requirements
of the supervising or examining authority referred to
above, then, for the purposes of this Section
4.01(a)(ii), the combined capital and surplus of such
corporation shall be deemed to be its combined capital
and surplus as set forth in its most recent report of
condition so published.

(b) If at any time the Guarantee Trustee shall cease
to be eligible to so act under Section 4.01(a), the
Guarantee Trustee shall immediately resign in the manner and
with the effect set out in Section 4.03(c).

(c) If the Guarantee Trustee has or shall acquire any
"conflicting interest" within the meaning of Section 310(b)
of the Trust Indenture Act, the Guarantee Trustee and
Guarantor shall in all respects comply with the provisions
of Section 310(b) of the Trust Indenture Act.

SECTION 4.02 Compensation and Reimbursement.

The Guarantor agrees:

(a) to pay the Guarantee Trustee from time to time
such reasonable compensation as the Guarantor and the Guarantee
Trustee shall from time to time agree in writing for all services
rendered by it hereunder (which compensation shall not be limited
by any provision of law in regard to the compensation of a
trustee of an express trust);

(b) except as otherwise expressly provided herein, to
reimburse the Guarantee Trustee upon its request for all
reasonable expenses, disbursements and advances incurred or made
by the Guarantee Trustee in accordance with the provisions of
this Guarantee (including the reasonable compensation and
expenses of its agents and counsel), except any such expense,
disbursement or advance as may be attributable to its negligence
or bad faith; and

(c) to indemnify each of the Guarantee Trustee and any
predecessor Guarantee Trustee for, and to hold it harmless from
and against, any and all loss, damage, claim, liability or
expense, including taxes (other than taxes based upon the income
of the Guarantee Trustee) incurred without negligence or bad
faith on its part, arising out of or in connection with the
acceptance of the administration of this Guarantee Agreement,
including the costs and expenses of defending itself against any
claim or liability in connection with the exercise or performance
of any its powers or duties hereunder.

As security for the performance of the obligations of
the Guarantor under this Section, the Guarantee Trustee shall
have a lien prior to the Preferred Securities upon all the
property and funds held or collected by the Guarantee Trustee as
such, except funds held in trust for the payment of principal of,
and premium (if any) or interest on, particular obligations of
the Guarantor under this Guarantee Agreement.

The provisions of this Section shall survive the
termination of this Guarantee Agreement.

SECTION 4.03 Appointment, Removal and Resignation of
Guarantee Trustee.

(a) Subject to Section 4.03(b), unless an Event of
Default shall have occurred and be continuing, the Guarantee
Trustee may be appointed or removed without cause at any time by
the Guarantor.

(b) The Guarantee Trustee shall not be removed until a
Successor Guarantee Trustee has been appointed and has accepted
such appointment by written instrument executed by such Successor
Guarantee Trustee and delivered to the Guarantor.

(c) The Guarantee Trustee appointed to office shall
hold office until a Successor Guarantee Trustee shall have been
appointed or until its removal or resignation. The Guarantee
Trustee may resign from office (without need for prior or
subsequent accounting) by an instrument in writing executed by
the Guarantee Trustee and delivered to the Guarantor, which
resignation shall not take effect until a Successor Guarantee
Trustee has been appointed and has accepted such appointment by
instrument in writing executed by such Successor Guarantee
Trustee and delivered to the Guarantor and the resigning
Guarantee Trustee.

(d) If no Successor Guarantee Trustee shall have been
appointed and accepted appointment as provided in this Section
4.03 within 60 days after delivery to the Guarantor of an
instrument of resignation, the resigning Guarantee Trustee may
petition any court of competent jurisdiction for appointment of a
Successor Guarantee Trustee. Such court may thereupon, after
prescribing such notice, if any, as it may deem proper, appoint a
Successor Guarantee Trustee.

(e) The Guarantor shall give notice of each
resignation and each removal of the Guarantee Trustee and each
appointment of a successor Guarantee Trustee to all Holders in
the manner provided in Section 8.03 hereof. Each notice shall
include the name of the successor Guarantee Trustee and the
address of its Corporate Trust Office.

ARTICLE V

GUARANTEE

SECTION 5.01 Guarantee. The Guarantor irrevocably
and unconditionally agrees to pay in full to the Holders the
Guarantee Payments (without duplication of amounts theretofore
paid by the Issuer), as and when due, regardless of any defense,
right of set-off or counterclaim which the Issuer may have or
assert. The Guarantor's obligation to make a Guarantee Payment
may be satisfied by direct payment of the required amounts by the
Guarantor to the Holders or by causing the Issuer to pay such
amounts to the Holders.

SECTION 5.02 Waiver of Notice and Demand. The
Guarantor hereby waives notice of acceptance of this Guarantee
Agreement and of any liability to which it applies or may apply,
presentment, demand for payment, any right to require a
proceeding first against the Issuer or any other Person before
proceeding against the Guarantor, protest, notice of nonpayment,
notice of dishonor, notice of redemption and all other notices
and demands.

SECTION 5.03 Obligations Not Affected. The
obligation of the Guarantor to make the Guarantee Payments under
this Guarantee Agreement shall in no way be affected or impaired
by reason of the happening from time to time of any of the
following:

(a) the release or waiver, by operation of law or
otherwise, of the performance or observance by the Issuer of
any express or implied agreement, covenant, term or
condition relating to the Preferred Securities to be
performed or observed by the Issuer;

(b) the extension of time for the payment by the
Issuer of all or any portion of the Distributions,
Redemption Price, Liquidation Distribution or any other sums
payable under the terms of the Preferred Securities or the
extension of time for the performance of any other
obligation under, arising out of, or in connection with, the
Preferred Securities (other than an extension of time for
payment of Distributions, Redemption Price, Liquidation
Distribution or other sum payable that results from the
extension of any interest payment period on the Debentures
permitted by the Indenture);

(c) any failure, omission, delay or lack of diligence
on the part of the Holders to enforce, assert or exercise
any right, privilege, power or remedy conferred on the
Holders pursuant to the terms of the Preferred Securities,
or any action on the part of the Issuer granting indulgence
or extension of any kind;

(d) the voluntary or involuntary liquidation,
dissolution, sale of any collateral, receivership,
insolvency, bankruptcy, assignment for the benefit of
creditors, reorganization, arrangement, composition or
readjustment of debt of, or other similar proceedings
affecting, the Issuer or any of the assets of the Issuer;

(e) any invalidity of, or defect or deficiency in, the
Preferred Securities;

(f) the settlement or compromise of any obligation
guaranteed hereby or hereby incurred; or

(g) any other circumstance whatsoever that might
otherwise constitute a legal or equitable discharge or
defense of a guarantor, it being the intent of this Section
5.03 that the obligations of the Guarantor hereunder shall
be absolute and unconditional under any and all
circumstances.

There shall be no obligation of the Holders to give notice to, or
obtain consent of, the Guarantor with respect to the happening of
any of the foregoing.

SECTION 5.04 Rights of Holders. The Guarantor
expressly acknowledges that: (i) this Guarantee Agreement will be
deposited with the Guarantee Trustee to be held for the benefit
of the Holders; (ii) the Guarantee Trustee has the right to
enforce this Guarantee Agreement on behalf of the Holders; (iii)
the Holders of a Majority in liquidation amount of the Preferred
Securities have the right to direct the time, method and place of
conducting any proceeding for any remedy available to the
Guarantee Trustee in respect of this Guarantee Agreement or
exercising any trust or power conferred upon the Guarantee
Trustee under this Guarantee Agreement; and (iv) if the Guarantee
Trustee fails to enforce this Guarantee Agreement as above
provided, any Holder may institute a legal proceeding directly
against the Guarantor to enforce its rights under this Guarantee
Agreement without first instituting a legal proceeding against
the Issuer or any other person or entity.

SECTION 5.05 Guarantee of Payment. This Guarantee
Agreement creates a guarantee of payment and not of collection.
This Guarantee Agreement will not be discharged except by payment
of the Guarantee Payments in full (without duplication).

SECTION 5.06 Subrogation. The Guarantor shall be
subrogated to all (if any) rights of the Holders against the
Issuer in respect of any amounts paid to the Holders by the
Guarantor under this Guarantee Agreement; provided, however, that
the Guarantor shall not (except to the extent required by
mandatory provisions of law) be entitled to enforce or exercise
any rights which it may acquire by way of subrogation or any
indemnity, reimbursement or other agreement, in all cases as a
result of payment under this Guarantee Agreement, if, at the time
of any such payment, any amounts of Guarantee Payments are due
and unpaid under this Guarantee Agreement. If any amount shall
be paid to the Guarantor in violation of the preceding sentence,
the Guarantor agrees to hold such amount in trust for the Holders
and to pay over such amount to the Holders.

SECTION 5.07 Independent Obligations. The Guarantor
acknowledges that its obligations hereunder are independent of
the obligations of the Issuer with respect to the Preferred
Securities and that the Guarantor shall be liable as principal
and as debtor hereunder to make Guarantee Payments pursuant to
the terms of this Guarantee Agreement notwithstanding the
occurrence of any event referred to in subsections (a) through
(g), inclusive, of Section 5.03.

