Ppl Corporation · NYSE:PPL
Ppl — Goldman Sachs Seventh Annual Power & Utility Conference 2007
42 slides from Ppl's conference presentation, May 9, 2007
Slide 1: Goldman Sachs Seventh Annual Power & Utility Conference
Goldman Sachs Seventh Annual Power & Utility Conference New York City May 10-11, 2007
Slide 2: PPL Facts
PPL Facts 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
Slide 3: PPL Facts (cont.)
PPL Facts (cont.) Financial and Operating Information (Winans, escent pe shee meus) ‘conan Eau Prefenestinty Shore Ott Longrtempeet Tota Caption ees acess ecatra vores epated Eringe Pe Share ted _Enrng Per Share Fron Orga Opartore Oko sez 221 otter rc or Shee 000 40 cok Vale Per Save 388 wat OE Feco
Slide 4: Agenda
Cautionary Satements Ard Factors That May Afed Fture Resuts Growing Shareouner Value Optimize Eneray Marketing Key Drivers of Morgin Grout Shrinking Reserve Margins Geate Potential Value for PPL Growing Constrained Region in PJMIncreases Vue of PPL Generation RPM Auction Provided Robust Pices PPL Ge
Slide 5: Appendix
Appendix Market Prices Guirent Hedge Posiions ~ Electicty and Fuel Scrubbers Expected to be Completed on Budget and on Schedule Generation Uprates PPL Supply Business Oversiew, Proactive Coal Supply Management Supports Growth in Margins Key Divers/Challenges Through 2010 Increasing Prices Under the
Slide 6: 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 7: Growing Shareowner Value
Growing Shareowner Value • Continued focus on execution of our current growth plan • Extract additional value from our energy marketing operations • Multi-faceted expansion of the generation portfolio
Slide 8: Optimize Energy Marketing
Optimize Energy Marketing • Expand marketing capabilities • Active participation in energy and commodity markets • Manage market, operational and financial risks
Slide 9: Key Drivers of Margin Growth
Key Drivers of Margin Growth $1,675 $1,818 $1,845 $1,984 $2,748 Supply Margins (Millions)
Slide 10: Shrinking Reserve Margins Create Potential Value for PPL
Shrinking Reserve Margins Create Potential Value for PPL Reserve Margin
Slide 11: Growing Constrained Region in PJM Increases Value of PPL Generation
Constrained Region Existing Constraint Constrained Region PJM Projected Constrained Region Beginning in 2009 Growing Constrained Region in PJM Increases Value of PPL Generation Montour Brunner Island Holtwood Wallenpaupack Martins Creek Keystone Conemaugh Safe Harbor Lower Mt. Bethel PA Combustion T
Slide 12: RPM Auction Provided Robust Prices
RPM Auction Provided Robust Prices PPL Capacity Hedge Position 2007 2008 2009 2010 97% 94% 87% 0% $/MWD PJM 2007/08 Planning Year • Planning year auction – July 2007 • Planning year auction – Oct. 2007 • Planning year auction – Jan. 2008
Slide 13: PPL's Generation Portfolio
PPL’s Generation Portfolio [Total Domestic Generation: 11,196 MW ] Planned Uprate Projects: _355 MW. 9,907 Mave Coal Nuclear oil Gas Hydro cts Fs Coal Hydro Reflects reduction of 300 MW at Martins Creek that PPL has agreed to shut down by September 2007 and 60 MW expected loss due to increased plant
Slide 14: Pennsylvania Generation Expansion
8,930 MW Existing Generation 299 MW Planned Uprates Base load expansion capabilities Pennsylvania Generation Expansion Montour/Coal 1,542 MW +16 MW +600-800 MW Brunner Island Coal 1,483 MW +21 MW Holtwood Hydro MW +125 MW Wallenpaupack Hydro MW Martins Creek Coal, Gas, Oil 1970 MW Keystone Coal MW C
Slide 15: Expanding Renewable Energy Portfolio
Expanding Renewable Energy Portfolio • Currently there are not enough renewable energy credits in the market • Plan to invest $100 million to develop renewable projects over next five years – Included in current capex program • Contracts in place with renewable energy facilities
