10-Q 1 ppl10q.htm PPL CORPORATION FORM 10-Q ppl10q.htm
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC  20549

Form 10-Q



[X]
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 for the quarterly period ended March 31, 2008
 
OR
[  ]
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 for the transition period from _________ to ___________

 
Commission File
Number
Registrant; State of Incorporation;
Address and Telephone Number
IRS Employer
Identification No.
       
 
1-11459
PPL Corporation
(Exact name of Registrant as specified in its charter)
(Pennsylvania)
Two North Ninth Street
Allentown, PA  18101-1179
(610) 774-5151
23-2758192
       
 
333-74794
PPL Energy Supply, LLC
(Exact name of Registrant as specified in its charter)
(Delaware)
Two North Ninth Street
Allentown, PA  18101-1179
(610) 774-5151
23-3074920
       
 
1-905
PPL Electric Utilities Corporation
(Exact name of Registrant as specified in its charter)
(Pennsylvania)
Two North Ninth Street
Allentown, PA  18101-1179
(610) 774-5151
23-0959590
       
       


Indicate by check mark whether the Registrants (1) have filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrants were required to file such reports), and (2) have been subject to such filing requirements for the past 90 days.


 
PPL Corporation
Yes  X   
No        
 
 
PPL Energy Supply, LLC
Yes  X   
No        
 
 
PPL Electric Utilities Corporation
Yes  X   
No        
 


 
 

 

Indicate by check mark whether the Registrants are large accelerated filers, accelerated filers, non-accelerated filers, or a smaller reporting company.  See definition of "accelerated filer, large accelerated filer and smaller reporting company" in Rule 12b-2 of the Exchange Act.  (Check one):

   
Large accelerated filer
Accelerated
filer
Non-accelerated
filer
Smaller reporting
company
 
PPL Corporation
[ X ]
[     ]
[     ]
[     ]
 
PPL Energy Supply, LLC
[     ]
[     ]
[ X ]
[     ]
 
PPL Electric Utilities Corporation
[     ]
[     ]
[ X ]
[     ]

Indicate by check mark whether the Registrants are shell companies (as defined in Rule 12b-2 of the Exchange Act).

 
PPL Corporation
Yes        
No  X   
 
 
PPL Energy Supply, LLC
Yes        
No  X   
 
 
PPL Electric Utilities Corporation
Yes        
No  X   
 

Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date:

 
PPL Corporation
Common stock, $.01 par value, 373,036,911 shares outstanding at April 28, 2008.
     
 
PPL Energy Supply, LLC
PPL Corporation indirectly holds all of the membership interests in PPL Energy Supply, LLC.
     
 
PPL Electric Utilities Corporation
Common stock, no par value, 66,368,056 shares outstanding and all held by PPL Corporation at April 28, 2008.

This document is available free of charge at the Investor Center on PPL's Web site at www.pplweb.com.  However, information on this Web site does not constitute a part of this Form 10-Q.

PPL CORPORATION
PPL ENERGY SUPPLY, LLC
PPL ELECTRIC UTILITIES CORPORATION

FORM 10-Q
FOR THE QUARTER ENDED MARCH 31, 2008

Table of Contents
 
Page
     
i
 
     
1
 
     
PART I.  FINANCIAL INFORMATION
   
 
Item 1.  Financial Statements
   
   
PPL Corporation and Subsidiaries
   
     
2
 
     
3
 
     
4
 
   
PPL Energy Supply, LLC and Subsidiaries
   
     
6
 
     
7
 
     
8
 
   
PPL Electric Utilities Corporation and Subsidiaries
   
     
10
 
     
11
 
     
12
 
   
14
 
 
Item 2.  Management's Discussion and Analysis of Financial Condition and Results of Operations
   
     
45
 
     
57
 
     
67
 
 
72
 
 
72
 
 
72
 
     
PART II.  OTHER INFORMATION
   
 
73
 
 
73
 
 
73
 
 
73
 
     
75
 
     
COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES
   
     
76
 
     
77
 
     
78
 
     
CERTIFICATES OF PRINCIPAL EXECUTIVE OFFICER AND PRINCIPAL FINANCIAL OFFICER
PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002
   
     
79
 
     
81
 
     
83
 
     
CERTIFICATES OF PRINCIPAL EXECUTIVE OFFICER AND PRINCIPAL FINANCIAL OFFICER
PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
   
     
85
 
     
87
 
     
89
 


PPL Corporation and its current and former subsidiaries

Hyder - Hyder Limited, a subsidiary of WPDL that was the previous owner of South Wales Electricity plc.  In March 2001, South Wales Electricity plc was acquired by WPDH Limited and renamed WPD (South Wales).

PPL - PPL Corporation, the parent holding company of PPL Electric, PPL Energy Funding and other subsidiaries.

PPL Capital Funding - PPL Capital Funding, Inc., a wholly-owned financing subsidiary of PPL.

PPL Electric - PPL Electric Utilities Corporation, a regulated utility subsidiary of PPL that transmits and distributes electricity in its service territory and provides electric supply to retail customers in this territory as a PLR.

PPL Energy Funding - PPL Energy Funding Corporation, a subsidiary of PPL and the parent company of PPL Energy Supply.