ARTICLE VI

SUBORDINATION

SECTION 6.01 Subordination. This Guarantee Agreement
will constitute an unsecured obligation of the Guarantor and will
rank (i) subordinate and junior in right of payment to all other
liabilities of the Guarantor, including the Debentures, except
those made pari passu or subordinate by their terms, (ii) pari
passu with the most senior preferred or preference stock now or
hereafter issued by the Guarantor and with any guarantee now or
hereafter entered into by the Guarantor in respect of any
preferred or preference stock of any Affiliate of the Guarantor,
and (iii) senior to all common stock of the Guarantor. Nothing
in this Section 6.01 shall apply to claims of, or payments to,
the Guarantee Trustee under or pursuant to Section 4.02 hereof.

ARTICLE VII

TERMINATION

SECTION 7.01 Termination. This Guarantee Agreement
shall terminate and be of no further force and effect upon: (i)
full payment of the Redemption Price of all Preferred Securities,
and all accrued and unpaid Distributions to the date of
redemption, (ii) the distribution of Debentures to Holders in
exchange for all of the Preferred Securities or (iii) full
payment of the amounts payable in accordance with the Trust
Agreement upon liquidation of the Issuer. Notwithstanding the
foregoing, this Guarantee Agreement will continue to be effective
or will be reinstated, as the case may be, if at any time any
Holder must restore payment of any sums paid with respect to
Preferred Securities or under this Guarantee Agreement.

ARTICLE VIII

MISCELLANEOUS

SECTION 8.01 Successors and Assigns. All guarantees
and agreements contained in this Guarantee Agreement shall bind
the successors, assigns, receivers, trustees and representatives
of the Guarantor and shall inure to the benefit of the Holders of
the Preferred Securities then outstanding. Except in connection
with a consolidation, merger or sale involving the Guarantor that
is permitted under Article Eleven of the Indenture, the Guarantor
shall not assign its obligations hereunder.

SECTION 8.02 Amendments. Except with respect to any
changes which do not adversely affect the rights of Holders (in
which case no consent of Holders will be required), this
Guarantee Agreement may only be amended with the prior approval
of the Holders of not less than 66 2/3% in aggregate liquidation
amount of all the outstanding Preferred Securities. The
provisions of Article Six of the Trust Agreement concerning
meetings of Holders shall apply to the giving of such approval.

SECTION 8.03 Notices. Any notice, request or other
communication required or permitted to be given hereunder shall
be in writing, duly signed by the party giving such notice, and
delivered, telecopied or mailed by first class mail as follows:

(a) if given to the Guarantor, to the address set
forth below or such other address as the Guarantor may give
notice of to the Holders of the Preferred Securities:

Texas Utilities Electric Company
Energy Plaza
1601 Bryan Street
Dallas, Texas 75201
Facsimile No: 214-812-2488
Attention: Treasurer

(b) if given to the Issuer, in care of the
Administrative Trustees, at the Issuer's (and the
Administrative Trustee's) address set forth below or such
other address as the Administrative Trustees on behalf of
the Issuer may give notice of to the Holders:

TU Electric Capital III
c/o Texas Utilities Electric Company
Energy Plaza
1601 Bryan Street
Dallas, Texas 75201
Facsimile No: 214-812-2488
Attention: Administrative Trustees

(c) if given to the Guarantee Trustee, to the address
set forth below or such other address as the Guarantee
Trustee may give notice of to the Holders of the Preferred
Securities:

The Bank of New York
101 Barclay Street
21 West
New York, New York 10286
Facsimile No: (212) 815-5915
Attention: Corporate Trust Trustee
Administration

(d) if given to any Holder, at the address set forth
on the books and records of the Issuer.

All notices hereunder shall be deemed to have been
given when received in person, telecopied with receipt confirmed,
or mailed by first class mail, postage prepaid except that if a
notice or other document is refused delivery or cannot be
delivered because of a changed address of which no notice was
given, such notice or other document shall be deemed to have been
delivered on the date of such refusal or inability to deliver.

SECTION 8.04 Benefit. This Guarantee Agreement is
solely for the benefit of the Holders and, subject to Section
3.01(a), is not separately transferable from the Preferred
Securities.

SECTION 8.05 Interpretation. In this Guarantee
Agreement, unless the context otherwise requires:

(a) Capitalized terms used in this Guarantee Agreement
but not defined in the preamble hereto have the respective
meanings assigned to them in Section 1.01;

(b) a term defined anywhere in this Guarantee
Agreement has the same meaning throughout;

(c) all references to "the Guarantee Agreement" or
"this Guarantee Agreement" are to this Guarantee Agreement
as modified, supplemented or amended from time to time;

(d) all references in this Guarantee Agreement to
Articles and Sections are to Articles and Sections of this
Guarantee Agreement unless otherwise specified;

(e) a term defined in the Trust Indenture Act has the
same meaning when used in this Guarantee Agreement unless
otherwise defined in this Guarantee Agreement or unless the
context otherwise requires;

(f) a reference to the singular includes the plural
and vice versa; and

(g) the masculine, feminine or neuter genders used
herein shall include the masculine, feminine and neuter
genders.

SECTION 8.06 Governing Law. THIS GUARANTEE AGREEMENT
SHALL BE GOVERNED BY AND CONSTRUED AND INTERPRETED IN ACCORDANCE
WITH THE LAWS OF THE STATE OF NEW YORK.

This instrument may be executed in any number of
counterparts, each of which so executed shall be deemed to be an
original, but all such counterparts shall together constitute but
one and the same instrument.

<PAGE>

THIS GUARANTEE AGREEMENT is executed as of the day and
year first above written.

Texas Utilities Electric Company

By:
----------------------------
Name:
Title:

The Bank of New York,
as Guarantee Trustee

By:
----------------------------
Name:
Title:

Exhibit 4(d)

AGREEMENT AS TO EXPENSES AND LIABILITIES

AGREEMENT dated as of ________ ___, 1995, between Texas
Utilities Electric Company, a Texas corporation ("TU Electric"),
and TU Electric Capital III, a Delaware business trust (the
"Trust").

WHEREAS, the Trust intends to issue its Common
Securities (the "Common Securities") to and receive Debentures
from TU Electric and to issue its ___% Trust Originated Preferred
Securities, Series A (the "Preferred Securities") with such
powers, preferences and special rights and restrictions as are
set forth in the Amended and Restated Trust Agreement of the
Trust dated as of ________ __, 199__ as the same may be amended
from time to time (the "Trust Agreement");

WHEREAS, TU Electric is the issuer of the Debentures;

NOW, THEREFORE, in consideration of the acceptance by
each holder of the Preferred Securities, which acceptance TU
Electric hereby agrees shall benefit TU Electric and which
acceptance TU Electric acknowledges will be made in reliance upon
the execution and delivery of this Agreement, TU Electric,
including in its capacity as holder of the Common Securities, and
the Trust hereby agree as follows:

ARTICLE I

Section 1.01. Assumption by TU Electric. Subject to
-------------------------
the terms and conditions hereof, TU Electric hereby irrevocably
and unconditionally assumes the full payment, when and as due, of
any and all Obligations (as hereinafter defined) to each person
or entity to whom the Trust is now or hereafter becomes indebted
or liable (the "Beneficiaries"). As used herein, "Obligations"
means any indebtedness, expenses or liabilities of the Trust,
other than (i) obligations of the Trust to pay to holders of any
Preferred Securities or other similar interests in the Trust the
amounts due such holders pursuant to the terms of the Preferred
Securities or such other similar interests, as the case may be
and (ii) obligations arising out of the negligence, willful
misconduct or bad faith of the Trustees of the Trust. This
Agreement is intended to be for the benefit of, and to be
enforceable by, all such Beneficiaries, whether or not such
Beneficiaries have received notice hereof.

Section 1.02. Term of Agreement. This Agreement shall
-----------------
terminate and be of no further force and effect upon the date on
which there are no Beneficiaries remaining; provided, however,
that this Agreement shall continue to be effective or shall be
reinstated, as the case may be, if at any time any holder of
Preferred Securities or any Beneficiary must restore payment of
any sums paid under the Preferred Securities, under any
Obligation, under the Guarantee Agreement dated the date hereof
by TU Electric and The Bank of New York, as guarantee trustee, or
under this Agreement for any reason whatsoever. This Agreement
is continuing, irrevocable, unconditional and absolute.

Section 1.03. Waiver of Notice. TU Electric hereby
----------------
waives notice of acceptance of this Agreement and of any
Obligation to which it applies or may apply, and TU Electric
hereby waives presentment, demand for payment, protest, notice of
nonpayment, notice of dishonor, notice of redemption and all
other notices and demands.

Section 1.04. No Impairment. The obligations,
-------------
covenants, agreements and duties of TU Electric under this
Agreement shall in no way be affected or impaired by reason of
the happening from time to time of any of the following:

(a) the extension of time for the payment by the Trust
of all or any portion of the Obligations or for the performance
of any other obligation under, arising out of, or in connection
with, the Obligations;

(b) any failure, omission, delay or lack of diligence
on the part of the Beneficiaries to enforce, assert or exercise
any right, privilege, power or remedy conferred on the
Beneficiaries with respect to the Obligations or any action on
the part of the Trust granting indulgence or extension of any
kind; or

(c) the voluntary or involuntary liquidation,
dissolution, sale of any collateral, receivership, insolvency,
bankruptcy, assignment for the benefit of creditors,
reorganization, arrangement, composition or readjustment of debt
of, or other similar proceedings affecting, the Trust or any of
the assets of the Trust.

