EEI Financial Conference
Hollywood, Florida
November 1-4, 2009
Exhibit 99.2
1
Cautionary Statements and Factors That
May Affect Future Results
May Affect Future Results
Any statements made in this presentation
about future operating results or other future
events are forward-looking statements under
the Safe Harbor Provisions of the Private
Securities Litigation Reform Act of 1995.
Actual results may differ materially from such
forward-looking statements. A discussion of
factors that could cause actual results or
events to vary is contained in the Appendix to
this presentation and in the Company’s SEC
filings.
about future operating results or other future
events are forward-looking statements under
the Safe Harbor Provisions of the Private
Securities Litigation Reform Act of 1995.
Actual results may differ materially from such
forward-looking statements. A discussion of
factors that could cause actual results or
events to vary is contained in the Appendix to
this presentation and in the Company’s SEC
filings.
2
Investment Highlights
• Significant increase in financial performance
– Earnings expected to increase substantially in 2010 driven by transition to market based
electricity prices after approximately 10 years of fixed generation rates
electricity prices after approximately 10 years of fixed generation rates
– Dividends continue to be viewed as an important component of shareowner return
– Investment grade credit ratings are a key competitive asset
• Highly attractive baseload oriented generation fleet
– Competitively positioned nuclear, hydro and efficient coal
– Attractive nuclear and hydro uprate/expansion projects equating to 208 additional MWs
– Potential benefit from carbon regulation
– Underlying value strongly and positively correlated to a recovery in natural gas prices
• Disciplined multiyear hedging program has created significant value
– 99% for 2009, 99% for 2010, 89% for 2011 and 58% for 2012 of expected baseload volumes
– Protects against further weakness in energy prices and allows for upside participation if near-
term recovery occurs
term recovery occurs
• Focused on growth in rate regulated businesses
– Achieved formula rate mechanism for Transmission tariffs at a ROE of 11.64%
– Highly attractive Susquehanna-Roseland RTEP project; PPL EU’s portion is expected to cost
about $500 million at an approved 12.89% ROE
about $500 million at an approved 12.89% ROE
– Significant Distribution Capex to support performance of existing network
– WPD DPCR5: Initial OFGEM proposal constructive; final proposal in November
PPL’s Generation Portfolio
3
Morony
Ryan
Cochrane
Rainbow
Black Eagle
Kerr
Thompson Falls
Holter
Hauser
Madison
Mystic Lake
Corette
Colstrip
Montour
Keystone
Conemaugh
Lake
Wallenpaupack
Wallenpaupack
Susquehanna
Martins Creek
Lower Mount Bethel
Ironwood
Brunner
Island
Island
Safe Harbor
Holtwood
Hydro
Coal
Nuclear
Gas/Oil
Coal
Nuclear
Gas/Oil
Key
Montana
Generating capacity - 1,287 MW
Madison
Morony
Mystic Lake
Rainbow
Ryan
Thompson Falls
Morony
Mystic Lake
Rainbow
Ryan
Thompson Falls
Other generating stations
(1) PPL has signed agreements to sell Shoreham, Edgewood and
the PPL Maine hydro assets.
PPL’s Generation Portfolio 3 MoronyRyanCochrane Rainbow Black Eagle Kerr Thompson Falls Holter Hauser Madison Mystic Lake Corette Colstrip Montour Keystone Conemaugh Lake Wallenpaupack Susquehanna Martins Creek Lower Mount Bethel Ironwood Brunner Island Safe Harbor Holtwood HydroCoal Nuclear Gas/Oil Key Montana Generating capacity – 1,287 MW Black EagleCochrane ColstripCorette Hauser Holter Kerr Madison MoronyMystic LakeRainbow RyanThompson Falls Other generating stations University Park, IL – 540 MW Wallingford, CT – 225 MW Shoreham and Edgewood, Long Island, NY – 159 MW (1) Nine Hydroelectric Facilities, ME – 39 MW (1) Wyman, ME – 51 MW PennsylvaniaGenerating capacity – 10,894 MW Brunner Island Holtwood Lake WallenpaupackLower Mount Bethel Martins Creek Montour SusquehannaConemaughKeystoneSafe Harbor Ironwood (1) PPL has signed agreements to sell Shoreham, Edgewood and the PPL Maine hydro assets.