PPL EnergyPlus - PPL EnergyPlus, LLC, a subsidiary of PPL Energy Supply that markets and trades wholesale and retail electricity, and supplies energy and energy services in deregulated markets.

PPL Energy Supply - PPL Energy Supply, LLC, a subsidiary of PPL Energy Funding and the parent company of PPL Generation, PPL EnergyPlus, PPL Global and other subsidiaries.

PPL Gas Utilities - PPL Gas Utilities Corporation, a regulated utility subsidiary of PPL that specializes in natural gas distribution, transmission and storage services, and the competitive sale of propane.  In March 2008, PPL signed a definitive agreement to sell these businesses.

PPL Generation - PPL Generation, LLC, a subsidiary of PPL Energy Supply that owns and operates U.S. generating facilities through various subsidiaries.

PPL Global - PPL Global, LLC, a subsidiary of PPL Energy Supply that primarily owns and operates a business in the U.K. that is focused on the regulated distribution of electricity.

PPL Martins Creek - PPL Martins Creek, LLC, a subsidiary of PPL Generation that owns generating operations in Pennsylvania.

PPL Montana - PPL Montana, LLC, an indirect subsidiary of PPL Generation that generates electricity for wholesale sales in Montana and the Pacific Northwest.

PPL Services - PPL Services Corporation, a subsidiary of PPL that provides shared services for PPL and its subsidiaries.

PPL Susquehanna - PPL Susquehanna, LLC, the nuclear generating subsidiary of PPL Generation.

PPL Transition Bond Company - PPL Transition Bond Company, LLC, a subsidiary of PPL Electric that was formed to issue transition bonds under the Customer Choice Act.

SIUK Capital Trust I - a business trust created to issue preferred securities, the common equity of which was held by WPD LLP.  The preferred securities were redeemed in February 2007.

WPD - refers collectively to WPDH Limited and WPDL.

WPD LLP - Western Power Distribution LLP, a wholly-owned subsidiary of WPDH Limited, which owns WPD (South West) and WPD (South Wales).

WPD (South Wales) - Western Power Distribution (South Wales) plc, a British regional electric utility company.

WPD (South West) - Western Power Distribution (South West) plc, a British regional electric utility company.

WPDH Limited - Western Power Distribution Holdings Limited, an indirect, wholly-owned subsidiary of PPL Global.  WPDH Limited owns WPD LLP.

WPDL - WPD Investment Holdings Limited, an indirect wholly-owned subsidiary of PPL Global.  WPDL owns 100% of the common shares of Hyder.

Other terms and abbreviations
£ - British pounds sterling.

2007 Form 10-K - Annual Report to the SEC on Form 10-K for the year ended December 31, 2007.

APB - Accounting Principles Board.

ARB - Accounting Research Bulletin.

ARO - asset retirement obligation.

Bcf - billion cubic feet.

Clean Air Act - federal legislation enacted to address certain environmental issues related to air emissions, including acid rain, ozone and toxic air emissions.

COLA - combined construction and operating license application.

CTC - competitive transition charge on customer bills to recover allowable transition costs under the Customer Choice Act.

Customer Choice Act - the Pennsylvania Electricity Generation Customer Choice and Competition Act, legislation enacted to restructure the state's electric utility industry to create retail access to a competitive market for generation of electricity.

DEP - Department of Environmental Protection, a state government agency.

DOE - Department of Energy, a U.S. government agency.

EITF - Emerging Issues Task Force, an organization that assists the FASB in improving financial reporting through the identification, discussion and resolution of financial accounting issues within the framework of existing authoritative literature.

EMF - electric and magnetic fields.

EPA - Environmental Protection Agency, a U.S. government agency.

EPS - earnings per share.

FASB - Financial Accounting Standards Board, a rulemaking organization that establishes financial accounting and reporting standards.

FERC - Federal Energy Regulatory Commission, the federal agency that regulates interstate transmission and wholesale sales of electricity and related matters.

FIN - FASB Interpretation.

Fitch - Fitch, Inc.

FSP - FASB Staff Position.

FTR - financial transmission rights, which are financial instruments established to manage price risk related to electricity transmission congestion.  They entitle the holder to receive compensation or require the holder to remit payment for certain congestion-related transmission charges that arise when the transmission grid is congested.

GWh - gigawatt-hour, one million kilowatt-hours.

IRS - Internal Revenue Service, a U.S. government agency.

ISO - Independent System Operator.

ITC - intangible transition charge on customer bills to recover intangible transition costs associated with securitizing stranded costs under the Customer Choice Act.

LIBOR - London Interbank Offered Rate.

Montana Power - The Montana Power Company, a Montana-based company that sold its generating assets to PPL Montana in December 1999.  Through a series of transactions consummated during the first quarter of 2002, Montana Power sold its electricity delivery business to NorthWestern.

Moody's - Moody's Investors Service, Inc.

MW - megawatt, one thousand kilowatts.

MWh - megawatt-hour, one thousand kilowatt-hours.

NERC - North American Electric Reliability Corporation.

NorthWestern - NorthWestern Energy Division, a Delaware corporation and a subsidiary of NorthWestern Corporation and successor in interest to Montana Power's electricity delivery business, including Montana Power's rights and obligations under contracts with PPL Montana.

NRC - Nuclear Regulatory Commission, the federal agency that regulates the operation of nuclear power facilities.

