Quarterly Report

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 September 30, 2007
 
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, or non-accelerated filers.  See definition of "accelerated filer and large accelerated filer" in Rule 12b-2 of the Exchange Act.  (Check one):

   
Large accelerated filer
Accelerated filer
Non-accelerated filer
 
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, 372,196,010 shares outstanding at October 31, 2007.
     
 
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 October 31, 2007.
     

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 SEPTEMBER 30, 2007

Table of Contents
 
Page
     
GLOSSARY OF TERMS AND ABBREVIATIONS
i
 
FORWARD-LOOKING INFORMATION
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
   
     
49
 
     
65
 
     
78
 
 
84
 
 
84
 
     
PART II.   OTHER INFORMATION
   
 
84
 
 
84
 
 
84
 
 
85
 
     
86
 
     
COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES
   
     
87
 
     
88
 
     
89
 
     
CERTIFICATES OF PRINCIPAL EXECUTIVE OFFICER AND PRINCIPAL FINANCIAL OFFICER
PURSUANT TO SECTION 302 OF THE SARBANES - OXLEY ACT OF 2002
   
     
90
 
     
92
 
     
94
 
     
CERTIFICATES OF PRINCIPAL EXECUTIVE OFFICER AND PRINCIPAL FINANCIAL OFFICER
PURSUANT TO SECTION 906 OF THE SARBANES - OXLEY ACT OF 2002
   
     
96
 
     
98
 
     
100
 
GLOSSARY OF TERMS AND ABBREVIATIONS
PPL Corporation and its current and former subsidiaries

Elfec - Empresa de Luz y Fuerza Electrica Cochabamba S.A., a Bolivian electric distribution company in which PPL Global had a majority ownership interest until its sale in July 2007.

Emel - Empresas Emel S.A., a Chilean electric distribution holding company in which PPL Global has a majority ownership interest.

Griffith - a 600 MW gas-fired station in Kingman, Arizona, that was jointly owned by an indirect subsidiary of PPL Generation and LS Power Group until the sale of PPL Generation's interest in June 2006.

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.

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 owns and operates international energy businesses that are focused on the regulated distribution of electricity.

PPL Holtwood - PPL Holtwood, LLC, a subsidiary of PPL Generation that owns PPL's hydroelectric generating operations in Pennsylvania.

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 and whose common securities were held by WPD LLP.  The 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.

1945 First Mortgage Bond Indenture - PPL Electric's Mortgage and Deed of Trust, dated as of October 1, 1945, to Deutsche Bank Trust Company Americas, as trustee, as supplemented.

2001 Senior Secured Bond Indenture - PPL Electric's Indenture, dated as of August 1, 2001, to The Bank of New York (as successor to JPMorgan Chase Bank), as trustee, as supplemented.

2006 Form 10-K - Annual Report to the SEC on Form 10-K for the year ended December 31, 2006.

APB - Accounting Principles Board.

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.

EWG - exempt wholesale generator.

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.

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.

PCB - polychlorinated biphenyl, an oil additive used in certain electrical equipment up to the late-1970s.  It is now classified as a hazardous chemical.

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 electricity 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.

RMR - reliability must run.

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.

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 may be 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.

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' 2006 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;
·
market prices for crude oil and the potential impact on synthetic fuel operations, synthetic fuel purchases from third parties and the phase-out of synthetic fuel tax credits;
·
weather conditions affecting generation production, customer energy usage and operating costs;
·
competition in retail and wholesale power markets;
·
liquidity of wholesale power markets;
·
defaults by our counterparties under our energy or fuel 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 and availability of existing generation facilities and operating costs;
·
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 and emission allowances and other expenses;
·
significant delays in the planned 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
September 30,
 