There shall be no obligation of the Beneficiaries to give notice
to, or obtain the consent of, TU Electric with respect to the
happening of any of the foregoing.

Section 1.05. Enforcement. A Beneficiary may enforce
-----------
this Agreement directly against TU Electric and TU Electric
waives any right or remedy to require that any action be brought
against the Trust or any other person or entity before proceeding
against TU Electric.

ARTICLE II

Section 2.01. Binding Effect. All guarantees and
--------------
agreements contained in this Agreement shall bind the successors,
assigns, receivers, trustees and representatives of TU Electric
and shall inure to the benefit of the Beneficiaries.

Section 2.02. Amendment. So long as there remains any
---------
Beneficiary or any Preferred Securities of any series are
outstanding, this Agreement shall not be modified or amended in
any manner adverse to such Beneficiary or to the holders of the
Preferred Securities.

Section 2.03. Notices. Any notice, request or other
-------
communication required or permitted to be given hereunder shall
be given in writing by delivering the same against receipt
therefor by facsimile transmission (confirmed by mail), telex or
by registered or certified mail, addressed as follows (and if so
given, shall be deemed given when mailed or upon receipt of an
answer-back, if sent by telex), to wit:

TU Electric Capital III
c/o [Trustee]

Facsimile No.:
Attention:

Texas Utilities Electric Company

Facsimile No.:
Attention:

Section 2.04 THIS AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED AND INTERPRETED IN ACCORDANCE WITH THE LAWS OF THE
STATE OF NEW YORK (WITHOUT REGARD TO CONFLICT OF LAWS
PRINCIPLES).

THIS AGREEMENT is executed as of the day and year first
above written.

TEXAS UTILITIES ELECTRIC COMPANY

By:
----------------------------
Name:
Title:

TU ELECTRIC CAPITAL III

By:
----------------------------
Wayne Patterson
not in his individual
capacity, but solely
as Administrative Trustee

----------------------------
Cathryn Hulen
not in her individual
capacity, but solely
as Administrative Trustee

----------------------------
Michael Perkins
not in his individual
capacity, but solely
as Administrative Trustee

Exhibit 4(e)

TEXAS UTILITIES ELECTRIC COMPANY

OFFICER'S CERTIFICATE

________________, the _______________ of Texas Utilities
Electric Company (the "Company"), pursuant to the authority
granted in the Board Resolutions of the Company dated
____________, 1995, and Sections 201 and 301 of the Indenture
defined herein, does hereby certify to The Bank of New York (the
"Trustee"), as Trustee under the Indenture of the Company (For
Unsecured Subordinated Debt Securities relating to Trust
Securities) dated as of December 1, 1995 (the "Indenture") that:

1. The securities of the first series to be issued under
the Indenture shall be designated "8.20% Junior
Subordinated Debentures, Series A, due September 30,
2030" (the "Debentures of the First Series"). All
capitalized terms used in this certificate which are
not defined herein but are defined in the Indenture
shall have the meanings set forth in the Indenture;

2. The Debentures of the First Series shall be limited in
aggregate principal amount to $__________ at any time
Outstanding, except as contemplated in Section 301(b)
of the Indenture;

3. The Debentures of the First Series shall mature and the
principal shall be due and payable together with all
accrued and unpaid interest thereon on September 30,
2030;

4. The Debentures of the First Series shall bear interest
from the date of original issuance, at the rate of
8.20% per annum payable quarterly in arrears on March
31, June 30, September 30 and December 31 of each year
(each, an "Interest Payment Date") commencing October
1, 1995. The amount of interest payable for any such
period will be computed on the basis of a 360-day year
of twelve 30-day months and on the basis of the actual
number of days elapsed within any month in relation to
the deemed 30 days of such month. Interest on the
Debentures of the First Series will accrue from the
date of original issuance but if interest has been paid
on such Debentures of the First Series, then from the
most recent Interest Payment Date through which
interest has been paid or duly provided for. In the
event that any Interest Payment Date is not a Business
Day, then payment of interest payable on such date will
be made on the next succeeding day which is a Business
Day (and without any interest or other payment in
respect of such delay), except that, if such Business
Day is in the next succeeding calendar year, such
payment shall be made on the immediately preceding
Business Day, in each case with the same force and
effect as if made on such Interest Payment Date;

5. Each installment of interest on a Debenture of the
First Series shall be payable to the Person in whose
name such Debenture of the First Series is registered
at the close of business on the day 15 days preceding
the corresponding Interest Payment Date (the "Regular
Record Date") for the Debentures of the First Series;
provided, however, that if the Debentures of the First
Series are held neither by the Trust nor by a
securities depositary, the Company shall have the right
to change the Regular Record Date by one or more
Officer's Certificates. Any installment of interest on
the Debentures of the First Series not punctually paid
or duly provided for shall forthwith cease to be
payable to the Holders of such Debentures of the First
Series on such Regular Record Date, and may be paid to
the Persons in whose name the Debentures of the First
Series are registered at the close of business on a
Special Record Date to be fixed by the Trustee for the
payment of such Defaulted Interest. Notice of such
Defaulted Interest and Special Record Date shall be
given to the Holders of the Debentures of the First
Series not less than 10 days prior to such Special
Record Date, or may be paid at any time in any other
lawful manner not inconsistent with the requirements of
any securities exchange on which the Debentures of the
First Series may be listed, and upon such notice as may
be required by such exchange, all as more fully
provided in the Indenture;

6. The principal and each installment of interest on the
Debentures of the First Series shall be payable at, and
registration of transfer, exchanges in respect of the
Debentures of the First Series may be effected at, the
office or agency of the Company in the City of Dallas;
provided that payment of interest may be made at the
option of the Company by check mailed to the address of
the persons entitled thereto. Notices, demands to or
upon the Company in respect of the Debentures of the
First Series may be served at the office or agency of
the Company in The City of New York. The Trustee will
initially be the agency of the Company for such service
of notices and demands; provided, however, that the
Company reserves the right to change, by one or more
Officer's Certificates any such office or agency. The
Company will be the Security Registrar and the Paying
Agent for the Debentures of the First Series;

7. The Debentures of the First Series will be redeemable
on or after November 1, 2001 at the option of the
Company, at any time and from time to time in whole or
in part, at a redemption price equal to 100% of the
principal amount of the Debentures of the First Series
being redeemed, together with any accrued interest,
including Additional Interest, if any, to the
redemption date, upon not less than 30 nor more than 60
days' notice given as provided in the Indenture. The
Company, however, may not redeem less than all
Outstanding Debentures of the First Series unless the
conditions specified in the second paragraph of item 8
below are met;

8. The Debentures of the First Series will also be
redeemable at the option of the Company if a Tax Event
shall occur and be continuing, in whole or in part, at
a redemption price plus accrued and unpaid
distributions equal to 100% of the principal amount of
the Debentures of the First Series then Outstanding
plus any accrued and unpaid interest, including
Additional Interest, if any, to the redemption date,
upon not less than 30 nor more than 60 days' notice
given as provided in the Indenture. "Tax Event" means
any event or events as a result of which, there is more
than an insubstantial risk that (i) the Trust is, or
will be subject to United States federal income tax
with respect to interest received on the Debentures of
the First Series, (ii) interest payable by the Company
on the Debentures of the First Series is not, or will
not be, fully deductible for United States federal
income tax purposes, or (iii) the Trust is, or will be,
subject to more than a de minimis amount of other
taxes, duties or other governmental charges;

The Company may not redeem less than all the Debentures
of the First Series unless all accrued and unpaid
interest (including any Additional Interest) has been
paid in full on all Debentures Outstanding under the
Indenture for all quarterly interest periods
terminating on or prior to the date of redemption. No
notice of redemption with respect to the Debentures may
state that such redemption shall be conditional upon
the receipt of certain moneys as contemplated in the
third paragraph of Section 404 of the Indenture;

9. So long as any Debentures of the First Series are
Outstanding, the failure of the Company to pay interest
on any Debentures of the First Series within 30 days
after the same becomes due and payable (whether or not
payment is prohibited by the provisions of Article
Fifteen of the Indenture) shall constitute an Event of
Default; provided, however, that a valid extension of
the interest payment period by the Company as
contemplated in Section 311 of the Indenture and
paragraph (10) of this Certificate shall not constitute
a failure to pay interest for this purpose;

