Slide 1: Third Quarter Earnings Call
Third Quarter Earnings Call November 4, 2008 Exhibit 99.2
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 • Third Quarter 2008 Earnings and Review of 2008, 2009 and 2010 Earnings Forecast and Outlook • Third Quarter Segment Results and Financial Overview • Operational Review • Q&A J. H. Miller P. A. Farr W. H. Spence 2
Slide 4: Reported Earnings
Reported Earnings Year-to-Date Per share $2.25 $1.73 $0.00 $0.50 $1.00 $1.50 $2.00 $2.50 $3.00 2007 2008 3 Note: See Appendix for the reconciliation of reported earnings and earnings from ongoing operations. Per share $0.84 $0.54 $0.00 $0.50 $1.00 2007 2008 Third Quarter
Slide 5: Ongoing Earnings
Ongoing Earnings Year-to-Date Per share $2.00 $1.56 $0.00 $0.50 $1.00 $1.50 $2.00 $2.50 2007 2008 4 Note: See Appendix for the reconciliation of reported earnings and earnings from ongoing operations. Per share $0.72 $0.45 $0.00 $0.50 $1.00 2007 2008 Third Quarter
Slide 6: Strong Long-Term Earnings Growth Forecast
$1.50 $2.00 $2.50 $3.00 $3.50 $4.00 $4.50 2007A* 2008* 2009 2010 Strong Long-Term Earnings Growth Forecast 5 * Earnings from ongoing operations – See Appendix for the per share reconciliation of reported earnings and earnings from ongoing operations. $2.60 $2.05 $4.20 Per Share $1.90 $1.60 $3.60 $2.
Slide 7: Ongoing Earnings Overview
Ongoing Earnings Overview $(0.27)$0.72$0.45Total 0.070.130.20International Delivery 0.000.090.09Pennsylvania Delivery $(0.34)$0.50$0.16Supply Change Q3 2007 Q3 2008 6 Note: See Appendix for the per share reconciliation of reported earnings and earnings from ongoing operations.
Slide 8: Supply Segment Earnings Drivers
Supply Segment Earnings Drivers (0.02)Depreciation (0.03)Synfuel (0.02)Financing $0.162008 EPS – Ongoing Earnings (0.34)Total $(0.27)Energy Margins – East $0.502007 EPS – Ongoing Earnings 3rd Quarter Note: See Appendix for the per share reconciliation of reported earnings and earnings from ongoing o
Slide 9: Pennsylvania Delivery Segment Earnings Drivers
Pennsylvania Delivery Segment Earnings Drivers (0.01)Income taxes and other $0.092008 EPS – Ongoing Earnings 0.00Total $ 0.01Delivery Margins (a) $0.092007 EPS – Ongoing Earnings 3rd Quarter 8 (a) Net of CTC/ITC amortization, interest expense on transition bonds and ancillary charges. Note: See Appe
Slide 10: International Delivery Segment Earnings Drivers
International Delivery Segment Earnings Drivers 0.02Other (0.03)Latin American Operations $0.202008 EPS – Ongoing Earnings 0.07Total 0.06Income taxes $0.02O&M $0.132007 EPS – Ongoing Earnings 3rd Quarter 9 Note: See Appendix for the per share reconciliation of reported earnings and earnings from ong
Slide 11: Expected 2008 Earnings Contributions
Expected 2008 Earnings Contributions 10 *See Appendix for the per share reconciliation of reported earnings and earnings from ongoing operations, and per share reconciliation of operating income and energy margins. $1.00 $1.25 $1.50 $1.75 $2.00 $2.25 $2.50 $2.75 2007A* Per Share $2.60 Net Impact of
Slide 12: Expected 2009 Earnings Contributions
$1.00 $1.25 $1.50 $1.75 $2.00 $2.25 $2.50 $2.75 2008E* 2009E Expected 2009 Earnings Contributions 11 * Earnings from ongoing operations – See Appendix for the per share reconciliation of reported earnings and earnings from ongoing operations. **Midpoint of forecast Per Share $2.02* Financing Costs (
Slide 13: Expected 2010 Earnings Contributions
$1.00 $2.00 $3.00 $4.00 $5.00 2009E 2010E Expected 2010 Earnings Contributions 12 * Midpoint of forecast $1.75* Energy Margins $2.40 $3.90* O&M ($0.11) Income Taxes & Other ($0.05) Depreciation ($0.04) Per Share Financing Costs ($0.05)
Slide 14: 2010 EPS Update
2010 EPS Update $3.50 $3.75 $4.00 $4.25 $4.50 2010 Update $4.30* WPD ($0.07) Financing Costs ($0.12) $3.90* O&M ($0.11) Other ($0.05) 2010 Previous Forecast * Midpoint of forecast 13 Energy Margins ($0.05) Per Share
Slide 15: Cash Flow Forecast
Cash Flow Forecast Millions ($200) $0 $200 $400 $600 $800 2007A 2008E 2009E 2010E Free cash flow before dividends 14 Note: See Appendix for the reconciliation of cash flow measures.
