Aug. 5--Energy Future Holdings, the former TXU Corp., said losses narrowed in the second quarter, thanks largely to cheaper fuel costs.

Still, the Dallas utility struggles as the slow economy prompts people to use less electricity and as power prices drop.

"The results of strong competitors and wholesale market prices and general commodity prices have impacted both margins and competitive pricing," chief executive John Young said. "That's why you've seen us announce lower prices."

EFH said Tuesday it turned a loss of $155 million in the second quarter, contrasted with last year's loss of $3.33 billion.

Those numbers include losses for revaluing the company's hedges, which are securities designed to protect the company from swings in commodity prices.

Excluding the change in value of those securities, EFH's loss narrowed to $248 million from $251 million a year ago.

EFH operated its low-cost nuclear plants more during the quarter than last year, boosting profit. Also, TXU Energy's cost of wholesale power dropped.

Still, lower wholesale prices hit revenue, which declined to $2.34 billion from $2.95 billion.

Natural gas prices averaged $3.84 per million British thermal units in the second quarter, compared with $13.35 last year.

Because about half of Texas' electricity comes from natural gas plants, the price of natural gas tends to set wholesale power prices.

That means wholesale power company Luminant fetched a much lower price for the power it generated.

Further, wholesale electricity sales volumes dropped 18 percent for the quarter as the economic slowdown caused people to conserve.

Lower wholesale prices caused retail market prices to drop, and TXU Energy followed with price cuts of its own. The cuts came after TXU Energy lost customers in the second quarter compared with the first quarter -- the first decline in retail customers since 2007, Young said.

The loss comes as EFH negotiates a deal with creditors for more loans.

The company asked creditors to cut its first-lien debt by $1.25 billion and increase second-lien debt capacity by $4 billion.

EFH already has $44 billion in debt after a leveraged buyout two years ago.

"We are focused on our balance sheet and will look for opportunities to deleverage," Young said.

On Monday, Moody's Investors Service downgraded EFH debt out of concern that the loan agreement doesn't fix a fundamental problem. EFH has more than $20 billion in debt maturing in 2014.

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