10. Pursuant to Section 311 of the Indenture, the Company
shall have the right, at any time and from time to time
during the term of the Debentures of the First Series,
to extend the interest payment period to a period not
exceeding 20 consecutive quarters (an "Extension
Period") during which period interest will be
compounded quarterly. At the end of the Extension
Period, the Company shall pay all interest accrued and
unpaid (together with interest thereon at the rate
specified for the Debentures of the First Series,
compounded quarterly, to the extent permitted by
applicable law). However, during any such Extension
Period, the Company shall not declare or pay any
dividend or distribution (other than a dividend or
distribution in common stock of the Company) on, or
redeem, purchase, acquire or make a liquidation payment
with respect to, any of its capital stock, redeem any
indebtedness that is pari passu with the Debentures of
the First Series, or make any guarantee payments with
respect to the foregoing. Prior to the termination of
any such Extension Period, the Company may further
extend the interest payment period, provided that such
Extension Period together with all such previous and
further extensions thereof shall not exceed 20
consecutive quarters at any one time or extend beyond
the maturity date of the Debentures of the First
Series. Upon the termination of any such Extension
Period and the payment of all amounts then due, the
Company may select a new Extension Period, subject to
the above requirements. No interest shall be due and
payable during an Extension Period, except at the end
thereof. The Company will give the Trust and the
Trustee notice of its election of an Extension Period
prior to the earlier of (i) one Business Day prior to
the record date for the distribution which would occur
but for such election or (ii) the date the Company is
required to give notice to the New York Stock Exchange
or other applicable self-regulatory organization of the
record date;

11. In the event that, at any time subsequent to the
initial authentication and delivery of the Debentures
of the First Series, the Debentures of the First Series
are to be held by a securities depositary, the Company
may at such time establish the matters contemplated in
clause (r) in the second paragraph of Section 301 of
the Indenture in an Officer's Certificate supplemental
to this Certificate;

12. No service charge shall be made for the registration of
transfer or exchange of the Debentures of the First
Series; provided, however, that the Company may require
payment of a sum sufficient to cover any tax or other
governmental charge that may be imposed in connection
with the exchange or transfer;

13. The Debentures of the First Series shall have such
other terms and provisions as are provided in the form
set forth in Exhibit A hereto, and shall be issued in
substantially such form;

14. In the event that the Debentures of the First Series
are distributed to holders of 8.20% Trust Originated
Preferred Securities as a result of the occurrence of a
Tax Event, the Company will use its best efforts to
list the Debentures of the First Series on the New York
Stock Exchange;

15. The undersigned has read all of the covenants or
conditions contained in Sections 303, 301, 201 and 102
of the Indenture relating to the issuance of the
Debentures of the First Series and the definitions in
the Indenture relating thereto and in respect of which
this certificate is made;

16. The statements contained in this certificate are based
upon the familiarity of the undersigned with the
Indenture, the documents accompanying this certificate,
and upon discussions by the undersigned with officers
and employees of the Company familiar with the matters
set forth herein;

17. In the opinion of the undersigned, he has made such
examination or investigation as is necessary to express
an informed opinion whether or not such covenants or
conditions have been complied with; and

18. In the opinion of the undersigned, such covenants or
conditions have been complied with.

IN WITNESS WHEREOF, I have executed this Officer's
Certificate this ____ day of _________________, 1995.

______________________________
Name: [Authorized Officer]
Title:

<PAGE>

No._______________
Cusip No.__________

EXHIBIT A

[FORM OF FACE OF JUNIOR SUBORDINATED DEBENTURE]

TEXAS UTILITIES ELECTRIC COMPANY

8.20% JUNIOR SUBORDINATED DEBENTURES, SERIES A,
DUE SEPTEMBER 30, 2030

TEXAS UTILITIES ELECTRIC COMPANY, a corporation duly
organized and existing under the laws of the State Texas (herein
referred to as the "Company", which term includes any successor
Person under the Indenture), for value received, hereby promises
to pay to ____________________________________, or registered
assigns, the principal sum of ____________________ Dollars on
September 30, 2030, and to pay interest on said principal sum
from _________, 1995 or from the most recent Interest Payment
Date to which interest has been paid or duly provided for,
quarterly on March 31, June 30, September 30 and December 31 of
each year, commencing October 1, 1995 at the rate of 8.20% per
annum until the principal hereof is paid or made available for
payment. The amount of interest payable on any Interest Payment
Date shall be computed on the basis of a 360-day year of twelve
30-day months. Interest on the Securities of this series will
accrue from _________ to the first Interest Payment Date, and
thereafter will accrue, from the last Interest Payment Date to
which interest has been paid or duly provided for. In the event
that any Interest Payment Date is not a Business Day, then
payment of interest payable on such date will be made on the next
succeeding day which is a Business Day (and without any interest
or other payment in respect of such delay), except that, if such
Business Day is in the next succeeding calendar year, such
payment shall be made on the immediately preceding Business Day,
in each case with the same force and effect as if made on the
Interest Payment Date. The interest so payable, and punctually
paid or duly provided for, on any Interest Payment Date will, as
provided in such Indenture, be paid to the Person in whose name
this Security (or one or more Predecessor Securities) is
registered at the close of business on the Regular Record Date
for such interest, which shall be the day 15 days preceding such
Interest Payment Date. Any such interest not so punctually paid
or duly provided for will forthwith cease to be payable to the
Holder on such Regular Record Date and may either be paid to the
Person in whose name this Security (or one or more Predecessor
Securities) is registered at the close of business on a Special
Record Date for the payment of such Defaulted Interest to be
fixed by the Trustee, notice whereof shall be given to Holders of
Securities of this series not less than 10 days prior to such
Special Record Date, or be paid at any time in any other lawful
manner not inconsistent with the requirements of any securities
exchange on which the Securities of this series may be listed,
and upon such notice as may be required by such exchange, all as
more fully provided in the Indenture referred to on the reverse
hereof.

Payment of the principal of (and premium, if any) and
interest on this Security will be made at the office or agency of
the Company maintained for that purpose in the [the City of
Dallas, the State of Texas], in such coin or currency of the
United States of America as at the time of payment is legal
tender for payment of public and private debts, provided,
however, that, at the option of the Company, interest on this
Security may be paid by check mailed to the address of the person
entitled thereto, as such address shall appear on the Security
Register.

Reference is hereby made to the further provisions of
this Security set forth on the reverse hereof, which further
provisions shall for all purposes have the same effect as if set
forth at this place.

Unless the certificate of authentication hereon has
been executed by the Trustee referred to on the reverse hereof by
manual signature, this Security shall not be entitled to any
benefit under the Indenture or be valid or obligatory for any
purpose.

IN WITNESS WHEREOF, the Company has caused this
instrument to be duly executed.

TEXAS UTILITIES ELECTRIC COMPANY

By:________________________________

ATTEST:

____________________________

[FORM OF CERTIFICATE OF AUTHENTICATION]

CERTIFICATE OF AUTHENTICATION

Dated:

This is one of the Securities of the series designated
therein referred to in the within-mentioned Indenture.

THE BANK OF NEW YORK, as Trustee

By:________________________________
Authorized Signatory

<PAGE>

[FORM OF REVERSE OF JUNIOR SUBORDINATED DEBENTURE]

This Security is one of a duly authorized issue of
securities of the Company (herein called the "Securities"),
issued and to be issued in one or more series under an Indenture,
dated as of December 1, 1995 (herein, together with any
amendments thereto, called the "Indenture", which term shall have
the meaning assigned to it in such instrument), between the
Company and The Bank of New York, as Trustee (herein called the
"Trustee", which term includes any successor trustee under the
Indenture), and reference is hereby made to the Indenture,
including the Board Resolutions and Officer's Certificate filed
with the Trustee on ___________, 1995 creating the series
designated on the face hereof, for a statement of the respective
rights, limitations of rights, duties and immunities thereunder
of the Company, the Trustee and the Holders of the Securities and
of the terms upon which the Securities are, and are to be,
authenticated and delivered. This Security is one of the series
designated on the face hereof, limited in aggregate principal
amount to $___________.

The Securities of this series are subject to redemption
upon not less than 30 nor more than 60 days' notice by mail, at
any time on or after November 1, 2001 as a whole or in part, at
the election of the Company, at a Redemption Price equal to 100%
of the principal amount, together in the case of any such
redemption with accrued interest to, but not including, the
Redemption Date, but interest installments whose Stated Maturity
is on or prior to such Redemption Date will be payable to the
Holder of such Security, or one or more Predecessor Securities,
of record at the close of business on the related Regular Record
Date referred to on the face hereof, all as provided in the
Indenture.

The Debentures of the First Series will also be
redeemable at the option of the Company if a Tax Event shall
occur and be continuing, in whole or in part, at a redemption
price plus accrued and unpaid distributions equal to 100% of the
principal amount of the Debentures of the First Series then
Outstanding plus any accrued and unpaid interest, including
Additional Interest, if any, to the redemption date, upon not
less than 30 nor more than 60 days' notice. "Tax Event" means
any event or events as a result of which, there is more than an
insubstantial risk that (i) the Trust is, or will be subject to
United States federal income tax with respect to interest
received on the Debentures of the First Series, (ii) interest
payable by the Company on the Debentures of the First Series is
not, or will not be, fully deductible for United States federal
income tax purposes, or (iii) the Trust is, or will be, subject
to more than a de minimis amount of other taxes, duties or other
governmental charges.

In the event of redemption of this Security in part
only, a new Security or Securities of this series and of like
tenor for the unredeemed portion hereof will be issued in the
name of the Holder hereof upon the cancellation hereof.