NUGs (Non-Utility Generators) - generating plants not owned by public utilities, whose electrical output must be purchased by utilities under the PURPA if the plant meets certain criteria.

NYMEX - New York Mercantile Exchange.

PJM (PJM Interconnection, L.L.C.) - operator of the electric transmission network and electric energy market in all or parts of Delaware, Illinois, Indiana, Kentucky, Maryland, Michigan, New Jersey, North Carolina, Ohio, Pennsylvania, Tennessee, Virginia, West Virginia and the District of Columbia.

PLR (Provider of Last Resort) - the role of PPL Electric in providing default electricity supply to retail customers within its delivery territory who have not chosen to select an alternative electricity supplier under the Customer Choice Act.

PP&E - property, plant and equipment.

Preferred Securities - company-obligated mandatorily redeemable preferred securities issued by SIUK Capital Trust I, which solely held debentures of WPD LLP.  The securities of SIUK Capital Trust I were redeemed in February 2007.

PUC - Pennsylvania Public Utility Commission, the state agency that regulates certain ratemaking, services, accounting and operations of Pennsylvania utilities.

PUHCA - Public Utility Holding Company Act of 1935, legislation passed by the U.S. Congress.  Repealed effective February 2006 by the Energy Policy Act of 2005.

PURPA - Public Utility Regulatory Policies Act of 1978, legislation passed by the U.S. Congress to encourage energy conservation, efficient use of resources and equitable rates.

Regulation S-X - SEC regulation governing the form and content of and requirements for financial statements required to be filed pursuant to the federal securities laws.

RFC - ReliabilityFirst Corporation (the regional transmission reliability entity that replaced the Mid-Atlantic Area Coordination Council).

SCR - selective catalytic reduction, a pollution control process.

Scrubber - an air pollution control device that can remove particulates and/or gases (such as sulfur dioxide) from exhaust gases.

SEC - Securities and Exchange Commission, a U.S. government agency whose primary mission is to protect investors and maintain the integrity of the securities markets.

SFAS - Statement of Financial Accounting Standards, the accounting and financial reporting rules issued by the FASB.

S&P - Standard & Poor's Ratings Services.

Smart metering technology - technology that can measure, among other things, time of consumption to permit offering rate incentives for usage during lower cost or demand intervals.

Superfund - federal environmental legislation that addresses remediation of contaminated sites; states also have similar statutes.

Synfuel projects - production facilities that manufacture synthetic fuel from coal or coal byproducts.  Favorable federal tax credits, which expired effective December 31, 2007, were available on qualified synthetic fuel products.

Tolling agreement - agreement whereby the owner of an electric generating facility agrees to use that facility to convert fuel provided by a third party into electric energy for delivery back to the third party.

VaR - value-at-risk.

Accounting Pronouncements

APB Opinion No. 23 - Accounting for Income Taxes-Special Areas.

EITF 87-24 - Allocation of Interest to Discontinued Operations.

EITF Issue No. 02-3 - Issues Involved in Accounting for Derivative Contracts Held for Trading Purposes and Contracts Involved in Energy Trading and Risk Management Activities.

FIN 39 - Offsetting of Amounts Related to Certain Contracts, as amended and interpreted.

FIN 45 - Guarantor's Accounting and Disclosure Requirements for Guarantees, Including Indirect Guarantees of Indebtedness of Others, an Interpretation of FASB Statements No. 5, 57, and 107 and Rescission of FASB Interpretation No. 34.

FSP FAS 157-1 -  Application of FASB Statement No. 157 to FASB Statement No. 13 and Other Accounting Pronouncements That Address Fair Value Measurements for Purposes of Lease Classification or Measurement under Statement 13.

FSP FAS 157-2 - Effective Date of FASB Statement No. 157.

SFAS 133 - Accounting for Derivative Instruments and Hedging Activities, as amended and interpreted.

SFAS 141 - Business Combinations.

SFAS 141(R) - Business Combinations (revised 2007).

SFAS 144 - Accounting for the Impairment or Disposal of Long-Lived Assets.

SFAS 157 - Fair Value Measurements.

SFAS 159 - The Fair Value Option for Financial Assets and Financial Liabilities, including an amendment of FASB Statement No. 115.

SFAS 160 - Noncontrolling Interests in Consolidated Financial Statements, an amendment of ARB No. 51.

SFAS 161 - Disclosures about Derivative Instruments and Hedging Activities, an amendment of FASB Statement No. 133.