4
Note: As of 9/30/2009
…provides higher level of earnings and cash flow predictability
2010 2011 2012
99%
Band 1
Band 2
89%
Band 3
58%
{
Target
Range
Range
Actual
Hedge
Level
Hedge
Level
Hedges
Swaps/Options 96% 89% 58%
Load-following 3% 0% 0%
Multi-year Hedging Program…
Note: As of 9/30/2009
2009 2010 2011 2012
Uranium 100% 100% 100% 100%
Coal
East 100% 97% 83% 60%
West 100% 100% 100% 90%
Total 100% 98% 88% 68%
$35
$40
$45
$50
$55
Balance of 2009
2010
2011
max collar price
fixed base price
min collar price
Weighted
Average
$/Ton
at Mine (1)
7%
11%
% Diesel Surcharge
78%
5%
0%
% Collars
88%
89%
% Fixed Base Price (2)
22%
0%
5
(1) Base prices for East wholly owned plants, which include Montour & Brunner Island but not Keystone & Conemaugh.
(2) Excludes contracts subject to mining-related oil surcharges and/or price collars.
Current Fuel Hedge Positions
PPL Electric Utilities
• Transmission and Distribution business
with 1.4 million customers in Pennsylvania
with 1.4 million customers in Pennsylvania
• Attractive rate base investment
opportunities to support infrastructure and
reliability
opportunities to support infrastructure and
reliability
• Superior customer service
• Constructive regulatory relationships
6
Millions
$3,006
$3,442
$3,907
$4,290
$4,679
$2,809
7
CAGR
Distribution = 6.8%
Transmission = 19.7%
PPL Electric Utilities Rate Base
Attractive Transmission Development Project 8 • PPL Electric to build Pennsylvania portion of the 150-mile Susquehanna to Roseland, NJ 500 kV transmission line. New Jersey portion of the line to be built by PSEG. • Project needed for reliability and is part of PJM’s Regional Transmission Expansion Plan (RTEP) • PJM-directed completion date June 2012 • Cost of PPL’s portion of the line is estimated at $500 million • Formula rate mechanism for transmission – Settlement agreement approved by FERC for 11.64% ROE* including RTO adder • PPL rate structure for RTEP project – 12.89% ROE* – CWIP in rate base – Recovery of costs if terminated *ROE increases to 11.68% including RTO adder and to 12.93% for RTEP projects in June 2010
Western Power Distribution
• Electricity Distribution company
that delivers electricity to 2.6
million end users in the United
Kingdom
that delivers electricity to 2.6
million end users in the United
Kingdom
• No commodity exposure
• Highly attractive regulatory
construct
construct
• Final proposal for DCPR5
expected in November
expected in November
9
Forecast
10
* Earnings from ongoing operations - See Appendix for the per share reconciliation of reported earnings and earnings from ongoing operations. |
$2.02
$3.50
Per Share
$1.90
$1.60
$3.10
Strong Expected Earnings Growth
(1) Market prices based on the average of broker quotes as of 9/30/2009
(2) 24-hour average
(3) NYMEX and TZ6NNY forward gas prices on 9/30/2009
(4) Market Heat Rate = PJM on-peak power price divided by TZ6NNY gas price
A-1
Market Prices
Market Prices (1) Market prices based on the average of broker quotes as of 9/30/2009 (2) 24-hour average (3) NYMEX and TZ6NNY forward gas prices on 9/30/2009 (4) Market Heat Rate = PJM on-peak power price divided by TZ6NNY gas price Actual 2008 2009 2010 2011 2012 $81 $44 $59 $63 $65 $49 $32 $39 $41 $43 $69 $38 $48 $52 $53 $65 $36 $52 $56 $57 $51 $29 $41 $45 $45 $59 $33 $47 $51 $51 $8.84 $4.04 $6.21 $6.87 $7.02 $9.85 $4.79 $7.01 $7.69 $7.80 8.2 9.2 8.4 8.2 8.3 $82.00 $158.24 $181.39 $136.79 $123.63 89.6% 89.5% 91.6% 88.6% 91.1% (Per MWD) EQA HEAT RATE(4) TZ6NNY PJM MARKET ATC(2) NYMEX GAS(3) CAPACITY PRICES Mid-Columbia Forward(1) On-Peak Off-Peak ATC(2) ELECTRIC PJM On-Peak Off-Peak A-1
Market Segment
Baseload
63%
Peaking
18%
Intermediate
19%
Installed Capacity
MW
Coal
34%
Gas/Oil
38%
Nuclear
18%
Hydro
8%
QFs
2%
Diverse and Balanced Fleet
Geography
Production
GWh
PJM
85%
WECC
11%
Coal
49%
Gas/Oil
10%
10%
Nuclear
32%
Hydro
9%
NEPOOL
3%
NYISO
1%
Baseload oriented fleet augmented by attractive load-following capabilities
A-2
Note: As of September 30, 2009
PPL has proactively complied with current environmental regulations on an economic basis