Slide 16: Liquidity Profile
Liquidity Profile (1) As of 9/30/2008 Diverse bank group with 24 banks committed, with no bank having more than 13% of bank commitments. 15 (2) Draw on facilities of PPL Energy Supply and PPL Electric Utilities made in 10/2008, draw at WPD made during 3Q. Institution Facility Expiration Date Total F
Slide 17: PPL Energy Supply Collateral Profile
PPL Energy Supply Collateral Profile (Millions of Dollars) 16 - 500 1,000 1,500 2,000 2,500 3,000 3,500 4,000 4,500 5,000 Jun- 07 Jul-07 Aug- 07 Sep- 07 Oct- 07 Nov- 07 Dec- 07 Jan- 08 Feb- 08 Mar- 08 Apr- 08 May- 08 Jun- 08 Jul-08 Aug- 08 Sep- 08 Available Credit Capacity Cash posted Letters of Cre
Slide 18: Debt Maturities
Debt Maturities (1) Excludes Transition Bonds (2) PPL Electric Utilities prefunding done in 10/2008 for 2009 maturity (3) WPD Group As of 9/30/2008 17 2008 2009 2010 2011 2012 PPL Energy Supply $0 $20 $24 $526 $25 PPL Capital Funding 0 201 0 0 0 PPL Electric Utilities (1) 0 486 0 0 0 WPD Group 225 0
Slide 19: Marketing and Trading
PPL’s marketing and trading operation has been profitable each of the last 4 years 18 Marketing and Trading *Marketing included as part of total generation gross margins in 2005. $32 $35 $41 $(82) $43 $104 $125 $145 $78 $32 $43 ($100) ($50) $0 $50 $100 $150 $200 2005 2006 2007 YTD Sept 2008 Marketin
Slide 20: Repair Work at Montour Cooling Tower
Repair Work at Montour Cooling Tower 19
Slide 21: Current Hedge Positions - Electricity and Fuel
Current Hedge Positions -Electricity and Fuel 2008 2009 2010 2011 2012 Electricity Sales East 99% 96% 76% 43% 23% West 100% 91% 75% 65% 44% Total 99% 95% 76% 46% 26% Uranium 100% 100% 100% 100% 100% Coal East 100% 98% 89% 78% 59% West 100% 100% 100% 86% 77% Total 100% 98% 92% 80% 64% Unhedged Coal –
Slide 22: Hedged Baseload Electricity 2008-2012
Hedged Baseload Electricity 2008-2012 Hedged Baseload Electricity Sales 0% 20% 40% 60% 80% 100% 2008 2009 2010 2011 2012 % of C o al, H hydro & N u clear Output $20 $30 $40 $50 $60 $70 $80 $/M W h Average Sale Price 21
Slide 23: Key Drivers of Supply Value: Open EBITDA
Key Drivers of Supply Value: Open EBITDA *Based on forward market prices as of September 30, 2008 2010E 2011E 2012E Generation Output - MWh 55.5 55.8 56.7 Unhedged Gross Margin*3,068 3,148 3,271 O&M (859) (899) (929) Open EBITDA 2,209 2,250 2,342 Above/(Below) Market value of Hedges* 200 174 169 Exp
Slide 24: 2008-2012 Sensitivities
2008 - -2012 Sensitivities 2008 2009 2010 2011 2012 $10/MW-Day Capacity Price Change >$0.00 >$0.00 >$0.00 >$0.00 ±$0.03 $1/MWh of Unhedged Baseload Sales ±$0.00 >$0.00 ±$0.02 ±$0.04 ±$0.06 $1/MWh of Unhedged Total Sales ±$0.00 >$0.00 ±$0.02 ±$0.05 ±$0.07 1% Generation Availability >$0.00 ±$0.03 ±$0.