The indebtedness evidenced by this Security is, to the
extent provided in the Indenture, subordinated and subject in
right of payment to the prior payment in full of all Senior
Indebtedness, and this Security is issued subject to the
provisions of the Indenture with respect thereto. Each Holder of
this Security, by accepting the same, (a) agrees to and shall be
bound by such provisions, (b) authorizes and directs the Trustee
on his behalf to take such action as may be necessary or
appropriate to acknowledge or effectuate the subordination so
provided and (c) appoints the Trustee his attorney-in-fact for
any and all such purposes. Each Holder hereof, by his acceptance
hereof, hereby waives all notice of the acceptance of the
subordination provisions contained herein and in the Indenture by
each holder of Senior Indebtedness, whether now outstanding or
hereafter incurred, and waives reliance by each such Holder upon
said provisions.

The Indenture contains provisions for defeasance at any
time of the entire indebtedness of this Security upon compliance
with certain conditions set forth in the Indenture.

If an Event of Default with respect to Securities of
this series shall occur and be continuing, the principal of the
Securities of this series may be declared due and payable in the
manner and with the effect provided in the Indenture.

The Indenture permits, with certain exceptions as
therein provided, the amendment thereof and the modification of
the rights and obligations of the Company and the rights of the
Holders of the Securities of each series to be affected under the
Indenture at any time by the Company and the Trustee with the
consent of the Holders of a majority in principal amount of the
Securities at the time Outstanding of all series to be affected.
The Indenture also contains provisions permitting the Holders of
specified percentages in principal amount of the Securities of
each series at the time Outstanding, on behalf of the Holders of
all Securities of such series, to waive compliance by the Company
with certain provisions of the Indenture and certain past
defaults under the Indenture and their consequences. Any such
consent or waiver by the Holder of this Security shall be
conclusive and binding upon such Holder and upon all future
Holders of this Security and of any Security issued upon the
registration of transfer hereof or in exchange herefor or in lieu
hereof, whether or not notation of such consent or waiver is made
upon this Security.

As provided in and subject to the provisions of the
Indenture, the Holder of this Security shall not have the right
to institute any proceeding with respect to the Indenture or for
the appointment of a receiver or trustee or for any other remedy
thereunder, unless such Holder shall have previously given the
Trustee written notice of a continuing Event of Default with
respect to the Securities of this series, the Holders of not less
than a majority in aggregate principal amount of the Securities
of all series at the time Outstanding in respect of which an
Event of Default shall have occurred and be continuing shall have
made written request to the Trustee to institute proceedings in
respect of such Event of Default as Trustee and offered the
Trustee reasonable indemnity, and the Trustee shall not have
received from the Holders of a majority in aggregate principal
amount of Securities of all series at the time Outstanding in
respect of which an Event of Default shall have occurred and be
continuing a direction inconsistent with such request, and shall
have failed to institute any such proceeding, for 60 days after
receipt of such notice, request and offer of indemnity. The
foregoing shall not apply to any suit instituted by the Holder of
this Security for the enforcement of any payment of principal
hereof or any premium or interest hereon on or after the
respective due dates expressed herein.

No reference herein to the Indenture and no provision
of this Security or of the Indenture shall alter or impair the
obligation of the Company, which is absolute and unconditional,
to pay the principal of and any premium and interest on this
Security at the times, place and rate, and in the coin or
currency, herein prescribed.

The Company shall have the right at any time and from
time to time during the term of the Securities of this series to
extend the interest payment period to a period not exceeding 20
consecutive quarters (an "Extended Interest Payment Period"), and
at the end of such Extended Interest Payment Period, the Company
shall pay all interest then accrued and unpaid (together with
interest thereon at the same rate as specified for the Securities
of this series, compounded quarterly, to the extent permitted by
applicable law); provided, however, that during such Extended
Interest Payment Period the Company shall not declare or pay any
dividend or distribution (other than a dividend or distribution
in common stock of the Company) on, or redeem, purchase, acquire
or make a liquidation payment with respect to, any of its capital
stock, redeem any indebtedness that is pari passu with the
Securities of this series, or make any guarantee payments with
respect to the foregoing. Prior to the termination of any such
Extended Interest Payment Period, the Company may further extend
the interest payment period, provided that such Extended Interest
Payment Period, together with all such previous and further
extensions thereof, may not exceed 20 consecutive quarters or
extend beyond the Stated Maturity of the Securities of this
series. Upon the termination of any such Extended Interest
Payment Period and the payment of all amounts then due, the
Company may select a new Extended Interest Payment Period,
subject to the above requirements. No interest during the
Extended Interest Payment Period, except at the end thereof,
shall be due and payable. The Company shall give the Holder of
this Security notice of its selection of such Extended Interest
Payment Period as provided in the Indenture.

The Securities of this series are issuable only in
registered form without coupons in denominations of $25 and any
integral multiple thereof. As provided in the Indenture and
subject to certain limitations therein set forth, Securities of
this series are exchangeable for a like aggregate principal
amount of Securities of this series and of like tenor and of
authorized denominations, as requested by the Holder surrendering
the same.

No service charge shall be made for any such
registration of transfer or exchange, but the Company may require
payment of a sum sufficient to cover any tax or other
governmental charge payable in connection therewith.

The Company, the Trustee and any agent of the Company
or the Trustee may treat the Person in whose name this Security
is registered as the absolute owner hereof for all purposes,
whether or not this Security be overdue, and neither the Company,
the Trustee nor any such agent shall be affected by notice to the
contrary.

All terms used in this Security which are defined in
the Indenture shall have the meanings assigned to them in the
Indenture.

[Clearing Agency Legend]

Exhibit 4(f)

Certificate Number Number of Preferred Securities

P- CUSIP NO.

Certificate Evidencing Preferred Securities

TU Electric Capital III

___% Quarterly Income Preferred Securities
(liquidation amount $25 per Preferred Security)

TU Electric Capital III, a statutory business trust
formed under the laws of the State of Delaware (the "Trust"),
hereby certifies that ____________ (the "Holder") is the
registered owner of _____ (_____) preferred securities of the
Trust representing an undivided beneficial interest in the assets
of the Trust and designated the TU Electric Capital III ___%
Quarterly Income Preferred Securities (liquidation amount $25
per Preferred Security) (the "Preferred Securities"). The
Preferred Securities are transferable on the books and records
of the Trust, in person or by a duly authorized attorney, upon
surrender of this certificate duly endorsed and in proper form
for transfer as provided in Section 5.04 or 5.11 of the Trust
Agreement (as defined below). The designations, rights,
privileges, restrictions, preferences and other terms and
provisions of the Preferred Securities are set forth in, and
this certificate and the Preferred Securities represented hereby
are issued and shall in all respects be subject to the terms
and provisions of, the Amended and Restated Trust Agreement of
the Trust dated as of _______ ___, 1995, as the same may be
amended from time to time (the "Trust Agreement") including the
designation of the terms of Preferred Securities as set forth
therein. The holder of this certificate is entitled to the
benefits of the Guarantee Agreement of Texas Utilities Electric
Company, a Texas corporation, and The Bank of New York, as
guarantee trustee, dated as of _______ ___, 1995 (the "Guarantee")
to the extent provided therein. The Trust will furnish a copy
of the Trust Agreement and the Guarantee to the holder of this
certificate without charge upon written request to the Trust at
its principal place of business or registered office.

Upon receipt of this certificate, the holder of this
certificate is bound by the Trust Agreement and is entitled to
the benefits thereunder.

IN WITNESS WHEREOF, one of the Administrative Trustees
of the Trust has executed this certificate for and on behalf of
the Trust this ____ day of _________, 1995.

TU ELECTRIC CAPITAL III

By:
---------------------------
not in his (her) individual
capacity, but solely as
Administrative Trustee

<PAGE>

ASSIGNMENT

FOR VALUE RECEIVED, the undersigned assigns and
transfers this Preferred Security to:

-----------------------------------------------------------------

-----------------------------------------------------------------
(Insert assignee's social security or tax identification number)

-----------------------------------------------------------------

-----------------------------------------------------------------
(Insert address and zip code of assignee)

and irrevocably appoints

-----------------------------------------------------------------

-----------------------------------------------------------------
agent to transfer this Preferred Securities Certificate on the
books of the Trust. The agent may substitute another to act for
him or her.

Date:
------------------

Signature:
--------------------------

(Sign exactly as your name appears on the other side of this
Preferred Securities Certificate)

Exhibit 5(a)

WORSHAM, FORSYTHE & WOOLDRIDGE, L.L.P.
1601 Bryan Street
Dallas, Texas 75201

November __, 1995

Texas Utilities Electric Company
Energy Plaza
1601 Bryan Street
Dallas, Texas 75201

Ladies and Gentlemen:

Reference is made to the Registration Statement
(Registration Statement) on Form S-3 to be filed by Texas
Utilities Electric Company (Company) on or about the date hereof,
with the Securities and Exchange Commission under the Securities
Act of 1933, as amended, for the registration of Quarterly Income
Preferred Securities (Preferred Securities) of TU Electric
Capital III (Trust) having an aggregate liquidation preference of
up to $__________, such Preferred Securities to be offered in an
underwritten public offering; of a Guarantee of the Company with
respect to the Preferred Securities; and of up to $___________ in
aggregate principal amount of the Company's Junior Subordinated
Debentures (Debentures) to be issued and delivered to the Trust
pursuant to the terms of an indenture from the Company to The
Bank of New York, as trustee (Indenture) in exchange for the
Preferred Securities. In connection therewith, we have reviewed
such documents and records as we have deemed necessary to enable
us to express an opinion on the matters covered hereby.

