Ppl Corporation · NYSE:PPL
Ppl — Conference Presentation (2004)
39 slides from Ppl's conference presentation, 2004
Slide 1: PPL
Slide 2: PPL Corporation - Organization Structure
PPL Corporation - Organization Structure PPL Corporation Supply Domestic Delivery International Delivery § Electric distribution to 1.3 § Electric distribution to 2.5 § 12,300 MW in operation million customers in million customers in the U.K. Pennsylvania § Electric distribution to 1.0 million custo
Slide 3: Execution of Supply Strategy
Execution of Supply Strategy n World class operation of low-cost generating fleet n Matching generating capacity to long-term, fixed-price energy supply contracts with creditworthy counterparties n Disciplined pricing and comprehensive quantitative risk management program
Slide 4: Comprehensive Risk Management Program
Comprehensive Risk Management Program n Within our Supply Segment, we attempt to maximize margins by effectively managing the following risks: — Fluctuations in wholesale electricity prices — Counterparty credit — Fuel supply and price — Power plant performance
Slide 5: Well-Balanced Portfolio
Well-Balanced Portfolio Geography Expected 2004 Production WSCC Nuclear MAIN NEPOOL NYISO 1% 3% 5% 17% 31% Hydro Gas/Oil 7% 9% 74% 53% PJM Coal n Low production costs — 91% of 2004 generation output expected to be produced at less than $14/MWh
Slide 6: Fuel Supply and Price
Fuel Supply and Price We hedge our exposure to fluctuations in fuel costs through active management and long-term commitments n Current hedge percentages: 2004 2005 Coal (Eastern Generation) 100% 95% Coal (Western Generation) 100% 100% Gas 100% 100%
Slide 7: Energy Delivery
Energy Delivery United States United Kingdom Pennsylvania PPL Electric and PPL Gas Utilities United Kingdom United Kingdom 1.4 million customers WPD (South West) WPD (South Wales) 1.0 million customers 1.5 million customers El Salvador Del Sur 262,000 customers Latin America Chile Bolivia Emel Elfec
Slide 8: Domestic Delivery - PPL Electric Utilities
Domestic Delivery - PPL Electric Utilities n Capped rates producing low single-digit returns n Rate increase request filed with the Pennsylvania PUC on March 29, 2004 n Increased rates expected to be effective January 1, 2005 when the rate cap expires n In addition, recovery of increased charges for
Slide 9: PPL Electric Utilities - Proposed Rate Increases
PPL Electric Utilities - Proposed Rate Increases n Filed for a distribution revenue increase of $164 million to be effective January 1, 2005 n Pass-through of additional PJM-billed transmission- related charges of $57 million effective January 1, 2005 — These charges include PJM-network service and
Slide 10: Highlights of Distribution Rate Filing
Highlights of Distribution Rate Filing n Rate Base of $1,815 million n Proposed ROE of 11.5% n Future Test Year common equity ratio assumption of 47%
Slide 11: Distribution Rate Case Timetable
Distribution Rate Case Timetable 4February 27, 2004 PUC notified of intent to file 4March 29, 2004 Rate case Filed with PUC 4May 7, 2004 Rate case suspended for hearings 4June 29, 2004 Intervenors file testimony 4June/July 2004 Public input hearings 4August 9-13, 2004 Evidentiary hearings Mid-Octobe
Slide 12: WPD Rate Review
WPD Rate Review n Revenues are set every five years by OFGEM n Typically, one-time reduction followed by annual adjustments for inflation (RPI) less an efficiency (or “X”) factor n The revenue that WPD can earn in each of the five years is the sum of: — The Regulator’s view of efficient operating co
