Slide 1: First Quarter Earnings Call May 2, 2008
First Quarter Earnings Call May 2, 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 • First Quarter 2008 Earnings and Review of 2008 and 2010 Earnings Forecast and Outlook • First Quarter Segment Results and Financial Overview • Operational Review • Q&A J. H. Miller P. A. Farr W. H. Spence 2
Slide 4: First Quarter Results
First Quarter Results Earnings from Ongoing Operations Per share $0.65 $0.61 $0.00 $0.50 $1.00 1Q 2007 1Q 2008 3 Note: See Appendix for the reconciliation of reported earnings and earnings from ongoing operations. Per share $0.52 $0.69 $0.00 $0.50 $1.00 1Q 2007 1Q 2008 Reported Earnings
Slide 5: 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 4 *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 6: 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 7: Ongoing Earnings Overview
Ongoing Earnings Overview $(0.04)$0.65$0.61Total 0.080.180.26International Delivery 0.010.150.16Pennsylvania Delivery $(0.13)$0.32$0.19Supply Change Q1 2007 Q1 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 (0.03)O&M (0.08)Synfuel 0.01Income taxes and other $0.192008 EPS – Ongoing Earnings (0.13)Total (0.01)Margins – West $(0.02)Margins – East $0.322007 EPS – Ongoing Earnings 1st Quarter Note: See Appendix for the per share reconciliation of reported earnings and earning
Slide 9: Pennsylvania Delivery Segment Earnings Drivers
Pennsylvania Delivery Segment Earnings Drivers $0.162008 EPS – Ongoing Earnings 0.01Total (0.02)O&M $0.03Delivery Margins $0.152007 EPS – Ongoing Earnings 1st Quarter 8 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 (0.03)Latin American Operations $0.262008 EPS – Ongoing Earnings 0.08Total 0.05Income Taxes & Other 0.02O&M $0.04Delivery Margins $0.182007 EPS – Ongoing Earnings 1st Quarter 9 Note: See Appendix for the per share reconciliation of reported earnings an
Slide 11: Expected 2008 Earnings Contributions
Expected 2008 Earnings Contributions 10 * Earnings from ongoing operations – See Appendix for the per share reconciliation of reported earnings and earnings from ongoing operations. **Midpoint of forecast $2.00 $2.25 $2.50 $2.75 $3.00 2007A* $2.60 Energy Margins $0.10 Net Impact of Asset Divestiture
Slide 12: Expected 2010 Earnings Contributions
$2.00 $3.00 $4.00 $5.00 2008E* 2010E Expected 2010 Earnings Contributions 11 * Earnings from ongoing operations – See Appendix for the per share reconciliation of report earnings and earnings from ongoing operations ** Midpoint of forecast $2.40** Increased Energy Margins $2.28 $4.30** Increased O&M
Slide 13: Cash Flow Forecast
Cash Flow Forecast Millions ($200) $0 $200 $400 $600 $800 $1,000 2007A 2008E 2009E 2010E Free cash flow before dividends 12 Note: See Appendix for the reconciliation of cash flow measures.
Slide 14: Continued Dividend Growth
$0.82 $0.92 $1.00 $1.10 $1.22 $1.34 $0.00 $0.25 $0.50 $0.75 $1.00 $1.25 $1.50 2004 April 2005 October 2005 2006 2007 2008 $/Share Annualized Continued Dividend Growth 713
Slide 15: PPL EU Completed Third RFP for 2010
PPL EU Completed Third RFP for 2010 14 • Solicitation for 850 MWs of residential and small commercial and industrial load • 50% of 2010 expected load now under contract • PUC approval of winning bids received March 27, 2008 • Prices contracted in the third auction were about $3/MWH higher than the p
Slide 16: 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 Being commissioned Montour 1 In Service 3/8/2008 Montour 2 Scheduled In-Service Dates December, 2006 March, 2008 Montour Scrubber Construction 1115
Slide 17: 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 completed • Progressing on other previously announced uprate projects • Investing in renewable energy projects 16
Slide 18: 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 13PPL has not yet decided
Slide 19: 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 20: Hedge and Supply Update
Hedge and Supply Update • Recent supply and demand events have produced 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 – In the east, 89% hedged 2008-2010 • Our 1,600 fleet rail cars
Slide 21: Current Hedge Positions - Electricity and Fuel
Current Hedge Positions -Electricity and Fuel 20 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 22: Key Driver of Fleet Value: Open EBITDA
Key Driver of Fleet Value: Open EBITDA 21 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 23: PPL
ppl
Slide 24: 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 25: 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 8% Coal 54% Nuclear 31% Hydro 7%
Slide 26: Key Drivers/Challenges Through 2010 and Beyond
Key Drivers/Challenges Through 2010 and Beyond • Increased prices for POLR sales • Expiration of supply contracts remarketed at current forward prices • Power plant uprates and planned levels of equivalent availability of generation • Net economic benefits from the installation of scrubbers at the M
Slide 27: 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 28: 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 29: 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-6 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 30: 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-7 Coal 3,483* Nuclear 2,117 Oil 1,716 Gas 1,582 Hydro 343 CTs 474 QFs 356 East 10,071 MW* Coal 683 Hyd
Slide 31: 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-8 $972 $153 ($29) $513Free Cash Flow before Dividends (65) 74 66 937 Other Investing Activities-net (1,490) (1,456) (1,609) (1,685) Capital Expenditures --(310) (310) Transition Bond Repayment Increase/
Slide 32: 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-9
Slide 33: Reconciliation of First Quarter Reported Earnings and Earnings from Ongoing Operations
Reconciliation of First Quarter Reported Earnings and Earnings from Ongoing Operations A-10 (Millions of Dollars) Pennsylvania International Supply Delivery Delivery Total Qtr. Ending March 31, 2008 Reported earnings $102 $60 $98 $260 Special Items: MTM adj's from energy-related, non- trading econom
Slide 34: Reconciliation of First Quarter Reported Earnings (Per Share)
Reconciliation of First Quarter Reported Earnings and Earnings from Ongoing Operations A-11 Pennsylvania International Supply Delivery Delivery Total Qtr. Ending March 31, 2008 Reported earnings $0.27 $0.16 $0.26 $0.69 Special Items: MTM adj's from energy-related, non- trading economic hedges 0.13 0
Slide 35: 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 $2.45 $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 36: Credit Ratings
Credit Ratings A-13 BBB Issuer Rating AAAAaa 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 AAA/A Aaa/Baa1***Tax-Exempt Bonds** BBBBBBBaa3Preference Stock PPL Electric Util
Slide 37: Credit Ratings (cont.)
Credit Ratings (cont.) A-14 A-3Commercial Paper A-BBB+ Baa1Senior Unsecured Debt F2A-2P-2Commercial Paper STABLE STABLE STABLE Outlook BBB+ BBB+ Baa1Issuer Rating A-BBB+ Baa1Senior Unsecured Debt F2A-2Commercial Paper STABLE STABLE STABLE Outlook Western Power Distribution (South West) PLC BBB+ BBB+
Slide 38: 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 39: Definitions of Financial Measures
Definitions of Financial Measures A-16 “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