Slide 1: Second Quarter Earnings Call August 4, 2009
Second Quarter Earnings Call August 4, 2009 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 • Second Quarter 2009 Earnings, 2009 and 2010 Earnings Forecast and Outlook • Segment Results and Financial Overview • Operational Review • Q&A J. H. Miller P. A. Farr W. H. Spence 2
Slide 4: Earnings Results
Earnings Results Second Quarter Earnings from Ongoing Operations $0.50 $0.32 ($0.50) $0.00 $0.50 $1.00 2Q 2008 2Q 2009 Per Share $0.50 ($0.02) ($0.50) $0.00 $0.50 $1.00 2Q 2008 2Q 2009 Per Share Second Quarter Reported Earnings Note: See Appendix for the reconciliation of reported earnings and earni
Slide 5: Strong Expected Earnings Growth Forecast
$0.00 $1.00 $2.00 $3.00 $4.00 $5.00 2008A* 2009* 2010 Strong Expected Earnings Growth Forecast 4 * Earnings from ongoing operations – See Appendix for the per share reconciliation of reported earnings and earnings from ongoing operations. $2.02 $3.50 Per Share $1.90 $1.60 $3.10
Slide 6: Ongoing Earnings Overview
Ongoing Earnings Overview $(0.18)$0.50$0.32Total 0.020.160.18International Delivery (0.03)0.080.05Pennsylvania Delivery $ (0.17)$0.26$0.09Supply Change Q2 2008 Q2 2009 5 Note: See Appendix for the per share reconciliation of reported earnings and earnings from ongoing operations.
Slide 7: Supply Segment Earnings Drivers
Supply Segment Earnings Drivers (0.04)Income taxes and other 0.01Margins - -West (0.03)O&M (0.01)Financing Costs $0.092009 EPS – Ongoing Earnings (0.17)Total (0.10)Margins – East $0.262008 EPS – Ongoing Earnings 2nd Quarter Note: See Appendix for the per share reconciliation of reported earnings and
Slide 8: Pennsylvania Delivery Segment Earnings Drivers
Pennsylvania Delivery Segment Earnings Drivers (0.03)Delivery Margins $0.052009 EPS – Ongoing Earnings (0.03)Total (0.02) 0.01 Financing Costs Income taxes and Other 0.01O&M $0.082008 EPS – Ongoing Earnings 2nd Quarter 7 Note: See Appendix for the per share reconciliation of reported earnings and ea
Slide 9: International Delivery Segment Earnings Drivers
International Delivery Segment Earnings Drivers (0.07)Effect of Exchange Rates 0.02Financing Costs $0.182009 EPS – Ongoing Earnings 0.02Total 0.05Income Taxes & Other 0.02O&M $0.162008 EPS – Ongoing Earnings 2nd Quarter 8 Note: See Appendix for the per share reconciliation of reported earnings and e
Slide 10: Strong Expected Earnings Growth Forecast
$0.00 $1.00 $2.00 $3.00 $4.00 $5.00 2008A* 2009* 2010 Strong Expected Earnings Growth Forecast 9 * Earnings from ongoing operations – See Appendix for the per share reconciliation of reported earnings and earnings from ongoing operations. $2.02 $3.50 Per Share $1.90 $1.60 $3.10
Slide 11: Free Cash Flow before Dividends Forecast
($605) $124 ($326) $524 $367 $272 ($30) ($180) $1 ($700) ($400) ($100) $200 $500 $800 2008A 2009E 2010E Supply Segment PA Delivery Segment International Delivery Segment Free Cash Flow before Dividends Forecast Millions 10
Slide 12: Liquidity Profile
Liquidity Profile (1) Reported as of 6/30/2009 (2) Expiration date has been extended to July 2010 (3) Facility was terminated in July 2009 and replaced with a new £210 million 3-year credit facility expiring in July 2012 Diverse bank group consisting of 23 banks committed under domestic facilities,
Slide 13: PPL Energy Supply Collateral Profile
