Slide 1: 2005 Earnings Webcast February 1, 2006
2005 Earnings Webcast February 1, 2006
Slide 2: Cautionary Statements And Factors That May Affect Future Results
Cautionary Statements And Factors That 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
Slide 3: Agenda
Agenda Review of Longer-Term Earnings and Dividend Growth 2005 Operating Results, 2006 and 2007 Forecasts Improving Cash Flow and Strengthening Balance Sheet Q&A W. F. Hecht J. H. Miller J. R. Biggar
Slide 4: Improved Long-Term Growth Rate
Improved Long-Term Growth Rate *Earnings from ongoing operations - see Appendix for the per share reconciliation of reported earnings and earnings from ongoing operations. 2005A 2006 2010 Target 2.08 2.2 3.5 11% CAGR **Midpoint of $2.15 to $2.25 forecast ** *
Slide 5: Key Drivers of Margin Growth
Key Drivers of Margin Growth Supply Margins (Millions)
Slide 6: Strong Fourth Quarter 2005 Results
Strong Fourth Quarter 2005 Results Millions Per share Note: See Appendix for the reconciliation of reported earnings and earnings from ongoing operations. Earnings from Ongoing Operations
Slide 7: Solid 2005 Results
Solid 2005 Results Millions Per share Note: See Appendix for the reconciliation of reported earnings and earnings from ongoing operations. Earnings from Ongoing Operations
Slide 8: Supply Segment Earnings Drivers
(Dollars per Share) Note: See Appendix for the per share reconciliation of reported earnings and earnings from ongoing operations. Supply Segment Earnings Drivers
Slide 9: Pennsylvania Delivery Segment Earnings Drivers
Pennsylvania Delivery Segment Earnings Drivers (Dollars per Share) Note: See Appendix for the per share reconciliation of reported earnings and earnings from ongoing operations.
Slide 10: International Delivery Segment Earnings Drivers
International Delivery Segment Earnings Drivers (Dollars per Share) Note: See Appendix for the per share reconciliation of reported earnings and earnings from ongoing operations.
Slide 11: 2005 Earnings Contributions
2005 Earnings Contributions (Dollars per Share)
Slide 12: Reaffirming 2006 Earnings Forecast
Reaffirming 2006 Earnings Forecast 2004* 1.87 2005* 2.08 2006 2.2 EPS *Earnings from ongoing operations - see Appendix for the per share reconciliation of reported earnings and earnings from ongoing operations. $2.08 $1.87 (Dollars per Share) $2.15 to $2.25 Forecast
Slide 13: 2006 Earnings Contributions
2006 Earnings Contributions (Dollars per Share) * Midpoint of forecast
Slide 14: Per Share Earnings from Ongoing Operations by Segment
Per Share Earnings from Ongoing Operations by Segment 2004 2005 2006 Supply 0.62 0.5 0.57 PA Delivery 0.12 0.23 0.2 International Delivery 0.26 0.27 0.23 $1.87 $2.15 - $2.25 Forecast $2.08 Note: See Appendix for the reconciliation of reported earnings and earnings from ongoing operations.
Slide 15: Preliminary 2007 Earnings Forecast - 4-5% Growth
Preliminary 2007 Earnings Forecast - 4-5% Growth Expiring fixed-price contracts POLR increases Increased fuel and fuel transportation costs Lower earnings from delivery segments
Slide 16: Scrubber Timetable
Scrubber Timetable Brunner | Brunner Montour | Island Island Units 1&2) Unit3 [Units 1&2 Award contracts v v v Air permit v May-06 | May-06 Construction start v Jun-06 | Jun-06 Major construction complete | Sep-07 Q2-08 Q3-08 Start-up and testing Aug-07 Q2-08 Q4-08 Mar-08 In service May-08 Q4-08 Q2-
Slide 17: Emission Controls Are Economically Compelling
Emission Controls Are Economically Compelling As of 1/06, projected annual savings >$150M by 2010 SO2 Emission Allowance Price
Slide 18: Strong Dividend Growth
2001 2002 2003 2004 April 2005* October 2005** Core Operations 0.53 0.72 0.77 0.82 0.92 1 $/share Annualized Expect to reach 50% payout in 2006 Strong Dividend Growth * Annualized rate beginning with the dividend payable April 1, 2005 **Annualized rate beginning with the dividend payable October 1,
Slide 19: Improving Cash from Operations
Improving Cash from Operations 2005 2006 2007 2008 2009 2010 Cash from operations available to meet corporate cash needs 1116 1204 1357 1421 1623 1881 Free Cash Flow Before Dividends 0 -60 180 610 780 Cash from operations related to transition bond maturities 272 287 300 305 0 0 Millions Note: See A
Slide 20: Cash Flow Forecast
Cash Flow Forecast Millions 2005 2006 2007 2008 2009 2010 Free cash flow before dividends 337 -141 131 370 764 914 Note: See Appendix for the reconciliation of cash flow measures.