Nine Months Ended
September 30,
   
2007
 
2006
 
2007
 
2006
Operating Revenues
               
Utility
 
$
1,016
   
$
972
   
$
3,074
   
$
2,892
 
Unregulated retail electric
   
28
     
23
     
73
     
68
 
Wholesale energy marketing
   
516
     
446
     
1,144
     
1,164
 
Net energy trading margins
   
10
     
15
     
23
     
26
 
Energy-related businesses
   
193
     
133
     
563
     
454
 
Total
   
1,763
     
1,589
     
4,877
     
4,604
 
                                 
Operating Expenses
                               
Operation
                               
Fuel
   
257
     
2 36
     
692
     
588
 
Energy purchases
   
224
     
284
     
534
     
738
 
Other operation and maintenance
   
324
     
299
     
996
     
914
 
Amortization of recoverable transition costs
   
78
     
75
     
229
     
210
 
Depreciation
   
108
     
10 5
     
334
     
3 08
 
Taxes, other than income
   
73
     
74
     
223
     
21 3
 
Energy-related businesses (Note 8)
   
178
     
156
     
581
     
4 53
 
Total
   
1,242
     
1, 229
     
3,589
     
3, 424
 
                                 
Operating Income
   
521
     
360
     
1,288
     
1, 180
 
                                 
Other Income - net
   
23
     
19
     
71
     
55
 
                                 
Interest Expense
   
117
     
114
     
357
     
3 38
 
                                 
Income from Continuing Operations Before Income Taxes, Minority Interest and Dividends on Preferred Securities of a Subsidiary
   
427
     
265
     
1,002
     
897
 
                                 
Income Taxes
   
88
     
44
     
188
     
21 4
 
                                 
Minority Interest
   
1
     
1
     
2
     
2
 
                                 
Dividends on Preferred Securities of a Subsidiary
   
5
     
5
     
14
     
10
 
                                 
Income from Continuing Operations
   
333
     
215
     
798
     
671
 
                                 
Income (Loss) from Discontinued Operations (net of income taxes) (Note 8)
   
(11
)
   
11
     
72
     
16
 
                                 
Net Income
 
$
322
   
$
226
   
$
870
   
$
687
 
                                 
Earnings Per Share of Common Stock:
                               
Income from Continuing Operations:
                               
Basic
 
$
0.88
   
$
0.5 6
   
$
2.08
   
$
1. 77
 
Diluted
   
0.87
     
0.5 5
     
2.06
     
1. 74
 
Net income:
                               
Basic
 
$
0.85
   
$
0.59
   
$
2.27
   
$
1.81
 
Diluted
   
0.84
     
0.58
     
2.25
     
1.78
 
                                 
Dividends Declared Per Share of Common Stock
 
$
0.305
   
$
0.275
   
$
0.915
   
$
0.825
 
 
The accompanying Notes to Condensed Consolidated Financial Statements are an integral part of the financial statements.
PPL Corporation and Subsidiaries
(Unaudited)
(Millions of Dollars)
   
Nine Months Ended
September 30,
   
2007
 
2006
Cash Flows from Operating Activities
               
Net income
 
$
870
   
$
687
 
Adjustments to reconcile net income to net cash provided by operating activities
               
Depreciation
   
345
     
326
 
Amortization s   - recoverable transition costs and other
   
327
     
234
 
Pre-tax gain from the sale of the El Salvadoran business
   
(94
)
       
Pre-tax loss from the sale of interest in the Griffith plant
           
40
 
Pension and other postretirement benefits
   
31
     
(28
)
Deferred income taxes and investment tax credits
   
(95
)
   
(81
)
Impairment of assets
   
97
         
Unrealized gain s on derivatives and other hedging activities
   
(68
)
   
(2
)
Other
   
(42
)
   
13
 
Change in current assets and current liabilities
               
Accounts receivable
   
(65
)
   
(2
)
Accounts payable
   
(60
)
   
(14
)
Fuel, materials and supplies
   
23
     
(22
)
Other
   
71
     
100
 
Other operating activities
               
Other assets
   
(33
)
   
5
 
Other liabilities
   
(55
)
   