Slide 13: Timetable for U.K. Price Review
Timetable for U.K. Price Review 4March 2004 OFGEM Policy Document 4June 2004 Initial Proposals Document September 2004 OFGEM Update Document November 2004 Final Proposals Document February 2005 Statutory notice on final rates April 2005 New Price Control implementation
Slide 14: Solid Earnings Performance
Solid Earnings Performance $/share $5.00 $4.24 $3.71 $3.65 $4.00 $3.54 $3.60 $3.00 $2.00 $1.36 $1.00 $0.00 2002 2003 2004 Actual Actual Forecast Reported (2004 = Midpoint of $3.50 to $3.80 forecast range*) Ongoing Operations (2004 = Midpoint of $3.45 to $3.75 forecast range) Note: See page A-15 for
Slide 15: Improving Liquidity and Strengthening Balance Sheet
Improving Liquidity and Strengthening Balance Sheet n $130 million improvement in free cash flow from 2003 to 2004 n Cash on hand at the end of 2004 projected to be $400 million n $1.9 billion of credit facilities n Committed to solid investment-grade credit ratings — $1.6 billion of common stock is
Slide 16: Strong Dividend Growth
Strong Dividend Growth $/share $2.00 $1.64 $1.54 $1.44 $1.06 $1.06 $1.00 $1.00 $0.00 1999 2000 2001 2002 2003 2004* * Annualized level beginning with the dividend payable April 1, 2004
Slide 17: Opportunities and Challenges
Opportunities and Challenges n Increased POLR prices and sales volume n PPL Electric Utilities rate case n WPD price review in the UK n Increase existing generation capacity by 200 MW n Growing equity ratio and opportunity to buy back common stock over the longer term consistent with plans to improv
Slide 18: Appendix
Slide 19: PPL's Generation Portfolio
PPL’s Generation Portfolio Total Domestic Generation: 12,291 MW Montana 1,266 MW Maine 96 MW Coal 683 Oil 52 Hydro 583 Hydro 44 (Plus Import Rights 100) Connecticut 243 MW Gas 243 New York 159 MW Gas 159 Pennsylvania 9,237 MW Coal 3,812 Arizona 450 MW Nuclear 2,117 Arizona 750 MW Gas/Oil 2,270 CTs 4
Slide 20: Visible Growth Opportunities
Visible Growth Opportunities n Increases in POLR prices under contract with PPL Electric Utilities 60 $49.10 $50.20 50 $47.80 $48.40 $44.10 $42.30 $42.70 $43.30 40 ($/MWh) 30 20 10 0 2002 2003 2004 2005 2006 2007 2008 2009 n Increases in POLR volumes
Slide 21: Sales Commitments
Sales Commitments Expected to produce about 95% of our 2004 supply margins Other West Committed Other East Committed 9% 26% Committed Margins 3% 51% POLR West 7% Retail 4% BGS & CL&P Northwestern
Slide 22: Supply Segment Counterparty Credit
Supply Segment Counterparty Credit Over 90% of receivables are with investment-grade counterparties Northwestern 4% 3% Non-Investment Grade 93% Investment Grade
Slide 23: Operational Excellence
Operational Excellence PPL Generation Equivalent Availability Projected 100% 92.0% 91.1% 90% 88.5% 85.3% 82.2% — Record availability in 2003 81.9% — 2003 generation records at 80% Susquehanna and Corette — 2003 Prime time availability >98% 70% 1999 2000 2001 2002 2003 2004 n Similar performance expe
Slide 24: 2004 Sources of Coal Supply
2004 Sources of Coal Supply Wyoming Montana Powder Mine-mouth River Basin 6% 21% Central PA 23% 18% Central Appalachia 32% Southwest PA
Slide 25: PPL Electric Utilities' Rates Unbundled by 1998 Settlement Agreement
PPL Electric Utilities’ Rates Unbundled by 1998 Settlement Agreement 9 7.42 Cents 7.42 Cents 8 7 6 4.33 Cents/kWh Generation, Generation,Generation, 5 Distributio & n& DistributionDistributio n POLR Generation Related TransmissTransmiss ion & ion 4 Transmission 3 1.35 Stranded 2 1.34 Distribution 1.