(1) Colstrip is located in Montana
(2) Keystone & Conemaugh: PPL is a minority owner and does not operate
A-3
Environmental Control Equipment
Environmental Control Equipment Keystone(2) Conemaugh(2) Control Device Removes Unit 1 Unit 2 Unit 3 Unit 1 Unit 2 Unit 3 & 4 Unit 3 & 4 Unit 1 & 2 Unit 1 & 2 Low Nox Burners NOx SCR NOx Scrubbers SO2 Brunner Island Montour Colstrip(1) = Installed = Potential = Under Construction PPL has proactively complied with current environmental regulations on an economic basis (1) Colstrip is located in Montana (2) Keystone & Conemaugh: PPL is a minority owner and does not operate A-3
A-4
Supply Segment Asset Hedge Positions
2009 2010
Expected Gross Margin $35 Mil $35 Mil
Expected Gross Margin $35 Mil $35 Mil
Geographic Diversity
2009 2010
NEPOOL
24%
MISO
2%
PJM
74%
PJM
71%
NEPOOL
27%
MISO
2%
A-5
Supply Segment Marketing and Trading Overview
A-6
Pennsylvania Electricity Distribution Rate Regulation
• Retail distribution of electricity and natural gas are regulated by the
Pennsylvania Public Utility Commission
Pennsylvania Public Utility Commission
– Pennsylvania deregulated the generation of electricity in 1997
– Transmission and wholesale sales of electricity are regulated by the Federal
Energy Regulatory Commission
Energy Regulatory Commission
• Retail distribution rates are set by a combination of base rate
proceedings and automatic adjustment clauses
proceedings and automatic adjustment clauses
• Base rate proceedings
– Initiated by a utility filing or, rarely, through a Commission investigation
– Based upon the traditional cost of service, rate of return model
– The utility must have the opportunity to earn a "fair rate of return“ on used and
useful rate base
useful rate base
– The utility must file historic data; may file future data
– The Commission must enter an order within nine months of the utility's filing or the
proposed rates go into effect subject to refund
proposed rates go into effect subject to refund
• Automatic adjustment clauses
– Specifically authorized in the Public Utility Code
– Limited by court decision to expense items, not capital costs
– Usually based on a forecast of costs with an annual reconciliation to actual costs
– Have been used to recover the costs of: energy, stranded investment,
transmission and universal service
transmission and universal service
PPL Electric Utilities 2011 to mid-2013
Procurement Plan
Procurement Plan
A-7
• Residential load to be supplied under 12- and 24-month
load-following contracts, 5- and 10-year fixed block
products, and spot purchases
load-following contracts, 5- and 10-year fixed block
products, and spot purchases
• Small commercial and industrial to be supplied under 12-
and 24-month load-following contracts, and spot
purchases
and 24-month load-following contracts, and spot
purchases
• Large commercial and industrial load to be supplied
under hourly pricing products and an optional fixed-price
product
under hourly pricing products and an optional fixed-price
product
A-8
August 11, 2009 July 19, 2011
October 20, 2009 October 18, 2011
January 19, 2010 January 9, 2012
April 20, 2010 April 3, 2012
July 20, 2010 July 17, 2012
October 19, 2010 October 16, 2012
April 18, 2011 January 22, 2013
P
P
P
Completed
PPL Electric Utilities 2011 to mid-2013
Procurement Plan Schedule
Procurement Plan Schedule
• Due dates for bids:
A-9
UK Electricity Distribution Regulation
• Electricity and natural gas supply and distribution are regulated by the UK’s Office of
Gas and Electricity Markets (OFGEM)
Gas and Electricity Markets (OFGEM)
• Electricity distribution revenues are set every five years through a Distribution Price
Control Review (DPCR) process
Control Review (DPCR) process
– Price control is based on a forward looking assessment of income sufficient to finance an
efficient business
efficient business
– Revenues must cover operating and capital costs at an efficient level for the service territory