Slide 25: Appendix
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Slide 26: Market Prices
Market Prices (1) Market prices based on the average of broker quotes as of 9/30/2008. (2) Prices at 10/2007 when 2010 earnings forecast of $4.00-$4.60 was developed. (3) 24-hour average. (4) NYMEX and TZ6NNY forward gas prices on 9/30/2008. (5) Market Heat Rate = PJM on-peak power price divided by
Slide 27: PPL Supply Business Overview
PPL Supply Business Overview 2008E Production GWH A-2 Gas/Oil 33% Coal 37% Nuclear 19% Hydro8% QFs 3% 2008E Installed Capacity MW Gas/ Oil 5% Coal 55% Nuclear 32% Hydro 8%
Slide 28: PPL's Generation Portfolio
PPL’s Generation Portfolio Total Domestic Generation: 11,358 MW Planned Uprate Projects: 331 MW *Reflects reduction of 60 MW expected loss due to increased plant usage during scrubber operation. A-3 Coal 3,483* Nuclear 2,117 Oil 1,795 Gas 1,503 Hydro 343 CTs 474 QFs 356 East 10,071 MW* Coal 683 Hydr
Slide 29: 2007 Synfuel and Divested Assets Ongoing Earnings Contributions
2007 Synfuel and Divested Assets Ongoing Earnings Contributions A-4 Synfuel Q1 Q2 Q3 Q4 2007 Synfuel Earnings $0.07 $0.01 $0.02 $0.04 $0.14 Fuel Costs 0.01 0.01 0.01 0.01 0.04 Total Synfuel Contribution $0.08 $0.02 $0.03 $0.05 $0.18 Net Impact of Asset Divestitures $0.03 $0.03 $0.02 $0.00 $0.08
Slide 30: 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-5 303898Asset Sales (203)Investment in Energy Projects $611$21($162)$513Free Cash Flow before Dividends (15)(15)(15)39Other Investing Activities-net (1,725)(1,246)(1,609)(1,685)Capital Expenditures --(3
Slide 31: Capital Expenditures by Segment
Millions $1,043 $1,030 $664 $718 $302 $281 $293 $580 $340 $298 $289 $427 $0 $400 $800 $1,200 $1,600 $2,000 2007A 2008E 2009E 2010E Supply PA Delivery International Delivery $1,685 $1,725 $1,246 $1,609 Capital Expenditures by Segment A-6
Slide 32: Reconciliation of Third Quarter Reported and Ongoing Earnings (Millions)
Reconciliation of Third Quarter Reported Earnings and Earnings from Ongoing Operations A-7 (Millions of Dollars) Pennsylvania International Supply Delivery Delivery Total Qtr. Ending September 30, 2008 Reported earnings $98 $32 $73 $203 Special Items: MTM adj's from energy-related, non- trading econ
Slide 33: Reconciliation of Third Quarter Reported and Ongoing Earnings (Per Share)
Reconciliation of Third Quarter Reported Earnings and Earnings from Ongoing Operations A-8 (Dollars Per Share) Pennsylvania International Supply Delivery Delivery Total Qtr. Ending September 30, 2008 Reported earnings $0.26 $0.08 $0.20 $0.54 Special Items: MTM adj's from energy-related, non- trading
Slide 34: Reconciliation of Third Quarter Operating Income and Energy Margins
Reconciliation of Third Quarter Operating Income and Energy Margins A-9 2008 2007 Change Per Share (after-tax) Tax Credit Reclass (a) Per Share Adjusted (after-tax) Eastern U.S., pre-tax $269 $447 ($178) ($0.28) $0.01 ($0.27) Western U.S., pre-tax 75 74 1 Domestic gross energy margins, pre-tax $344
Slide 35: Reconciliation of Third Quarter Operating Income and Energy Margins
Reconciliation of Third Quarter Operating Income and Energy Margins A-10 Revenue adjustments 2008 2007 Change Revenue Utility $1,007 $1,016 ($9) Unregulated retail electric and gas 43 28 15 Wholesale energy marketing 1,915 517 1,398 Net energy trading margins (132) 20 (152) Revenue adjustments WPD u