Slide 26: PPL Electric Utilities' Rate Case Facts
PPL Electric Utilities’ Rate Case Facts Amount of Distribution Revenue Increase $164M Amount of Transmission-related Cost Recovery $57M % Total Revenue Increase Including Generation-Related Revenue, but Excluding 6.03% Transmission-Related Services Increase % Total Revenue Increase Including Generat
Slide 27: PPL Electric Utilities' Low Cost Distribution Charges
PPL Electric Utilities’ Low Cost Distribution Charges $40 $37.14 $35 $29.39 $29.04 $29.11 $30 $27.01 $25 $18.83 $19.06 $20 $15 $10 $5 $0 Duquesne Allegheny Average Met Ed Penelec PPL PECO Based on the Distribution Charge for a residential monthly bill for 750 kWh of electricity use
Slide 28: WPD's "Benchmark" Performance
WPD’s “Benchmark” Performance Distribution Complaints to Energywatch per 100,000 customers 12 Months Ended December 2003 10 8.02 8 7.16 6.14 6 4.54 4.65 4.69 4 2.77 2.85 2.88 2.38 2.53 2 1.72 0.00 0.07 0 WPD WPD A B C D E F G H I J K L South South Wales West For every complaint per 100,000 customers
Slide 29: WPD's "Benchmark" Performance (Cont'd)
WPD’s “Benchmark” Performance (Cont’d) Average Customer Minutes Lost 160 151 140 131 129 129 120 100 87 85 81 80 75 71 65 60 40 20 0 1994/95 1995/96 1996/97 1997/98 1998/99 1999/00 2000/01 2001/02 2002/03 2003/04 Year Ended March 31 Best in UK on a Normalized Basis
Slide 30: WPD's "Benchmark" Performance (Cont'd)
WPD’s “Benchmark” Performance (Cont’d) 1-Hour Restoration Rate Year ended March 31, 1999 – 51.9% Year ended March 31, 2000 – 53.7% Year ended March 31, 2001 – 57.6% Year ended March 31, 2002 – 74.9% Year ended March 31, 2003 – 80.0% Year ended March 31, 2004 – 82.0% Best in UK
Slide 31: Segment Data - EPS From Ongoing Operations
Segment Data - EPS From Ongoing Operations 100% 6% 12% 21% 23% 19% 13% 75% 6% 9% 50% 75% 75% 73% 68% 25% 0% 2001 2002 2003 2004 $4.22 $3.54 $3.71 $3.45-$3.75 Supply Delivery International Forecast* *Based upon midpoint of forecast See pages A-14 and A-15 for reconciliations of earnings from ongoing
Slide 32: Reconciliation of Segment Earnings from Ongoing Operations and Reported Earnings
Reconciliation of Segment Earnings from Ongoing Operations and Reported Earnings 2003 Supply Delivery International Total Earnings from Ongoing Operations $2.70 $0.24 $0.77 $3.71 Unusual Items 0.20 (0.03) 0.36 0.53 Earnings - Reported $2.90 $0.21 $1.13 $4.24 2002 Supply Delivery International Total
Slide 33: Earnings Per Share Reconciliation 1999-2004
Earnings Per Share Reconciliation 1999-2004 Per Share Reconciliation of PPL's Reported Earnings and Earnings from Ongoing Operations Forecast ** Actual High 2004 Low 2004 2003 2002 2001 2000 1999 1998 1997 Earnings from Ongoing Operations* (per share) $ 3.75 $ 3.45 $ 3.71 $ 3.54 $ 4.22 $ 3.28 $ 2.35
Slide 34: Earnings Per Share Reconciliation for Periods Ending June 30, 2004 and 2003
Earnings Per Share Reconciliation for Periods Ending June 30, 2004 and 2003 3 Months Ended 6 Months Ended 12 Months Ended 6/30/04 6/30/03 6/30/04 6/30/03 6/30/04 6/30/03 Earnings from Ongoing Operations $0.72 $0.67 $1.75 $1.72 $3.72 $3.50 Unusual Items (net of tax): Impairment of investment in techn
Slide 35: Credit Ratings
Credit Ratings Moody’s S&P Fitch Moody’s S&P Fitch PPL Corporation WPD Holdings U.K. Issuer Rating BBB BBB Issuer Rating Baa2 BBB- Senior Unsecured Debt Baa2 BBB- BBB PPL Capital Funding Outlook Stable Negative Stable Senior Unsecured Debt Baa3 BBB- BBB Subordinated Unsecured Debt Ba1 BB+ BBB- Weste
Slide 36: Comparison of 5-Year Cumulative Total Return
Comparison of 5-Year Cumulative Total Return Value of Investment ($) $200 $150 $100 $50 12/31/98 12/31/99 12/31/00 12/31/01 12/31/02 12/31/03 PPL Corporation S&P 500 Index EEI Index of Investor-owned Electric Utilities Assumes investing $100 on 12/31/98 and reinvesting dividends in PPL Corporation c
Slide 37: Definitions of Financial Measures
Definitions of Financial Measures “Earnings from ongoing operations” excludes the impact of unusual items. Earnings from ongoing operations should not be considered as an alternative to net income, which is an indicator of operating performance determined in accordance with GAAP. PPL believes that e
Slide 38: Forward-Looking Information Statement
Forward-Looking Information Statement Statements contained in this presentation, including statements with respect to future earnings, revenues, expenses, net income, equity ratios, dividends, electric rates, capital structure, cash flows, capital expenditures, energy prices, supply, sales, margins
Slide 39: PPL