• Efficiency is determined through a detailed comparative analysis of all UK electricity
distribution companies
distribution companies
– Typically, the DPCR results in a one-time price reduction followed by annual adjustments for
inflation less an efficiency factor
inflation less an efficiency factor
• An incentive / penalty arrangement exists for reliability and customer service levels
• The revenue that a company can earn in each of the five years is the sum of:
– The Regulator’s view of efficient operating costs,
– A return on the value of Regulated Asset Base (“RAB”), and
– A return of capital being the depreciation of the RAB
• The DPCR is currently in process with the next five-year period beginning April 1,
2010
2010
A-10
$1,503
$1,299
$1,888
$2,185
$1,933
$1,845
Capital Expenditures by Segment
Millions
A-11
Note: See Appendix for reconciliation of cash from operations to free cash flow before dividends
Free Cash Flow before Dividends Forecast
(1) Reported as of 9/30/2009
A-12
Domestic facilities consist of a diverse bank group, with no bank and its
affiliates providing an aggregate commitment of more than 15% of the total
committed capacity.
affiliates providing an aggregate commitment of more than 15% of the total
committed capacity.
Liquidity Profile
Liquidity Profile (1) Reported as of 9/30/2009 A-12 Institution Facility Expiration Date Total Facility (Millions) Letters of Credit Outstanding (1) (Millions) Drawn (1) (Millions) Availability (Millions) PPL Energy Supply 5-year Credit Facility Jun-2012 $3,225 $455 $285 $2,485 Bilateral Credit Facility Mar-2010 200 4 0 196 5-year Structured Credit Facility Mar-2011 300 230 0 70 364-day Credit Facility Sep-2010 400 0 0 400 $4,125 $689 $285 $3,151 PPL Electric Utilities 5-year Credit Facility May-2012 $190 $5 $0 $185 Asset-backed Credit Facility Jul-2010 150 0 0 150 $340 $5 $0 $335 WPD 3-year Credit Facility Jul-2012 £210 £0 £54 £156 5-year Credit Facility Jan-2013 150 0 127 23 Uncommitted Credit Facilities 60 0 21 39 Letter of Credit Facility Mar-2010 3 3 0 0 £423 £3 £202 £218 Domestic facilities consist of a diverse bank group, with no bank and its affiliates providing an aggregate commitment of more than 15% of the total committed capacity.
A-13
PPL Energy Supply Collateral Profile
Note: As of 9/30/2009
A-14
(1) PPL Capital Funding $201 million maturity paid off in March 2009
(2) PPL Electric Utilities $486 million maturity paid off in August 2009
Debt Maturities
Debt Maturities Note: As of 9/30/2009 A-14 2009 2010 2011 2012 2013 PPL Energy Supply $0 $0 $500 $0 $737 PPL Capital Funding 0 (1) 0 0 0 0 PPL Electric Utilities 0 (2) 0 0 0 500 WPD Group 0 0 0 0 0 Total $0 $0 $500 $0 $1,237 (Millions) (1) PPL Capital Funding $201 million maturity paid off in March 2009 (2) PPL Electric Utilities $486 million maturity paid off in August 2009
(Millions)
A-15
2008 | 2009 | 2010 | |
Cash from Operations | $ 595 | $741 | $1,437 |
Increase/(Decrease) in cash due to: | |||
Capital Expenditures | (939) | (753) | (892) |
Investment in Energy Project | (203) | ||
Asset Sales | 216 | 39 | |
Other Investing Activities-net | (58) | (15) | (61) |
Free Cash Flow before Dividends | ($605) | $189 | $523 |
Actual Projected
Note: Asset Sales in 2009 include the anticipated proceeds from the announced pending sale of most of the Maine generating assets
and all of the Long Island generating assets. Closing of the sale of the Maine assets is expected on or about November 1,
2009. Closing on the sale of the Long Island assets is expected later in 2009 or in the first quarter of 2010. Asset sales in
2010 include the anticipated proceeds from the announced pending sale of the remaining Maine generating assets.
and all of the Long Island generating assets. Closing of the sale of the Maine assets is expected on or about November 1,
2009. Closing on the sale of the Long Island assets is expected later in 2009 or in the first quarter of 2010. Asset sales in
2010 include the anticipated proceeds from the announced pending sale of the remaining Maine generating assets.