Statements contained in this Form 10-Q concerning expectations, beliefs, plans, objectives, goals, strategies, future events or performance and underlying assumptions and other statements which are other than statements of historical facts are "forward-looking statements" within the meaning of the federal securities laws.  Although PPL, PPL Energy Supply and PPL Electric believe that the expectations and assumptions reflected in these statements are reasonable, there can be no assurance that these expectations will prove to be correct.  Forward-looking statements involve a number of risks and uncertainties, and actual results may differ materially from the results discussed in forward-looking statements.  In addition to the specific factors discussed in "Item 1A. Risk Factors" in the companies' 2007 Form 10-K and in "Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations" in this Form 10-Q report, the following are among the important factors that could cause actual results to differ materially from the forward-looking statements:

·
market demand and prices for energy, capacity and fuel;
·
weather conditions affecting generation production, customer energy use and operating costs;
·
competition in retail and wholesale power markets;
·
liquidity of wholesale power markets;
·
defaults by our counterparties under our energy, fuel or other power product contracts;
·
the effect of any business or industry restructuring;
·
the profitability and liquidity, including access to capital markets and credit facilities, of PPL and its subsidiaries;
·
new accounting requirements or new interpretations or applications of existing requirements;
·
operation, availability and operating costs of existing generation facilities;
·
transmission and distribution system conditions and operating costs;
·
current and future environmental conditions and requirements and the related costs of compliance, including environmental capital expenditures, emission allowance costs and other expenses;
·
significant delays in the ongoing installation of pollution control equipment at certain coal-fired generating units in Pennsylvania due to weather conditions, contractor performance or other reasons;
·
market prices of commodity inputs for ongoing capital expenditures;
·
collective labor bargaining negotiations;
·
development of new projects, markets and technologies;
·
performance of new ventures;
·
asset acquisitions and dispositions;
·
political, regulatory or economic conditions in states, regions or countries where PPL or its subsidiaries conduct business;
·
any impact of hurricanes or other severe weather on PPL and its subsidiaries, including any impact on fuel prices;
·
receipt of necessary governmental permits, approvals and rate relief;
·
new state, federal or foreign legislation, including new tax legislation;
·
state, federal and foreign regulatory developments;
·
the impact of any state, federal or foreign investigations applicable to PPL and its subsidiaries and the energy industry;
·
capital market conditions, including changes in interest rates, and decisions regarding capital structure;
·
stock price performance of PPL;
·
the market prices of equity securities and the impact on pension costs and resultant cash funding requirements for defined benefit pension plans;
·
securities and credit ratings;
·
foreign currency exchange rates;
·
the outcome of litigation against PPL and its subsidiaries;
·
potential effects of threatened or actual terrorism or war or other hostilities; and
·
the commitments and liabilities of PPL and its subsidiaries.

Any such forward-looking statements should be considered in light of such important factors and in conjunction with other documents of PPL, PPL Energy Supply and PPL Electric on file with the SEC.

New factors that could cause actual results to differ materially from those described in forward-looking statements emerge from time to time, and it is not possible for PPL, PPL Energy Supply or PPL Electric to predict all of such factors, or the extent to which any such factor or combination of factors may cause actual results to differ from those contained in any forward-looking statement.  Any forward-looking statement speaks only as of the date on which such statement is made, and PPL, PPL Energy Supply and PPL Electric undertake no obligation to update the information contained in such statement to reflect subsequent developments or information.

Item 1. Financial Statements
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
PPL Corporation and Subsidiaries
(Unaudited)
(Millions of Dollars, except per share data)
   
Three Months Ended
March 31,
   
2008
 
2007
Operating Revenues
           
Utility
 
$
1,120
   
$
1,081
 
Unregulated retail electric
   
34
     
22
 
Wholesale energy marketing
   
258
     
249
 
Net energy trading margins
   
(2
)
   
9
 
Energy-related businesses
   
116
     
185
 
Total
   
1,526
     
1,546
 
                 
Operating Expenses
               
Operation
               
Fuel
   
243
     
233
 
Energy purchases
   
55
     
122
 
Other operation and maintenance
   
377
     
325
 
Amortization of recoverable transition costs
   
76
     
81
 
Depreciation
   
112
     
116
 
Taxes, other than income
   
75
     
78
 
Energy-related businesses (Note 8)
   
108
     
202
 
Total
   
1,046
     
1,157
 
                 
Operating Income
   
480
     
389
 
                 
Other Income - net
   
8
     
27
 
                 
Interest Expense
   
108
     
120
 
                 
Income from Continuing Operations Before Income Taxes, Minority Interest and Dividends on Preferred Securities of a Subsidiary
   
380
     
296
 
                 
Income Taxes
   
129
     
69
 
                 
Minority Interest
           
1
 
                 
Dividends on Preferred Securities of a Subsidiary
   
5
     
5
 
                 
Income from Continuing Operations
   
246
     
221
 
                 
Income (Loss) from Discontinued Operations (net of income taxes) (Note 8)
   
14
     
(18
)
                 
Net Income
 
$
260
   
$
203
 
                 
Earnings Per Share of Common Stock:
               
Income from Continuing Operations:
               
Basic
 
$
0.66
   
$
0.58
 
Diluted
 
$
0.65
   
$
0.57
 
Net Income:
               
Basic
 
$
0.70
   
$
0.53
 
Diluted
 
$
0.69
   
$
0.52
 
                 
Dividends Declared Per Share of Common Stock
 
$
0.335
   
$
0.305
 
 
The accompanying Notes to Condensed Consolidated Financial Statements are an integral part of the financial statements.