Based upon the foregoing, we are of the opinion that:

1. All requisite action necessary to make the Guarantee a
valid, legal and binding obligation of the Company will have
been taken when the Board of Directors of the Company, or an
officer duly authorized thereby, shall have taken such
action as may be necessary to fix and determine the terms of
the Guarantee and the Guarantee shall have been duly
executed and delivered.

2. All requisite action necessary to make the Debentures
valid, legal and binding obligations of the Company will
have been taken when the Board of Directors of the Company,
or an officer duly authorized thereby, shall have taken such
action as may be necessary to fix and determine the terms of
the Debentures, the Indenture shall have been executed and
delivered, and the Debentures shall have been issued and
delivered in exchange for the Preferred Securities,

in each case, except as such may be limited by bankruptcy,
insolvency or other laws affecting creditors' rights generally
and by general principles of equity.

We are members of the State Bar of Texas and do not
hold ourselves out as experts on the laws of New York. As to all
matters of New York law, we have with your consent relied upon an
opinion of even date herewith addressed to you by Reid & Priest
LLP of New York, New York.

We hereby consent to the filing of this opinion as an
exhibit to the Registration Statement and to the use of our name
as counsel in such Registration Statement and as authority for
certain of the statements contained, or incorporated by
reference, therein.

Very truly yours,

WORSHAM, FORSYTHE &
WOOLDRIDGE, L.L.P.

/s/ Timothy A. Mack
By: --------------------
A Partner

Exhibit 5(b) and 8

Reid & Priest LLP
40 West 57th Street
New York, New York 10019

November __, 1995

Texas Utilities Electric Company
Energy Plaza
1601 Bryan Street
Dallas, Texas 75201

Ladies and Gentlemen:

Reference is made to the Registration Statement
(Registration Statement) on Form S-3 to be filed by Texas
Utilities Electric Company (Company) on or about the date hereof,
with the Securities and Exchange Commission under the Securities
Act of 1933, as amended, for the registration of Quarterly Income
Preferred Securities (Preferred Securities) of TU Electric
Capital III (Trust) having an aggregate liquidation preference of
up to $_____________, such Preferred Securities to be offered in
an underwritten public offering; of a Guarantee of the Company
with respect to the Preferred Securities; and of up to $_________
in aggregate principal amount of the Company's Junior
Subordinated Debentures (Debentures) to be issued and delivered
to the Trust pursuant to the terms of an indenture from the
Company to The Bank of New York, as trustee (Indenture) in
exchange for the Preferred Securities. In connection therewith,
we have reviewed such documents and records as we have deemed
necessary to enable us to express an opinion on the matters
covered hereby.

Based upon the foregoing, we are of the opinion that:

in each case, except as such may be limited by bankruptcy,
insolvency or other laws affecting creditors' rights generally
and by general principles of equity.

We are members of the New York Bar and do not hold
ourselves out as experts on the laws of Texas. As to all matters
of Texas law, we have with your consent relied upon an opinion of
even date herewith addressed to you by Worsham, Forsythe &
Wooldridge, L.L.P. of Dallas, Texas.

We confirm our opinion as set forth under the caption
"Certain United States Federal Income Tax Consequences" in the
prospectus constituting a part of the Registration Statement.

We hereby consent to the use of this opinion as an
exhibit to the Registration Statement.

Very truly yours,

/s/ Reid & Priest LLP

REID & PRIEST LLP

Exhibit 5(c)

[Letterhead of Richards, Layton & Finger]

November 13, 1995

TU Electric Capital III
c/o Texas Utilities Electric Company
1601 Bryan Street
Dallas, TX 75201

Re: TU Electric Capital III
-----------------------

Ladies and Gentlemen:

We have acted as special Delaware counsel for
Texas Utilities Electric Company, a Texas corporation
("Texas Utilities"), and TU Electric Capital III, a Delaware
business trust (the "Trust"), in connection with the
matters set forth herein. At your request, this opinion is
being furnished to you.

For purposes of giving the opinions hereinafter
set forth, our examination of documents has been limited to
the examination of originals or copies of the following:

(a) The Certificate of Trust of the Trust, dated
as of October 17, 1995 (the "Certificate"), as filed in
the office of the Secretary of State of the State of
Delaware (the "Secretary of State") on October 17, 1995;

(b) The Trust Agreement of the Trust, dated as
of October 17, 1995, between Texas Utilities and the
trustees of the Trust named therein;

(c) The Registration Statement (the "Registration
Statement") on Form S-3, including a preliminary prospectus
(the "Prospectus"), relating to the ____% Quarterly Income
Preferred Securities of the Trust representing preferred
undivided beneficial interests in the assets of the Trust
(each, a "Preferred Security" and collectively, the
"Preferred Securities"), as proposed to be filed by Texas
Utilities and the Trust with the Securities and Exchange
Commission on November 13, 1995;

(d) A form of Amended and Restated Trust
Agreement of the Trust, to be entered into among Texas
Utilities, the trustees of the Trust named therein, and the
holders, from time to time, of undivided beneficial
interests in the assets of the Trust (including Exhibits B
and D thereto) (the "Trust Agreement"), attached as an
exhibit to the Registration Statement; and

(e) A Certificate of Good Standing for the
Trust, dated November 13, 1995, obtained from the Secretary
of State.

Initially capitalized terms used herein and not
otherwise defined are used as defined in the Trust
Agreement.

For purposes of this opinion, we have not
reviewed any documents other than the documents listed in
paragraphs (a) through (e) above. In particular, we have
not reviewed any document (other than the documents listed
in paragraphs (a) through (e) above) that is referred to in
or incorporated by reference into the documents reviewed by
us. We have assumed that there exists no provision in any
document that we have not reviewed that is inconsistent
with the opinions stated herein. We have conducted no
independent factual investigation of our own but rather
have relied solely upon the foregoing documents, the
statements and information set forth therein and the
additional matters recited or assumed herein, all of which
we have assumed to be true, complete and accurate in all
material respects.

With respect to all documents examined by us, we
have assumed (i) the authenticity of all documents
submitted to us as authentic originals, (ii) the conformity
with the originals of all documents submitted to us as
copies or forms, and (iii) the genuineness of all
signatures.

For purposes of this opinion, we have assumed (i)
that the Trust Agreement constitutes the entire agreement
among the parties thereto with respect to the subject
matter thereof, including with respect to the creation,
operation and termination of the Trust, and that the Trust
Agreement and the Certificate are in full force and effect
and have not been amended, (ii) except to the extent
provided in paragraph 1 below, the due creation or due
organization or due formation, as the case may be, and
valid existence in good standing of each party to the
documents examined by us under the laws of the jurisdiction
governing its creation, organization or formation, (iii)
the legal capacity of natural persons who are parties to
the documents examined by us, (iv) that each of the parties
to the documents examined by us has the power and authority
to execute and deliver, and to perform its obligations
under, such documents, (v) the due authorization, execution
and delivery by all parties thereto of all documents
examined by us, (vi) the receipt by each Person to whom a
Preferred Security is to be issued by the Trust
(collectively, the "Preferred Security Holders") of a
Preferred Securities Certificate registered in the name of
such Person for such Preferred Security and the payment for
the Preferred Security acquired by it, in accordance with
the Trust Agreement and the Registration Statement, and
(vii) that the Preferred Securities are issued and sold to
the Preferred Security Holders in accordance with the Trust
Agreement and the Registration Statement. We have not
participated in the preparation of the Registration
Statement and assume no responsibility for its contents.

This opinion is limited to the laws of the State
of Delaware (excluding the securities laws of the State of
Delaware), and we have not considered and express no
opinion on the laws of any other jurisdiction, including
federal laws and rules and regulations relating thereto.
Our opinions are rendered only with respect to Delaware
laws and rules, regulations and orders thereunder which are
currently in effect.

Based upon the foregoing, and upon our
examination of such questions of law and statutes of the
State of Delaware as we have considered necessary or
appropriate, and subject to the assumptions,
qualifications, limitations and exceptions set forth
herein, we are of the opinion that:

1. The Trust has been duly created and is
validly existing in good standing as a business trust under
the Delaware Business Trust Act.

2. The Preferred Securities will represent
valid and, subject to the qualifications set forth in
paragraph 3 below, fully paid and nonassessable undivided
beneficial interests in the assets of the Trust.

3. The Preferred Security Holders, as
beneficial owners of the Trust, will be entitled to the
same limitation of personal liability extended to
stockholders of private corporations for profit organized
under the General Corporation Law of the State of Delaware.
We note that the Preferred Security Holders may be
obligated to make payments as set forth in the Trust
Agreement.