Supply Segment Reconciliation of Cash from Operations
to Free Cash Flow before Dividends
to Free Cash Flow before Dividends
(Millions)
A-16
2008 | 2009 | 2010 | |
Cash from Operations | $ 643 | $561 | $250 |
Less Transition Bond Repayment Increase/(Decrease) in cash due to: | (293) | ||
Capital Expenditures | (286) | (295) | (568) |
Asset Sales & Other | 303 | ||
Free Cash Flow before Dividends | $367 | $266 | ($318) |
Note: Asset Sales in 2008 includes the net proceeds from the sale of gas and propane businesses
Actual Projected
PA Delivery Segment Reconciliation of Cash from
Operations to Free Cash Flow before Dividends
Operations to Free Cash Flow before Dividends
(Millions)
A-17
2008 | 2009 | 2010 | |
Cash from Operations | $ 279 | $230 | $248 |
Increase/(Decrease) in cash due to: | |||
Capital Expenditures | (278) | (251) | (428) |
Free Cash Flow before Dividends | $ 1 | ($ 21) | ($180) |
Actual Projected
International Delivery Segment Reconciliation of Cash
from Operations to Free Cash Flow before Dividends
from Operations to Free Cash Flow before Dividends
A-18
Reconciliation of PPL’s Reported Earnings and
Earnings from Ongoing Operations
Earnings from Ongoing Operations
Reconciliation of PPL’s Reported Earnings and Earnings from Ongoing Operations Forecast Actual High Low 2009 2009 2008 2007 Earnings from Ongoing Operations per share of common stock $1.90 $1.60 $2.02 $2.60 Special items (net of taxes): Unrealized gains (losses) from energy-related, non-trading economic hedges (0.45) (0.45) 0.67 0.08 Unrealized losses from foreign currency economic hedges (0.01) (0.01) Adjustments -nuclear decommissioning trust investments (0.04) Sale of Latin American businesses 0.67 Sale of telecommunication operations (0.06) Sale of gas and propane businesses (0.01) (0.11) Settlement of Wallingford cost-based rates 0.09 Impairment of transmission rights (0.04) Change in U.K. tax rate 0.14 Workforce reductions (0.03) (0.03) (0.02) Synfuel tax adjustment (0.04) Montana basin seepage litigation (0.01) Impairments & other impacts - emission allow ances (0.04) (0.04) (0.07) Impairments - assets held for sale & other (0.10) (0.10) (0.05) Taxes - Latin American businesses (0.06) (0.06) Changes in tax accounting method (0.07) (0.07) (0.76) (0.76) 0.45 0.75 Reported Earnings per share of common stock $1.14 $0.84 $2.47 $3.35 Note: Per share amounts are based on diluted shares outstanding.
Credit Ratings
A-19
Moody’s | Standard & Poor’s | Fitch | |
PPL Corporation | |||
Issuer Rating | Baa2 | BBB | BBB |
Outlook | NEGATIVE | NEGATIVE | STABLE |
PPL Energy Supply | |||
Issuer Rating | BBB | BBB | |
Tax-Exempt Bonds* | Aaa | AAA | |
Senior Notes | Baa2 | BBB | BBB+ |
Outlook | STABLE | NEGATIVE | STABLE |
PPL Capital Funding | |||
Issuer Rating | BBB | ||
Senior Unsecured Debt | Baa2 | BBB- | BBB |
Subordinated Debt | Baa3 | BB+ | BBB- |
Outlook | NEGATIVE | STABLE | |
PPL Electric Utilities | |||
Issuer Rating | Baa1 | A- | BBB |
First Mortgage Bonds | A3 | A- | A- |
Tax-Exempt Bonds** | A3/Baa1 | A/A- | |
Senior Secured Debt | A3 | A- | A- |
Commercial Paper | P-2 | A-2 | F-2 |
Preferred Stock | Baa3 | BBB | BBB |
Preference Stock | Baa3 | BBB | BBB |
Outlook | NEGATIVE | NEGATIVE | STABLE |
* Letter of Credit-Backed Security
** Includes both Insured and Non-Insured Securities
Credit Ratings (cont.)