$0 $500 $1,000 $1,500 $2,000 $2,500 $3,000 $3,500 $4,000 $4,500 $5,000 $5,500 Apr-08 May-08 Jun-08 Jul-08 Aug-08 Sep-08 Oct-08 Nov-08 Dec-08 Jan-09 Feb-09 Mar-09 Apr-09 May-09 Jun-09 Available Credit Capacity Cash Posted Borrowings/CP Outstanding Letters of Credit PPL Energy Supply Collateral Profil
Slide 14: PA and International Delivery Segment Operational Update
PA and International Delivery Segment Operational Update PA Delivery • PUC approved 2011 to mid-2013 Procurement Plan – Bids for first procurement due August 11, 2009 with PUC approval expected August 13 • Bids due for final 2010 RFP October 5, 2009 with PUC approval expected October 8 • Filed Act 1
Slide 15: PPL Electric Utilities 2011 to 2013 Procurement Plan
• Residential load to be supplied under 12-and 24-month load-following contracts and block power purchases, 5-and 10-year fixed block products, and spot purchases • Small commercial and industrial to be supplied under 12-and 24-month load-following contracts, and spot purchases • Large commercial an
Slide 16: Supply Segment Operational Update
Supply Segment Operational Update • Susquehanna Unit 2 uprate of 45 MW successfully completed • Agreements reached to sell non-core assets on Long Island and in Maine • Brunner Island Unit 3 scrubber went in service • Brunner Island Units 1 and 2 scrubber will be placed in service in the Fall 15
Slide 17: Hedged Baseload Electricity 2009-2012
Hedged Baseload Electricity 2009-2012 Hedged Baseload Electricity Sales 0% 20% 40% 60% 80% 100% 2009 2010 2011 2012 % of C oal, H ydro & N uclear O utput$20 $30 $40 $50 $60 $70 $80 $/M W h Average Sale Price 16 2009 2010 2011 2012 Baseload Electricity Sales 98% 98% 80% 53% Uranium 100% 100% 100% 100
Slide 18: ppl
ppl
Slide 19: Market Prices
Market Prices ELECTRIC PJM On-Peak Off-Peak ATC(2) Mid-Columbia On-Peak Off-Peak ATC(2) GAS(3) NYMEX TZ6NNY PJM MARKET HEAT RATE(4) CAPACITY PRICES (Per MWD) EQA Actual 2008 2009 2010 2011 2012 $81 $46 $58 $63 $66 $49 $34 $41 $43 $46 $69 $40 $49 $52 $55 $65 $33 $48 $56 $58 $51 $28 $38 $45 $46 $59 $3
Slide 20: Current Hedge Positions - Electricity and Fuel
Current Hedge Positions -Electricity and Fuel Note: As of 6/30/2009 A-2 2009 2010 2011 2012 Electricity Sales East 94% 91% 72% 45% West 94% 84% 81% 72% Total 94% 90% 73% 49% Uranium 100% 100% 100% 100% Coal East 100% 97% 79% 57% West 100% 100% 86% 77% Total 100% 98% 81% 63% Unhedged Coal – million t
Slide 21: PPL Supply Business Overview
PPL Supply Business Overview 2009E Production GWh A-3 Gas/Oil 38% Coal 34% Nuclear 18% Hydro8% QFs 2% 2009E Installed Capacity MW Gas/Oil 10% Coal 50% Nuclear 32% Hydro 8% Note: Graphs include tolling agreements
Slide 22: PPL's Generation Portfolio
PPL’s Generation Portfolio Total Domestic Generation: 12,166 MW Planned Uprate Projects or Additions: 208 MW (1) Reflects reduction of 60 MW expected loss due to increased plant usage during scrubber operation. (2) Includes tolling agreements (3) Includes MWs associated with the proposed sale of Sho
Slide 23: Current East Coal Contracts - Base Prices
Current East Coal Contracts -Base Prices A-5 Base Prices for Wholly Owned Plants* *East wholly owned plants include Montour & Brunner Island but not Keystone & Conemaugh. **Excludes contracts subject to mining-related oil surcharges and/or price collars. Note: As of 6/30/2009 $35 $40 $45 $50 $55 Bal
Slide 24: Capital Expenditures by Segment
Millions $939 $753 $891 $936 $809 $648 $286 $295 $576 $649 $504 $535 $278 $251 $428 $448 $460 $477 $0 $400 $800 $1,200 $1,600 $2,000 $2,400 2008A 2009E 2010E 2011E 2012E 2013E Supply PA Delivery International Delivery $1,503 $2,033 $1,895 $1,299 Capital Expenditures by Segment $1,773 $1,660 A-6
