Ppl Corporation · NYSE:PPL
Ppl — Deutsche Bank 2008 Energy and Utilities Conference
34 slides from Ppl's conference presentation, May 27, 2008
Slide 1: Deutsche Bank 2008 Energy and Utilities Conference
Deutsche Bank 2008 Energy and Utilities Conference May 29, 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: Pennsylvania Update
Pennsylvania Update • Legislative discussions continuing in four areas: – Demand management, conservation – Procurement – Rate Mitigation – Energy Independence fund • PPL efforts – Continuing discussions with legislators, regulators, administration, other utilities --many areas of agreement – One-ha
Slide 4: Scrubbers Expected to be Completed on Budget and on Schedule
Scrubbers Expected to be Completed on Budget and on Schedule Q2-09Brunner Island 1 & 2 Q4-08Brunner Island 3 In Service 5/17/2008Montour 1 In Service 3/8/2008 Montour 2 Scheduled In-Service Dates December, 2006 May, 2008 Montour Scrubber Construction 3 Brunner Island Scrubber Construction
Slide 5: Expansion of Generation Portfolio
Expansion of Generation Portfolio • Agreed to acquire long-term tolling agreement of 664 MW natural-gas combined-cycle plant in PJM • Susquehanna Unit 1 uprate, phase 1, is now complete • Susquehanna Unit 2 uprate following Spring 2009 refueling outage • Progressing on other announced uprate and hyd
Slide 6: Why Nuclear Makes Sense for PPL
Why Nuclear Makes Sense for PPL 5 • Public support • Climate change legislation • Potential JVs to reduce risk • Economic analysis favorable • Volatile coal, gas and oil prices • Economic incentives for early movers • Record performance at existing plants • Multiple vendor designs and better technol
Slide 7: Nuclear Development Schedule
Nuclear Development Schedule Late 2008 (Estimate)Order Long Lead-Time Materials 2016 to 2018 (Estimate)Commercial Operation 2011 (Estimate)Begin Construction 2011 (Estimate)NRC Approval of COLA 2009Early Site Work Sept. 2008Submit DOE Loan Application Sept. 2008Submit COLA PPL has not yet decided to
Slide 8: Renewable Energy Development
Renewable Energy Development • Objective: Generate Renewable Energy Credits(RECs) and improve carbon footprint • Large Projects: – Holtwood Hydro Expansion Project: • 125MW, completion in 2012 – Maine and Montana Hydro Expansion Projects: • 31MW, completion in 2009, 2011 – Wind development and purch
Slide 9: Global Climate Change Legislation
Global Climate Change Legislation Lieberman–Warner • Aggressive targets and timetables – severe and disruptive to economic growth • No safety valve – leads to price volatility • Greater advantages to those with diverse fuel mix • Industry challenge is to amend the legislation to reflect sector’s pri
Slide 10: PPL's Carbon Footprint
PPL’s Carbon Footprint • Currently 40% of generation output non- carbon emitting • Power plant uprates – all carbon neutral • If Holtwood hydro expansion and possible3rd nuclear unit are completed, 50% of generation output would be non-carbon emitting • PPL’s Supply margins would benefit under vario
Slide 11: RPM Update
RPM Update • In April 2008, FERC denied PJM request to increase CONE price in capacity pricing formula beginning with the 2011/2012 RPM auction • FERC issued a separate April 2008 order regarding Duquesne, which stated that PJM may grant network transmission rights to capacity resources in the Duque
Slide 12: Coal Hedge and Supply Update
Coal Hedge and Supply Update • Recent supply and demand events have resulted in higher coal prices • PPL consumes approximately 9.2 million tons of coal in the east, and 3.3 million tons of coal in the west – In the west, 100% hedged 2008-2010, Colstrip hedged to 2019 – In the east, 89% hedged 2008-
Slide 13: Hedge Positions - Electricity and Fuel
Hedge Positions -Electricity and Fuel 12 2008 2009 2010 Electricity Sales East 98% 97% 66% West 100% 81% 66% Total 99% 94% 66% Uranium 100% 100% 100% Coal East 99% 91% 77% West 100% 100% 100% Total 99% 93% 83% Average Delivered Coal Price Increase 10%-15% 10%-15% 3%-7% Note: As of 3/31/2008
Slide 14: Key Driver of Fleet Value: Open EBITDA
Key Driver of Fleet Value: Open EBITDA 13 2010E Generation Output -millions of MWH 56.2 Implied Gross Margin -millions * 3,698 $ O&M - -millions (814) $ Open EBITDA -millions $ 2,884 Below-Market Value of Hedges -millions * (240) $ * Based on forward market prices as of March 31, 2008
Slide 15: Strong Long-Term Earnings Growth Forecast
$2.00 $2.50 $3.00 $3.50 $4.00 $4.50 $5.00 2007A* 2008* 2010 Strong Long-Term Earnings Growth Forecast 14 *Earnings from ongoing operations – See Appendix for the per share reconciliation of reported earnings and earnings from ongoing operations. $2.60 $2.35 $2.45 $4.00 $4.60 Per Share
Slide 16: PPL
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Slide 17: Market Prices