A-20
Commercial Paper
A-
BBB+
Baa1
Senior Unsecured Debt
F2
A-2
P-2
Commercial Paper
POSITIVE
NEGATIVE
STABLE
Outlook
BBB+
BBB+
Baa1
Issuer Rating
A-
BBB+
Baa1
Senior Unsecured Debt
F2
A-2
Commercial Paper
POSITIVE
NEGATIVE
STABLE
Outlook
Western Power Distribution (South West) PLC
BBB+
BBB+
Issuer Rating
Western Power Distribution (South Wales) PLC
POSITIVE
NEGATIVE
STABLE
Outlook
POSITIVE
Outlook
BBB
Issuer Rating
WPD Holdings LLP
BBB-
BBB-
Baa3
Issuer Rating
BBB
BBB-
Baa3
Senior Unsecured Debt
A-3
Commercial Paper
WPD Holdings Limited
BBB
BBB-
Baa3
Pass-Through Certificates
STABLE
STABLE
Outlook
PPL Montana
Fitch
Standard & Poor’s
Moody’s
A-21
PPL Corporation (NYSE: PPL) is a Fortune 500 company with headquarters in Allentown, Pa. The Company’s diversified
corporate strategy is to achieve growth in energy supply margins while limiting volatility in both cash flows and earnings and to
achieve stable, long-term growth in regulated delivery businesses through efficient operations and strong customer and
regulatory relations. The strategy is carried out through four principal subsidiaries:
corporate strategy is to achieve growth in energy supply margins while limiting volatility in both cash flows and earnings and to
achieve stable, long-term growth in regulated delivery businesses through efficient operations and strong customer and
regulatory relations. The strategy is carried out through four principal subsidiaries:
PPL EnergyPlus, which markets energy in key U. S. markets.
PPL Generation, which operates more than 12,000 megawatts of electricity generating capacity in Pennsylvania, Montana,
Maine, Illinois, New York and Connecticut, with an additional 208 megawatts of planned uprate projects.
Maine, Illinois, New York and Connecticut, with an additional 208 megawatts of planned uprate projects.
PPL Electric Utilities, which delivers electricity to 1.4 million customers in Pennsylvania.
PPL Global, which delivers electricity to 2.6 million customers in the United Kingdom.
Security Ratings
Moody’s S&P Fitch
PPL Corp.
Corporate Credit Rating Baa2 BBB BBB
PPL Capital Funding, Inc.
Senior Unsecured Debt Baa2 BBB- BBB
PPL Electric Utilities Corp.
First Mortgage Bonds A3 A- A-
Senior Secured Bonds A3 A- A-
PPL Energy Supply
Senior Unsecured Notes Baa2 BBB BBB+
WPD Holdings Limited
Senior Unsecured Debt Baa3 BBB- BBB
WPD Operating Cos.
Senior Unsecured Debt Baa1 BBB+ A-
Contacts
Joseph P. Bergstein, Jr.