Slide 16: Operational Update
Operational Update • Scrubbers expected to be completed on schedule and on budget • Generation uprates remain on schedule • PUC action expected shortly regarding PPL Electric Utilities’ POLR transition proposal • PPL EU filed for $83.6 million rate increase • Continued strength of customer service a
Slide 17: Latin American Assets to be Sold
Latin American Assets to be Sold El Salvador Chile Bolivia Del Sur 291,000 customers yr. avg. load growth = 6.2% PPL ownership = 86.4% Emel 576,000 customers yr. avg. load growth = 7.7% PPL ownership = 95.4% Elfec S.A. 281,000 customers yr. avg. load growth = 5.1% PPL ownership = 92.1% Schedule Apri
Slide 18: Pennsylvania Energy Issues
Pennsylvania Energy Issues PPL Electric Utilities Bridge Plan • Procure 2010 POLR Supply in 2007, 2008, 2009 to reduce exposure to price spikes • Supply costs to be passed directly to customers • Continue optional time-of-use rates for residential and large industrial customers PUC Proposed Regulati
Slide 19: PPL Electric Utilities Distribution Rate Case Facts
PPL Electric Utilities Distribution Rate Case Facts Amount of distribution revenue increase request $83.6 million % Total revenue increase 2.7% % Distribution revenue increase 13% 12/31/2006 Proposed Distribution rate base $1,925 million $2,023 million Rate of return on rate base 6.62% 8.36% Common
Slide 20: Cash Flow Forecast
Cash Flow Forecast Millions Note: See Appendix for the reconciliation of cash flow measures.
Slide 21: Dividend Payout Ratio Greater than 50% after 2006
Dividend Payout Ratio Greater than 50% after 2006 $/share Annualized *Annualized rate based on quarterly dividend declared in February 2007.
Slide 22: Strong Long-Term Earnings Growth
Strong Long-Term Earnings Growth Forecast * * Midpoint of $2.30 to $2.40 earnings forecast. ** Earnings from ongoing operations – See Appendix for the per share reconciliation of reported earnings and earnings from ongoing operations.
Slide 23: Slide 23
Slide 24: Market Prices
2010 2006 2007 2008 2010 Market Prices EAST PJM On-Peak Off-Peak ATC (2) WEST Mid-Columbia On-Peak Off-Peak ATC (2) GAS NYMEX Price (3) (1) Market prices based on the average of broker quotes as of 3/30/2007. (2) 24-hour average. (3) NYMEX forward gas price on 3/30/2007. (4) Prices at 12/2005 when 2
Slide 25: Current Hedge Positions - Electricity and Fuel
Current Hedge Positions - Electricity and Fuel A-2 2007 2008 2009 Electricity Sales East 96% 100% 97% West 100% 100% 77% Total 97% 100% 94% Coal East 96% 82% 74% West 100% 100% 78% Total 97% 87% 75%
Slide 26: Scrubbers Expected to be Completed on Budget and on Schedule
Scrubbers Expected to be Completed on Budget and on Schedule Montour Unit #2 Absorber A-3 In-Service Dates Montour Q1-08 Montour Q2-08 Brunner Island Q4-08 Brunner Island 1 & 2 Q2-09
Slide 27: Generation Uprates
Completed Ww In-Service Dates Brunner Island 3 Turbine t 2006 Colstrip 1&4 2006 Proposed Brunner Island 1 Turbine 10 2007 Brunner Island 2 Turbine 11 2009 Montour Turbine 16 2008 ‘Susquehanna 45 2008 ‘Susquehanna 69 2009 ‘Susquehanna 29 2010 Colstrip 2 & 3 10 2007-2008 Kerr 12 2007 Great Falls 28 20
Slide 28: PPL Supply Business Overview
PPL Supply Business Overview Gas/Oill 32% Coal 39% Gas/Oil 6% Coal 56% n In 2007, 94% of our owned generation output is expected to be produced at a fuel cost of approximately $16/MWh or less. Production GWh A-5 Nuclear 18% Hydro 8% QFs 3% Installed Capacity MW Nuclear 30% Hydro 8%
Slide 29: Proactive Coal Supply Management Supports Growth in Margins