Market Prices EAST PJM On-Peak Off-Peak ATC (3) WEST Mid-Columbia On-Peak Off-Peak ATC (3) GAS (4) NYMEX TZ6NNY PJM MARKET HEAT RATE (5) Actual Forward (1) At 10/2007(2) 2007 2008 2009 2010 2010 9.4 $7.78 $6.86 $51 $45 $57 $57 $43 $73 8.8 $9.04 $8.08 $60 $53 $67 $64 $51 $79 8.58.48.4 $10.20$10.93$10
Slide 18: PPL Supply Business Overview
PPL Supply Business Overview 2008E Production GWH A-2 2008E Installed Capacity MW Gas/ Oil 8% Coal 54% Nuclear 31% Hydro 7% QFs Gas/Oil 33% Coal 37% Nuclear 19% Hydro8% 3%
Slide 19: Coal Supply by Region
Northern App 43% Central Pa 17% Central App 14% PRB 6% Mine Mouth 20% Coal Supply by Region Projected 2008 Coal Supply Projected 2010 Coal Supply Northern App 53% Central Pa 13% Mine Mouth 20% PRB 6% Central App 5% Potential Illinois/PRB for Eastern Fleet A-3 3%
Slide 20: Key Drivers/Challenges Through 2010 and Beyond
Key Drivers/Challenges Through 2010 and Beyond • Increased prices for POLR sales • Expiration and remarketing of supply contracts • Power plant uprates and planned levels of equivalent availability of generation • Net economic benefits from the installation of scrubbers at the Montour and Brunner Is
Slide 21: Summary of Completed RFPs
Summary of Completed RFP’s Small Commercial and Residential Customers Industrial Customers Round 1 (July 2007) Retail Price Per MWH $101.77 $105.11 Round 2 (October 2007) Retail Price Per MWH $105.08 $105.75 Round 3 (March 2008) Retail Price Per MWH $108.80 $108.76 Average Retail Price Per MWH Incre
Slide 22: 2008 PJM Power & Natural Gas Prices
62.00 64.00 66.00 68.00 70.00 72.00 74.00 76.00 1-Jan4-Jan7-Jan10-Jan13-Jan16-Jan19-Jan22-Jan25-Jan28-Jan31-Jan3-Feb6-Feb9-Feb12-Feb15-Feb18-Feb21-Feb24-Feb27-Feb1-Mar4-Mar7-Mar10-Mar13-Mar16-Mar19-Mar22-Mar25-Mar 7.00 7.50 8.00 8.50 9.00 9.50 10.00 $/MWH 2008 PJM Power & Natural Gas Prices West Hub
Slide 23: Retail Price Components Example
0 20 40 60 80 100 120 2009 2009 2010 $/MWH Shaped Energy & Capacity Including Congestion Other Adders Line Losses GRT Load-following Components Example A-7 Total $105 $82.00* $45.47 Total $51.23 * Shaped price based on $63/MWH ATC energy price, $150/MW-Day capacity price, and congestion. $48.29 Tota
Slide 24: 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. Coal 3,483* Nuclear 2,117 Oil 1,716 Gas 1,582 Hydro 343 CTs 474 QFs 356 East 10,071 MW* Coal 683 Hydro 6
Slide 25: 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-9 $972$153($29)$513Free Cash Flow before Dividends (65)7466937Other Investing Activities-net (1,490)(1,456)(1,609)(1,685)Capital Expenditures --(310)(310)Transition Bond Repayment Increase/(Decrease) in
Slide 26: Capital Expenditures by Segment
Millions $1,043 $1,030 $824 $750 $692 $514 $302 $281 $305 $404 $521 $511 $340 $298 $327 $336 $343 $351 $0 $400 $800 $1,200 $1,600 $2,000 2007A 2008E 2009E 2010E 2011E 2012E Supply PA Delivery International Delivery $1,685 $1,556 $1,376 $1,490$1,456 $1,609 Capital Expenditures by Segment A-10
Slide 27: 2007 Synfuel and Divested Assets Earnings
2007 Synfuel and Divested Assets Earnings A-11 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 28: Reconciliation of 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 $2.45 $2.35 $2.60 $2.25 Special items (net of taxes): economic hedges 0.13 0.13 0.08 (0.03) Reversal of cost recovery - Hurricane Isabel (0.02) Impai
Slide 29: Credit Ratings
Credit Ratings A-13 BBB Issuer Rating AAAAaa Tax-Exempt Bonds* STABLE STABLE STABLE Outlook A-A-A3Senior Secured Bonds F-2A-2P-2Commercial Paper BBBBBBBaa3Preferred Stock BBBA-Baa1Issuer Rating A-A-A3First Mortgage Bonds AAA/A Aaa/Baa1***Tax-Exempt Bonds** BBBBBBBaa3Preference Stock PPL Electric Uti
Slide 30: Credit Ratings (cont.)
Credit Ratings (cont.) A-14 A-3Commercial Paper A-BBB+ Baa1Senior Unsecured Debt F2A-2P-2Commercial Paper POSITIVE sTABLE STABLE Outlook BBB+ BBB+ Baa1Issuer Rating A-BBB+ Baa1Senior Unsecured Debt F2A-2Commercial Paper POSITIVE STABLE STABLE Outlook Western Power Distribution (South West) PLC BBB+
Slide 31: PPL Facts
PPL Corporation (NYSE: PPL) is a Fortune 500 company with headquarters in Allentown, Pa. The Company’s diversified corporate strategy is to achieve growth in energy supply margins while limiting volatility in both cash flows and earnings and to achieve stable, long-term growth in regulated delivery
Slide 32: PPL Facts (cont.): Financial and Operating Information
PPL Facts (cont.) Financial and Operating Information Note: See Appendix for the reconciliation of reported earnings per share and earnings from ongoing operations. ii(Unaudited) ($ in millions, except per share amounts) 12 Months Ended March 2008 March 2007 Common Equity $5,584 $5,273 Preferred Equ
Slide 33: Forward-Looking Information Statement
Forward-Looking Information Statement 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, bus
Slide 34: Definitions of Financial Measures
Definitions of Financial Measures A-18 “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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