2
 
Net cash provided by operating activities
   
1,252
     
1,258
 
                 
Cash Flows from Investing Activities
               
Expenditures for property, plant and equipment
   
(1,121
)
   
(859
)
Proceeds from the sale of the El Salvadoran and Bolivian businesses
   
191
         
Proceeds from the sale of telecommunication operations
   
47
         
Proceeds from the sale of interest in the Griffith plant
           
115
 
Purchases of emission allowances
   
(20
)
   
(68
)
Proceeds from the sale of emission allowances
   
82
     
42
 
Purchases of nuclear decommissioning trust investments
   
(176
)
   
(178
)
Proceeds from the sale of nuclear decommissioning trust investments
   
165
     
166
 
Purchases of short-term investments
   
(516
)
   
(331
)
Proceeds from the sale of short-term investments
   
574
     
271
 
Net (increase) decrease in restricted cash
   
(35
)
   
8
 
Other investing activities
   
12
     
16
 
Net cash used in investing activities
   
(797
)
   
(818
)
                 
Cash Flows from Financing Activities
               
Issuance of long-term debt
   
855
     
800
 
Retirement of long-term debt
   
(904
)
   
(757
)
Issuance of common stock
   
25
     
13
 
Repurchase of common stock
   
(565
)
       
Issuance of preference stock, net of issuance costs
           
245
 
Payment of common stock dividends
   
(343
)
   
(304
)
Net increase (decrease) in short-term debt
   
150
     
(172
)
Other financing activities
   
(17
)
   
(21
)
Net cash used in financing activities
   
(799
)
   
(196
)
                 
Effect of Exchange Rates on Cash and Cash Equivalents
   
2
     
1
 
                 
Net (Decrease) Increase in Cash and Cash Equivalents
   
(342
)
   
245
 
Cash and Cash Equivalents at Beginning of Period
   
794
     
555
 
Cash and Cash Equivalents included in Assets Held for Sale
   
(13
)
       
Cash and Cash Equivalents at End of Period
 
$
439
   
$
800
 
 
The accompanying Notes to Condensed Consolidated Financial Statements are an integral part of the financial statements.
PPL Corporation and Subsidiaries
(Unaudited)
(Millions of Dollars)
   
September 3 0 ,
200 7
 
December 31,
200 6
Assets
               
                 
Current Assets
               
Cash and cash equivalents
 
$
439
   
$
794
 
Short-term investments
   
308
     
359
 
Restricted cash
   
135
     
102
 
Accounts receivable (less reserve:  200 7, $39; 200 6 , $ 50 )
   
542
     
591
 
Unbilled revenues
   
447
     
469
 
Fuel, materials and supplies
   
320
     
378
 
Prepayments
   
123
     
79
 
Deferred income taxes
   
76
     
162
 
Price risk management assets
   
472
     
551
 
Other intangibles
   
97
     
124
 
Assets held for sale (Note 8)
   
979
         
Other
   
19
     
21
 
Total Current Assets
   
3,957
     
3,630
 
                 
Investments
               
Investment in unconsolidated affiliates - at equity
   
46
     
47
 
Nuclear plant decommissioning trust fund s
   
558
     
510
 
Other
   
8
     
7
 
Total Investments
   
612
     
564
 
                 
Property, Plant and Equipment
               
Electric plant in service
               
Transmission and distribution
   
8,563
     
8,836
 
Generation
   
8,736
     
8,744
 
General
   
796
     
779
 
     
18,095
     
18,359
 
Construction work in progress
   
1,131
     
682
 
Nuclear fuel
   
336
     
354
 
Electric plant
   
19,562
     
19,395
 
Gas and oil plant
   
66
     
373
 
Other property
   
191
     
311
 
     
19,819
     
20,079
 
Less:  accumulated depreciation
   
7,696
     
8,010
 
Total Property , Plant and Equipment
   
12,123
     
12,069
 
                 
Regulatory and Other Noncurrent Assets
               
Recoverable transition costs
   
654
     
884
 
Goodwill
   
974
     
1,154
 
Other intangibles
   
302
     
367
 
Price risk management assets
   
294
     
144
 
Other
   
909
     
935
 
Total Regulatory and Other Noncurrent Assets
   
3,133
     
3,484
 
                 
Total Assets
 
$
19,825
   
$
19,747
 
 
The accompanying Notes to Condensed Consolidated Financial Statements are an integral part of the financial statements.
CONDENSED CONSOLIDATED BALANCE SHEET S
PPL Corporation and Subsidiaries
(Unaudited)
(Millions of Dollars)
   