Slide 25: Pennsylvania Delivery Rate Base
Millions $693 $811 $952 $1,221 $1,469 $1,528 $2,081 $2,207 $2,353 $2,513 $2,664 $2,803 $0 $1,000 $2,000 $3,000 $4,000 $5,000 2008A 2009E 2010E 2011E 2012E 2013E Transmission Distribution & Other Pennsylvania Delivery Rate Base $3,018 $3,305 $3,734 $4,133 $4,331 $2,774 A-7
Slide 26: PPL Electric Utilities 2011 to 2013 Procurement Plan Schedule
PPL Electric Utilities 2011 to 2013 Procurement Plan Schedule • Due dates for bids: August 11, 2009 July 19, 2011 October 20, 2009 October 18, 2011 January 19, 2010 January 9, 2012 April 20, 2010 April 3, 2012 July 20, 2010 July 17, 2012 October 19, 2010 October 16, 2012 April 18, 2011 January 22, 2
Slide 27: Annualized Continued Dividend Growth
$1.00 $1.10 $1.22 $1.34 $1.38 $0.00 $0.25 $0.50 $0.75 $1.00 $1.25 $1.50 2005 2006 2007 2008 2009 $/Share Annualized Continued Dividend Growth A-9
Slide 28: Debt Maturities
Debt Maturities (1) PPL Capital Funding $201 million maturity paid off in March 2009 (2) PPL Electric Utilities prefunding done in 10/2008 and 5/2009 for 2009 maturity Note: As of 6/30/2009 A-10 2009 2010 2011 2012 2013 PPL Energy Supply $0 $0 $500 $0 $737 PPL Capital Funding 0 (1) 0 0 0 0 PPL Elect
Slide 29: Supply Segment Reconciliation of Cash from Operations to Free Cash Flow
Supply Segment Reconciliation of Cash from Operations to Free Cash Flow before Dividends (Millions) A-11 39216Asset Sales (203)Investment in Energy Project $524$124($605)Free Cash Flow before Dividends (61)(15)(58)Other Investing Activities-net (891)(753)(939)Capital Expenditures Increase/(Decrease)
Slide 30: PA Delivery Segment Reconciliation of Cash from Operations to Free Cash Flow
PA Delivery Segment Reconciliation of Cash from Operations to Free Cash Flow before Dividends (Millions) A-12 303Asset Sales & Other ($326)$272$367Free Cash Flow before Dividends (576)(295)(286)Capital Expenditures (293)Less Transition Bond Repayment Increase/(Decrease) in cash due to: $250$567$ 643
Slide 31: International Delivery Segment Reconciliation of Cash from Operations to Free Cash Flow
International Delivery Segment Reconciliation of Cash from Operations to Free Cash Flow before Dividends (Millions) A-13 ($180)($ 30)$ 1Free Cash Flow before Dividends (428)(251)(278)Capital Expenditures Increase/(Decrease) in cash due to: $248$221$ 279Cash from Operations 201020092008 Actual Projec
Slide 32: 2009-2010 Sensitivities EPS Impact
2009 - -2010 Sensitivities EPS Impact See Appendix A-1 for market price assumptions A-14 Note: Discrete sensitivities based on changes to individual item, which ultimately may be interrelated. 2009 2010 $10/MW-Day Capacity Price Change >$0.00 >$0.00 $1/MWh of Unhedged Baseload Sales ±<$0.01 ±<$0.01
Slide 33: Reconciliation of Second Quarter Reported Earnings and Ongoing Earnings
Reconciliation of Second Quarter Reported Earnings and Earnings from Ongoing Operations A-15 (Millions) Pennsylvania International Supply Delivery Delivery Total Quarter Ending June 30, 2009 Reported earnings* ($86) $17 $62 ($7) Special Items: Unrealized losses from energy-related, non-trading econo
Slide 34: Reconciliation of Second Quarter Reported Earnings and Ongoing Earnings (per share)