PPL Corporation and Subsidiaries
(Unaudited)
(Millions of Dollars)
   
Three Months Ended
March 31,
   
2008
 
2007
Cash Flows from Operating Activities
               
Net income
 
$
260
   
$
203
 
Adjustments to reconcile net income to net cash provided by operating activities
               
Depreciation
   
112
     
124
 
Amortization - recoverable transition costs and other
   
94
     
108
 
Unrealized gain on derivatives and other hedging activities
   
(63
)
   
(22
)
Deferred income taxes and investment tax credits
   
(38
)
   
(32
)
Impairment of assets
           
65
 
Other
   
39
     
11
 
Change in current assets and current liabilities
               
Accounts receivable
   
61
     
(48
)
Accounts payable
   
(65
)
   
(29
)
Fuel, materials and supplies
   
28
     
58
 
Prepayments
   
(107
)
   
(135
)
Taxes
   
137
     
49
 
Other
   
(15
)
   
(70
)
Other operating activities
               
Other assets
   
11
     
16
 
Other liabilities
   
(30
)
   
(12
)
Net cash provided by operating activities
   
424
     
286
 
                 
Cash Flows from Investing Activities
               
Expenditures for property, plant and equipment
   
(330
)
   
(341
)
Purchases of emission allowances
   
(19
)
   
(4
)
Proceeds from the sale of emission allowances
   
1
     
30
 
Purchases of nuclear decommissioning trust investments
   
(47
)
   
(42
)
Proceeds from the sale of nuclear decommissioning trust investments
   
40
     
38
 
Purchases of other investments
   
(50
)
   
(127
)
Proceeds from the sale of other investments
   
25
     
132
 
Net (increase) decrease in restricted cash and cash equivalents
   
(78
)
   
10
 
Other investing activities
   
(4
)
   
5
 
Net cash used in investing activities
   
(462
)
   
(299
)
                 
Cash Flows from Financing Activities
               
Issuance of long-term debt
   
399
     
505
 
Retirement of long-term debt
   
(91
)
   
(201
)
Repurchase of common stock
   
(38
)
       
Issuance of common stock
   
4
     
5
 
Payment of common stock dividends
   
(113
)
   
(105
)
Net (decrease) increase in short-term debt
   
(50
)
   
29
 
Other financing activities
   
(3
)
   
(12
)
Net cash provided by financing activities
   
108
     
221
 
                 
Effect of Exchange Rates on Cash and Cash Equivalents
   
(2
)
   
(1
)
                 
Net Increase in Cash and Cash Equivalents
   
68
     
207
 
Cash and Cash Equivalents at Beginning of Period
   
430
     
794
 
Cash and Cash Equivalents included in Assets Held for Sale
   
(3
)
   
(36
)
Cash and Cash Equivalents at End of Period
 
$
495
   
$
965
 
 
The accompanying Notes to Condensed Consolidated Financial Statements are an integral part of the financial statements.

PPL Corporation and Subsidiaries
(Unaudited)
(Millions of Dollars)
   
March 31,
2008
 
December 31,
2007
Assets
               
                 
Current Assets
               
Cash and cash equivalents
 
$
495
   
$
430
 
Short-term investments
   
100
     
108
 
Restricted cash and cash equivalents
   
278
     
203
 
Accounts receivable (less reserve:  2008, $40; 2007, $39)
               
Customer
   
504
     
574
 
Other
   
84
     
87
 
Unbilled revenues
   
510
     
531
 
Fuel, materials and supplies
   
305
     
316
 
Prepayments
   
187
     
160
 
Deferred income taxes
   
40
     
25
 
Price risk management assets
   
1,078
     
319
 
Other intangibles
   
75
     
76
 
Assets held for sale (Note 8)
   
315
     
318
 
Other
   
18
     
21
 
Total Current Assets
   
3,989
     
3,168
 
                 
Investments
               
Investment in unconsolidated affiliates - at equity
   
43
     
44
 
Nuclear plant decommissioning trust funds
   
530
     
555
 
Other
   
39
     
9
 
Total Investments
   
612
     
608
 
                 
Property, Plant and Equipment
               
Electric plant in service
               
Transmission and distribution
   
8,737
     
8,787
 
Generation
   
9,323
     
8,812
 
General
   
843
     
836
 
     
18,903
     
18,435
 
Construction work in progress
   
930
     
1,287
 
Nuclear fuel
   
411
     
387
 
Electric plant
   
20,244
     
20,109
 
Gas and oil plant
   
67
     
66
 
Other property
   
197
     
202
 
     
20,508
     
20,377
 
Less:  accumulated depreciation
   
7,850
     
7,772
 
Total Property, Plant and Equipment
   
12,658
     
12,605
 
                 
Regulatory and Other Noncurrent Assets
               
Recoverable transition costs
   
497
     
574
 
Goodwill
   
962
     
991
 
Other intangibles
   
351
     
335
 
Price risk management assets
   
854
     
587
 
Other
   
1,132
     
1,104
 
Total Regulatory and Other Noncurrent Assets
   
3,796
     
3,591
 
                 
Total Assets
 
$
21,055
   
$
19,972
 
 
The accompanying Notes to Condensed Consolidated Financial Statements are an integral part of the financial statements.