September 3 0 ,
200 7
 
December 31,
200 6
Liabilities and Equity
               
                 
Current Liabilities
               
Short-term debt
 
$
181
   
$
42
 
Long-term debt
   
481
     
1,018
 
Long-term debt with affiliate trust
           
89
 
Accounts payable
   
539
     
667
 
Above market NUG contracts
   
47
     
65
 
Taxes
   
137
     
194
 
Interest
   
153
     
109
 
Dividends
   
120
     
111
 
Price risk management liabilities
   
529
     
550
 
Liabilities held for sale and related minority interest (Note 8)
   
394
         
Other
   
443
     
503
 
Total Current Liabilities
   
3,024
     
3,348
 
                 
Long-term Debt
   
7,171
     
6,728
 
                 
Deferred Credits and Other Noncurrent Liabilities
               
Deferred income taxes and investment tax credits
   
2,059
     
2,331
 
Price risk management liabilities
   
580
     
459
 
Accrued pension obligations
   
320
     
364
 
Asset retirement obligations
   
369
     
336
 
Above market NUG contracts
   
40
     
71
 
Other
   
775
     
627
 
Total Deferred Credits and Other Noncurrent Liabilities
   
4,143
     
4,188
 
                 
Commitments and Contingent Liabilities (Note 10)
               
                 
Minority Interest
   
26
     
60
 
                 
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
   
2,303
     
2,810
 
Earnings reinvested
   
3,144
     
2,626
 
Accumulated other comprehensive loss
   
(291
)
   
(318
)
Total Shareowners' Common Equity
   
5,160
     
5,122
 
                 
Total Liabilities and Equity
 
$
19,825
   
$
19,747
 
 
(a)
 
780 million shares authorized; 375 million shares outstanding at September 30, 2007 , and 385 million shares outstanding at December 31, 2006 .
 
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
September 30,
 
Nine Months Ended
September 30,
   
2007
 
2006
 
2007
 
2006
Operating Revenues
                               
Wholesale energy marketing
 
$
516
   
$
446
   
$
1,144
   
$
1,164
 
Wholesale energy marketing to affiliate
   
453
     
445
     
1,356
     
1,286
 
Utility
   
204
     
174
     
638
     
562
 
Unregulated retail electric
   
28
     
23
     
73
     
68
 
Net energy trading margins
   
10
     
15
     
23
     
26
 
Energy-related businesses
   
191
     
129
     
557
     
434
 
Total
   
1,402
     
1, 232
     
3,791
     
3, 540
 
                                 
Operating Expenses
                               
Operation
                               
Fuel
   
257
     
236
     
692
     
588
 
Energy purchases
   
167
     
231
     
377
     
584
 
Energy purchases from affiliate
   
43
     
41
     
117
     
119
 
Other operation and maintenance
   
238
     
229
     
743
     
681
 
Depreciation
   
72
     
74
     
227
     
212
 
Taxes, other than income
   
24
     
25
     
74
     
70
 
Energy-related businesses (Note 8)
   
177
     
154
     
578
     
437
 
Total
   
978
     
990
     
2,808
     
2,691
 
                                 
Operating Income
   
424
     
242
     
983
     
849
 
                                 
Other Income - net
   
32
     
21
     
80
     
62
 
                                 
Interest Expense
   
73
     
65
     
217
     
180
 
                                 
Interest Expense with Affiliates
           
3
     
4
     
9
 
                                 
Income from Continuing Operations Before Income Taxes and Minority Interest
   
383
     
195
     
842
     
722
 
                                 
Income Taxes
   
72
     
26
     
139
     
164
 
                                 
Minority Interest
   
1
     
1
     
2
     
2
 
                                 
Income from Continuing Operations
   
310
     
168
     
701
     
556
 
                                 
Income from Discontinued Operations (net of income taxes) (Note 8)
   