Reconciliation of Second Quarter Reported Earnings and Earnings from Ongoing Operations A-16 Pennsylvania International Supply Delivery Delivery Total Quarter Ending June 30, 2009 Reported earnings ($0.23) $0.05 $0.16 ($0.02) Special Items: Unrealized losses from energy-related, non-trading economic
Slide 35: Reconciliation of Year-to-Date Reported Earnings and Ongoing Earnings
Reconciliation of Year-to-Date Reported Earnings and Earnings from Ongoing Operations A-17 (Millions) Pennsylvania International Supply Delivery Delivery Total Year-to-Date June 30, 2009 Reported earnings* $19 $66 $149 $234 Special Items: Unrealized losses from energy-related, non-trading economic h
Slide 36: Reconciliation of Year-to-Date Reported Earnings and Ongoing Earnings (per share)
Reconciliation of Year-to-Date Reported Earnings and Earnings from Ongoing Operations A-18 Pennsylvania International Supply Delivery Delivery Total Year-to-Date June 30, 2009 Reported earnings $0.05 $0.18 $0.39 $0.62 Special Items: Unrealized losses from energy-related, non-trading economic hedges
Slide 37: Reconciliation of PPL's Reported Earnings and Earnings from Ongoing Operations
Reconciliation of PPL’s Reported Earnings and Earnings from Ongoing Operations High Low 2009 2009 2008 2007 Earnings from Ongoing Operations per share of common stock $1.90 $1.60 $2.02 $2.60 Special items (net of taxes) through June 30, 2009: economic hedges (0.10) (0.10) 0.67 0.08 Unrealized losses
Slide 38: Reconciliation of Second Quarter Operating Income and Energy Margins
Reconciliation of Second Quarter Operating Income and Energy Margins A-20 2009 2008 Change Per Share (after-tax) Eastern U.S., pre-tax $312 $379 ($67) ($0.10) Western U.S., pre-tax 77 68 9 0.01 Domestic gross energy margins, pre-tax $389 $447 ($58) ($0.09) 2009 2008 Operating Income $104 $385 Adjust
Slide 39: Reconciliation of Second Quarter Operating Income and Energy Margins (cont.)
A-21 2009 2008 Revenue adjustments WPD utility revenue $ (155) $ (211) Domestic delivery component of utility revenue (293) (310) Other utility revenue (7) (14) Unrealized gains (losses) from economic hedge activity 111 617 Margins from Supply segment discontinued operations 7 10 Total revenue adjus
Slide 40: Credit Ratings
Credit Ratings A-22 BBB Issuer Rating AAAAaa Tax-Exempt Bonds* STABLE NEGATIVE NEGATIVE Outlook A-A-A3Senior Secured Debt F-2A-2P-2Commercial Paper BBBBBBBaa3Preferred Stock BBBA-Baa1Issuer Rating A-A-A3First Mortgage Bonds A/A-A3/Baa1Tax-Exempt Bonds** BBBBBBBaa3Preference Stock PPL Electric Utilit
Slide 41: Credit Ratings (cont.)
Credit Ratings (cont.) A-23 A-3Commercial Paper A-BBB+ Baa1Senior Unsecured Debt F2A-2P-2Commercial Paper POSITIVE NEGATIVE STABLE Outlook BBB+ BBB+ Baa1Issuer Rating A-BBB+ Baa1Senior Unsecured Debt F2A-2Commercial Paper POSITIVE NEGATIVE STABLE Outlook Western Power Distribution (South West) PLC B
Slide 42: Forward-Looking Information Statement
Forward-Looking Information Statement A-24 Statements contained in this presentation, including statements with respect to future earnings, energy prices, margins and sales, growth, revenues, expenses, credit profile, cash flow, liquidity, financing, asset disposition, marketing performance, hedging
Slide 43: Definitions of Non-GAAP Financial Measures
Definitions of Non-GAAP Financial Measures A-25 “Earnings from ongoing operations” excludes the impact of special items. Special items include charges or credits that are unusual or nonrecurring. Special items also include unrealized gains or losses from energy-related and foreign currency-related,