Proactive Coal Supply Management Supports Growth in Margins Montana Mine-mouth 21% Central Appalachia 11% Projected 2007 Coal Supply A-6 Central PA 17% PRB 6% Southwest PA 45% • Supply region diversity • Fleet trains (1600 cars) • Average delivered costs – 4%-5% annual increase 2006 to 2010
Slide 30: Key Drivers/Challenges Through 2010
Key Drivers/Challenges Through 2010 A-7 • Increased prices for POLR sales • Expiration of supply contracts remarketed at current forward prices • Power plant uprates • Net economic benefits from the installation of scrubbers at the Montour and Brunner Island coal-fired power plants • Increased fuel
Slide 31: Increasing Prices Under the POLR Contract
Increasing Prices Under the POLR Contract A-8
Slide 32: PPL Proposal to Transition to Competitive Electricity Markets
PPL Proposal to Transition to Competitive Electricity Markets A-9 • Conduct procurements for 2010 POLR supply in March and September of 2007, 2008 and 2009 • Reduce the risk of customer exposure to price spikes in wholesale markets • PUC approval would remove risk for PPL Electric Utilities by ensur
Slide 33: 2007 Ongoing Earnings Contributions
2007 Ongoing Earnings Contributions $2.25 Energy Margins $0.22 International Delivery Margins $0.07 U.K. Liquidations ($0.07) O&M ($0.03) Depreciation ($0.05) Income Taxes & Other ($0.04) $2.35* (Dollars per Share) A-10 *Midpoint of forecast Note: See Appendix for the reconciliation of reported earn
Slide 34: Reconciliation of Cash from Operations to Free Cash Flow before Dividends
Reconciliation of Cash from Operations to Free Cash Flow before Dividends (Millions of Dollars) A-11 2006 2007 2008 2009 2010 Cash from Operations $1,758 $1,642 $1,779 $1,679 $2,082 Increase/(Decrease) in cash due to: Transition Bond Repayment (282) (294) (310) - - Capital Expenditures (1,394) (1,73
Slide 35: Capital Expenditures by Segment
Capital Expenditures by Segment Millions $1,394 $1,168 $1,271 $1,212 $1,397 $1,732 A-12
Slide 36: Reconciliation of First Quarter Reported Earnings and Earnings from Ongoing Operations
Reconciliation of First Quarter Reported Earnings and Earnings from Ongoing Operations A-13 (Millions of Dollars)
Slide 37: Reconciliation of First Quarter Reported Earnings and Earnings from Ongoing Operations
Reconciliation of First Quarter Reported Earnings and Earnings from Ongoing Operations A-14 (Dollars Per Share)
Slide 38: Reconciliation of PPL's Reported Earnings and Earnings from Ongoing Operations
Reconciliation of PPL’s Reported Earnings and Earnings from Ongoing Operations A-15
Slide 39: Credit Ratings
PPL Corporation Issuer Rating Outioak PPL Energy Supply Issuer Rang Senior Notes Canmercial paper Outloak PPL Capital Funding Senior Unsecured Debt Subordinated Debt Medium-Term Notes Outioak PPL Electric Utilities Issuer Rating First Martgage Bonds Pollan Contral Bands* Senior Secured Debt Corrmerc
Slide 40: Credit Ratings (cont.)
Credit Ratings (cont.) Moody's Standard & Poor's Fitch PPL Transition Bond Co. Transition Bonds faa AA AAA PPL Montana Pass-Through Certificates Baa BEB. BEB Outloak STABLE STABLE WPD Holdings Limited Issuer Rang Baad BEB. BEB. ‘Senior Unsecured Debt Baad BEB. BEB Corrmercial Paner 3 Outlook STABLE
Slide 41: 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, marketing performance, regulatory action, growth, rates, revenues, expenses, cash flows, cash from operations, dividends, credit pr
Slide 42: Definitions of Financial Measures
Definitions of Financial Measures A-19 “Earnings from ongoing operations” excludes the impact of special items. Special items include charges, credits or gains that are unusual or non-recurring and the mark-to-market impact of energy-related, non-trading economic hedges. The mark-to-market impact of
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