13
     
14
     
89
     
14
 
                                 
Net Income
 
$
323
   
$
182
   
$
790
   
$
570
 
                                 
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)
   
Nine Months Ended
September 30,
   
2007
 
2006
                 
Cash Flows from Operating Activities
               
Net income
 
$
790
   
$
570
 
Adjustments to reconcile net income to net cash provided by operating activities
               
Depreciation
   
234
     
225
 
Pre-tax gain from the sale of the El Salvadoran business
   
(94
)
       
Pre-tax loss from the sale of interest in the Griffith plant
           
40
 
Pension and other postretirement benefits
   
26
     
(35
)
Deferred income taxes   and investment tax credits
   
(25
)
   
23
 
Impairment of assets
   
97
         
Unrealized gain s on derivatives and other hedging activities
   
(70
)
   
(6
)
Other
   
27
     
28
 
Change in current assets and current liabilities
               
Accounts receivable
   
(61
)
   
(13
)
Accounts payable
   
(95
)
   
(2
)
Fuel, materials and supplies
   
32
     
(22
)
Other
   
130
     
112
 
Other operating activities
               
Other assets
   
(26
)
       
Other liabilities
   
(71
)
   
(23
)
Net cash provided by operating activities
   
894
     
897
 
                 
Cash Flows from Investing Activities
               
Expenditures for property, plant and equipment
   
(884
)
   
(584
)
Proceeds from the sale of the El Salvadoran and Bolivian businesses
   
191
         
Proceeds from the sale of telecommunication operations
   
47
         
Proceeds from the sale of interest in the Griffith plant
           
115
 
Purchases of emission allowances
   
(20
)
   
(68
)
Proceeds from the sale of emission allowances
   
82
     
42
 
Purchases of nuclear decommissioning trust investments
   
(176
)
   
(178
)
Proceeds from the sale of nuclear decommissioning trust investments
   
165
     
166
 
Purchases of short-term investments
   
(477
)
   
(196
)
Proceeds from the sale of short-term investments
   
509
     
136
 
Net (increase) decrease in restricted cash
   
(27
)
   
4
 
Other investing activities
   
7
     
13
 
Net cash used in investing activities
   
(583
)
   
(550
)
                 
Cash Flows from Financing Activities
               
Issuance of long-term debt
   
6
     
800
 
Retirement of long-term debt
   
(141
)
   
(144
)
Distributions to Member
   
(1,272
)
   
(651
)
Contributions from Member
   
700
     
116
 
Net increase (decrease) in short-term debt
   
111
     
(172
)
Other financing activities
   
(7
)
   
(28
)
Net cash used in financing activities
   
(603
)
   
(79
)
                 
Effect of Exchange Rates on Cash and Cash Equivalents
   
2
     
1
 
                 
Net (Decrease) Increase in Cash and Cash Equivalents
   
(290
)
   
269
 
Cash and Cash Equivalents at Beginning of Period
   
524
     
227
 
Cash and Cash Equivalents included in Assets Held for Sale
   
(13
)
       
Cash and Cash Equivalents at End of Period
 
$
221
   
$
496
 
                 
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)
   
September 30,
2007
 
December 31,
2006
Assets
               
                 
Current Assets
               
Cash and cash equivalents
 
$
221
   
$
524
 
Short-term investments
   
303
     
328
 
Restricted cash
   
79
     
51
 
Accounts receivable (less reserve:  2007, $21; 2006, $29)
   