We consent to the filing of this opinion with the
Securities and Exchange Commission as an exhibit to the
Registration Statement. In addition, we hereby consent to
the use of our name under the heading "Legality" in the
Prospectus. In giving the foregoing consents, we do not
thereby admit that we come within the category of Persons
whose consent is required under Section 7 of the Securities
Act of 1933, as amended, or the rules and regulations of
the Securities and Exchange Commission thereunder. Except
as stated above, without our prior written consent, this
opinion may not be furnished or quoted to, or relied upon
by, any other Person for any purpose.

Very truly yours,

/s/ Richards, Layton & Finger

EXHIBIT 15

Texas Utilities Electric Company:

We have reviewed, in accordance with standards established by the
American Institute of Certified Public Accountants, the unaudited
condensed interim financial information of Texas Utilities
Electric Company for the periods ended March 31, 1995 and 1994,
June 30, 1995 and 1994, and September 30, 1995 and 1994, as
indicated in our reports dated May 10, 1995, August 8, 1995 and
November 7, 1995, respectively; because we did not perform an
audit, we expressed no opinion on that information.

We are aware that our reports referred to above, which were
included in your Quarterly Reports on Form 10-Q for the quarters
ended March 31, 1995, June 30, 1995 and September 30, 1995, are
being used in this Registration Statement.

We also are aware that the aforementioned reports, pursuant to
Rule 436(c) under the Securities Act of 1933, are not considered
a part of the Registration Statement prepared or certified by an
accountant or a report prepared or certified by an accountant
within the meaning of Sections 7 and 11 of that Act.

/s/Deloitte & Touche LLP

DELOITTE & TOUCHE LLP

November 13, 1995

EXHIBIT 23(a)

INDEPENDENT AUDITORS' CONSENT

We consent to the incorporation by reference in this Registration
Statement of Texas Utilities Electric Company ("the Company") on
Form S-3 of our report dated March 1, 1995 appearing in the
Company's Annual Report on Form 10-K for the year ended December
31, 1994 and to the reference to us under the heading "Experts"
in the Prospectus which is part of this Registration Statement.

/s/ Deloitte & Touche LLP

DELOITTE & TOUCHE LLP

Dallas, Texas
November 13, 1995

Exhibit 25(a)

SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

_________________

FORM T-1

STATEMENT OF ELIGIBILITY UNDER THE TRUST
INDENTURE ACT OF 1939 OF A CORPORATION
DESIGNATED TO ACT AS TRUSTEE

CHECK IF AN APPLICATION TO DETERMINE ELIGIBILITY OF A
TRUSTEE PURSUANT TO SECTION 305(b)(2) ____________

_________________

THE BANK OF NEW YORK
(Exact name of trustee as specified in its charter)

New York 13-5160382
(Jurisdiction of incorporation (I.R.S. Employer
if not a U.S. national bank) Identification No.)

48 Wall Street, New York, New York 10286
(Address of principal executive offices) (Zip code)

_________________

TU ELECTRIC CAPITAL III
(Exact name of obligor as specified in its charter)

Delaware To Be Applied For
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification No.)

1601 Bryan Street
Dallas, Texas 75201
(Address of principal executive offices) (Zip code)

_________________

Trust Originated Preferred Securities*
(Title of the indenture securities)

*Specific title to be determined in connection with sale of Trust
Originated Preferred Securities

<PAGE>

Item 1. General Information.*

Furnish the following information as to the Trustee:

(a) Name and address of each examining or supervising
authority to which it is subject.

Superintendent of Banks of the 2 Rector Street, New York, N.Y.
State of New York 10006 and Albany, N.Y. 12203
Federal Reserve Bank of 33 Liberty Plaza, New York, N.Y.
New York 10045
Federal Deposit Insurance 550 17th Street, N.W.,
Corporation Washington, D.C. 20429
New York Clearing House New York, N.Y.
Association

(b) Whether it is authorized to exercise corporate trust
powers.

Yes.

Item 2. Affiliations with Obligor.

If the obligor is an affiliate of the trustee, describe
each such affiliation.

None. (See Note on page 2.)

Item 16. List of Exhibits.

Exhibits identified in parentheses below, on file with
the Commission, are incorporated herein by reference as an
exhibit hereto, pursuant to Rule 7a-29 under the Trust Indenture
Act of 1939 (the "Act") and Rule 24 of the Commission's Rules of
Practice.

1. - A copy of the Organization Certificate of The
Bank of New York (formerly Irving Trust
Company) as now in effect, which contains the
authority to commence business and a grant of
powers to exercise corporate trust powers.
(Exhibit 1 to Amendment No. 1 to Form T-1
filed with Registration Statement No. 33-
6215, Exhibits 1a and 1b to Form T-1 filed
with Registration Statement No. 33-21672 and
Exhibit 1 to Form T-1 filed with Registration
Statement No. 33-29637.)

4. - A copy of the existing By-laws of the
Trustee. (Exhibit 4 to Form T-1 filed with
Registration Statement No. 33-31019.)

6. - The consent of the Trustee required by
Section 321(b) of the Act. (Exhibit 6 to
Form T-1 filed with Registration Statement
No. 33-44051.)

7. - A copy of the latest report of condition of
the Trustee published pursuant to law or to
the requirements of its supervising or
examining authority.

__________________

*Pursuant to General Instruction B, the Trustee has responded
only to Items 1, 2 and 16 of this form since to the best of the
knowledge of the Trustee the obligor is not in default under any
indenture under which the Trustee is a trustee.

<PAGE>

NOTE

Inasmuch as this Form T-1 is being filed prior to the
ascertainment by the Trustee of all facts on which to base a
responsive answer to Item 2, the answer to said Item is based on
incomplete information.

Item 2 may, however, be considered as correct unless
amended by an amendment to this Form T-1.

SIGNATURE

Pursuant to the requirements of the Act, the Trustee,
The Bank of New York, a corporation organized and existing under
the laws of the State of New York, has duly caused this statement
of eligibility to be signed on its behalf by the undersigned,
thereunto duly authorized, all in The City of New York, and State
of New York, on the 10th day of November, 1995.

THE BANK OF NEW YORK

By: /s/ WALTER N. GITLIN
------------------------
Walter N. Gitlin
Vice President

<PAGE>
EXHIBIT 7
(Page 1 of 3)

Consolidated Report of Condition of
THE BANK OF NEW YORK
of 48 Wall Street, New York, N.Y. 10286

And Foreign and Domestic Subsidiaries, a member of the Federal
Reserve System, at the close of business June 30, 1995, published
in accordance with a call made by the Federal Reserve Bank of
this District pursuant to the provisions of the Federal Reserve
Act.

Dollar Amounts
ASSETS in Thousands
------ --------------

Cash and balances due from
depository institutions:
Noninterest-bearing balances
and currency and coin . . . . . . . . . . . . . $ 3,025,419
Interest-bearing balances . . . . . . . . . . . . 881,413
Securities:
Held-to-maturity securities . . . . . . . . . . . 1,242,368
Available-for-sale securities . . . . . . . . . . 1,774,079
Federal funds sold in domestic
offices of the bank . . . . . . . . . . . . . . . 5,503,445
Securities purchased under
agreements to resell . . . . . . . . . . . . . . 200,634
Loans and lease financing
receivables:
Loans and leases, net of unearned
income. . . . . . . 26,599,533
LESS: Allowance for loan and
lease losses. . . . . . 516,283
Loans and leases, net of unearned
income and allowance . . . . . . . . . . . . 26,083,250
Assets held in trading accounts . . . . . . . . . . 1,455,639
Premises and fixed assets (including
capitalized leases) . . . . . . . . . . . . . . . 612,547
Other real estate owned . . . . . . . . . . . . . . 79,667
Investments in unconsolidated subsid-
iaries and associated companies . . . . . . . . . 198,737
Customers' liability to the bank on
acceptances outstanding . . . . . . . . . . . . . 1,111,464
Intangible assets . . . . . . . . . . . . . . . . . 105,263
Other assets . . . . . . . . . . . . . . . . . . . 1,237,264
---------
Total assets . . . . . . . . . . . . . . . . . . . $43,511,189
===========

<PAGE>

EXHIBIT 7
(Page 2 of 3)

LIABILITIES
-----------

Deposits:
In domestic offices . . . . . . . . . . . . . . . $19,233,885
Noninterest-bearing. . .7,677,954
Interest-bearing. . . .11,555,931
In foreign offices, Edge and
Agreement subsidiaries, and IBFs . . . . . . . . 12,641,676
Noninterest-bearing. . . . 72,479
Interest-bearing. . . .12,569,197
Federal funds purchased and securities
sold under agreements to repurchase
in domestic offices of the bank and
of its Edge and Agreement subsid-
iaries, and in IBFs:
Federal funds purchased . . . . . . . . . . . . . 1,747,659
Securities sold under agreements
to repurchase . . . . . . . . . . . . . . . . . 73,553
Demand notes issued to the U.S.
Treasury . . . . . . . . . . . . . . . . . . . . 300,000
Trading liabilities . . . . . . . . . . . . . . . . 738,317
Other borrowed money:
With original maturity of one year or less . . . 1,586,443
With original maturity of more than
one year . . . . . . . . . . . . . . . . . . . 220,877
Bank's liability on acceptances
executed and outstanding . . . . . . . . . . . 1,113,102
Subordinated notes and debentures . . . . . . . . . 1,053,860
Other liabilities . . . . . . . . . . . . . . . . . 1,489,252
---------
Total liabilities . . . . . . . . . . . . . . . . . 40,198,624
----------