CONDENSED CONSOLIDATED BALANCE SHEETS
PPL Corporation and Subsidiaries
(Unaudited)
(Millions of Dollars)
   
March 31,
2008
 
December 31,
2007
Liabilities and Equity
               
                 
Current Liabilities
               
Short-term debt
 
$
41
   
$
92
 
Long-term debt
   
797
     
678
 
Accounts payable
   
659
     
723
 
Above market NUG contracts
   
37
     
42
 
Taxes
   
178
     
127
 
Interest
   
122
     
131
 
Dividends
   
130
     
118
 
Price risk management liabilities
   
1,066
     
423
 
Liabilities held for sale (Note 8)
   
58
     
68
 
Other
   
468
     
480
 
Total Current Liabilities
   
3,556
     
2,882
 
                 
Long-term Debt
   
7,067
     
6,890
 
                 
Deferred Credits and Other Noncurrent Liabilities
               
Deferred income taxes and investment tax credits
   
2,113
     
2,192
 
Price risk management liabilities
   
1,194
     
916
 
Accrued pension obligations
   
58
     
59
 
Asset retirement obligations
   
380
     
376
 
Above market NUG contracts
   
23
     
29
 
Other
   
760
     
752
 
Total Deferred Credits and Other Noncurrent Liabilities
   
4,528
     
4,324
 
                 
Commitments and Contingent Liabilities (Note 10)
               
                 
Minority Interest
   
19
     
19
 
                 
Preferred Securities of a Subsidiary
   
301
     
301
 
                 
Shareowners' Common Equity
               
Common stock - $0.01 par value (a)
   
4
     
4
 
Capital in excess of par value
   
2,157
     
2,172
 
Earnings reinvested
   
3,583
     
3,448
 
Accumulated other comprehensive loss
   
(160
)
   
(68
)
Total Shareowners' Common Equity
   
5,584
     
5,556
 
                 
Total Liabilities and Equity
 
$
21,055
   
$
19,972
 
 
(a)
 
780 million shares authorized; 373 million shares issued and outstanding at March 31, 2008 and December 31, 2007.
 
The accompanying Notes to Condensed Consolidated Financial Statements are an integral part of the financial statements.
 
 

 
PPL Energy Supply, LLC and Subsidiaries
(Unaudited)
(Millions of Dollars)
   
Three Months Ended
March 31,
   
2008
 
2007
Operating Revenues
               
Wholesale energy marketing
 
$
258
   
$
249
 
Wholesale energy marketing to affiliate
   
489
     
481
 
Utility
   
241
     
216
 
Unregulated retail electric
   
34
     
22
 
Net energy trading margins
   
(2
)
   
9
 
Energy-related businesses
   
114
     
183
 
Total
   
1,134
     
1,160
 
                 
Operating Expenses
               
Operation
               
Fuel
   
243
     
233
 
Energy purchases
   
14
     
71
 
Energy purchases from affiliate
   
28
     
37
 
Other operation and maintenance
   
283
     
244
 
Depreciation
   
77
     
81
 
Taxes, other than income
   
19
     
24
 
Energy-related businesses (Note 8)
   
106
     
201
 
Total
   
770
     
891
 
                 
Operating Income
   
364
     
269
 
                 
Other Income - net
   
11
     
24
 
                 
Interest Expense
   
71
     
72
 
                 
Interest Expense with Affiliates
           
4
 
                 
Income from Continuing Operations Before Income Taxes and Minority Interest
   
304
     
217
 
                 
Income Taxes
   
105
     
44
 
                 
Minority Interest
           
1
 
                 
Income from Continuing Operations
   
199
     
172
 
                 
Income (Loss) from Discontinued Operations (net of income taxes) (Note 8)
   
5
     
(25
)
                 
Net Income
 
$
204
   
$
147
 
 
The accompanying Notes to Condensed Consolidated Financial Statements are an integral part of the financial statements.
 
 

 
PPL Energy Supply, LLC and Subsidiaries
(Unaudited)
(Millions of Dollars)
   
Three Months Ended
March 31,
   
2008
 
2007
Cash Flows from Operating Activities
               
Net income
 
$
204
   
$
147
 
Adjustments to reconcile net income to net cash provided by operating activities
               
Depreciation
   
77
     
87
 
Unrealized gain on derivatives and other hedging activities
   
(66
)
   
(23
)
Deferred income taxes and investment tax credits
   
11
     
5
 
Impairment of assets
           
65
 
Other
   
38
     
20
 
Change in current assets and current liabilities
               
Accounts receivable
   
100
     
(28
)
Accounts payable
   
(62
)
   
(66
)
Fuel, materials and supplies
   
10
     
35
 
Taxes
   
135
         
Other
   
25
     
(8
)
Other operating activities
               
Other assets
   
5
     
8
 
Other liabilities
   
(26
)
   
(19
)
Net cash provided by operating activities
   
451
     
223
 
                 
Cash Flows from Investing Activities
               
Expenditures for property, plant and equipment
   
(266
)
   
(270
)
Purchases of emission allowances
   
(19
)
   
(4
)
Proceeds from the sale of emission allowances
   
1
     
30
 
Purchases of nuclear decommissioning trust investments
   
(47
)
   
(42
)
Proceeds from the sale of nuclear decommissioning trust investments
   
40
     
38
 
Purchases of other investments
   
(47
)
   
(93
)
Proceeds from the sale of other investments
   
22
     
72
 
Net (increase) decrease in restricted cash and cash equivalents
   
(82
)
   
3
 
Other investing activities
   
(5
)
   
2
 
Net cash used in investing activities
   
(403
)
   
(264
)
                 
Cash Flows from Financing Activities
               
Issuance of long-term debt
   
399
     
6
 
Retirement of long-term debt
   
(9
)
   