Manager-Investor Relations
Phone: (610) 774-5609
Fax: (610) 774-5106
jpbergstein@pplweb.com
www.pplweb.com
PPL Facts
A-22
Statements contained in this presentation, including statements with respect to future earnings, energy prices,
margins and sales, growth, revenues, expenses, cash flow, asset disposition, marketing performance, hedging,
regulation, corporate strategy and generating capacity and performance, are “forward-looking statements” within
the meaning of the federal securities laws. Although PPL Corporation believes that the expectations and
assumptions reflected in these forward-looking statements are reasonable, these statements are subject to a
number of risks and uncertainties, and actual results may differ materially from the results discussed in the
statements. 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 customer energy usage and operating costs; competition in power markets; the effect of any business
or industry restructuring; the profitability and liquidity of PPL Corporation and its subsidiaries; new accounting
requirements or new interpretations or applications of existing requirements; operating performance of plants and
other facilities; environmental conditions and requirements and the related costs of compliance, including
environmental capital expenditures and emission allowance and other expenses; system conditions and
operating costs; development of new projects, markets and technologies; performance of new ventures; asset
acquisitions and dispositions; any impact of hurricanes or other severe weather on our business, including any
impact on fuel prices; receipt of necessary government permits, approvals, rate relief and regulatory cost
recovery; capital market conditions and decisions regarding capital structure; the impact of state, federal or
foreign investigations applicable to PPL Corporation and its subsidiaries; the outcome of litigation against PPL
Corporation and its subsidiaries; stock price performance; the market prices of equity securities and the impact
on pension income and resultant cash funding requirements for defined benefit pension plans; the securities and
credit ratings of PPL Corporation and its subsidiaries; political, regulatory or economic conditions in states,
regions or countries where PPL Corporation or its subsidiaries conduct business, including any potential effects
of threatened or actual terrorism or war or other hostilities; foreign exchange rates; new state, federal or foreign
legislation, including new tax legislation; and the commitments and liabilities of PPL Corporation and its
subsidiaries. Any such forward-looking statements should be considered in light of such important factors and in
conjunction with PPL Corporation’s Form 10-K and other reports on file with the Securities and Exchange
Commission.
margins and sales, growth, revenues, expenses, cash flow, asset disposition, marketing performance, hedging,
regulation, corporate strategy and generating capacity and performance, are “forward-looking statements” within
the meaning of the federal securities laws. Although PPL Corporation believes that the expectations and
assumptions reflected in these forward-looking statements are reasonable, these statements are subject to a
number of risks and uncertainties, and actual results may differ materially from the results discussed in the
statements. 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 customer energy usage and operating costs; competition in power markets; the effect of any business
or industry restructuring; the profitability and liquidity of PPL Corporation and its subsidiaries; new accounting
requirements or new interpretations or applications of existing requirements; operating performance of plants and
other facilities; environmental conditions and requirements and the related costs of compliance, including
environmental capital expenditures and emission allowance and other expenses; system conditions and
operating costs; development of new projects, markets and technologies; performance of new ventures; asset
acquisitions and dispositions; any impact of hurricanes or other severe weather on our business, including any
impact on fuel prices; receipt of necessary government permits, approvals, rate relief and regulatory cost
recovery; capital market conditions and decisions regarding capital structure; the impact of state, federal or
foreign investigations applicable to PPL Corporation and its subsidiaries; the outcome of litigation against PPL
Corporation and its subsidiaries; stock price performance; the market prices of equity securities and the impact
on pension income and resultant cash funding requirements for defined benefit pension plans; the securities and
credit ratings of PPL Corporation and its subsidiaries; political, regulatory or economic conditions in states,
regions or countries where PPL Corporation or its subsidiaries conduct business, including any potential effects
of threatened or actual terrorism or war or other hostilities; foreign exchange rates; new state, federal or foreign
legislation, including new tax legislation; and the commitments and liabilities of PPL Corporation and its
subsidiaries. Any such forward-looking statements should be considered in light of such important factors and in
conjunction with PPL Corporation’s Form 10-K and other reports on file with the Securities and Exchange
Commission.
Forward-Looking Information Statement
A-23
“Earnings from ongoing operations” excludes the impact of special items. Special items include charges or credits that are unusual or
nonrecurring. Special items also include unrealized gains and losses from energy-related, non-trading economic hedges, foreign
currency-related economic hedges and impairments of securities in PPL’s nuclear decommissioning trust funds. The energy-related, non
-trading economic hedges are used to hedge a portion of the economic value of PPL’s generation assets and PPL’s load-following and
retail activities. This economic value is subject to changes in fair value due to market price volatility of the input and output commodities
(e.g., fuel and power). Also included in this special item is the ineffective portion of qualifying cash flow hedges. The foreign currency-
related economic hedges are used to hedge a portion of the net income of the international delivery business segment. This economic
value in U.S. dollars is subject to changes in the British Pound Sterling to U.S. dollar exchange rate. Management believes that the
exclusion of such amounts provides a better matching of ongoing earnings to the actual amounts settled for our underlying hedged
assets. Earnings from ongoing operations should not be considered as an alternative to reported earnings, or net income attributable to
PPL, which is an indicator of operating performance determined in accordance with generally accepted accounting principles (GAAP).