EQUITY CAPITAL
--------------

Common stock . . . . . . . . . . . . . . . . . . . 942,284
Surplus . . . . . . . . . . . . . . . . . . . . . . 525,666
Undivided profits and capital
reserves . . . . . . . . . . . . . . . . . . . . 1,849,221
Net unrealized holding gains (losses)
on available-for-sale securities . . . . . . . . ( 662)
Cumulative foreign currency
translation adjustments . . . . . . . . . . . . . ( 3,944)
----------
Total equity capital . . . . . . . . . . . . . . . 3,312,565
---------
Total liabilities and equity capital . . . . . . . $43,511,189
===========

<PAGE>

EXHIBIT 7
(Page 3 of 3)

I, Robert E. Keilman, Senior Vice President and Comptroller of
the above-named bank do hereby declare that this Report of
Condition has been prepared in conformance with the instructions
issued by the Board of Governors of the Federal Reserve System
and is true to the best of my knowledge and belief.

Robert E. Keilman

We, the undersigned directors, attest to the correctness of
this Report of Condition and declare that it has been examined by
us and to the best of our knowledge and belief has been prepared
in conformance with the instructions issued by the Board of
Governors of the Federal Reserve System and is true and correct.

J. Carter Bacot )
Thomas A. Renyi ) Directors
Samuel F. Chevalier)

Exhibit 25(b)

SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

_________________

FORM T-1

STATEMENT OF ELIGIBILITY UNDER THE TRUST
INDENTURE ACT OF 1939 OF A CORPORATION
DESIGNATED TO ACT AS TRUSTEE

CHECK IF AN APPLICATION TO DETERMINE ELIGIBILITY OF A
TRUSTEE PURSUANT TO SECTION 305(b)(2) ____________

_________________

THE BANK OF NEW YORK
(Exact name of trustee as specified in its charter)

New York 13-5160382
(Jurisdiction of incorporation (I.R.S. Employer
if not a U.S. national bank) Identification No.)

48 Wall Street, New York, New York 10286
(Address of principal executive offices) (Zip code)

_________________

TEXAS UTILITIES ELECTRIC COMPANY
(Exact name of obligor as specified in its charter)

Texas 75-1837355
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification No.)

1601 Bryan Street
Dallas, Texas 75201
(Address of principal executive offices) (Zip code)

_________________

Junior Subordinated Debentures, Series C*
(Title of the indenture securities)

*Specific title to be determined in connection with sale of Junior
Subordinated Debentures, Series C

<PAGE>

Item 1. General Information.*

Furnish the following information as to the Trustee:

(a) Name and address of each examining or supervising
authority to which it is subject.

Superintendent of Banks of the 2 Rector Street, New York, N.Y. 10006
State of New York and Albany, N.Y. 12203
Federal Reserve Bank of New York 33 Liberty Plaza, New York, N.Y. 10045
Federal Deposit Insurance 550 17th Street, N.W., Washington, D.C.
Corporation 20429
New York Clearing House New York, N.Y.
Association

(b) Whether it is authorized to exercise corporate trust
powers.

Yes.

Item 2. Affiliations with Obligor.

If the obligor is an affiliate of the trustee, describe
each such affiliation.

None. (See Note on page 2.)

Item 16. List of Exhibits.

4. - A copy of the existing By-laws of the
Trustee. (Exhibit 4 to Form T-1 filed with
Registration Statement No. 33-31019.)

6. - The consent of the Trustee required by
Section 321(b) of the Act. (Exhibit 6 to
Form T-1 filed with Registration Statement
No. 33-44051.)

7. - A copy of the latest report of condition of
the Trustee published pursuant to law or to
the requirements of its supervising or
examining authority.

________________
*Pursuant to General Instruction B, the Trustee has responded
only to Items 1, 2 and 16 of this form since to the best of the
knowledge of the Trustee the obligor is not in default under any
indenture which the Trustee is a trustee.

<PAGE>

NOTE

Item 2 may, however, be considered as correct unless
amended by an amendment to this Form T-1.

SIGNATURE

THE BANK OF NEW YORK

By: /s/ WALTER N. GITLIN
--------------------------
Walter N. Gitlin
Vice President
<PAGE>

EXHIBIT 7
(Page 1 of 3)

Consolidated Report of Condition of
THE BANK OF NEW YORK
of 48 Wall Street, New York, N.Y. 10286

Dollar Amounts
ASSETS in Thousands
------ --------------

<PAGE>
EXHIBIT 7
(Page 2 of 3)

LIABILITIES
-----------

EQUITY CAPITAL
--------------

EXHIBIT 7
(Page 3 of 3)

Robert E. Keilman

J. Carter Bacot )
Thomas A. Renyi ) Directors
Samuel F. Chevalier)

Exhibit 25(c)

SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

_________________

FORM T-1

STATEMENT OF ELIGIBILITY UNDER THE TRUST
INDENTURE ACT OF 1939 OF A CORPORATION
DESIGNATED TO ACT AS TRUSTEE

CHECK IF AN APPLICATION TO DETERMINE ELIGIBILITY OF A
TRUSTEE PURSUANT TO SECTION 305(b)(2) ____________

_________________

THE BANK OF NEW YORK
(Exact name of trustee as specified in its charter)

New York 13-5160382
(Jurisdiction of incorporation (I.R.S. Employer
if not a U.S. national bank) Identification No.)

48 Wall Street, New York, New York 10286
(Address of principal executive offices) (Zip code)

_________________

TEXAS UTILITIES ELECTRIC COMPANY
(Exact name of obligor as specified in its charter)

Texas 75-1837355
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification No.)

1601 Bryan Street
Dallas, Texas 75201
(Address of principal executive offices) (Zip code)

_________________

Guarantee with respect to
TU Electric Capital III Trust Originated Preferred Securities*
(Title of the indenture securities)

*Specific title to be determined in connection with sale of Trust
Originated Preferred Securities

<PAGE>

Item 1. General Information.*

Furnish the following information as to the Trustee:

(a) Name and address of each examining or supervising
authority to which it is subject.

Superintendent of Banks of the 2 Rector Street, New York, N.Y.
State of New York 10006 and Albany, N.Y. 12203
Federal Reserve Bank of 33 Liberty Plaza, New York, N.Y.
New York 10045
Federal Deposit Insurance 550 17th Street, N.W., Washington,
Corporation D.C. 20429
New York Clearing House New York, N.Y.
Association

(b) Whether it is authorized to exercise corporate trust
powers.

Yes.

Item 2. Affiliations with Obligor.

If the obligor is an affiliate of the trustee, describe
each such affiliation.

None. (See Note on page 2.)

Item 16. List of Exhibits.

4. - A copy of the existing By-laws of the
Trustee. (Exhibit 4 to Form T-1 filed with
Registration Statement No. 33-31019.)

6. - The consent of the Trustee required by
Section 321(b) of the Act. (Exhibit 6 to
Form T-1 filed with Registration Statement
No. 33-44051.)

7. - A copy of the latest report of condition of
the Trustee published pursuant to law or to
the requirements of its supervising or
examining authority.

_________________
* Pursuant to General Instruction B, the Trustee has responded
only to Items 1, 2 and 16 of this form since to the best of the
knowledge of the Trustee the obligor is not in default under any
indenture under which the Trustee is a trustee.

<PAGE>

NOTE

Item 2 may, however, be considered as correct unless
amended by an amendment to this Form T-1.

SIGNATURE

THE BANK OF NEW YORK

By: /s/ WALTER N. GITLIN
------------------------
Walter N. Gitlin
Vice President

<PAGE>

EXHIBIT 7
(Page 1 of 3)

Consolidated Report of Condition of
THE BANK OF NEW YORK
of 48 Wall Street, New York, N.Y. 10286

Dollar Amounts
ASSETS in Thousands
------ --------------

<PAGE>

EXHIBIT 7
(Page 2 of 3)

LIABILITIES
-----------

EQUITY CAPITAL
--------------

Common stock . . . . . . . . . . . . . . . . . . . 942,284
Surplus . . . . . . . . . . . . . . . . . . . . . . 525,666
Undivided profits and capital
reserves . . . . . . . . . . . . . . . . . . . . 1,849,221
Net unrealized holding gains (losses)
on available-for-sale securities . . . . . . . . ( 662)
Cumulative foreign currency
translation adjustments . . . . . . . . . . . . . ( 3,944)
----------
Total equity capital . . . . . . . . . . . . . . . 3,312,565
----------
Total liabilities and equity capital . . . . . . . $43,511,189
===========
<PAGE>

EXHIBIT 7
(Page 3 of 3)

Robert E. Keilman

J. Carter Bacot )
Thomas A. Renyi ) Directors
Samuel F. Chevalier)