Slide 21: Strengthening Balance Sheet
Strengthening Balance Sheet 20
Slide 22: Improved Long-Term Growth Rate
Improved Long-Term Growth Rate * Earnings from ongoing operations - see Appendix for the per share reconciliation of reported earnings and earnings from ongoing operations. 2005A 2006 2010 Target 2.08 2.2 3.5 11% CAGR **Midpoint of $2.15 to $2.25 forecast ** *
Slide 23: Appendix
Appendix
Slide 24: Market Prices - Electricity
Market Prices - Electricity A-1
Slide 25: Current Hedge Positions - Electricity and Fuel
Current Hedge Positions - Electricity and Fuel A-2
Slide 26: Generation Portfolio Focused on Two Markets
Generation Portfolio Focused on Two Markets Coal 691 Hydro 576 Montana 1,267 MW Oil 52 Hydro 44 Maine 96 MW Coal (2006-2008) 20 Montana 20 MW Coal 3,814 Nuclear 2,120 Gas (Comb Cycle) 582 Oil 1,670 CTs 451 QFs 295 Hydro 293 Pennsylvania 9,225 MW Connecticut 243 MW Operating Upgrade Projects Planned
Slide 27: Key Drivers/Assumptions Through 2010
Key Drivers/Assumptions Through 2010 Increased prices for POLR sales Expiration of supply contracts remarketed at current forward prices Power plant uprates Net benefits from the installation of scrubbers at the Montour and Brunner Island coal-fired power plants Increased fuel and O&M costs Loss of
Slide 28: Increasing Prices Under the POLR Contract
Increasing Prices Under the POLR Contract 2002 2003 2004 2005 2006 2007 2008 2009 42.3 42.7 43.3 44.1 47.8 48.4 49.1 50.2 $/MWh A-5
Slide 29: Capital Expenditures by Segment
Capital Expenditures by Segment A-6 Million
Slide 30: Reconciliation of Cash from Operations to Free Cash Flow before Dividends
Reconciliation of Cash from Operations to Free Cash Flow before Dividends A-7 (Millions of Dollars)
Slide 31: Segment Per Share Earnings From Ongoing Operations - Fourth Quarter
Segment Per Share Earnings From Ongoing Operations - Fourth Quarter (Dollars per Share) Note: See Appendix for the per share reconciliation of reported earnings and earnings from ongoing operations. A-8
Slide 32: Segment Per Share Earnings From Ongoing Operations for the Year
Segment Per Share Earnings From Ongoing Operations for the Year (Dollars per Share) Note: See Appendix for the per share reconciliation of reported earnings and earnings from ongoing operations. A-9
Slide 33: Reconciliation of Fourth Quarter Reported Earnings and Earnings from Ongoing Operations
Reconciliation of Fourth Quarter Reported Earnings and Earnings from Ongoing Operations A-10 (Millions of Dollars)
Slide 34: Reconciliation of Fourth Quarter Reported Earnings and Earnings from Ongoing Operations (Per Share)
Reconciliation of Fourth Quarter Reported Earnings and Earnings from Ongoing Operations (Dollars Per Share) A-11
Slide 35: Reconciliation of Year-End Reported Earnings and Earnings from Ongoing Operations
Reconciliation of Year-End Reported Earnings and Earnings from Ongoing Operations (Millions of Dollars) A-12
Slide 36: Reconciliation of Year-End Reported Earnings and Earnings from Ongoing Operations (Per Share)
Reconciliation of Year-End Reported Earnings and Earnings from Ongoing Operations (Dollars per Share) A-13
Slide 37: Reconciliation of PPL's Reported Earnings and Earnings from Ongoing Operations
Reconciliation of PPL's Reported Earnings and Earnings from Ongoing Operations A-14
Slide 38: Credit Ratings
Credit Ratings PPL Corporation Issuer Rating Subordinated Debt Senior Unsecured Short-term debt Outlook PPLErergySupply Issuer Rating Senior Netes Commercial Paper Outlook PPL Capital Funding Senior Unsecured Debt Subordinated Debt Mediun-Term Notes Outlook PPLElecticLitliies Issuer Rating First Mor
Slide 39: Credit Ratings (cont.)
Credit Ratings (cont.) Moods Standard &Poots Fie PPL Traretton Bond Co, Traneiton Bonds Aaa ron ron PPL Montana Pass-Through Certfioates Baas Bee. Bee tleae STABLE STABLE WO Holdings Linited tesuer Rating Baas 26. Senior Uneecured Debt Bax Bee. eee. Commercial Paper re Preferred Stock utlece STABLE
Slide 40: Forward-Looking Information Statement
Forward-Looking Information Statement Statements contained in this presentation, including statements with respect to future earnings, energy prices, margins and sales, growth, revenues, expenses and pension costs, cash flows, cash from operations, dividends, credit profile, capital expenditures and
Slide 41: Definitions of Financial Measures
Definitions of Financial Measures "Earnings from ongoing operations" excludes the impact of unusual items. Earnings from ongoing operations should not be considered as an alternative to net income, or reported earnings, which is an indicator of operating performance determined in accordance with GAA