Slide 36: Reconciliation of Year-to-Date Reported and Ongoing Earnings (Millions)
Reconciliation of Year-to-Date Reported Earnings and Earnings from Ongoing Operations A-11 (Millions of Dollars) Pennsylvania International Supply Delivery Delivery Total Year-to-Date September 30, 2008 Reported earnings $297 $123 $233 $653 Special Items: MTM adj's from energy-related, non- trading
Slide 37: Reconciliation of Year-to-Date Reported and Ongoing Earnings (Per Share)
Reconciliation of Year-to-Date Reported Earnings and Earnings from Ongoing Operations A-12 (Dollars Per Share) Pennsylvania International Supply Delivery Delivery Total Year-to-Date September 30, 2008 Reported earnings $0.78 $0.33 $0.62 $1.73 Special Items: MTM adj's from energy-related, non- tradin
Slide 38: Reconciliation of PPL's Operating Income and Energy Margins
Reconciliation of PPL’s Operating Income and Energy Margins A-13 2008 2007 Change Per Share (after-tax) Synfuel Tax Credit Reclass (a) Fourth Quarter 2008 Change Full Year 2008 vs. 2007 Domestic gross energy margins, pre-tax $1,192 $1,385 ($193) ($0.30) $0.03 ($0.03) ($0.30) 2008 2007 Operating Inco
Slide 39: Reconciliation of Year-to-Date Operating Income and Energy Margins
Reconciliation of Year-to-Date Operating Income and Energy Margins A-14 Revenue adjustments 2008 2007 Change Revenue Utility $3,108 $3,074 $34 Unregulated retail electric and gas 110 73 37 Wholesale energy marketing 2,000 1,145 855 Net energy trading margins (82) 38 (120) Revenue adjustments WPD uti
Slide 40: Reconciliation of PPL's Reported Earnings and Earnings from Ongoing Operations
Reconciliation of PPL’s Reported Earnings and Earnings from Ongoing Operations High Low 2008 2008 2007 2006 Per Share Earnings from Ongoing Operations $2.05 $2.00 $2.60 $2.25 Special items (net of taxes): economic hedges 0.32 0.32 0.08 (0.03) Reversal of cost recovery - Hurricane Isabel (0.02) Impai
Slide 41: Credit Ratings
Credit Ratings A-16 BBB Issuer Rating AAA Aaa Tax-Exempt Bonds* STABLE STABLE STABLE Outlook A-A-A3Senior Secured Debt F-2A-2P-2Commercial Paper BBBBBBBaa3Preferred Stock BBBA-Baa1Issuer Rating A-A-A3First Mortgage Bonds AA/A*** Aa3/Baa1***Tax-Exempt Bonds** BBBBBBBaa3Preference Stock PPL Electric U
Slide 42: Credit Ratings (cont.)
Credit Ratings (cont.) A-17 A-3Commercial Paper A-BBB+ Baa1Senior Unsecured Debt F2A-2P-2Commercial Paper POSITIVE STABLE STABLE Outlook BBB+ BBB+ Baa1Issuer Rating A-BBB+ Baa1Senior Unsecured Debt F2A-2Commercial Paper POSITIVE STABLE STABLE Outlook Western Power Distribution (South West) PLC BBB+
Slide 43: Forward-Looking Information Statement
Forward-Looking Information Statement A-18 Statements contained in this presentation, including statements with respect to future earnings, energy prices, margins, sales and supply, marketing performance, growth, revenues, expenses, rates, regulation, cash flows, credit profile, financing, dividends
Slide 44: Earnings from ongoing operations definition
“Earnings from ongoing operations” excludes the impact of special items. Special items include charges, credits or gains that are unusual or nonrecurring. Special items also include the mark-to-market impact of energy-related, non-trading economic hedges and impairments of securities in PPL’s nuclea