PPL believes that earnings from ongoing operations, although a non-GAAP measure, is also useful and meaningful to investors because
it provides them with PPL’s underlying earnings performance as another criterion in making their investment decisions. PPL’s
management also uses earnings from ongoing operations in measuring certain corporate performance goals. Other companies may use
different measures to present financial performance.
nonrecurring. Special items also include unrealized gains and losses from energy-related, non-trading economic hedges, foreign
currency-related economic hedges and impairments of securities in PPL’s nuclear decommissioning trust funds. The energy-related, non
-trading economic hedges are used to hedge a portion of the economic value of PPL’s generation assets and PPL’s load-following and
retail activities. This economic value is subject to changes in fair value due to market price volatility of the input and output commodities
(e.g., fuel and power). Also included in this special item is the ineffective portion of qualifying cash flow hedges. The foreign currency-
related economic hedges are used to hedge a portion of the net income of the international delivery business segment. This economic
value in U.S. dollars is subject to changes in the British Pound Sterling to U.S. dollar exchange rate. Management believes that the
exclusion of such amounts provides a better matching of ongoing earnings to the actual amounts settled for our underlying hedged
assets. Earnings from ongoing operations should not be considered as an alternative to reported earnings, or net income attributable to
PPL, which is an indicator of operating performance determined in accordance with generally accepted accounting principles (GAAP).
PPL believes that earnings from ongoing operations, although a non-GAAP measure, is also useful and meaningful to investors because
it provides them with PPL’s underlying earnings performance as another criterion in making their investment decisions. PPL’s
management also uses earnings from ongoing operations in measuring certain corporate performance goals. Other companies may use
different measures to present financial performance.
“Free cash flow before dividends” is derived by deducting capital expenditures and other investing activities-net, as well as the
repayment of transition bonds, from cash flow from operations. Free cash flow before dividends should not be considered as an
alternative to cash flow from operations, which is determined in accordance with GAAP. PPL believes that free cash flow before
dividends, although a non-GAAP measure, is an important measure to both management and investors since it is an indicator of the
company’s ability to sustain operations and growth without additional outside financing beyond the requirement to fund maturing debt
obligations. Other companies may calculate free cash flow before dividends in a different manner.
repayment of transition bonds, from cash flow from operations. Free cash flow before dividends should not be considered as an
alternative to cash flow from operations, which is determined in accordance with GAAP. PPL believes that free cash flow before
dividends, although a non-GAAP measure, is an important measure to both management and investors since it is an indicator of the
company’s ability to sustain operations and growth without additional outside financing beyond the requirement to fund maturing debt
obligations. Other companies may calculate free cash flow before dividends in a different manner.
"Domestic Gross Energy Margins" is intended to supplement the investors' understanding of PPL’s domestic non-trading and trading
activities by combining applicable income statement line items and related adjustments to calculate a single financial measure. PPL
believes that "Domestic Gross Energy Margins" is useful and meaningful to investors because it provides them with the results of PPL's
domestic non-trading and trading activities as another criterion in making their investment decisions. "Domestic Gross Energy Margins"
is not intended to replace "Operating Income," which is determined in accordance with GAAP, as an indicator of overall operating
performance. PPL's management also uses "Domestic Gross Energy Margins" in measuring certain corporate performance goals used
in determining variable compensation. Other companies may use different measures to present the results of their non-trading and
trading activities.
activities by combining applicable income statement line items and related adjustments to calculate a single financial measure. PPL
believes that "Domestic Gross Energy Margins" is useful and meaningful to investors because it provides them with the results of PPL's
domestic non-trading and trading activities as another criterion in making their investment decisions. "Domestic Gross Energy Margins"
is not intended to replace "Operating Income," which is determined in accordance with GAAP, as an indicator of overall operating
performance. PPL's management also uses "Domestic Gross Energy Margins" in measuring certain corporate performance goals used
in determining variable compensation. Other companies may use different measures to present the results of their non-trading and
trading activities.
Definitions of Non-GAAP Financial Measures