305
     
354
 
Unbilled revenues
   
293
     
301
 
Accounts receivable from affiliates
   
142
     
136
 
Collateral on PLR energy supply to affiliate
   
300
     
300
 
Fuel, materials and supplies
   
286
     
330
 
Prepayments
   
81
     
66
 
Deferred income taxes
   
118
     
117
 
Price risk management assets
   
471
     
551
 
Other intangibles
   
97
     
124
 
Assets held for sale (Note 8)
   
626
         
Other
   
6
     
10
 
Total Current Assets
   
3,328
     
3,192
 
                 
Investments
               
Investment in unconsolidated affiliates - at equity
   
46
     
47
 
Nuclear plant decommissioning trust funds
   
558
     
510
 
Other
   
5
     
4
 
Total Investments
   
609
     
561
 
                 
Property, Plant and Equipment
               
Electric plant in service
               
Transmission and distribution
   
4,295
     
4,673
 
Generation
   
8,736
     
8,744
 
General
   
303
     
318
 
     
13,334
     
13,735
 
Construction work in progress
   
991
     
578
 
Nuclear fuel
   
336
     
354
 
Electric plant
   
14,661
     
14,667
 
Gas and oil plant
   
66
     
64
 
Other property
   
190
     
309
 
     
14,917
     
15,040
 
Less:  accumulated depreciation
   
5,825
     
6,115
 
Total Property, Plant and Equipment
   
9,092
     
8,925
 
                 
Other Noncurrent Assets
               
Goodwill
   
974
     
1,099
 
Other intangibles
   
183
     
245
 
Price risk management assets
   
287
     
135
 
Other
   
501
     
498
 
Total Other Noncurrent Assets
   
1,945
     
1,977
 
                 
Total Assets
 
$
14,974
   
$
14,655
 
 
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)
   
September 30,
2007
 
December 31,
2006
Liabilities and Equity
               
                 
Current Liabilities
               
Short-term debt
 
$
100
         
Long-term debt
   
176
   
$
181
 
Long-term debt with affiliate trust
           
89
 
Accounts payable
   
457
     
571
 
Accounts payable to affiliates
   
15
     
36
 
Above market NUG contracts
   
47
     
65
 
Taxes
   
150
     
151
 
Interest
   
119
     
82
 
Deferred revenue on PLR energy supply to affiliate
   
12
     
12
 
Price risk management liabilities
   
517
     
541
 
Liabilities held for sale and related minority interest (Note 8)
   
326
         
Other
   
327
     
325
 
Total Current Liabilities
   
2,246
     
2,053
 
                 
Long-term Debt
   
4,931
     
5,106
 
                 
Deferred Credits and Other Noncurrent Liabilities
               
Deferred income taxes and investment tax credits
   
1,274
     
1,363
 
Price risk management liabilities
   
568
     
437
 
Accrued pension obligations
   
253
     
279
 
Asset retirement obligations
   
369
     
336
 
Above market NUG contracts
   
40
     
71
 
Deferred revenue on PLR energy supply to affiliate
   
14
     
23
 
Other
   
480
     
393
 
Total Deferred Credits and Other Noncurrent Liabilities
   
2,998
     
2,902
 
                 
Commitments and Contingent Liabilities (Note 10)
               
                 
Minority Interest
   
26
     
60
 
                 
Member's Equity
   
4,773
     
4,534
 
                 
Total Liabilities and Equity
 
$
14,974
   
$
14,655
 
                 
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
September 30,
 
Nine Months Ended
September 30,
   
2007
 
2006
 
2007
 
2006
Operating Revenues
                       
Retail electric
 
$
812
   
$
800
   
$
2,438
   
$
2,33 3
 
Wholesale electric to affiliate
   
43
     
41
     
117
     
119
 
Total
   
855
     
841
     
2,555
     
2,452
 
                                 
Operating Expenses
                               
Operation
                               
Energy purchases
   
55
     
53
     
156
     
155
 
Energy purchases from affiliate
   
453
     
445
     
1,356
     
1,286
 
Other operation and maintenance
   
104
     
81
     
295
     
266