(121
)
Contributions from Member
           
500
 
Distributions to Member
   
(492
)
   
(72
)
Net decrease in short-term debt
   
(50
)
       
Other financing activities
   
(3
)
   
(2
)
Net cash (used in) provided by financing activities
   
(155
)
   
311
 
                 
Effect of Exchange Rates on Cash and Cash Equivalents
   
(2
)
   
(1
)
                 
Net (Decrease) Increase in Cash and Cash Equivalents
   
(109
)
   
269
 
Cash and Cash Equivalents at Beginning of Period
   
355
     
524
 
Cash and Cash Equivalents included in Assets Held for Sale
           
(36
)
Cash and Cash Equivalents at End of Period
 
$
246
   
$
757
 
                 
The accompanying Notes to Condensed Consolidated Financial Statements are an integral part of the financial statements.
 

PPL Energy Supply, LLC and Subsidiaries
(Unaudited)
(Millions of Dollars)
   
March 31,
2008
 
December 31,
2007
Assets
               
                 
Current Assets
               
Cash and cash equivalents
 
$
246
   
$
355
 
Short-term investments
   
100
     
102
 
Restricted cash and cash equivalents
   
227
     
146
 
Accounts receivable (less reserve:  2008, $21; 2007, $20)
               
Customer
   
254
     
376
 
Other
   
54
     
61
 
Unbilled revenues
   
339
     
339
 
Accounts receivable from affiliates
   
195
     
169
 
Collateral on PLR energy supply to affiliate
   
300
     
300
 
Fuel, materials and supplies
   
271
     
282
 
Prepayments
   
47
     
120
 
Deferred income taxes
   
59
     
49
 
Price risk management assets
   
1,072
     
318
 
Other intangibles
   
75
     
76
 
Other
   
5
     
7
 
Total Current Assets
   
3,244
     
2,700
 
                 
Investments
               
Investment in unconsolidated affiliates - at equity
   
43
     
44
 
Nuclear plant decommissioning trust funds
   
530
     
555
 
Other
   
31
     
5
 
Total Investments
   
604
     
604
 
                 
Property, Plant and Equipment
               
Electric plant in service
               
Transmission and distribution
   
4,375
     
4,470
 
Generation
   
9,323
     
8,812
 
General
   
329
     
334
 
     
14,027
     
13,616
 
Construction work in progress
   
821
     
1,165
 
Nuclear fuel
   
411
     
387
 
Electric plant
   
15,259
     
15,168
 
Gas and oil plant
   
67
     
66
 
Other property
   
195
     
200
 
     
15,521
     
15,434
 
Less:  accumulated depreciation
   
5,963
     
5,904
 
Total Property, Plant and Equipment
   
9,558
     
9,530
 
                 
Other Noncurrent Assets
               
Goodwill
   
962
     
991
 
Other intangibles
   
230
     
214
 
Price risk management assets
   
812
     
568
 
Other
   
686
     
660
 
Total Other Noncurrent Assets
   
2,690
     
2,433
 
                 
Total Assets
 
$
16,096
   
$
15,267
 
 
 The accompanying Notes to Condensed Consolidated Financial Statements are an integral part of the financial statements.

CONDENSED CONSOLIDATED BALANCE SHEETS
PPL Energy Supply, LLC and Subsidiaries
(Unaudited)
(Millions of Dollars)
   
March 31,
2008
 
December 31,
2007
Liabilities and Equity
               
                 
Current Liabilities
               
Short-term debt
         
$
51
 
Long-term debt
 
$
273
     
283
 
Accounts payable
   
595
     
626
 
Accounts payable to affiliates
   
38
     
61
 
Above market NUG contracts
   
37
     
42
 
Taxes
   
180
     
102
 
Interest
   
107
     
94
 
Deferred revenue on PLR energy supply to affiliate
   
12
     
12
 
Price risk management liabilities
   
1,063
     
421
 
Other
   
354
     
342
 
Total Current Liabilities
   
2,659
     
2,034
 
                 
Long-term Debt
   
5,136
     
4,787
 
                 
Deferred Credits and Other Noncurrent Liabilities
               
Deferred income taxes and investment tax credits
   
1,381
     
1,413
 
Price risk management liabilities
   
1,185
     
904
 
Accrued pension obligations
   
19
     
23
 
Asset retirement obligations
   
380
     
376
 
Above market NUG contracts
   
23
     
29
 
Deferred revenue on PLR energy supply to affiliate
   
9
     
12
 
Other
   
455
     
465
 
Total Deferred Credits and Other Noncurrent Liabilities
   
3,452
     
3,222
 
                 
Commitments and Contingent Liabilities (Note 10)
               
                 
Minority Interest
   
19
     
19
 
                 
Member's Equity
   
4,830
     
5,205
 
                 
Total Liabilities and Equity
 
$
16,096
   
$
15,267
 
 
The accompanying Notes to Condensed Consolidated Financial Statements are an integral part of the financial statements.
 
 

 
PPL Electric Utilities Corporation and Subsidiaries
(Unaudited)
(Millions of Dollars)
   
Three Months Ended
March 31,
   
2008
 
2007
Operating Revenues
               
Retail electric
 
$
880
   
$
865
 
Wholesale electric to affiliate
   
28
     
37
 
Total
   
908
     
902
 
                 
Operating Expenses
               
Operation
               
Energy purchases
   
41
     
51
 
Energy purchases from affiliate
   
489
     
481
 
Other operation and maintenance
   
103
     
92
 
Amortization of recoverable transition costs
   
76
     
81
 
Depreciation
   
32
     
32
 
Taxes, other than income
   
56
     
54
 
Total
   
797
     
791
 
                 
Operating Income
   
111
     
111
 
                 
Other Income - net
   
5
     
12
 
                 
Interest Expense
   
26
     
32
 
                 
Interest Expense with Affiliate
   
3
     
4
 
                 
Income Before Income Taxes
   
87
     
87
 
                 
Income Taxes
   
31
     
30
 
                 
Net Income
   
56
     
57
 
                 
Dividends on Preferred Securities
   
5
     
5
 
                 
Income Available to PPL
 
$
51
   
$
52
 
 
The accompanying Notes to Condensed Consolidated Financial Statements are an integral part of the financial statements.
 
 

 
PPL Electric Utilities Corporation and Subsidiaries
(Unaudited)
(Millions of Dollars)
   
Three Months Ended
March 31,
   
2008
 
2007
                 
Cash Flows from Operating Activities
               
Net income
 
$
56
   
$
57
 
Adjustments to reconcile net income to net cash (used in) provided by operating activities
               
Depreciation
   
32
     
32
 
Amortization - recoverable transition costs and other
   
82
     
86
 
Other
   
6
     
3
 
Change in current assets and current liabilities
               
Accounts receivable
   
(68
)
   
(46
)
Accounts payable
   
(43
)
   
2
 
Prepayments
   
(115
)
   
(118
)
Other
   
25
     
3
 
Other operating activities
               
Other assets
   
(1
)
   
3
 
Other liabilities
   
3
     
8
 
Net cash (used in) provided by operating activities
   
(23
)
   
30
 
                 
Cash Flows from Investing Activities
               
Expenditures for property, plant and equipment
   
(58
)
   
(63
)
Purchases of investments
           
(32
)
Proceeds from the sale of investments
           
57
 
Net decrease in note receivable from affiliate
   
277
         
Net (increase) decrease in restricted cash and cash equivalents
   
(1
)
   
5
 
Other investing activities
   
1
     
3
 
Net cash provided by (used in) investing activities
   
219
     
(30
)
                 
Cash Flows from Financing Activities
               
Retirement of long-term debt
   
(82
)
   
(80
)
Payment of common dividends to PPL
   
(18
)
   
(40
)
Net increase in short-term debt
           
29
 
Other financing activities
   
(5
)
   
(5
)
Net cash used in financing activities
   
(105
)
   
(96
)
                 
Net Increase (Decrease) in Cash and Cash Equivalents
   
91
     
(96
)
Cash and Cash Equivalents at Beginning of Period
   
33
     
150
 
Cash and Cash Equivalents at End of Period
 
$
124
   
$
54
 
                 
The accompanying Notes to Condensed Consolidated Financial Statements are an integral part of the financial statements.
 
 

 
PPL Electric Utilities Corporation and Subsidiaries
(Unaudited)
(Millions of Dollars)
   
March 31,
2008
 
December 31,
2007
Assets
               
                 
Current Assets
               
Cash and cash equivalents
 
$
124
   
$
33
 
Restricted cash and cash equivalents
   
41
     
42
 
Accounts receivable (less reserve:  2008, $19; 2007, $18)
               
Customer
   
250
     
197
 
Other
   
22
     
17
 
Unbilled revenues
   
171
     
192
 
Accounts receivable from affiliates
   
26
     
16
 
Note receivable from affiliate
           
277
 
Prepayments
   
131
     
16
 
Prepayment on PLR energy supply from affiliate
   
12
     
12
 
Other
   
51
     
53
 
Total Current Assets
   
828
     
855
 
                 
Property, Plant and Equipment
               
Electric plant in service
               
Transmission and distribution
   
4,362
     
4,316
 
General
   
452
     
443
 
     
4,814
     
4,759
 
Construction work in progress
   
99
     
114
 
Electric plant
   
4,913
     
4,873
 
Other property
   
2
     
2
 
     
4,915
     
4,875
 
Less:  accumulated depreciation
   
1,870
     
1,854
 
Total Property, Plant and Equipment
   
3,045
     
3,021
 
                 
Regulatory and Other Noncurrent Assets
               
Recoverable transition costs
   
497
     
574
 
Intangibles
   
121
     
121
 
Prepayment on PLR energy supply from affiliate
   
9
     
12
 
Taxes recoverable through future rates
   
247
     
245
 
Other
   
159
     
158
 
Total Regulatory and Other Noncurrent Assets
   
1,033
     
1,110
 
                 
Total Assets
 
$
4,906
   
$
4,986
 
 
The accompanying Notes to Condensed Consolidated Financial Statements are an integral part of the financial statements.
 
 

 
CONDENSED CONSOLIDATED BALANCE SHEETS
PPL Electric Utilities Corporation and Subsidiaries
(Unaudited)
(Millions of Dollars)
   
March 31,
2008
 
December 31,
2007
Liabilities and Equity
               
                 
Current Liabilities